Property Expenses During Probate - Who Pays

[jz6x3d]

My question involves estate proceedings in the state of: Alabama. Currently in the 2nd year of acting as the PR for a relative's estate. A will contest prevented any actions for the first 11 months. That contest has been resolved and the will accepted by the court. One of the major assets is a large home on 120 acres. I have just completed a court approved sale of the property, paid of the mortgage and have the remaining funds deposited in an escrow account. I do have an attorney but occasionally his answers are a bit convoluted.

My question is this. During probate, I have paid approximately $100K in property expenses (Mortgage Payments, Utilities, Insurance, Property Tax, Pool Maintenance, Lawn Care and Repairs). The proceeds from the property goes to a group of heirs (group A). The residual portion of the estate goes to group B. There is an overlap of heirs between the two groups. To me it seems like those expenses should come out of the proceeds of the sale. The lawyer says that it normally comes from the residual portion but he says it is normally the same heirs so that it doesn't matter. He is suggesting that we ask the judge to rule on it. I'm trying to understand what is normal and if there is any case law on the subject.

thanks

[llworking]

My question involves estate proceedings in the state of: Alabama. Currently in the 2nd year of acting as the PR for a relative's estate. A will contest prevented any actions for the first 11 months. That contest has been resolved and the will accepted by the court. One of the major assets is a large home on 120 acres. I have just completed a court approved sale of the property, paid of the mortgage and have the remaining funds deposited in an escrow account. I do have an attorney but occasionally his answers are a bit convoluted.

My question is this. During probate, I have paid approximately $100K in property expenses (Mortgage Payments, Utilities, Insurance, Property Tax, Pool Maintenance, Lawn Care and Repairs). The proceeds from the property goes to a group of heirs (group A). The residual portion of the estate goes to group B. There is an overlap of heirs between the two groups. To me it seems like those expenses should come out of the proceeds of the sale. The lawyer says that it normally comes from the residual portion but he says it is normally the same heirs so that it doesn't matter. He is suggesting that we ask the judge to rule on it. I'm trying to understand what is normal and if there is any case law on the subject.

thanks

You are entitled to be reimbursed for any money you paid out of pocket. I also think that it should come from the proceeds of the sale of the house since it was expenses from the house. I think that the lawyer is being extra cautious here, but I can understand why since the will was already contested. It doesn't hurt to ask the judge to rule on it.

[budwad]

All expenses of the estate are paid first (including anything you paid out of pocket) before there is any distribution of assists to beneficiaries. You're the PR so where the money comes from is up to you.

[adjusterjack]

During probate, I have paid approximately $100K in property expenses (Mortgage Payments, Utilities, Insurance, Property Tax, Pool Maintenance, Lawn Care and Repairs).

There were probably other ongoing administrative expenses and funeral costs. Unless the estate had cash assets that paid ongoing expenses, you also get those back.

All of that comes off the top before the estate's assets are distributed.

You are also entitled to collect a fee (also off the top) for your handling of the estate as well as be reimbursed if you incurred the attorney fees involved in defending the estate from the contest.

See 43-2-848 and 43-2-849:

https://law.justia.com/codes/alabama...-2/article-20/

[pg1067]

I do have an attorney but occasionally his answers are a bit convoluted.

Then you keep asking questions until you get answers that make sense to you.

He is suggesting that we ask the judge to rule on it.

And there you go. None of the anonymous strangers who post here -- most of whom are not lawyers and, AFAIK, none of whom are in Alabama, will have a better answer for you.

[jz6x3d]

Thank you all for your input. That has answered part of my question in that I understand these debts come off the top.

If the sale of the farm netted 1M after paying the mortgage, do the 100K expenses get deducted from that, leaving 900K to group A? Other debts from the estate such as funeral / final medical bills and final CC bills are coming out of the residual portion of the estate. The probate code doesn't seem to address this. Is it just a judgement call call from the judge? If that is the case, will I just submit my proposed distributions when it is time and let the judge approve it? I suspect that a subset of group A will try to challenge that.

[adjusterjack]

By now the estate should have had an estate checking account in the name of The Estate of ________ into which all funds and proceeds are deposited and all disbursements are made.

Subject to you confirming this with your lawyer, here's how I think it should go.

The entire proceeds from the sale of the home go into the estate account.
The proceeds from the sale of any other assets (cars, household goods, etc) go into the estate account.
Cash coming in from any other source goes into the account.

From that total you:

First - pay yourself your fee.
Second - reimburse yourself for anything and everything you spent, including attorney fees.
Third - pay all remaining creditors.
Fourth - distribute the remaining funds to the heirs in accordance with the will to the extent that there are funds available.

I think you may find all that addressed in the statute section Administration of Estates:

https://law.justia.com/codes/alabama...-43/chapter-2/

Tell the people in Group A that the attorney fees for any further challenge along with additional fees to you for handling it will be coming out of the proceeds before distribution to the heirs.

[pg1067]

If the sale of the farm netted 1M after paying the mortgage, do the 100K expenses get deducted from that, leaving 900K to group A? Other debts from the estate such as funeral / final medical bills and final CC bills are coming out of the residual portion of the estate. The probate code doesn't seem to address this. Is it just a judgement call call from the judge? If that is the case, will I just submit my proposed distributions when it is time and let the judge approve it? I suspect that a subset of group A will try to challenge that.

No one here has read the will, so all we have is your attempt to paraphrase it. No one here is an Alabama probate lawyer. We can all give you ignorant guesses about the answer to your questions, but no one here can give you an informed response. Again, this is why you have an attorney.

[jz6x3d]

pg1067 - I find very few of the responses here to be ignorant guesses. As with any forum, a grain of salt is required. I have been blessed through the years with responses that have helped me deal with situations in different estates. I'm the go to PR for my extended family. This forum has been very helpful in helping me point me in new directions for my research. I never assume that my attorney's are infallible so I do my own research on unusual situations.

Thanks again to everyone for your time in responding.

[llworking]

By now the estate should have had an estate checking account in the name of The Estate of ________ into which all funds and proceeds are deposited and all disbursements are made.

Subject to you confirming this with your lawyer, here's how I think it should go.

The entire proceeds from the sale of the home go into the estate account.
The proceeds from the sale of any other assets (cars, household goods, etc) go into the estate account.
Cash coming in from any other source goes into the account.

From that total you:

First - pay yourself your fee.
Second - reimburse yourself for anything and everything you spent, including attorney fees.
Third - pay all remaining creditors.
Fourth - distribute the remaining funds to the heirs in accordance with the will to the extent that there are funds available.

I think you may find all that addressed in the statute section Administration of Estates:

https://law.justia.com/codes/alabama...-43/chapter-2/

Tell the people in Group A that the attorney fees for any further challenge along with additional fees to you for handling it will be coming out of the proceeds before distribution to the heirs.

AJ you are not paying attention to the fact that one group of heirs gets proceeds from the sale of the property, and another group of heirs gets part of the residual estate. Therefore the accounting has to be separate for the sale of the property and the residual estate. Since the estate has already been challenged it's critical that things be done properly.

Let's give an example...lets say that the sale of the property netted 2 million dollars and the residual estate is 500k. If the expense reimbursement is going to come out of the residual estate there is going to be another legal fight on top of what has already happened, because heirs in the B group are not going to want to be responsible for expenses related to the sale of the property, since they don't benefit from that.