Estate administration involves collecting a decedent’s assets – particularly personal assets – and using them to pay debts, taxes and costs of administration until all the debts and costs are paid or the assets are exhausted. The remaining assets are distributed in accordance with the decedent’s will or, in the absence of a will, by intestate succession, as provided by state law.
In many states, legislatures have adopted some version of the Uniform Probate Code (UPC), which was designed to simplify the estate administration process. Due to the real or perceived complexity of the estate administration (or probate) process, many people have sought legal advice on how to avoid probate. In this, as in any complex legal matter, consulting an attorney with experience in estate administration is essential.
An estate may need to be administered in more than one state. Generally, a decedent’s estate is probated or administered in the state where he or she resided at the time of death. However, because state law governs the transfer of real estate it may be necessary to do an ancillary proceeding to probate for any real estate the decedent owned in another state. An ancillary proceeding is a scaled-down probate proceeding, which governs only the assets located in that state.
While probate proceedings can be extremely formal, they can also be relatively informal. An informal probate proceeding usually involves filing some basic paperwork, having the court appoint someone to manage the estate, paying the debts, distributing the assets and having the court approve the distribution. The court may never require a hearing, but only a review of the papers filed.
In other instances – such as when a will is disputed – a formal probate proceeding may be required. A formal proceeding involves more court oversight and usually requires one or more court hearings. In some states, a probate proceeding can be formal in parts and informal in others. For example, the matter may start out formally, with a court hearing to appoint the personal representative, but end informally, with a paper filed with the court detailing how the assets are to be distributed.
It may be possible to avoid the probate process for a decedent who owned few assets. A “small estate administration” is available in many jurisdictions. Usually, in order to qualify for a small estate administration the decedent’s assets must not include real estate and must be worth less than a threshold amount determined by the state. If a small estate administration is possible, the parties who are entitled to receive the decedent’s assets may collect those assets by way of an affidavit. Even in a small estate proceeding, though, the decedent’s creditors need to be paid from the assets.
Generally, the first task in a probate proceeding is appointing a responsible party to manage the estate. This person is usually called the personal representative, but may also be known as the “executor.” The personal representative may be an individual or a company, such as a bank. The personal representative may have been nominated by the decedent in the will. In the absence of a will, the court will usually appoint the surviving spouse or another family member. There may be more than one personal representative named.
After being appointed, the personal representative is expected to document all of the decedent’s assets. This documentation is often referred to as the inventory. The personal representative must also inform the decedent’s creditors that the decedent has died. If the decedent’s probate assets are sufficient to pay the creditors, the personal representative will pay them from the estate. If the probate assets are insufficient, the personal representative may need to obtain court approval to determine which creditors should be paid.
Assets left after the creditors have been paid are distributed according to the will. If there is no will, the decedent is said to have died intestate. State laws vary as to how to distribute the assets of an intestate decedent.
The personal representative must also file any necessary tax returns, and may need to bring a lawsuit to collect any money owed to the estate. If the will is contested or there is any other dispute about how to distribute the estate assets, the personal representative may have to “defend” the will in a probate proceeding.
Preparing to Meet with Your Estate Planning Attorney
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