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Paralegal 101: When Brokers Are Heirs Handling Family Estates

Paralegal 101: When Brokers Are Heirs Handling Family Estates

Get an attorney, get an attorney, get an attorney... (LOL). This is not legal advice, it's just a few points of order you need to keep in mind because the death of a loved one can be emotionally numbing. I am going to quote and cite a few useful court cases as bite sized illustrations (feel free to Google your own research and make sure you speak with an attorney regarding your estate issues):

"If there are sufficient assets in the estate to pay all estate obligations' (i.e., administration and funeral expenses, debts, estate taxes and general dispositions...) without invading property specifically devised or bequeathed, such general assets must be used to pay those obligations; but if the estate assets exclusive of the property specifically devised or bequeathed are insufficient to pay the administration, funeral expenses, debts and estate taxes, the specific dispositions are subject to abatement to pay them." (Matter of Maron, 49 A.D.2d 244, 246, 374 N.Y.S.2d 200 [4th Dept. 1975]; 5 Warren's Heaton on Surrogate's Court Practice, 7th edition, [**5] § 68.04[9].)

The Surrogate bears the ultimate responsibility of deciding what constitutes a reasonable attorney's fee, irrespective of the existence of a retainer agreement. (Matter of Tendler, 12 AD3d 520, 784 N.Y.S.2d 604 [2d Dept. 2004].)

Additionally, "[i]n evaluating what constitutes a reasonable attorney's fee, factors to be considered include the time and labor expended, the difficulty of the questions involved and the required skill to handle the problems presented, the attorney's experience, ability and reputation, the amount involved, the customary fee charged for such services, and the results obtained." (Matter of Massey, NYLJ, 06/01/10 at 32 col. 5 [2d Dept. 2010]; Matter of Szkambara, 53 AD3d 502, 860 N.Y.S.2d 914 [2d Dept. 2008].)

The Court may also consider the custom and practice which obtains in the community with respect to such matters. (Matter of Smolley, 188 A.D.2d 535, 537, 591 N.Y.S.2d 441 [2d Dept. 1992].) The size of the estate is another factor to be considered. (Matter of Goliger, 58 AD3d 732, 871 N.Y.S.2d 689 [2d Dept. 2009].) "If the size of the estate is limited, compensation to an [executrix's attorneys] may be less than what the services would otherwise command." (In re Judicial Settlement of Second Intermediate Account of Chase Manhattan Bank [Matter of Dumont], 68 A.D.3d 1670, 893 N.Y.S.2d 406 [4th Dept. 2009] [**6] .)

Some thirty-five (35) years ago, the United States Supreme Court held that the minimum fee schedule published by the Fairfax County Bar Association violated Section 1 of the Sherman Act. (Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L. Ed. 2d 572 [1975], rehearing den'd 423 U.S. 886, 96 S. Ct. 162, 46 L. Ed. 2d 118 [1975]; 8 Warren's Heaton on Surrogate's Court Practice, 7th edition, § 106.03[1][d].) As a result of the Goldfarb decision, many Bar Associations discontinued the use of fee schedules. (8 Warren's Heaton, supra at 106-48.)

If you contract for services with a CPA and an Attorney to help you, make sure you understand that you are hiring licensed professional(s) to assist you who expect to be paid in a timely manner for services rendered. If you find yourself in a position where you are to be compensated for handling the affairs of closing out an estate, these professionals will assist you in determining what your reasonable compensation is for the work you have been chosen to do as per your loved one's will.

Did you even know it was permissible for you to be compensated for this type of work? Hmm... It's a lot of work... with serious issues... especially if the relatives start squabbling over money and disputing the valuations of possessions because they want more of what ever it is they want more of. Some relatives are even stupid enough to believe you shouldn't be paid for your time working on this project. Closing out an estate is time consuming so yeah, it's a major project...

Did I mention get an attorney, get an attorney, get an attorney?

Yup... I think I did...

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Comment balloon 6 commentsC Tann-Starr • June 27 2010 08:58AM

Comments

C - interesting precedent cited, but do you really think we should consult attorneys instead of doing PEBO (Probate Estate By Owner).

Posted by Mike Saunders (Lanier Partners) about 8 years ago

Big Mike, every estate is unique and different so each person has to decide what the best course of action is based upon how simple or complicated the estate appears to be. Some people are up to the task of researching creditor accounts and making all necessary disbursements while others are clueless and don't know where to start because items may be in dispute and/or annuities may be pending. 

The fudiciary statement of actions taken on behalf of an estate usually contains a detailed description of the dates of services, the initials of the person(s) providing the service, the service undertaken, the time involved and the corresponding flat fee or hourly charges or portion of it attributable to the service performed. Keeping tabs of who got sent where to do what in writing is always helpful in case there is a dispute later on. If you are the one doing everything you need to be able to explain your actions if questions arise.

What if the person who dies owes money to individual family members or vice versa? To determine which claims and administration expenses are valid and/or what should or should not be paid can sometimes produce tension and stress if the person executing the will is also inheriting something from the estate. Allocating financial responsibilities between the beneficiaries and submitting either an informal or formal accounting to close out the account is not a casual thing. If there is one diamond wedding/engagement ring and three ladies say she promised me the ring that becomes your headache (LOL).

If everyone receiving a portion gets along and there is no dispute, not much to talk about. If one person is upset, things could get tangled up for months. My family routinely borrows from each other. It doesn't mean the cash becomes a gift if I die. They will owe that money to my kids. Credits and debts research isn't just about the household bills. The conversation may get very interesting when the I.O.U.s materialize or people show up with bank statements to prove they made the withdrawals to loan money that needs to be paid back. Question: Was the check made to Granny a loan to her or was it the relative paying back what they owed to her? If they lie and turn their debt into her debt so they can get more out of the estate that lawyer may start to look like a great investment.

Each person has to make their own decision. If they want to handle everything, cool. If they don't and need some professional help, cool. :-)

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) about 8 years ago

C,

As you know I do a lot of probate and trust sales. I have yet to find a family who did not have at least a small squable over something. It is such an emotional time for everyone.

Marcy

Posted by Marcy Moyer, Probate, Trust, and Investment Specialist (eXp Realty of California Silicon Valley Probate, Trust, and Investment Sales) about 8 years ago

Marcy, it is indeed. I am trying to help out some family members now. They are having a very difficult time making arrangements and dealing with personal/emotional issues. It's hard on everyone...

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) about 8 years ago

Hi Carolyn,  My business partner is going through this right now...to say its emotional is an understatement!  As if her relative's passing wasn't difficult enough, now she and the family must deal with the estate.  Getting an attorney would probably be the best thing, but then there would be arguments over which attorney!

Posted by Amy Salisbury, West Virginia Realtor/Jefferson/Berkeley (Leading Edge Properties) about 8 years ago

Amy, I am sorry for your business partner's loss and do hope things don't get complicated. It's a hard bit of business to deal with on so many levels.

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) about 8 years ago

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