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Liens And Probate
One of many judgment articles: I am a judgment broker, not a lawyer, and this article is my opinion based on my experience, please consult with a lawyer if you need legal advice.
Continuing the "what if" example; the daughter is the executor of the late father's estate, and she will inherit a house. Your judgment debtor will inherit an expensive Corvette automobile. As a judgment recovery expert, your first thoughts for possible recovery actions might include:
1) Serving a notice of your lien on the daughter. Because she is the executor of the estate, in theory she would have no trouble paying off your lien. The problem is, she might ignore it, and you might need to serve her attorney as well, and you may not know who that attorney is.
2) An assignment order served on the daughter. You might have the same problem as above.
3) Have a debtor examination (and/or perhaps later, a bench warrant) served on your debtor. This may defeat your judgment recovery purpose because the debtor might put the eventually inherited Corvette in another name, and hide any other assets he may receive.
4) Subpoena the daughter with a subpoena duces tecum, for a copy of the will and/or trust.
A notice of lien is almost always a slow-payment approach. Courts take the position that a notice of lien is effective, however in probate court, liens have no legal significance until the court makes a disposition of the assets; and the ownership rights are transferred from the decedent's estate to the debtor, as an heir of the decedent's estate.
What the will says in terms of distribution of the estate, is not final at the beginning of the probate proceeding (except that it names the executor on whom to serve legal papers). Someone could contest the will (including the naming of the executor), and all such issues need to be litigated in court.
Lots of things can happen during the time that the daughter administers the estate of the decedent. Your debtor will get nothing (except perhaps, the cost of funeral expenses), and you may get tied up with appearances in probate court every time something happens with the estate. If you skip hearings, you take the chance of missing something important.
Just because you file a notice of your lien, or a request for a notice of the proceedings; does not mean that you will get a copy of every motion made by the executor, all papers filed, or noticed on every court appearance by the executor.
In a will situation, during the time that asset distributions are being considered by the court, you will have to wait. Many things can go wrong.
If you file a notice of lien, you can intervene (in California, under CCPs 387 and 708.440), because there is no one in the probate action that represents your interests as a judgment creditor.
Once you are granted status as an intervenor (not every court allows this), then you can fight to maximize the distribution of the estate to your debtor as a beneficiary, according to what the will states (or what you interpret it as stating).
The executor can do what is in the best interest of the estate, and some have interpreted this to mean that the executor can pay you, but only if you can come up with a settlement offer that benefits the estate, including avoiding the expense of further litigation.
Some courts will deny your right to a legal standing, however it is usually a good idea to ask the court for an order that the executor of the estate obtain a probate bond.
Even if the will states that a bond is not required, a bond will ensure that the distribution to your debtor gets made with a minimum of risk to the recovery of your debtor's share of inheritance. It is worth it to mitigate the risk of having an executor with no experience in administering a probate estate.
Most probate bond companies will not sell a probate bond to an executor attempting to administer the affairs of a probate estate without legal representation; unless the executor has real property of their own to pledge as collateral for the bond. This means the executor will need to pay an attorney to get a probate bond.
In many states, the attorney will by statute, get 4% of the first $100K of the estate, 3% of the next $100K, 2% of the next $100K, and 1% of anything beyond that, up to $1 million.
The executor may be reluctant to pay the extra attorney fees from the assets of the probate estate, if they figure out that you will probably get the money you are owed, anyway. The executor may wish to settle with you, rather than incur this additional cost.
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