Estate Administration Tales – Part 4

In my blog post this week I continue to tell you about a call we received concerning a dad who died without a will leaving a surviving spouse and 3 daughters from two marriages.  I explained in previous posts that not everything passes to the surviving spouse under New Jersey intestacy laws, which control when there is no will.  

Daughter who called us said she and her sister wanted to leave their share to their mom and wanted their mom to receive 100% ownership of the home that was owned by Dad and which Mom continued to live in.  She wasn’t so sure, however, about her half sister who may want to receive her share.  Read my post from last week for an explanation of how each share is calculated and how we could accomplish that goal.

It seemed like there was a way in which to make everyone happy.  That’s when Daughter provided me with one more piece of information.  She told me that the $50,000 individual account in Dad’s name was not really his.  I asked her what she meant since the account was titled in his name.  Daughter explained that the money in Dad’s account was really his friend’s money.

I explored this further and learned that there was no written agreement stating that it was the friend’s money.  Daughter told me that it was acknowledged by her mother that this was not her dad’s money.  She said that was good enough for her and her sister.

“But what about your half sister”, I asked.  Daughter apparently had not yet had a conversation with her about it.  I explained that if there is no written documentation proving that the money was the friend’s all we have to go on is the ownership of the account which is solely in Dad’s name.

Even if the surviving spouse corroborates the friend’s claim, the problem is that she is not the sole heir.  As administrator she has an obligation to protect the interests of all the heirs.  Again, even if Daughter and her sister concur with their mother to give the friend the $50,000, if half sister does not agree she could claim that there is not sufficient evidence to establish friend’s ownership and insist that she be entitled to her share of the account.

I told Daughter that if half sister ultimately refuses to go along, the amount of money involved is not large enough to warrant a battle in court.  Legal fees to resolve the issue could easily approach or exceed the value of the account.  It would be better to negotiate a resolution.  But, it would mean that while surviving spouse would own most of the home, half sister’s share would probably need to be satisfied by giving her a partial interest in the home if the $50,000 is “returned” to Dad’s friend.

I explained that had Dad signed a will providing instructions of what to do with the account some of the problem could have been avoided, although it does raise another issue.  I’ll get to that issue next week.