Protected Family Inheritance From Creditor’s Claim

“From Our Perspective” is an ongoing R&H series examining successful case outcomes. In this episode, Probate Senior Associate Katherine Fontenot discusses the complex probate of a multi-million dollar estate. The estate included a house featured in Better Homes and Gardens, valuable artwork, and gold coins.

This case highlights the challenges of high-value estates with multiple interested parties. Our strategy and preparation led to a strong outcome for our client. The complexities of managing valuable assets, handling creditor claims, and working with multiple parties require expert guidance.

Past results afford no guarantee of future results; each matter is different and must be judged on its own merits. Facts are those of an actual Robinson & Henry probate case. 

Unique Case With Unusual Circumstances

Our client faced a rare and challenging situation. When his brother passed away, our client was named personal representative of a complex estate.  His brother had been married to a wealthy woman with strong ties to the art community. When she died years earlier, she left behind an array of assets, including valuable artwork and a large home, which our client’s brother was tasked with caring for as its trustee.

When our client’s brother passed, his estate included his assets and the house in the trust. 

With layers of assets from both the deceased wife’s trust and the brother’s estate, R&H Probate Attorney Katherine Fontenot guided our client through the complexities of figuring out what property belonged to whom so the probate process could move forward smoothly.

Understanding the Role of the Personal Representative

Being a personal representative comes with a lot of responsibility. This individual is appointed by the court to manage the estate of a deceased person and settle their probate.

The personal representative gathers and manages all the assets left behind and makes sure they’re distributed according to the decedent’s will or Colorado probate law if a will doesn’t exist. 

For our client, this meant overseeing everything from valuable art to the home in question. Being a personal representative requires careful management, as the role must balance the needs and claims of any heirs with creditors.

Iconic Home in Disrepair

At the center of this case was the deceased’s home, a once-magnificent property featured in Better Homes and Gardens that had fallen into significant disrepair. 

The trust mandated that the house go to a niece, but the property’s broken-down condition led her to file a claim against the estate, seeking compensation for the property’s neglect. 

This $2 million claim was one of the most significant hurdles Katherine’s team had to address. It threatened to drain the estate’s resources before the rightful heirs could benefit.

Navigating a High-Stakes Creditor Claim

As the estate’s primary creditor, the niece wanted to sell the house immediately, but Katherine knew her team needed time to properly assess the damage and its true impact on the estate. 

Katherine brought in trusted professionals, including an appraiser, to carefully examine the house, which had been neglected for years. With the estate on the line, getting an accurate assessment of the home’s value was essential. 

The appraiser estimated the damage to be a few hundred thousand dollars, significantly lower than the $2 million creditor claim the niece initially filed.  

Reaching a Resolution

With a strong appraisal report, Katherine sought the help of an experienced mediator to reach a fair settlement between the niece and our client’s brother’s estate.  

With the niece’s creditor claim satisfied, our client could now focus on preserving the remaining assets, including the valuable artwork and gold coins, to distribute to the intended heirs.

Read this video’s full transcript:

Question: Katherine, thank you so much for joining me. Tell me more about our client and why they needed your help.

Katherine: Our client came to us with kind of an unusual circumstance related to the passing of his brother. His brother was married to a very wealthy woman, and she had a lot of family money. Big in the art scene, had a lot of art, and owned a very large house. She had passed about a decade before our client's brother passed away. 

He left some property that his wife had left to him. And then the brother of our client was also the trustee of a trust. The trust owned a very big house and a lot of artwork and a lot of other property.

It was really a complicated estate. My job, of course, is to take the client in, organize and figure out where the property is, who it belongs to, and then step him through the process to get through not only the trust, but all of the property in the estate.

The home that the decedent was living in was in a state of complete disrepair. He was charged with taking care of the house. It was owned by the trust, and he was supposed to be trustee. Then the house goes to the niece, essentially. I think for about 15 years nothing is done on this house, it was completely dilapidated. 

Obviously, that's a big problem because our clients are stepping into the shoes of the person who passed. They have to sort of clean up the mistakes that he made when he was alive.

Question: What were some of the challenges of this case, and how much was the creditor claim? 

Katherine: The creditor claim was a little over $2 million. The niece who was supposed to get the house files into the case and essentially is suing the estate. It was for the dilapidated condition of the house. 

Question: How important were the experts that you used to assess the damage and also the value of this home? 

Katherine: Really important. This was something that we worked really hard on as a team. We got an appraiser in there. I walked the property with him and with the clients. 

It came back really favorable regarding the damage, it was a few hundred thousand dollars that was the expert opinion as to how much the dilapidation cost the overall value, which was quite a contrast from the $2 million claim that they filed.

Question: And ultimately, what was the outcome of this case? 

Katherine: It was great, we settled for the appraisal report. It was just a few hundred thousand dollars overall was owed to the creditor, and then they were gone. We sort of got rid of them and could continue probating the rest of the estate assets. The valuable artwork, some gold coins, just a lot of good assets that we were able to preserve and keep.

Question: What advice would you have for someone who is dealing with a high asset and high conflict probate case? 

Katherine: I would say get some help, you know, hire an attorney. It was very difficult to negotiate and manage a trust, an estate, all of the high value, a creditor that's coming after the estate for 2 million. 

It was a lot of moving pieces for a long period of time. I definitely would give the advice to anybody to make sure they get representation and make sure the agreements are fair and it's just a lot more complicated than you think it might be.