As you can imagine, probating a hoarder’s estate adds a few more complications. In this episode, we will talk about how to deal with some of the main challenges.

A hoarder can be defined as someone that likes to keep a lot of things; those that hold on to items with little value. As an executor, we define it as a situation where it’s abnormally difficult to navigate the living quarters. For example, a hallway that isn’t a hallway. Or trouble opening a door, because there are items blocking it.

How much does it cost to clean a hoarder’s estate?

On average, to clean out a hoarder’s house, it will cost about two to three times as much as it would cost to clean out a similar living space of the same size. We’ve chatted about the costs for cleaning a “normal” home, which can add up in a typical situation. For example, if you’re cleaning out a hoarder’s one-bedroom apartment, the cost will be the equivalent of a two-to-three-bedroom home. The reality is that you will need more movers, trucks, and dumpsters.

Another level of additional cost is dependent upon the cleanliness, which you may not know until the stuff is removed. You may be facing possible additional safety/hazmat costs, depending on the severity.

How to find important items in a hoarder probate

Another twist when you are dealing with a hording situation in probate, is how to find important items in the home. Even in normal (or conventional, typical) estates, it can be hard to track down important items. For example, executors need to look and find estate planning documents, tax returns, or tangible gifts such as art, jewelry, collectibles. There’s a much higher risk of not finding these items when the home is in this condition.

In addition, it makes the cleanout process much slower. Typically, we can find the items before it’s cleaned out. But, in a hoarding situation, we have to wait for the movers to clean out walkways to access areas to search. They are helping us gain more elbow room and to be able to navigate the living area. It’s a move items, search for items, move more items, search for more items game. You have to search as they are cleaning, which prolongs the process and adds time and money.

How to protect a hoarder’s reputation during probate

Another layer is how to protect the reputation of a hoarder during probate. Most hoarders aren’t proud of their situation, how much stuff they had, how they lived, etc. In this case, more than a few hoarders have explicitly asked us (as their professional executor) to hide the situation from family, friends, and neighbors. We’ve talked previously on how to handle privacy for our clients. We are happy to do this for them.

We will select our cleanout crew carefully, making sure they have a high level of professionalism and discretion. We’ve seen crews that have someone at the door nudging along nosey neighbors and some that even set up barriers to block the view in the home. In a building setting, even requesting the assistance of the building managers is important, as they are the first line of gossip defense.

If you want to find out what is required of an executor, I suggest reading my book, “How to Hire an Executor.” A non-professional executor may get overwhelmed by this particular situation. In addition, hiring a professional who will adhere to your request for reputation protection in a hording situation is important.

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Hurray, you’re finally in contract and ready to close on the sale of the estate’s business. You already did all the hard work preparing to sell the business, now make sure you cross the finish line and close the sale properly.

Maintain status quo until sold

Make sure you maintain your insurance payments. In the rare chance that there is a slip and fall accident between the time your insurance lapses and the closing occurs, it will be your problem.

Maintain your security plan, whether it’s an alarm system or driving by to check on the place. We have had an attempted burglary in one of our situations. It’s like the burglars have a sixth sense that the owner passed away and that the building is not well-attended. They notice that there are no cars or customers coming and going from the business.

Keep up to date with all of the business vendors. If the business is not operational, let the vendors know not to come by anymore. You don’t want boxes of inventory stacked up, just like you don’t want piles of mail stacked up outside of a decedent’s home. It’s pretty obvious that the place is vacant if no one takes the items inside.

Allow buyer’s final inspections

Make sure that the lease is transferable. The buyer may need to have an introduction with the landlord to make sure they get along and agree on new terms.

Even if you provide a fully audited inventory of the estate assets, sometimes buyers want to do their own inventory. Cash registers, coolers, machinery, the condition of the parking lot – the buyer will want to see these for himself. Sometimes you can’t capture the condition of these types of things in a report or photographs.

Transfer all paperwork

While most of the paperwork happens at closing, some paperwork needs to be put in motion ahead of time. For example, making sure that the buyer can take over the lease from the landlord.

There may be a whole bureaucratic process to make sure the buyer gets the necessary licenses and permits to operate the business. Maybe it’s a permit to have a cafe on the sidewalk in front of the restaurant or obtaining a liquor license.

Think you’re done? Not quite. Even if you’ve sold and liquidated the business assets, you probably still need to wind down or dissolve the corporation and business bank accounts. You probably did the sale in the form of an asset sale (meaning, the buyer bought the stuff), and not a sale of the corporate stock. The estate is now left with an empty corporate entity. Dissolving the corporation involves getting certain tax clearances, notifying the Department of State, emptying business accounts, and notifying the IRS with a corporate tax return.

It’s a long process, but it has to be done.  We’ll cover this in a future episode, but please comment below if you have questions or comments in the meantime.

If you want to learn more about how probate works, check out my book on Amazon, “How Probate Works.”

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Did you know that heirs of Metropolitan Transit Authority (MTA) workers who died of COVID19 may receive a $500,000 death benefit?

When I first heard of this, I thought it was a scam. But, yes, this is real! We’ve helped families collect this benefit. Here’s how:

Who qualifies for the MTA COVID19 death benefit?

Any MTA employee who died of COVID19 qualifies. The MTA has already paid out over $62,000,000, which means at least 140 employees have passed away from COVID 19.

How to apply for the MTA COVID19 death benefit?

An heir can’t just apply as family member of the decedent (we’ve been hired by families that have tried). You must set up an estate and get a court-appointed executor or administrator. That court-appointed person is who must apply. An administrator is appointed for an estate without a will, and an executor is appointed for an estate with a will.

Be sure to choose wisely who you want to fill that role, because once that person is appointed, they need to know how to work with the MTA to get the claim pushed through.

It’s not easy like submitting a life insurance claim. This kind of death benefit claim is new. Anytime you are dealing with something new involving a bureaucracy, you need some force of will to get it done. From personal experience, getting the MTA death benefit can be a long, drawn-out process involving numerous emails and long hold times on the phone. But, with the right team pushing through, we have had successful outcomes for our clients.

When will the MTA COVID19 death benefit end?

As of this writing, it is currently extended through December 21, 2021. It could last longer, but we don’t know yet.

If you lost a loved one who was an MTA employee, you should apply for this benefit as soon as you have opened the estate. Sooner is better than later. Why? Because the MTA seems to be tightening the qualifications, making it harder to qualify. For example, an unvaccinated employee is no longer eligible. The MTA is also taking a closer look at the cause of death (did the employee die directly from COVID 19, or something else?).

Be aware: getting a court-appointed executor or administrator currently takes a few months or longer. So, start now. If you call us today to open an estate, it could be early spring before the court appoints a representative for the estate. The courts are very backed up and short-staffed.

This was a very specific blog about a specific benefit, but it is important to know about it if you think you may qualify.

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Waiting for tax clearance is often the biggest delay in closing an estate. We’ll explain why tax clearance is so important and why it takes so long.

Why tax clearance is so important

No one wants IRS problems under any circumstances. In estates, the IRS is a top priority creditor. They need to get paid before anyone else gets paid. It’s important to know the final figures for the IRS before distributing to the other creditors and heirs.

If the IRS is not paid properly, the IRS will come after the executor and heirs later. In order to be paid, they will come after whoever has the money, which can include the heirs who received an incorrect distribution. The executor can also be held personally liable.

Let’s say you are the executor, and you neglect to pay the taxes properly. You cut the checks to the heirs and six months later the IRS says you owe another $50,000. Imagine asking heirs to give back some money to pay taxes. Those heirs are not going to return your phone calls no matter the amount of money owed.

Must file final returns to get started

Sometimes it is hard to get the decedent’s final paperwork in order to make that final filing. It’s happened to us many times. We know there’s another W-2 or 1099 out there to finalize the return, but we don’t have them. If we’re missing documents, we have to request them from banks and other financial institutions. This process can take weeks, or even months, because these bureaucracies are not used to dealing with non-everyday situations like death. We often get shuffled around among different departments to get what we need.

Even worse, sometimes we have to request missing information from the IRS. This process can be brutally long. It takes a whole year just to get the tax clearance from the IRS. Imagine trying to request just one piece of paper. The IRS is overworked, and they don’t answer the phone. You end up filling out and submitting forms, then play the waiting game.

Sometimes filing the final tax return isn’t final. Even after filing the decedent’s 1040, from time to time you need ANOTHER filing (1041) to confirm that there are no capital gains on the sale of the decedent’s home.

Last bite at the apple

This is the IRS’s last chance to get money out of the decedent. Once the tax return is filed, the IRS takes a LONG time to review it and give a final answer. They know that this is their last opportunity to collect from this taxpayer. They examine a decedent’s return way more thoroughly than a living person’s return.

The IRS reviews more than a W-2, a 1099, and a bank interest statement. Within the Statute of Limitations, the IRS looks at social security withholding, payroll tax, income tax, capital gains, and everything in between. This just adds to the already existing delay in processing.

It is frustrating for the heirs to wait so long for a distribution; however, they seem to prefer to wait rather than to sign a statement saying that they will bear the responsibility if the IRS comes after them. When dealing with the IRS, you rush to wait. There’s not much of a choice.

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We all know siblings who are constantly competing or comparing with each other. Let’s talk about how those rivalries cause problems during probate.

Which sibling inherits more?

If there is any slight imbalance of inheritance amounts, there’s an issue of who was the favorite. Or maybe it’s an issue of who took care of mom or dad at the end of life. Maybe there is compensation or gratitude for whoever dedicated the time when things got difficult at the end. It might also be a reflection of who already received lifetime gifts or support. Maybe the parent helped with a down payment for one sibling’s house or tuition for another sibling’s children.

There could be many reasons for each sibling inheriting different amounts, but the siblings will see it the way they want to see it, and this imbalance can create conflict.

Which sibling gets more control, communications during probate?

It’s not just about competing for dollars or inheritance amounts. Even if everything is divided equally, there could still be disputes or harsh feelings about who gets to be the executor. In this case, it may be better to hire an independent executor. It could relieve some stress.

But, even if you have an independent executor, there could be disputes about who talks to the lawyer/executor more! We get this a lot: “I heard that my sister emailed you several times, and I want to know everything you told her.”  Making the attorney the middleman slows things down and creates more billable time.

When siblings don’t talk

When siblings don’t talk to each other, the attorney ends up having double communications – which increases costs. For example, I may have a phone call with the older sister to explain the file status. Then, I have the same phone call with the other two siblings separately. That’s three billed items that could have been just one.

In severe situations, siblings want to make sure the other siblings never get their contact information. We have to ensure that phone, email, and home addresses never get shared with the other! It’s a lot to keep track of.

For example, we’ve had to file probate petitions in such a way that the addresses of the heirs are hidden. In another recent example, we had to mail out 18 separate letters instead of one mass letter, so that no one has each other’s contact information. If that’s what the siblings want, we’ll do it. They just have to understand that there’s a cost involved.

To learn more about what probate entails, check out my book, “How Probate Works,” available on Amazon.