FREE CONSULTATION • CALL US 24 / 7 212-994-7777

Estate Administration

Estate Plan

A person's estate refers to all of their property, which generally includes:

  • Personal items, including furniture;
  • Bank accounts, including savings accounts;
  • Cash;
  • Jewelry;
  • Real estate;
  • Vehicles that are owned by the estate's owner;
  • Retirement accounts;
  • Stocks and securities; and
  • Other such assets.

The person who makes the plan is called a testator. When you die as a testator, an estate plan is what provides instructions regarding how your property will be managed and distributed. A well-developed estate plan can also have many additional benefits. An example of this would be how a clear plan can minimize your loved one's tax burden, as well as the need for probate court proceedings.

Estate Administration

Estate administration is the legal process of locating, maintaining and distributing someone's assets, e.g. real, personal property and intellectual property, after they pass away. The person who has passed away is referred to as the “decedent” in probate terminology. All of a person's property, real and personal of whatever kind, is referred to as their “estate.” At the end of the estate administration process, the assets in the estate are distributed in accordance with the testamentary will of the decedent.

If a person does not have a valid will when they pass away, their estate must still be located and maintained and other tasks taken care of just as for a decedent who has a will, but the estate is distributed according to the laws of intestacy of the state in which they resided. Laws of intestacy are laws that direct how the estate of a person who dies without a will, or “intestate,” should be distributed.

All of this takes place under the supervision of a probate court. Probate court is a court that specializes in the process of probating estates. Probate is a legal process in which the court supervises the location and collection of a decedent's assets, makes sure creditors are paid and then that the assets are distributed to the appropriate beneficiaries, either according to the decedent's will or to the state's laws of intestacy. Most states have a branch of their court system called “probate court,” or it may be called “Surrogate's Court,” “Orphan's Court,” or “Chancery Court.”

Estate Administration Process

The estate administration process involves several important tasks that need to be completed. The process is known as “probate.” Probate begins with the death of the decedent, whose estate is then opened by a person referred to as an “executor.”

The executor may be a person or entity appointed by the decedent in their last will and testament or, If there is no will, the court may appoint one. If the person who has been named as an executor in a will does not want to serve in that role, they must petition the probate court to have another executor appointed. Alternatively, other interested persons can apply to be the executor by submitting an application to the court to be appointed to the role.

Once the court appoints an executor, the probate process can begin. The executor, who is sometimes referred to as the “personal representative,” is responsible for estate administration and accounting to the court for having completed the probate in accordance with all applicable laws.

The estate administration process typically involves locating and maintaining the assets of the decedent, taking care of any outstanding tax issues, settling any outstanding debts of the decedent and then distributing the remaining property among the beneficiaries as provided in the will or by the laws of intestacy.

Of course issues may arise. If the decedent had a will, someone may contest the will, claiming it was the product of undue influence exerted on the decedent. Or a creditor may contest the amount of a debt. Or, the executor may want to contest the claim of a creditor for payment of a debt. Dealing with all such issues is the responsibility of the executor.

Duties Of An Estate Executor's Duties

The executor assumes general responsibility over all issues touching on the decedent's finances. An executor's duties include the following:

  • Conducting a search for the assets of the decedent, so that they are all identified and located;
  • Filing a probate inventory of the estate;
  • Defending lawsuits against the estate;
  • Managing the estate's assets;
  • Identifying the beneficiaries; and
  • Ensuring that the beneficiaries receive their proper inheritance.

The executor is also directed to pay the legitimate claims of the decedent's creditors and taxes to taxing authorities from the estate's assets. Of course, this must all be done before any assets can be distributed to heirs.

Expenses Associated with Estate Administration

As one might expect, there are costs associated with administering an estate. Administration of an estate can take a fair amount of time and consume some of the resources of the estate. Of course, the expenses will vary from case to case, but they may include some of the following:

  • Commissions for the Executor: The fee paid to the executor may vary according to state law. It is often expressed as a percentage of the assets of the estate;
  • Attorney's fees and costs: If an attorney has to be retained to perform legal services for the estate, of course, the attorney must be paid; and
  • Miscellaneous Expenses: these will all be connected with locating and then maintaining the estate's assets. Sometimes selling certain assets, e.g. personal property, furniture and even real estate owned by the decedent, is required.

The various expenses involved would include any costs associated with the collection of assets, paying off debts, and maintaining estate assets while the administration is underway. For example, if residential real property is part of the estate, the property must be maintained until the administration of the estate is finished; property taxes must be paid when due, and the property must be heated in winter. If it is a rental property, the executor must deal with the tenants. The property may need to be sold, and there would be expenses associated with this, such as preparing the property for sale and paying a real estate agent to handle the sale

Expenses that are considered necessary for the administration of the estate will usually be deducted from the taxable income of the estate, if there is any. Attorney's fees for estate administration are usually considered necessary expenses.

Firing or Switching Executors

Usually, the executor is chosen because the person was close to the decedent and someone the decedent believed could be trusted with the responsibility. However, it can happen that the executor may be removed or changed because of disputes or some type of misconduct on the part of the executor, such as:

  • Waste or embezzlement of estate funds;
  • An inability to execute the duties of the office properly, e.g. the executor could become incapacitated by illness or some other condition;
  • Wrongful neglect of the estate assets;
  • Acting in such a way as to threaten the estate, by, for example, converting estate assets to personal use.

The selection of an executor is an important decision, and attempting to remove an executor is also a big step. If, however, the executor is not performing to the standards demanded of an executor by law, it is a step that should be taken.

To remove an executor and appoint a new one, an interested person must turn to the probate court for action.

Removing an Executor

Only the probate court can remove an executor. But any interested person can petition the court to remove an executor from the role. An interested person is usually a beneficiary or creditor who has a stake in the administration of the estate. A common example of this is a person who is named in the decedent's will and stands to acquire estate assets as an inheritance.

The petition for removal should be combined with a request to appoint a new executor. This will cause some delay in the overall administration of the estate until a new executor is finally appointed and can resume the administration.

What Do You Need to Remove an Executor?

The party who seeks the removal of an executor must present the court with facts showing “cause,” i.e.a proper basis in fact, for the executor's removal. The court will hold a hearing at which the executor can show why they should not be removed from the role. If the court determines that there are sufficient grounds for removal, the executor will be removed from the position and a replacement named by the court.

Small Estate Administration

When a person passes away, their estate is distributed to their heirs or devisees through a will, a trust, or through the probate process. Some estates take a long time to settle due to the size and complexity of the deceased's property and any issues that may come up with named or unnamed beneficiaries.

But on the other end of the spectrum, there are a lot of estates that are smaller in property amount and size, without any of the legal complications that can arise with larger estates. To speed up the execution and distribution of these estates, most jurisdictions have provided an option for these situations known as small estate administration. This streamlined process takes less time, paperwork, and costs than normal estate administration. This option is designed to resolve simple distributions quickly and clear up probate dockets for more complex cases. 

What Qualifies for Small Estate Administration?

As stated above, every state has its own limitations on what estates can qualify for this form of expedited administration. The most obvious and prominent limitation is how much the estate is worth. The estate qualifies if that total dollar amount is below the jurisdictional threshold. Which assets must be included in that amount differ by state.

Some states may require that certain properties be included in the calculations, while another state does not. Other factors like taxes, real estate values, and other state-specific values will also affect the small estate administration cut-off.

For example, two of the largest states in the country are California and Texas. The cutoff is $75,000 or less in Texas, while California's threshold is much higher at $166,250. In addition, some states will not consider small estate administration if the deceased had a will, while others allow administration for both testate and intestate situations.

Things I Should I Know Before Beginning the Small Estate Process

If you want to settle an estate with an affidavit, you need to make sure that it is legally possible before you begin. Do so by asking yourself the following questions:

  • Does the deceased person's estate qualify?
  • Was there a will in place?
  • Am I allowed to use the affidavit?
  • Has enough time passed?

Each state has different rules about what qualifies as a small estate. A small estate is typically defined by its dollar value. If a decedent's assets are worth less than $50,000, it may be considered small. In some states, estates worth as much as $150,000 may be considered small, depending on the laws and counted assets. Generally, only probate assets are counted.

What is Included in a Small Estate Calculation?

While the specifics of what comprises a small estate inventory vary from state to state, a few common assets are included in the law of most jurisdictions. Non-probate assets are normally excluded from a small estate inventory, such as:

  • Life insurance;
  • Trust assets;
  • Retirement benefits;
  • Transfer/payable on death bank accounts; and
  • Jointly owned properties.

Many states also exclude motor vehicles, registered watercraft, and out-of-state property.

Valuing a certain piece of personal or real property is an important part of determining small estate eligibility. Some states instruct executors to use the market value at the time of death, while others direct them to subtract the amount the deceased still owes on the property at the time of death. These little details can make a big difference in determining if the deceased's estate qualifies or not.

Who Can Use a Small Estate Affidavit?

When a person dies without a will, the person who can use an affidavit may be limited to the surviving spouse, heirs, or administrators of the estate. In some cases, creditors can get a small estate affidavit to repay unpaid debts.

Whoever wants to use a small estate affidavit must be required by state law to wait until a certain amount of time has passed since the decedent's death. This time period can be as long as two months.

Notarizing A Small Estate Affidavit

Many states require the notarization of a small estate to be valid. Even if it isn't required in your state, you should consider notarizing it.

Some financial institutions require notarization, and a notary seal can help prove the document's legitimacy, so you don't encounter any problems during the process of claiming and transferring the deceased's assets.

Administration Process

States usually require a waiting period before a small estate administration can begin, usually between 30 and 60 days. The primary document is normally called a small estate affidavit and must be notarized, signed under oath, and filed in the proper court.

Once accepted, the person who will be in charge of distributing the property (the executor or an administrator, depending on the state) must file any necessary supporting documents required by state law. These usually include a death certificate, estate inventory, supporting appraisal paperwork, and a list of all debts.

Once all the proper documents are provided, the court will verify that the estate meets the state requirements and allow distribution to the deceased's heirs, either stated in the will or designated as an heir by law. Some states require a brief court appearance that takes minutes, while others may not require one.

Still, others may choose either option depending on the circumstances of the case, such as documentation issues or questions about heirs and property values. If the affidavit application is approved and any issues cleared up, distribution can begin.

Are There Quick Probate Options for Non-Qualifying Estates?

What if you want to provide an easy probate path (or avoid it altogether) for your descendants but probably won't qualify for small estate administration? Careful estate planning can help reduce any probate court interaction, no matter the size of the estate. Using a trust instead of a more traditional will gives the testator the ability to transfer property in and out of a protected legal entity and the flexibility to add certain conditions and protections that they can't in a will.

Also, be sure to check property that can be non-probate assets, such as IRAs, 401Ks, life insurance, and even payable-on-death bank accounts. Legal ownership automatically transfers if you name a person or persons as specific beneficiaries. The property has to go through the traditional probate process if none are named. 

How Can An Attorney Help Me With My Estate Administration Issues?

An executor, especially one who is not a lawyer, but even one who is, may well need to consult an experienced estate lawyer for guidance as to how to proceed and possibly representation if someone sues the estate. The person selected to administer an estate may have tax or legal questions that need to be answered by an estate lawyer or a tax professional. An experienced estate lawyer in your area can provide valuable guidance during estate administration. If any lawsuits are filed against the estate, an attorney can provide representation for the estate and guidance to the executor as to how best to proceed. At the very least, questions that require answers from an estate lawyer are likely to come up and it is helpful to have a knowledgeable estate lawyer at hand.