Who pays to maintain the homestead while the probate case makes its way through court? What about sales prep costs?
When our mother died, there were not enough liquid assets to care for the homestead indefinitely - while the case made it's way through probate. So not to lose it to foreclosure, my brother loaned the estate $5000 to pay the mortgage, taxes, utilities, listing costs, repair and maintenance.
Is he entitled to be paid back the $5000, plus mileage (400 miles every month), labor and all the costs related to the homestead, as he is requesting? I believe these costs are his to bear as PR and that they should be deducted from his salary. Also, I refuse to pay his salary or the attorney's if not forced to do so.
Please advise who should pay for what homestead-related costs.
3 attorney answers
A debit of the estate is repaid by estate assets. A Personal Representative (PR) is not personally responsible for any estate debit or cost. The PR and the attorney are entitled, by FL statute, to be compensated, from estate assets, for their time spent handling the estate. You may object to their compensation if you feel the amount is unreasonable. If you object, a hearing will be set before the probate judge and the judge will make a ruling as to amount of the compensation. Please note, your objection and the hearing will cost the estate additional funds. Furthermore, if their compensation is found to be reasonable, the court will order payment. More than likely, both the PR and the attorney are being compensated via the terms of the FL statutes, each will receive aprox. 3% of the value of the estate. The attorney will also receive additional compensation for extraordinary services including a hearings, the sale of real estate, ect. See FL Stat. 733.617 & 733.6171
I am assuming, based on the way you stated your question, that the house can be sold for more than the outstanding mortgage. If that is the case, it sounds as if your brother was trying to get a larger inheritance for you and the rest of the beneficiaries by lending the estate $5,000. Your brother should be paid back the $5,000.
Review the above mentioned statutes. If the compensation falls within the guidelines of the statute, don't object to either one's compensation. If you are still unsure how to proceed, hire a local probate attorney before deciding to object.
This answer is provided for informational and/or educational purposes only, does not constitute legal advice, and does not create an attorney-client relationship. Florida Attorney practicing in areas of Estate Planning, Elder Law, Trusts, Probate, Guardianship, and Business Law. Please contact me at [email protected] or call my office, (727) 471-0039, if you would like to discuss your Florida legal matter further. Actual legal advice can only be provided after completing a comprehensive consultation in which all of the relevant facts are discussed and reviewed.
Fiduciaries such as executors, administrators or trustee may borrow on behalf of the estate and sign for the loan in that capacity.
Using the real property currently vested in an estate (or trust) to secure financing can resolve many problems can be solved in short order. As is the case in any loan, of course, a few conditions will have to be met to assure a smooth, orderly transaction as well as providing for all of the legal requirements of estate administration.
Mortgages are typically based on the remaining equity in the real property. This method is primarily used when goal of estate is to pay attorney fees, creditors, or to provide liquidity prior to close of probate.
How Financing Works
There are two main ways in which financing estate property can be accomplished. Each method has variations which can be tailored to the individual probate case. The essential ingredients are comprised of the “security” (the real estate) and the “borrower” (the estate representative, trustee or heir/beneficiary). We must then establish whether the client will be borrowing in the capacity as the estate rep. or trustee (not as a natural person) or if they’ll be “buying” the property from the estate and using their own credit and income to qualify.
Who’s The Borrower?
Therefore, achieving your client’s financing goal will largely depend on how they will sign for the loan. The key to remember is that how they will sign makes a difference to the lender, a big difference. That is to say, will the borrower be signing on behalf of the estate or personally?
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If you received the "order"-then the homestead has been transferred and is now owned by all the heirs. If no other money exists in the estate-you have a problem that should have been obvious when you started the probate procedure.
I assume you have an attorney-if so-your attorney should advise you further.
The answer given does not imply that an attorney-client relationship has been established and your best course of action is to have legal representation in this matter.