Pub. 15 2020-21 Issue 6

NEBRASKA BANKERS ASSOCIATION 13 COUNSELOR’S CORNER — continued on page 14 C. The estate inventory. After filing a claim, a lender should review the estate in - ventory. The inventory is due to be filed within three months after a personal representative is appointed. If properly prepared, it will catalog the decedent’s assets at death, includ- ing jointly held property that passed upon death and the fair market values. If not timely filed, the creditor can bring this to the attention of the probate court. But that inventory probably won’t tell the whole story. Until all creditor claims are filed, the total debt amount won’t be known. Once the claims bar date passes, the lender can review creditor claims and determine if the estate is likely solvent or insolvent. An additional way to check for non-probate property is to review a decedent’s Nebraska inheritance tax return. A properly completed inheritance tax return will list all assets in which the decedent had an interest, including assets passing through non-probate transfer. The inheritance tax return is required to be filed with the county court within 12 months of the decedent’s death. D. Enlarging the Estate Assets Once it becomes clear that the estate is likely insolvent, the creditor may want to look at several ways to enlarge the estate to pay debts. 1. Bringing joint tenancy property, “payable on death,” and other non-probate assets back to the estate. Nebraska law provides that if other estate assets are insuf- ficient, transfers resulting from a right of survivorship (joint tenancy property), a “payable on death” (“POD”) designa - tion on a bank account or a “transfer on death” (“TOD”) for securities, are not effective against the estate to the extent it is needed to pay claims and statutory allowances. Neb. Rev. Stat. § 30-2726(a). One who receives payment from an account after the death of the decedent “is liable to account to the personal representative for a proportionate share of the amount received to the extent necessary to discharge estate claims.” In other words, the joint payee must pay the funds received from a joint account or other non-probate property back to the estate, up to the amount needed to make the estate solvent. However, the personal representative is not required to act unless it has received a “demand” from an interested party, such as a creditor or heir. The proceeding to recover the joint property or account funds has a time deadline — one year from the decedent’s date of death. Creditors should be aware of this one-year cutoff. A demand made by a creditor after the one-year period has expired may be of no effect. This is a very powerful tool for creditors. It is common for substantial property to change hands at the decedent’s death due to joint tenancy, POD or TOD accounts. Often, those monies and property go to the surviving spouse or other family members. Those funds can be recovered for creditors under this statute, and in some instances, that may provide the difference between a solvent estate and an insolvent estate. 2. Recovery of pre-death fraudulent transfers The personal representative can also bring a claim for transfers the decedent made during his lifetime that were fraudulent as to creditors. These could include, for example, transfers of money or property to family members where there was no adequate consideration received, if the transfer was made while the decedent was insolvent, or if the transfer rendered him or her insolvent. E. What if the Personal Representative is Not Acting Responsibly? Sometimes, the PR may not be fully cooperative in collect - ing assets to pay creditors. This might be for any of several reasons. For example, the PR may have benefited from the receipt of joint or other non-probate property received upon the decedent’s death and may be unwilling (or feel unable) to repay it. Or, those funds may have gone to other family mem- bers, leaving the PR reluctant to make demands upon them. Or, overwhelmed by the death of a loved one and the respon- sibilities of the estate, the PR may not be emotionally able to address the necessary liquidation of property for payment of estate debts. Fortunately, the probate code provides ways to address these issues. Creditors who think that a probate case might already exist but who have not received a notice should inquire at the county where the decedent lived. The court clerk should be able to check on pending probates, and lawyers can also access that information.