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Ask Dave

Help! How Do I Settle Mom's Estate?

Daniel doesn't know what to do with his mom's car and the debt associated with it. Her retirement account is being divided between grandchildren. If the car is sold, it'll break even. Dave has a warning.

QUESTION: Daniel in Buffalo says his mom passed away about a month ago, and he doesn’t know what to do with her car and the debt associated with it. She had a retirement account, but it’s being divided between grandchildren. If the car is sold, it’ll break even. Dave has a warning for Daniel.

ANSWER: The first thing you must understand is that her entire estate, everything she owned, has to stand good for her debts before any grandchildren get anything. If she has any debts that have to be paid, those have to be cleared before the estate can be settled. You can’t just write checks out of this and pay everybody and then not pay the creditors. They will come back after the entire gang.

It sounds like the retirement account and the car is her whole estate. As long as you can sell the car for a break-even price or better, you will be fine for distributing the retirement accounts to the grandkids as requested.

You have to get court approval here. Someone has to be assigned as the executor in order to sign the title. Then you can just sell the car. You just act like the owner of the car. Your sister has court approval to do business on behalf of the estate. She just has to sell the car for enough to pay off the debt, just like if you were the owner of the car and you sold it.

If you have to get something from probate court, that varies from state to state. Just get a motion from the judge. Since it’s a very small and simple estate, if it’s possible in New York state to avoid running it through probate, that might save you $1,000, which might be the difference in this whole thing working or not.

But you have to have a valid way to sign the title. You can’t pass title if you don’t have proper permission to do that. For instance, I bought a property in Tennessee not long ago from an estate. In order for the title company to give us title insurance, the court had to give approval for the executor to sign on behalf of the estate. We had to file a motion with the court. In our state, it’s not that expensive, but we are a very low tax state.

You have to check on that and find out if there is a way to transfer the car title without running the entire estate through probate. I doubt there is, but I’m not an attorney, and certainly I’m not one in New York state.