I was recently presenting in front of a wonderful group of people in Hendersonville, Tennessee at one of our live educational events on how to avoid probate, estate taxes, and nursing home poverty. Following this presentation, one of the attendees asked me a series of questions about their father’s estate. This person discussed with me that their father had passed away about 3 months ago and he had inherited his dad’s home according to the will. He also told me that the estate settlement process was incredibly simple and he didn’t have to open a probate estate because he had access to everything. He mentioned that he was in the process of hiring a relator to sell his dad’s old home.
I explained to this person that not opening a probate estate in the probate court is incredibly dangerous and exposes you to possible liability. Second, I also explained to this person that it will be incredibly difficult to sell his dad’s home right now. Under Tennessee law, anyone who purchases real estate from a person within six months of that person’s death takes the property subject to the claim of a creditor. Therefore, I explained, from a practical stand point, no one is going to purchase his father’s house because no one will agree to purchase real estate subject to unknown creditor claims.
In addition, I explained that creditors, at most, have a period of one year, in which to file a claim against the estate after being put on notice of the person’s death. I explained that not opening a probate estate to administer the settlement of his father’s estate and distributing the assets immediately, he could find himself in a situation of being forced to pay future bills and debts of his father years from now. In addition, I explained that if the creditors can prove that you knew about the debts and specifically did not pay them or put them on notice, they may be able to take you to court and argue that you should be held personally liable for your father’s debts. In addition, if your father owed any taxes and you had knowledge and didn’t pay them before distributing your father assets, the IRS can come back and hold you personally responsible as the executor of the last will and testament.
Finally, I concluded, therefore, to avoid potential personal liability, if a loved one dies with or without a will and you are the executor / personal administrator, it is not only required, but it is imperative that you have the estate settled through the probate court system.
If you have questions about estate planning in Tennessee, establishing a revocable living trust or an irrevocable Medicaid trust, avoiding nursing home poverty and Medicaid planning, or any other estate planning topics, then I encourage you to attend one of our free live educational events scheduled this month. At these events, you will hear a lot of real life stories about families that paid thousands of dollars in unnecessary expenses, families that were able to avoid unnecessary expenses, and families that were able to protect their assets from unnecessary nursing home costs and expenses.
I look forward to speaking with you at one of our upcoming live educational events!