Probate & Estate Administration
Estate administration is needed when a person dies, leaving assets in an estate. A variety of duties must be performed by the administrator, or executor, in order to properly dispose of the assets. Proper administration requires meeting the requirements of state and federal estate laws. Lawyers specializing in estate planning are often hired to administer estates, or to advise the estate administrator.Distributing Estate Assets
An estate consists of the total assets owned by a decedent at the time of death. It includes personal property, real estate, cash, and securities. The assets in an estate are used to pay claims against the estate and to pay any state or federal estate taxes that may be due. Remaining assets are distributed according to the terms of the decedent’s will, if there is one. If there is no will, the assets are distributed according to the state inheritance laws where the decedent resided.
Settling Estates in Probate Court
Probate is a court procedure used to settle an estate. The procedure begins by establishing if a decedent’s will is or is not valid. The assets of the estate are established. Creditors' claims can be filed and settled. Fees for administration can be established and paid. Lastly, the assets of the estate are distributed. The specific requirements of probate vary according to state laws. It is typically the case that probate requirements are less formal for smaller estates.
Designating an Estate Administrator
The basic responsibility of the administrator is to manage the estate assets until they are finally distributed. As part of that responsibility, the administrator needs to act to preserve the assets. Preservation of assets includes properly storing and caring for valuables. It also entails trying to minimize estate expenses, including estate taxes. Proper valuation of assets needs to be performed so that distributions are properly made, and estate taxes are correctly calculated.
The administrator is responsible for settling any debts or taxes owed by the estate. In order to properly manage the estate’s assets, the administrator must evaluate the assets. Administrators are entitled to reasonable compensation for their services. They are also subject to being sued if they mismanage the estate.
Property Not Subject to Probate
Some types of property are not subject to probate when a person dies. It can be beneficial to keep assets out of probate as a means of saving on probate expenses, and as a means of keeping the nature and amount of assets from becoming a matter of public record.
The main types of property not subject to probate are:
- Property held as joint tenants with right of survivorship. Upon the death of one joint tenant, the property will pass directly to the other joint tenant without probate.
- Property held in trusts. Trusts can provide a flexible means of holding assets in a way that avoids probate, and that provides for property management and assistance in the event the person becomes disabled.
- Annuities and retirement benefits.
- Life insurance proceeds.
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