SBA Loan, Personal Guaranty signed by dead husband --how liable is the estate?

[uniblonder]

Husband died, left signed personal guaranty for a couple of loans at his business. His partner signed the mirror guarantees for each loan. There is not much $ in the estate, but there might be at some point. The loans are for over $300k, the language says that both are "jointly and severally" responsible for payment.

1) Is there any way to indemnify the estate for these loans?

2) The house was in both our names and I intend to sell it at some point and use the equity to purchase a new home for me and our young children. I've been told that there is a possibility that if my dead husband's business partner defaults on the SBA loan (and/or the other loans that are personally guaranteed) that the creditors *might* be able to come after 1/2 of the proceeds of the sale of the house....even years down the road (the SBA loan has over 20 years left on it).

3) Is there any way to force my dead husband's business partner to re-negotiate these loans?

I currently own 50% of the shares of the business, but there is a buy-sell agreement in place. I have to sell my shares to the partner at some point.

Thank you so much. This is all weighing very heavy on me, as my children are very young and my husband's death was unexpected.
(ETA: Business is located in NY, our state of residence is NJ)

 

[seniorjudge]

If the loan is now not in default and if no one files a claim in the estate for the loan within the time period allowed for claims, then you will be okay.

Note the two big words in the above answer: IF

 

[uniblonder]

Okay, well that sounds good, except aren't I required to notify them of my husband's death? I think the terms of the loan state that is will go into default if one of the guarantors dies. Not that I'm in any hurry to let them know, but aren't I legally obligated to do so?

The business is the borrower, he's only the guarantor--does that help?

Also, what determines the filing period for claims against the estate?

...I'm trying not to get discouraged here. Your help is greatly appreciated, I have a couple of attorneys on retainer, but they couldn't answer THAT question (one is a NY corporate atty, the other, a NJ estate atty).

 

[seniorjudge]

Q: Okay, well that sounds good, except aren't I required to notify them of my husband's death?

A: Yes; otherwise, you will not be protected by their non-action.


Q: I think the terms of the loan state that is will go into default if one of the guarantors dies. Not that I'm in any hurry to let them know, but aren't I legally obligated to do so?

A: Check out those terms again. That sounds very strange.


Q: The business is the borrower, he's only the guarantor--does that help?

A: It doesn't help you.


Q: Also, what determines the filing period for claims against the estate?

A: State law.


Q: ...I'm trying not to get discouraged here. Your help is greatly appreciated, I have a couple of attorneys on retainer, but they couldn't answer THAT question (one is a NY corporate atty, the other, a NJ estate atty).

A: A bright sixth-grader could find that answer on the internet. I am not impressed by your lawyers.

 

[uniblonder]

Q: ...I'm trying not to get discouraged here. Your help is greatly appreciated, I have a couple of attorneys on retainer, but they couldn't answer THAT question (one is a NY corporate atty, the other, a NJ estate atty).

A: A bright sixth-grader could find that answer on the internet. I am not impressed by your lawyers.

Guess I shouldn't exactly be impressed by my attorneys either. The only thing the estate attorney has told me to do is to have my NJ Surrogate's Office publish a notice for creditors. Is that it? That seems a little....ah, well..it just doesn't seem very thorough.

As for the terms of the loan--all I rec'd were copies of the loan documents from the business partner. I'll review them again, but the default clause does say that it will default if a borrow dies...(see below).

As I see it, the partner is my biggest liability. He'll keep the business going for as long as it benefits him---but the lease on the business space expires in less than 10 years and I doubt he'll renew the lease and will probably ultimately dissolve the business. The SBA loan goes out over 20 years and I just can't see him paying after the business is dissolved. I'm aware that he's put all his personal assets in his wife's name and is just about as sneaky as they come. I don't want to depend on him to pay this debt.

Here is the wording of the loan. I guess since the business itself is listed as the "borrower"....does that make a difference? My husband's name appears as "Guarantor".


The terms of the loan do state that the: "Borrower is in default under this note if Borrower does not make a payment when due under this Note, of if Borrower: a) Fails to comply with any provision of this note; b) Defaults on an other SBA loan; c) Sells or otherwise transfers or does not preserve or account to the SBA's satisfaction for, any of the Collateral or its proceeds; d) does not disclose, or anyone acting on their behalf does not disclose, any material fact to the SBA; e) Makes or anyone acting in their behalf makes, a materially false or misleading representation to the SBA; f) Defaults on any loan or agreement with another creditor, if the SBA believes the default may materially affect Borrower's ability to pay this Note........j) Makes an assignment for the benefit of creditors; k) Has any adverse change in financial condition or business operation that SBA believes may materially affect the Borrower's ability to pay this Note; l) Dies; m) Reorganizes, merges, consolidates or otherwise changes ownership or business structure without SBA's prior written consent; or, n)Becomes the subject of a civil or criminal action that SBA believes may materially affect Borrower's ability to pay this Note.


Again, I thank you.