Q: What rules decide the paying of an estate debt when that debt is connected to an asset that will continue past probate?
The sole owner of a Washington State C-Corp dies. The will is entered into probate and names 1 of 3 equal beneficiaries the Personal Representative with non-intervention powers.
The assets of the estate consist mainly of proceeds from the sale of the house and the business which has been operating for 25 years and has 2 branches. PR makes it known that they plan to buyout other beneficiaries interest in business during settlement and begins directing the business as is their right. One month into probate, PR shuts down one branch of the business claiming hardship of running both branches.
Nearing settlement of debts and the estates, PR intends to use proceeds from the sale of the house to settle all business debts (around 100k, 60k non guaranteed by testator) What rules dictate the decision of when an estate does not have to settle debt that is closely connected and can follow an individual estate asset and that asset will be continued and owned by one beneficiary?
A:
Your situation is a bit complex for a website answer. You should speak with a local probate attorney to protect your interests as a beneficiary.
Shutting down a branch, may or may not be a good business decision. The PR needs to be careful to distinguish his or her roles. As a PR, there are duties. As a beneficiary (a second role here), the person has to be real careful not to be seen as self-dealing.
Washington has TEDRA. There's a whole lot that can be said about TEDRA, but the short version is that you can reach agreements between the beneficiaries to help solve difficult situations in probate. Paying the creditors, is of course, a high-priority duty of the PR. Figuring out what a "fair" price is for the business is probably the most compelling reason that you should speak with a local probate attorney, one familiar a bit with business valuations.
Best of luck.
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