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Help! I Was Left A House In The Estate, But No Cash To Pay Creditors!

Last updated on June 28, 2023

Middle-class families often face a common dilemma when an elderly parent dies: They are left with the family house, maybe some stocks, and personal property of relatively little value, but there is little or no cash to pay for the cost of estate administration. And creditors don’t take front porches as payment. An Executor or Administrator should never have to pay out-of-pocket to probate an estate. Yet it costs hundreds of dollars just to get into court in order to start the probate process.

Gadi Zohar is a probate and estate planning lawyer Gadi Zohar, Esq., in Palo Alto, California. Throughout Gadi’s years of practice as an attorney, our office has helped a great many families resolve the common problem of probating an estate with little or no cash.

There Are Solutions, And We Will Guide You Through Them

If you are the Executor or Administrator of an estate, call our office to discuss ways we can help with the following options:

  • Determining what claims are legitimate: Creditors, organizations and individuals can come out of the woodwork to stake a claim against a decedent’s estate, especially if there are significant assets. Gadi will guide you through the probate process to determine which claims are legitimate and require immediate attention. Sometimes lenders need to be contacted and informed of probate. Other times creditors are making claims you do not necessarily have to pay – like when potentially fraudulent charges appear on a credit card after a decedent died.
  • Paying for court and other costs: It is not uncommon for there to be a house and essentially nothing else of value in the estate. Yet it costs more than $600 just to get your first hearing in court so that you can even have the right to sell the house and get cash to pay costs and debts. The probate referee may be entitled to $1,000 or more for the inventory and appraisal you must complete before selling the family home. In many cases, Gadi will pay these costs out of our pocket and get reimbursed when the house sells.
  • Funding house upgrades and repairs: It is not uncommon to have a house worth significant money. But the house would sell for much more if you made some upgrades and repairs. Gadi works with realtors who will often put up their own money or provide zero-interest loans and then they get repaid when the house sells. It’s a win-win because the realtor makes more when the house sells for a higher price and the beneficiaries get more without anyone having to put up their own money to prepare the house for sale.
  • Insufficient value: Sometimes a decedent owed more debt than the value of the house. In most cases, the Executor or Administrator’s fees actually take priority over the mortgage. This means that even when an estate is underwater, at least the Executor or Administrator will get paid for their efforts – often tens of thousands of dollars – before the debts are paid off. Attorney’s fees are also paid as a cost of administration ahead of the mortgage lender, so the estate, not you as Administrator, pays the attorney’s fees. This can only be done with protective orders from the court prior to selling a home.
  • I keep creditors and claimants at bay: Being named Executor or Administrator of an estate does not mean that creditors have the right to go after your personal assets to seek repayment. Nor are they allowed to press you for repayment of a debt out of order. Gadi has even defended from creditors who made outrageous claims against the estate. Once an estate is in probate, creditors must follow the legal process. Having an experienced probate and estate law professional on your side means you can turn the problem over to me.
  • Loans to the estate: In some rare cases, it may be advisable for the estate to get a loan. Gadi can help guide you to services that will provide a secured loan to the estate. Obtaining a loan for the estate may be a way for the estate to have the cash to pay costs of administration (fees, costs, taxes, debts, etc.) while preserving real property to be passed on to heirs and beneficiaries. Such loans are specialized and usually require that the estate real property be refinanced shortly after the close of probate. Beneficiaries can also get access to cash separately from the estate, but the cost of such cash is usually exceedingly high. Nevertheless, when cash is needed, Gadi can point all interested parties to their options and allow them to make informed decisions.

Contact Our Office To Start Resolving The Cashflow Issues Of Your Probate

Call Gadi Zohar, Esq., in Palo Alto at 650-449-6671 or contact our office by email to discuss the circumstances you face regarding administering an estate with little or no cash. Gadi have the experience to help you through every type of probate problem.