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SUMMARY ADMINISTRATION: ANOTHER ABBREVIATED PROBATE PROCEDURE
By Deirdre W. Edmonds, Attorney at Law
The typical probate administration takes a minimum of twelve (12) months to complete, with the average time usually being between twelve (12) and fourteen (14) months. This is generally the timeframe for estates that don’t involve controversies or disputes among family members or with creditors, and for estates that are not taxable under federal estate tax laws. Controversies and disputes can cause an estate to drag on for years and dealing with the IRS and a taxable estate can take just as long.
Despite the typical 12 to 14 months, there are some estate administrations that can be completed in just a few short months. These are estates that qualify for administration under what’s known as the “summary administration” procedure. Instead of waiting until the expiration of the creditor claims period before the estate’s representative (known as the personal representative) distributes any estate assets, the summary administration procedure allows the personal representative to distribute estate assets very soon after the estate is commenced and then complete the filings required in the probate court well before the creditors’ claims period expires.
There are two (2) situations under which an estate can qualify for the summary administration procedure. They are as follows:
(1) If the value of the probate assets after deducting the value of any liens, encumbrances, the costs and expenses of administration, funeral expenses and last illness hospital and medical expenses does not exceed $25,000, the estate qualifies for summary administration; or
(2) If the personal representative of the estate is the sole beneficiary under the deceased’s Will or, if the deceased person died without a Will, if the personal representative is the sole heir of the estate, then the estate will also qualify for summary administration. (This option is also available if all of the beneficiaries or heirs are also all personal representatives of the estate. So you might have two personal representatives who are the only two heirs and the estate would also qualify for summary administration.)
Under a summary administration, the estate is commenced and a personal representative is appointed in the same manner as a regular estate. The personal representative is required to give the same notices as are required with a regular administration: (i) information to the heirs and devisees that the estate administration has been commenced, and (ii) publication of the notice to creditors in a local newspaper.
As with a normal estate administration, the personal representative of an estate that qualifies for summary administration is required to file an Inventory and Appraisement with the Court setting forth all of the probate assets and property that the decedent owned at the time of his or her death and their value. This inventory is a relatively simple form and only the deceased’s probate assets must be identified and valued.
As soon as the personal representative makes a determination that the estate qualifies for summary administration under one of the standards set forth above, which may be as soon as the estate is opened or as soon as the Inventory is completed, the personal representative can begin transferring and retitling the decedent’s probate assets to the heirs or devisees who are entitled to the assets. The personal representative is not required to wait until the creditors’ claims period expires before retitling and transferring the property out of the decedent’s name and into the names of the heirs or devisees.
One caveat, however, is that the transfer of the deceased’s assets to the heirs or devisees does not mean that the estate is not subject to the 12-month creditor claims period. The estate is still subject to the claims period and any valid, timely filed creditor claim will need to be resolved by the personal representative before the estate is officially closed by the probate court. To protect creditors who timely file their claims, our Probate Code allows the creditor to either recover a decedent’s assets from the persons receiving the assets from the personal representative or seek to require a personal representative to recover the assets in order to pay their claim. In my years of experience, these creditor recoveries are rarely necessary or invoked.
After the personal representative has retitled and transferred all of the decedent’s property to the persons entitled to the property, the personal representative can then file with the court a very simple probate form to close the estate and also file his proof that the closing form was sent to all heirs or devisees. There is no need in either summary administration procedure to file a detailed, itemized accounting with the court or show how or to whom the estate assets were distributed.
After this simple closing form is filed, the court is required to leave the estate open for a period of one year following the date of the deceased’s death. During this time period, the personal representative is still the duly appointed representative of the estate and, as such, has the necessary authority to handle any matters that arise involving the estate, such as a creditor’s claim, dispute among heirs, tax filing matters, etc. At the end of the one-year period following the deceased’s death, assuming that no lawsuit has been filed in the meantime involving the estate, the estate is closed by the court. These closings are generally handled by the court without any need for any further filings or contact with the personal representative.
The summary administration procedure is most often available and used upon the death of a spouse when their Will leaves everything to their surviving spouse and the surviving spouse also serves as personal representative of the estate. It is also available for those small estates that have more than one heir or devisee but little probate property. These summary administration procedures are relatively simple and allow an estate to be concluded quickly and without undue delay. They save families a great deal of time and aggravation and allow them to be finished with this dreaded post-death process relatively quickly, helping to bring some closure to the loss of a loved one. Because of all of these benefits, it’s a win-win situation for everyone. I encourage you to investigate any estate that you may be involved in to determine whether it qualifies for summary administration so that you can take advantage of this simple administration procedure. (The information provided in this article is for informational purposes only and is of a general nature. The information should not be construed as legal advice. If you have any questions about the subject matter of this article or related matters, you should consult with a professional advisor for advice. Deirdre W. Edmonds previously served for twelve years as Horry County Probate Judge and is currently the owner of The Law Office of Deirdre W. Edmonds, PA, located at 1500 Highway 17 North, The Courtyard, Suite 213, Surfside Beach, SC 29575. The Law Office of Deirdre W. Edmonds, PA focuses on estate planning, probate administration, probate and trust litigation, disability planning and elder law. Contact Deirdre W. Edmonds via Telephone: (843) 232-0654; Website: www.dedmondslaw.com; and Email: firstname.lastname@example.org.)
BASIC STEPS OF PROBATE ADMINISTRATION
By Deirdre W. Edmonds, Attorney at Law
After a person's death, a determination must be made as to the nature and extent of the deceased person's assets and income, and that determination will generally dictate what must be done with respect to probate administration. Often, a person dies owning assets and property known as "probate property" that can only be dealt with through some type of action in the local probate court. Previously, I have discussed the difference between "probate property" and "non-probate property". I have also previously discussed various simplified probate administration procedures. This article assumes that the deceased person's probate property includes either real property or that the probate property exceeds $25,000 in value. Under either of these circumstances, a full probate administration is required through the local probate court.
This article outlines the basic steps that must be taken in a normal probate administration. Although no two estates are the same, there are certain steps that all probate administrations must follow. Oftentimes, added to these steps are more complex issues that arise, which require more time, expense and effort to resolve. Probate administrations are very fact specific. The particular facts and circumstances related to the nature and extent of the deceased's property, their family members and family dynamics, the extent of their preplanning or lack of planning, all impact the ease or complexity of their estate administration. In general, the following basic steps are required for a probate administration in this state:
STEP ONE: GATHER NECESSARY INFORMATION AND OPEN ESTATE WITH PROBATE COURT. Determine the deceased's assets and income, their family members and family relationships, and whether or not they had a Last Will and Testament. File any Will with the probate court and seek the appointment of a personal representative to manage the deceased's probate assets. The personal representative is in charge of the probate administration.
STEP TWO: PROVIDE INITIAL REQUIRED NOTICES. As soon as the Will is filed and/or a personal representative is appointed, duties arise that require certain persons to be notified regarding whether or not there is a Will and also notified that the personal representative has been appointed by the Court. These duties also include publishing the Notice to Creditors in a local newspaper.
STEP THREE: MARSHALL, APPRAISE AND INVENTORY ASSETS. The personal representative must act quickly to gather and protect the deceased person's assets. This includes, determining what bank accounts exist, what vehicles the deceased owned, whether the deceased owned any stocks, bonds, life insurance policies, real property, brokerage accounts, 401(k)s, IRAs and business interests. The more diverse or the greater the value of the assets, the more steps required to administer the assets. The assets must be valued or appraised and an inventory of the assets is required to be filed with the probate court.
STEP FOUR: HANDLE DEBTS AND CREDITOR CLAIMS. A personal representative is required to handle and resolve all claims and debts against a deceased person's estate. Claims and debts can be paid, negotiated, disallowed or contested. Sometimes, lawsuits are required in order to resolve debts and claims, and assets must be sold in order to pay all the claims and debts. Occasionally, there are not sufficient estate assets to pay all the debts and claims. If this is the case, then additional work is required to determine which assets can be sold and/or who might not receive their share of an estate.
STEP FIVE: TAX ISSUES MUST BE ADDRESSED. A deceased's final income tax return may have to be filed. An estate that earns income during the course of the administration may be required to file a fiduciary income tax return. A large estate that exceeds the estate tax exemption amount at the time of the deceased's death (currently, $11.2 million dollars) must also file a federal estate tax return. The administration of a taxable estate that is required to file an estate tax return can take several years to complete.
STEP SIX: MORE COMPLEX ISSUES THAT MAY ARISE. Complex or unusual issues that arise or that the estate is involved in must be handled and resolved before the estate can be concluded. These may include, but not be limited to, will contests and estate disputes, business ownership interests, spousal claims, unmarried couples, disinherited children, minor beneficiaries, wrongful death claims, and disputed ownership of property.
STEP SEVEN: DISTRIBUTION AND CLOSING OF ESTATE. After all claims, disputes and tax issues have been resolved, a personal representative can generally begin distributing the assets remaining in the estate and begin the estate closing process. Assets must be properly retitled and handed over to the persons entitled to them. Deeds must be prepared and executed for real property. Stock certificates held in the deceased's name are turned in and new certificates issued by the issuing company in the proper names. Automobiles must be retitled through the motor vehicles department and bank accounts are closed and funds distributed. Numerous estate closing documents are required to be completed and filed by the personal representative, including a full accounting of the personal representative's administration of the estate. These estate closing documents must also be provided to all interested persons. Anyone who has an objection to the administration of the estate by the personal representative has a right to demand a hearing in the probate court. If a hearing is demanded, the court will schedule a hearing and the personal representative will be required to answer questions related to his or her conduct in administering the estate. If the court is satisfied that the estate has been properly administered, the personal representative can then proceed with all final estate distributions and the court will close the estate. If the court believes that improper actions have been taken or that assets have not been properly administered, the court can order appropriate action to remedy the matter. After remedial actions are completed, then the estate will be closed by the court.
The foregoing outlines the general steps required to administer an estate in the probate court. Oftentimes, each general step involves numerous tasks and additional work to complete. The steps can be easy to achieve and complete or they may be complex and complicated. A person who has properly planned for their death by having a well-drafted Last Will and Testament helps insure that the steps required to be taken after their death through a probate administration are easier and less complicated than someone who fails to plan. That's the first step in making the whole probate administration process as simple and easy as it can be. It's not a guarantee but it’s a very good start. (The information provided in this article is for informational purposes only and is of a general nature. The information should not be construed as legal advice. If you have any questions about the subject matter of this article or related matters, you should consult with a professional advisor for advice. Deirdre W. Edmonds previously served for twelve years as Horry County Probate Judge and is currently the owner of The Law Office of Deirdre W. Edmonds, PA, located at 1500 Highway 17 North, The Courtyard, Suite 213, Surfside Beach, SC 29575. The Law Office of Deirdre W. Edmonds, PA focuses on estate planning, probate administration, probate and trust litigation, disability planning and elder law. Contact Deirdre W. Edmonds via Telephone: (843) 232-0654; Website: www.dedmondslaw.com; and Email: email@example.com.)
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