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My parents died of COVID-19 and left no will. My brother lives rent-free in their home, and borrowed $35K. How do we start probate?

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Dear Quentin,

Both my parents recently died of COVID-19.

They have a few bank accounts and own their home outright, and were not in debt. I have 5 older living siblings, and one that has died with two living sons. My parents did not leave a will or any instructions about what to do in case of their death. My siblings and I do not agree on anything, so we have not moved forward with probate.


‘One of my brothers lives in the home rent free. My mother loaned my other brother $35,000 for his down payment on his mobile home.’

One of my brothers lives in the home rent free. My mother loaned my other brother $35,000 for his down payment on his mobile home. He now says it was a gift, and he does not have to pay it back. There are receipts, but it was paid directly to the escrow company from my mother’s bank account.

Does he have to pay that money back given that it was a good-faith loan? Does my other brother have to pay rent, and how do we move into probate so we do not lose the house and bank accounts, while not killing ourselves in the process given that half of us see things one way and the others see it a completely different way?

JB

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com

Dear JB,

You need to appoint an administrator who can start probate, and mediate any concerns among your siblings. This can be a laborious process. In addition to gathering paperwork for your parents’ assets, in some states the administrator also requires a veritable family tree of descendants. But given your sibling standoff, and how some of your siblings would benefit from delaying probate, there is no other option. Ideally, this person should be an objective party with no horse in the race. Estate law firms will have probate and estate administration attorneys to help.


‘While many executors and administrators perform these designated tasks in an expeditious and prudent manner, this is not always the case.’


— White & Williams, a law firm based in the Northeast

Unlike an executor, an administrator takes over when there is no will. “If the decedent failed to take advantage of his right to name a personal representative, and if no persons with close relationships are available, the court, in its discretion, might appoint someone unknown to the decedent and unfamiliar with his affairs,” according to law firm White and Williams. “This is often the case when the court is concerned about possible conflicts of interest or the rights of creditors or other beneficiaries.”

And, now, a warning. “While many executors and administrators perform these designated tasks in an expeditious and prudent manner, this is not always the case,” the law firm adds. “State law usually holds the personal representative to the standard of care of a ‘reasonable, prudent individual’ under all circumstances. What is reasonable and prudent to the personal representative when performing his tasks, however, is not always so to the beneficiaries, especially retrospectively.”

If your parents helped your brother qualify for a mortgage, they will have signed a “Gift Letter” to satisfy the bank and/or the building’s board. Assuming this was not notarized loan agreement, the administrator will likely rule that this $35,000 was given to your brother as a gift. This is a cautionary tale to always make sure personal loans — however well you know the person and well intentioned — are recorded in a notarized agreement.

For anyone who has not made a will, your story provides another lesson. Whether you are 30 or 80, you should have a last will and testament, especially if you have children. As your story painfully illustrates, siblings seldom agree.

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My fiancée’s mother asked us to raise her 2 kids, as we live in a good school district and she has a gambling addiction — then she claimed their stimulus checks

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Dear Quentin,

Last year, in February, my fiancée’s stepfather passed away. After his passing, my fiancée’s mother asked both her and me to raise her younger sons, as we had recently purchased a new home, have degrees and will be able to provide a great area for their education, such as help with homework and the ability to communicate with their schools or doctors. My fiancée’s mother cannot read, write or speak English, and she has an addiction to gambling at casinos.

COVID-19 hit soon afterward. We both were let go from our jobs, and are making it by with unemployment and savings.

With that said, in March of this year, we filed taxes and my fiancée claimed both of her brothers since they had lived with us for almost nine months of last year. We received both of their stimulus payments a few days later. About three weeks later, we found out that my fiancée’s mother had also received the stimulus payments, even though she is adamant that she did not claim her children this year.

Upon seeing the money, I advised her to leave the money as the Internal Revenue Service may eventually ask for it back. Her new boyfriend then quickly told her to withdraw it anyway. They’ll deal with it later if the IRS asks for it, he said.

My question is: Will this situation hurt my fiancée and me in any way? I fear that the IRS may find out sooner or later about the error and seek the money from us, as her mother may have already gambled away that stimulus money, and make us pay for it even though we are using it as it was intended: for bills and necessities.

Fiancé

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com.

Dear Fiancé,

You are correct. The IRS will eventually ask for that money back, and it will likely do so by deducting the money from a future tax refund. You are also correct that your de facto mother-in-law should not spend the money. I take my hat off to you for raising these two children, and giving them a stable home and the head start in life that they deserve.

Many people in such a situation would write complaining about how they did X, Y and Z, and their in-laws were ungrateful. But you have taken the high road, knowing that these shenanigans are between you two and your fiancée’s mother, and do not involve your girlfriend’s two younger siblings. I am glad that you have not involved them in this somewhat messy situation.

You, of course, have done the right thing. The Moneyist column has dealt with dependents who claimed the stimulus, and parents who are not guardians of their children collecting it. The $1,400 economic stimulus payment, as you are aware, is not a loan. This third stimulus check is an advance tax credit on your 2021 taxes, and calculated based on your 2020 taxes.

If the IRS does not know who is telling the truth here, it will audit both parties. The truth will come to light eventually, and your fiancée’s mother and her boyfriend should be made aware that you are not in a position to help bail them out of this situation. They have knowingly walked into it, and there should be a clear boundary between helping her children and being a facilitator to this malfeasance.

The IRS has extensive guidance on what to do when someone fraudulently claims your dependent. “If you determine the other person was not eligible to claim your dependent, you’ll need to take steps to protect your right to claim the dependent and ensure an accurate filing,” it says. You have everything you need to know in order to take proactive steps here.

I leave that for you to decide.

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I’m on track to retire at 58. My fiancée is in debt and drives my old car, and I support her family. How do I ensure my son inherits my wealth after I die?

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Dear Quentin,

I have dated my fiancée for just over three years. Within those three years, I have been severed from a job and spent two years unemployed looking for a new job. I have a new job, making roughly 75% of what I previously made, but it is a more than livable salary. My fiancée makes a modest salary in comparison to my own.

Financially, I had spent a lot of years going without in order to pay for my son’s college education and to stockpile savings in order to retire early. According to my financial planner, I am well ahead of my goal to retire at 58 (I’m 51 currently) with an IRA of around $2 million, plus savings and other liquid assets.

Currently, my fiancée is trying to get herself out of debt. She drives my old car and shares no utility bills or mortgage payments, but she does buy groceries, as the household is made up of her, her children and me. By supporting her family, I have very little I can do for my own son.

It has always been tradition in my family to leave an inheritance. I had planned on leaving my only son a rather large inheritance so that he may better himself and his family. My fiancée has children, and my concern is that if I am married (I live in Texas), the savings I have would go to her and subsequently her children, bypassing my son.

Since I am 10 years older than my fiancée, I suspect she may outlive me. How do I protect my assets so that they can be split as part of my wishes?

Nervous Fiancé and Father

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com.

Want to read more? Follow Quentin Fottrell on Twitterand read more of his columns here.

Dear F & F,

Texas is a community-property state, so what you bring into the marriage, you also take out of the marriage. Assets accrued during the marriage, with the exception of inheritance, are deemed marital or community property.

You have several options, including setting up a living trust to allow you to transfer your wealth to your son during your lifetime, and thereby avoiding going through probate, which can be an unpredictable, cumbersome and public process.

You have two choices of trust: revocable or irrevocable. The first can be changed. You could retitle financial accounts in your son’s name. The latter cannot be changed, and also serves to save on estate taxes. It’s typically used to leave assets to children and grandchildren.

Other routes: a prenuptial agreement, a will (obviously) and naming your son as your beneficiary on your life-insurance policy. With the help of an estate planner, you can devise ways to ensure your son is taken care of after you’re gone, and your future wife is not left out.

In the meantime, ensure you keep separate property separate. If you deposit an inheritance in a joint bank account, for instance, it becomes marital property. If your fiancée contributes to the renovation of a home in your name, it again becomes community property.

Speak to your fiancée about your concerns and goals. It’s important to be transparent and ensure that you and she are on the same page, and share the same financial expectations. You may also want to wait until your wife pays her debts before marrying.

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 group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

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