Delaying a probate estate

kastnna · 2010-08-12T15:41:30+00:00

Hi all,Got a quirky situation...A friend's wife died recently leaving behind little more than her 1/2ownership interest in their house (JTWROS), a few personal items (e.g.jewelry), various debts, and a $1M life insurance policy. Her husbandis the sole beneficiary of everything. He was also the namedbeneficiary of the insurance policy, so that claim has already beenfiled and paid to him directly.Thus far, the wife has been deceased for three months and the husbandstill hasn't opened probate. As a matter of fact, he doesn't intend tountil he's forced to. You see, his wife had a number of medical bills,credit cards, short-term bank loans, etc... that all have extremelylucrative terms (low monthly payments and very low rates).My friend reasons that if he doesn't open probate, he can continue todutifully services those debts at low interest rates. However, if heopens probate, he'll be forced to notify her creditors and pay-off allher debts sooner rather than later. In other words, opening probatewill force him to accelerate the payment of favorable loans inexchange for very little in return. The way he sees it, he's gotnothing to lose by keeping probate closed. Obviously, he intends toeventually open probate once those loans reach maturity and/or oncethe introductory rates expire. But that will likely be a year fromnow.Anybody see any flaws in his logic?

Aug 12, 2010 22 Replies

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Phil Marti 15 years ago

OP said "very low rates."

It was a Visa or MasterCard. I don't remember which issuing bank.

Phil Marti

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kastnna 15 years ago

Excellent point. Now that's what "devil's advocate" is all about. I had not thought of the possibility of "frozen interest".

As I mentioned earlier, and Mark B wisely picked up on, we're only talking about small debts and, mostly, introductory rate credit cards. How long do those intro rates even last, 9 - 18 months (at best)? If we assume that those intro rate periods are half over, he may actually make (save) more money by opening probate, freezing the interest accrual, and paying the debts in 6 months when he's ready to close probate.

Estate taxes were mentioned.... she died and 2010 (no estate tax) and she obviously left a spouse behind (unlimited marital deduction).

thanks all.

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Stuart A. Bronstein 15 years ago

Be sure to check with a local probate lawyer. That is not the rule everywhere.

Depending on the size of her estate, the unlimited marital deduction may be a disadvantage to kids (or whatever heirs there are) after the husband dies.

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