I am the appointed executor of a deceased estate. There is only one fixed asset (apartment) in the estate and one stream of income (the rent paid for the apartment). I have two problems:
1. The real estate is mortgaged by a bank. There is no equity. There is an insurance policy that covers the outstanding mortgage amount, but the insurers refuse to pay out. It will cost litigation, which neither the estate nor I personally can afford, to get this money from the insurers. In the mean time the mortgage on the real estate is not getting serviced and thus the mortgage is now about 4x the value of the real estate! What do I do here?
2. I have a perpetual lease on the same real estate and pay the rent into the estate account every month. How do I calculate my executor fees since I might still be
living in the apartment 20 years from now since the lease automatically renews itself every year?
Ethics / Professional Responsibility Lawyer
You need to get yourself to a lawyer to review the documents. Maybe some real estate attorney will disagree, but my understanding of a lease is that it can't be perpetual. A perpetual lease is a freehold- the lessor would own the property. Are you sure you are not describing a life estate? Meanwhile, if the mortgage is not serviced, the bank will foreclose and you won't have any legal problem at all, or a place to live either. You should be using the rent payments to service the mortgage. As far as the life insurance policy is concerned, you need to get to a lawyer for an opinion whether you can successfully litigate to get payment. If the insurer's refusal is unjustified and you have a strong case, you should be able to hire a lawyer to take the case on a contingency. For advice about the estate, you need an estate lawyer, and you will have to pay an hourly rate.
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I would have an insurance law attorney review the situation with you, because the insurance could solve a multitude of problems, if it pays out. The facts of your case will determine the answer and you have not included them in your summary. I would meet with an attorney right away. Best of luck to you!
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I agree with my colleagues who have encouraged you to retain an attorney. The life insurance issue needs to be addressed as quickly as possible. If the company can be made to pay out the death proceeds, that should go a long ways towards solving the problems you've described. If, on the other hand, the company is legally justified in refusing to pay on the policy, you may be able to negotiate a "short sale" or "deed in lieu of foreclosure" with the bank. Without knowing more facts, however, I couldn't say which of these options might be better for you.
I realize that good legal advice can be expensive, but the problems you've described are not ones you should try to resolve on your own. If you choose not to hire an attorney, then you should probably consider resigning your position as the Executor of the estate, as you could become personally liable to other estate beneficiaries (if there are any) if the estate is not properly administered.
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