How an estate Trust works I recently found out that my parents are broke. They have nothing saved, no stock, bonds, etc, and the house they have lived in for 30 years still has a heavy mortgage. My father does have a 10k life insurance policy. My father has put the house in a trust to my brother. His logic is that if my mother has to go into a nursing home after his death then the state (New York) cannot take the house. Both my mother (68) and father (72) have lived there for 30 years, and the house is worth no more than 400k Question 1. In the trust that goes solely to my brother, in the event either my mother or father are dead, how is that asset split up? Can a trust dictate how an asset if split up if I am not on the trust. Question 2. How is the debt handled? The asset still has debt on it, who is responsible for the debt? I am thinking the answer to this question depends on the answer the Question 1. Question 3. They currently live in New York state, I found an article that New York state for nursing home care at more that 12k per year. If they were to move to a cheaper state like Alabama what are the laws or rules, ie. how long they have lived there, assets. https://www.seniorliving.org/nursing-homes/costs/
Question 1. In the trust that goes solely to my brother, in the event either my mother or father are dead, how is that asset split up? Can a trust dictate how an asset if split up if I am not on the trust. This is governed by the terms of the trust. The trust can say whatever the people who wrote it wanted. Question 2. How is the debt handled? The asset still has debt on it, who is responsible for the debt? I am thinking the answer to this question depends on the answer the Question 1. The trust owns the property subject to the mortgage. The people who originally signed the mortgage (presumably both of your parents) are also personally liable to pay the mortgage in the event that the debt is not fully satisfied in a foreclosure sale, or in the event that the mortgage creditor prefers to sue the mortgage debtors individually in the event of a default. After the death of the mortgage debtors, the mortgage company can file claims in their probate estates for repayment of the mortgage related debt if it does so in a timely fashion, although it would be more common to simply foreclose on the real property and obtain repayment of the debt that way. The death of the mortgage debtors is almost always an event of default under a mortgage, so if both mortgage debtors die, the mortgage creditor can usually force the trust to repay the debt, either by selling the house or by refinancing it. Question 3. They currently live in New York state, I found an article that New York state for nursing home care at more that 12k per year. If they were to move to a cheaper state like Alabama what are the laws or rules, ie. how long they have lived there, assets. This question verges on incoherent. But I think I understand what you are trying to ask. In every U.S. state, the joint federal-state program known at the federal level as Medicaid, although it has different names at the state level (California, for example, calls it &quot;Medi-Cal&quot;), will pay for nursing home care at approved nursing home facilities if the applicants meet state eligibility requirements. This generally involves an income test, an asset test, and a determination that the applicants have not made disqualifying gifts to trusts or to third-parties within the past five years. The income test is based upon state median or average income and is usually lower in a state like Alabama that has a lower median state income, than it is in New York, that has a higher median state income. For retirees, the main kinds of income considered are defined benefit pension plans payments, annuity payments, and investment income. The exact details of the asset test vary somewhat from state to state. Generally speaking, New York State is among the most strict in this regard. The basic outlines of the disqualification for gifts made within five years to others including trusts before applying for nursing home care are similar in broad outline, but the consequences for violating the rules are a function of the average cost of nursing home care in a state, which varies considerably. Generally, a gift of a fixed dollar amount gives rise to more months of disqualification of Medicaid in a state where the costs of nursing home care is low than it does where the costs of nursing home care are high, because the amount of the gift made in the past five years is divided by the average cost of nursing home care at the time the application is made, to determine the number of months that the applicants are disqualified from Medicaid. More generally, setting up trusts intended to qualify you for Medicaid is a highly technical matter with severe consequences if it is done incorrectly, and I would hope that your parents did so while conferring with a competent elder law lawyer. If they did it themselves, there is a high chance that this will have very severe negative consequences.
It doesn't matter if a debt arises as a result of normal commercial transactions or because of liability for a legal wrong - if you owe money you owe money. While you are alive you are responsible for settling your debts out of your assets as and when they fall due. When you die, your executor has the same responsibility. The executor's first responsibility is to settle the debts of the deceased - only after they have done this can they make distributions to the beneficiaries. One of their duties is to advertise the death of the person and invite anyone who has a claim against the estate (as a creditor or beneficiary) to come forward - the law puts time limits on how long they have to do so. If some of these liabilities are disputed then the executor must hold back enough funds to cover the disputed amount (and the costs of defending against it). Intangible assets (copyright, patents etc.) are no different from tangible assets - they can be offered to the creditor to (part) settle the debt or the can be liquidated (sold) to get cash to settle the debt if there is insufficient cash in the estate. Once all known debts have been settled or successfully denied the executor can distribute whatever assets are left in accordance with the will (or the law if there is no will). If they do all this in accordance with the law then they have no liability. The beneficiaries never have any liability. Sometimes the estate will be insolvent - its liabilities are greater than its assets. The executor's duty in that case is to follow the applicable bankruptcy law.
I am unfamiliar with a "perpetual contract" and that phase does not appear in any reported appellate court decision of the State of Oklahoma. However, usually unpaid utility bills do constitute a lien against the property that is enforceable against a subsequent purchaser, which has the same practical effect. This kind of obligation is also sometimes described as an "encumbrance". Usually, in an arms length sale of real estate through real estate agents, a title insurance company is hired and is responsible for determining if there are any outstanding liens, pro-rating utility bills, pro-rating property taxes, etc. at closing. If the title company fails to find a lien and there is one, the title company is responsible for paying off the lien that it failed to find (although it can often force the previous owner to indemnify it for the payment it has to make). It could be that since water service was not currently being delivered, that the title company did not search in the manner that it should have to find this lien, or it could be that there was no title company used and so no one ever checked. Also, if the property was conveyed with a "warranty deed" such a deed contains a promise from the seller that there are no liens or encumbrances not listed on the face of the deed that have to be paid, and the seller has liability for breach of the warranty of title. But, if the property was conveyed with a "quitclaim deed" there is no such warranty.
Any debts that a person has are to be paid by their estate. Whoever administers the estate must, in all states, publish an announcement to the effect that Smith is deceased and all claims must be made by such and such date, probably within 90 days. If (this is a small if) the hospital takes 6 months to make their claim, it is too late for them (provided that notice was properly given). There are also limits on how much can be collected, the simplest case being that you can't collect more than what is in the estate. There can also be complexities regarding order of priority – as you would expect, you must pay debts to the government first. That could include the Medicaid clawback (officially &quot;estate recovery&quot;), however, in the circumstance that you describe it doesn't sound like that would be applicable. There may also be exemptions in a state, for example in Florida, your registered homestead (property of a certain size that you have been living in and have filed the paperwork for) cannot be seized to pay debts, even after death.
Dead people have to pay their debts just like everybody else It is one of the primary roles of the executor to make sure this happens. Dead people can dispute a debt just like everybody else Just because someone says you owe them money, that doesn't mean you owe them money. In fact, the onus of proving the debt lies with the person claiming the money. It is perfectly reasonable for an executor to ask the creditor to do so. Some questions that are appropriate to ask: Presumably, the entitlement arises under a contract; when was the contract entered into? What were its terms? Where is the evidence the deceased agreed to these terms? Do the terms comply with (consumer) law? Have the prices been calculated in accordance with the terms? Have previous invoices been submitted and paid on the same basis? All the issues you mentioned. These are all things the creditor would need to prove if they went to court. If they can provide satisfactory answers to these then pay the bill. If they can't then try to agree to a settlement amount acceptable to both parties. If you can't do that, let them sue the estate and let a judge decide. The debts of the deceased person are payable by the estate of the deceased person for which the executor is the trustee. The executor has a duty to the beneficiaries of the estate to act in their best interest. This means paying bills that they are satisfied are justified, contesting those that aren't but ultimately, making commercial decisions that benefit the beneficiaries. Getting bogged down in a court case may not be in their best interest especially if it delays finalisation of the estate. In any event, the executor is not liable personally for the debt, or for anything they do or fail to do if done or not done in good faith.
In business dealings, you would have a contract with a company, not with its owner. The new owner inherits both the assets and liabilities of the company. It's up to the buyer of the business to do due diligence before buying the company. The old owner may escape obligations to clients and suppliers once the sale of the business is complete, but the new owner could sue the old owner for fraud. (It may be possible to escape some liabilities by declaring bankruptcy, but that's not the situation you described. One unethical accounting trick that a company can use is to split the company into two corporations such that one branch inherits the liabilities, and it go defunct.)
There are multiple kinds of joint ownership, centered around the question of survivorship. One possible outcome is that the deceased willed their property to some other person Smith, therefore Smith will not have A's interest in the account. Let's assume that the accounts and house are both joint tenants with right of survivorship. Then the survivor simply is the only person who has the right to access the account. However, the account probably cannot be closed, because as far as the bank knows, the deceased spouse still has an interest in the account, and will require the spouse to sign the paperwork. Therefore the surviving spouse will have to bring in paperwork to establish that the deceased spouse is deceased. Similarly, a deceased spouse can remain on the deed, but when it comes time to sell the house, it will be necessary to legally &quot;extinguish&quot; the deceased spouse's interest in the house. It can also complicate mortgage-refinancing or using the house as security for a loan to leave the paperwork unresolved.
In Civil law jurisdictions, the heir of a deceased person will generally inherit all the possessions, rights and obligations - this may include debts. So if a borrower passes away, the lender will typicall find out who is the heir, and ask them to pay. The heir will be required to pay, and the creditor can use the usual channels (reminders, collection agencies, court judgements) to make them pay. However, if the inheritance is &quot;under water&quot; (has more debts than assets), there are ways to avoid having to pay the debts: In Civil law jurisdictions, acceptance of an inheritance usually means being liable for all the debts, too. Details vary between jurisdictions - in Germany, for example, acceptance of an inheritance is automatic, and a heir must file a document to refuse it (this is called disclaiming the inheritance). In France, in contrast, the default is to disclaim the heritage, but certain interested parties (such as creditors) can require a heir to formally make a choice, then the default is acceptance (https://www.service-public.fr/particuliers/vosdroits/F1199). In contrast, in the United States (which generally uses Common law), creditors are paid first, and the heirs only inherit what is left, in a process called probate. In that case, a heir need not explicitly disclaim an inheritance that is &quot;under water&quot; - they will simply not inherit anything. Note that the heir may choose to inherit certain debts in exchange for keeping certain assets - for example, if a home with a mortage is part of the inheritance, the heir may either choose to sell the home and pay the mortage, or keep the home and accept the mortage as debt. Notes: Even if inheritance is not automatic, the system usually allows a heir to disclaim it. There are other reasons for disclaiming an inheritance apart from debts, for example tax advantages, or the desire to grant the inheritance to a different relative. If a heir disclaims the inheritance, no matter the reason, the inheritance automatically passes to the next heir in line. If all potential heirs disclaim in turn (as would typically happen if the inheritance has more debt than assets), the inheritance will usually fall to the state. Then, the assets will be divided up among the creditors (similar to insolvency proceedings). As an exception to the rule above, the state does not have to pay outstanding debts - so that money would be lost for the creditors.