An Overview Of Probate And Estate Administration
Estate administration refers to the process of probating the estate of a decedent, which generally includes collecting, inventorying and appraising assets; gathering and paying debts; filing and paying estate taxes; and distributing any remaining assets to beneficiaries. Our attorney at Probate Law Center, PC, in St. Louis, Missouri, can help simplify this complicated process. If you need help with the administration of an estate, call 314-272-4156 today.
An estate is the total amount of property that is owned by the decedent at his or her death and that has not already been set up to transfer automatically (such as transfer of a joint tenancy or payment to a named beneficiary of an insurance policy). Once a person dies, the estate is submitted to the probate court.
If there is a will, the probate court will determine if the will is valid and then oversee the administration of the estate by the Personal Representative (the person appointed in the will by the decedent to oversee the estate). If there is no will or the will is determined to be invalid, the probate court will appoint an administrator and the decedent’s property will be distributed according to the state’s laws of inheritance.
Personal Representative Duties
The Personal Representative is the person named by the decedent in the will to administer the estate. The executor has many important functions to complete, including:
- Gathering and inventorying all assets of the estate
- Appraising the assets
- Collecting any payments or debts owed to the estate
- Paying any debts owed by the estate
- Filing and paying local, state and federal taxes
- Distributing assets to the beneficiaries as stipulated in the will
The personal representative owes fiduciary duties to anyone who has an interest in the estate. This means that the personal representative owes a duty of loyalty and must act in the best interests of the estate. For example, if the personal representative mismanages estate assets and causes the estate to lose value, he or she can be held liable for these actions and may have to repay the estate the amount of the lost value.
Preserving Estate Assets
An important but sometimes neglected responsibility in administering an estate is to look for opportunities to preserve assets for distribution. Reducing estate taxes is one way that an estate can retain more of its wealth for the decedent’s heirs. Some of the ways to accomplish this are by:
- Considering whether administration expenses and casualty losses should be reported on the estate tax return or on the estate’s income tax return
- Considering whether there are income tax savings opportunities on the decedent’s final return (such as whether or not a joint income tax return should be filed with the surviving spouse)
- Considering whether assets should be valued at the date of the decedent’s death or six months later (or, if assets have been distributed prior to six months after the decedent’s death, the date of the disposition of the assets)
Probate And Nonprobate Assets
Probate assets are subject to court administration. Probate can be an expensive and long process, and beneficiaries may have to wait anywhere from one to two years to receive the property left to them in the will. Probate assets include assets owned only by the decedent that do not have a named beneficiary.
Nonprobate assets do not have to go through probate. These assets are typically distributed more quickly to the appropriate beneficiaries since a probate proceeding is not required. Nonprobate assets generally include:
- Property owned in joint tenancy or tenancy by entirety with rights of survivorship
- Payment on death (POD) bank accounts
- Transfer on death (TOD) securities
- Life insurance policies that designate a beneficiary other than the decedent’s estate
- IRAs, 401(k) accounts, and other retirement plans that name a beneficiary other than the decedent’s estate
Revocable Living Trusts
Revocable living trusts are similar in form and substance to wills. These instruments allow the creator (the testator) to transfer the title of ownership of property to the trust. During life, the testator can remain in control of his or her assets, with the ability to sell, buy or transfer property as he or she wants. The trust also can be changed or terminated at any time by the testator.
Upon death, the property in the trust does not become part of the probate estate because the title to the property is owned by the trust, not the decedent. The trustee designated in the revocable living trust will then be in charge of administering the trust and distributing property to the beneficiaries in accordance with the terms of the instrument.
Many people use revocable living trusts as a way to limit the amount of property subject to probate. Revocable living trusts are often advertised as a way to avoid probate altogether, but often they are coupled with a will that disposes of any property not specifically named in the trust.
Other Resources For Probate And Estate Administration
Uniform Probate Code Locator
Maintained by Cornell University Law School, this site identifies the states that have adopted, at least in part, the Uniform Probate Code. Links are also provided to each state’s version of the code.
This page is maintained by the H.E.L.P. organization and provides an overview of the executor’s, personal representatives’, and trustee’s estate administration responsibilities.
SmartMoney® Estate Planning
Provides information to consumers on the process of gathering information and documentation for estate planning.
How to Calculate Your Estate Tax
An online estate tax calculator.
Contact Me Today For Help
Guiding an estate through the probate process and effectively administering that estate requires a strong understanding of probate and tax laws. If you need help with an estate, call my St. Louis office at 314-272-4156, or use my online contact form to make a free initial appointment.