Basic Estate Advice
If a family member or friend has passed away and you are going to be acting as the Executor or Administrator of the estate (the “personal representative” in the words of the Legislature), here are some preliminary tips for getting off to the right start:
Grieve First
When someone dies, there is no real deadline for filing his or her Will or otherwise opening the estate. The Clerk of Court would prefer that you do so within 90 days, but in reality, the Clerk is not going to turn you away if it takes you a little longer than that to get started. Be with your family, attend to the funeral arrangements, and don’t worry about opening the estate until you are ready to proceed. Serving as a personal representative can be a difficult job, and you should have a clear head before beginning the process.
Don’t Give Away Any Assets
It can be tempting to go ahead and start distributing money or other items to a deceased person’s heirs, especially if there are specific items listed in a Will or if the heirs are pressuring you for their share. The best practice is to wait until you are ready to settle the estate or at least until you have information concerning the deceased’s debts. If the person dies leaving behind medical bills, credit cards, taxes, or other debts that can’t otherwise be paid, you will be held personally responsible for reimbursing the estate for the value of any items or money that you gave away. You will usually know what debts are out there within three or four months after you’ve opened the estate file at the courthouse, so everybody just needs to be patient until then.
Keep Accurate Records
One of your most important duties as a personal representative is to complete and file estate accountings with Court. Do yourself a favor and hang on to every bank statement, cancelled check, receipt, invoice, or other financial document that crosses your path. I once put a lot of time into compiling final account documents in a complicated estate, only to discover that in between drafting the documents and receiving the final bank statement from the estate bank account, the bank paid interest into that account in the amount of one cent ($0.01). Because of that one-penny difference, I had to go back and redo the paperwork before the Court would accept it. Take the job of personal representative seriously from the start and you’ll save yourself a lot of headaches in the end.
You Got Served
OK, before you get too excited, this blog post is not about a breakdancing competition. I had some friends in middle 
school who could probably write volumes on that topic, but I was never that coordinated. Rather, this post is about what you should do when you’ve been served with a lawsuit. Although service of a lawsuit can be accomplished using certified mail, service most often occurs when a Sheriff’s deputy arrives at your home and hands a summons and complaint (a lawsuit) to you. First of all, don’t get frightened or upset about the officer arriving at your house. The deputies are professionals who do this every day – they are not there to upset or judge you, they just have to hand the paperwork to somebody and then they move on to the next address. A couple of tips if this ever happens to you:
Read the Paperwork
I’ve had lots of clients over the years who got served with a lawsuit and never bothered to even read any of it. Many clients have even thrown the paperwork away without looking at it. Here’s a general rule of thumb: Whether it’s Luca Brasi handing Johnny Fontaine’s contract to the bandleader or a Deputy Sheriff handing you a summons, when somebody with a gun puts a stack of papers in front of you, you really should at least take a look at it. Something delivered in that fashion is almost always going to be something important and you should take the time to read it.
Luca says always read your legal documents.
There have been countless occasions where the wrong person is being sued in a lawsuit, either by accident or on purpose. For example, there are many lawsuits that should legally be filed against a corporation, but the case gets filed against the owners of the corporation instead. There are many others where a debt is owed by only one person, but the lawsuit is filed against both that person and his/her spouse. I have even had to ask judges to sanction plaintiffs (the person suing you) and/or their attorneys because they have knowingly sued the wrong person, hoping that the defendant (the person being sued) won’t read the lawsuit and just allow a judgment to be entered against him or her. Even if the right person is being sued, a lawsuit could be asking for more money than is really owed, and if you don’t read it, you may end up paying a lot more than you should.
Don’t Miss the Deadline to Respond
From the time you receive the summons, you only have 30 days to file an answer to the lawsuit. If you don’t respond, you lose. That’s it, case closed. There will be no hearing scheduled and you will not get your day in court. After 30 days, a judgment will be entered against you and the person who sued you will begin the process for having the Sheriff’s Department collect the amount of the judgment from you. I have received many phone calls from people who tell me that they can’t possibly have a judgment against them because they never received notice of any court date. Unfortunately, those folks found out too late that this is not true. Failing to respond makes you liable for anything contained in the lawsuit, whether it’s true or not, and you may have no opportunity to defend yourself if you don’t respond within the 30-day time limit. So, do yourself a favor – read the paperwork, and if there’s anything untrue in there, make sure you or your attorney file a response on time.
Bankruptcy Myth #1: You Will Lose Your House
This is the first in a series of posts about bankruptcy myths – things I hear over and over again from clients that just aren’t true. Most of the time, clients have heard these myths, and believed them, from co-workers, neighbors, relatives, or other sources. Basically, they’ve heard these ideas from everyone under the sun, except for a bankruptcy attorney.
One of the myths I hear most often from clients is that if you file bankruptcy, the Bankruptcy Court or mortgage company will automatically take your house. In the vast majority of cases, especially in this real estate market, this rumor is simply not true. There’s no good source to find hard numbers as to how often the Bankruptcy Court actually ends up selling a debtor’s residence, but most Chapter 7 filers who wish to keep their home and keep making the payments on their mortgage are allowed to do so. I’m only discussing Chapter 7 bankruptcies here, because the Court doesn’t ever take any property from debtors in a Chapter 13 case, which is often filed for the express purpose of saving the debtor’s home from foreclosure.
Now, it is possible to lose your home in a Chapter 7 bankruptcy case, it’s just not very likely in most cases. The reason it’s unlikely is because of the generous homestead exemption (N.C.G.S. sec. 1C-1601(a)(1)) that bankruptcy filers and judgment debtors enjoy in the State of North Carolina. Exemption is just the legal term for the amount of property that you get to keep; what can’t be taken away from you when you either file bankruptcy or have a civil judgment entered against you. In North Carolina, each person gets to keep $35,000.00 equity in his/her residence, and a married couple who owns their house jointly gets $35,000.00 each for a total of $70,000.00 that is protected.
To find the amount of equity in your home, estimate the fair market value of your home and then subtract the amount owed on all of your mortgages – the remaining amount is the equity. Calculating the amount owed on your mortgages is the easy part, but determining fair market value can be tricky, because it’s not necessarily what you paid for your home 6 years ago, or what it was appraised for when you refinanced 3 years ago, and it usually isn’t exactly what the tax value of your home is either. Fair market value is what you could sell your house for, and in this awful real estate market, it would be very difficult, in most cases, to sell your home for $70,000.00 (or even $35,000.00) more than what you owe on it. Some county tax websites (e.g. Wake County) will provide a list of other houses that have sold in your neighborhood recently and tell you what the sales prices were. Where only one spouse is filing and the spouses have no joint unsecured debts (usually credit cards or medical bills), the exemption for home equity is unlimited if the home is owned by both spouses, meaning that the couple could keep the house no matter how much it’s worth.
The point is, don’t put off talking to a bankruptcy attorney because you think you’d lose your home. That outcome is very rare, and it’s not something that happens by surprise because a competent attorney is going to discuss this issue with you in depth before any papers are ever filed. With many attorneys offering free consultations for bankruptcy matters, you have nothing to lose by asking.
The Garner Lawyer 