by Attorney Jennifer Kahl on Monday, January 28, 2019
After consulting with an experienced estate administration attorney, you have determined that it is necessary for you to open a formal probate estate. (Click here to see if it’s necessary to open a formal probate estate). This probably means that the value of the probate estate is over $50,000 and none of the strategies for administering small estates apply. So, where do you start?
The Personal Representative
The “Personal Representative” is the fiduciary who will manage and represent the estate. If the decedent did not have a will, the title of the Personal Representative will be “Administrator.” If the decedent had a will and you are the person nominated in the will as the executor, the title will be “Executor.” If the decedent had a will, but you are not the person nominated in the will as executor, your title will be “Administrator c.t.a.”
Bear in mind that a will only nominates a person to be executor. No one actually becomes an executor unless he or she has appeared in Court and qualified as such.
The qualification appointment
To open a probate estate, you must appear before the Clerk of Court and qualify as the Personal Representative of the estate. This is called a qualification appointment. If you are required to post a bond, a bondsman must appear with you at the appointment. Once you have qualified, the Clerk will give you a Qualification Certificate. This is the document that proves that you are the Personal Representative of the Estate. The Clerk will assign you to a Commissioner of Accounts (“COA”) and give you a packet of instructions.
Collecting the Assets
Once you have qualified, you can obtain a tax identification number (EIN). You can do this for free online at irs.gov. Take your letter of qualification and your EIN to the bank where you want to gather the estate funds. Open a new bank account in the name of the estate. You can now begin the process of transferring the decedent’s assets into the estate bank account. In most cases, it is easiest to have only one estate bank account. The simplifies the accounting process. However, there is no restriction on the number of accounts that you can open, so you can open more if it makes sense.
The Inventory is due to the COA within four months of your qualification date. The Inventory should show the value of all the estate assets on the date of death. So, if Dad died on February 15 and you qualified as Executor on April 20, the inventory would be due on August 20 and would show the value of the assets on February 15. The inventory must be signed by all Personal Representatives and submitted to the COA with the appropriate filing fees.
Pay the Debts and Taxes and make the Distributions
Pay any debts, taxes or bills of the decedent. If you fail to pay a creditor, that creditor can attack you personally for their debt. To ensure that you have located all of the creditors, you may participate in an optional process called a debts and demands hearing. This process can limit your liability to outside creditors that you may not be aware of. Hire a tax professional to ensure that all of the taxes are paid, both for the decedent individually and for the estate. Pay any administrative expenses of the estate. Finally, make the distributions to the beneficiaries.
File the First Accounting
The First Accounting period runs from the date of death until one year after the date of qualification. The First Accounting is due to the COA four months after the end of the accounting period. So, if Dad died on February 15, 2019 and you qualified on April 20, 2019, the first accounting would cover February 15, 2019 to April 20, 2020, and it would be due on August 20, 2020.
The Accounting must show everything that was done with the estate assets, balanced to the penny. You must have detailed receipts to back up every transaction. If this is a Final Accounting, the COA will want to see proof that you took care of the taxes and paid the funeral bill. If there are still undistributed assets on hand at the end of the First Accounting period, the estate will roll over into a Second Accounting period. The accountings will continue on an annual basis until the estate is finalized.
Most Personal Representatives require the assistance of a lawyer to help them navigate this process. Call The Heritage Law Group to schedule a consultation.