Estate Administration

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 What is 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.”

What Happens During the 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.

What Are the 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.

What Expenses Are 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.

Can You Fire or Switch 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 incapcitated 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.

Who Can Remove 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.

Do I Need an Attorney for Help with 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.

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