Probate & Estate Administration

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Losing a loved one can be both devastating and disorienting, particularly if you are responsible for administering their estate. While you are personally grieving, you also have to navigate a maze of legal issues, including probate, transferring or selling assets, handling bills and creditor claims, filing tax returns, and everything else included in the estate administration process. In addition to managing your own life, you are now responsible for wrapping up the life someone else led. Estate administration can be complex and often incorporates a variety of legal issues, including probate law, trust law, real estate law, banking law, contract law, tax law, creditor rights, business law, and many others. It can feel overwhelming if you don’t have the right help.

An experienced probate and estate administration attorney can relieve some of these burdens by offering guidance and breaking the estate administration process into easy to accomplish steps.

ESTATE ADMINISTRATION:

Estate administration is the general process of winding up a deceased person’s lifetime affairs, satisfying any liabilities they may owe, selling or distributing the person’s property, and carrying out their last wishes. There are three basic types of estate administration: formal probate administration, informal non-probate administration, and trust administration.

When someone dies, their estate may be subject to any or even all three of these estate administration processes.

Probate Estate Administration:

Probate is the formal, court-supervised process of appointing an executor or administrator, finalizing a deceased person’s affairs, carrying out his or her known wishes and the law, paying creditors and taxes, and disbursing assets to heirs or beneficiaries. If a deceased person has a Will, the probate court will determine the validity of the Will, ensure that the terms of the Will are followed, and provide interpretation when necessary. If a deceased person does not have a Will, Ohio law determines how the estate is administered and assets are distributed to heirs. The probate court supervises the executor or administrator, ensures that the law is followed, and resolves any disputes that may arise. Probate is required for most assets a deceased person owned individually and did not designate beneficiaries on.

Non-Probate Administration

Assets that are owned jointly with survivorship rights, have a designated beneficiary, or pass to a surviving spouse under law are all considered non-probate assets. These assets may include financial accounts, retirement accounts, and life insurance policies with designated beneficiaries; assets that are owned jointly with a spouse or others; and up to $65,000 worth of vehicles, one boat and one outboard motor that may be transferred directly to a living surviving spouse. Families can typically complete much of the non-probate administration process on their own. But you will need the assistance of an attorney to transfer real estate to a surviving joint owner or beneficiary and should consult with an accountant or attorney for tax advice.

Trust Administration

Assets that are held within a trust or are payable or transferable to a trustee when the owner passes will be administered by the trustee. Trust administration is less burdensome since it is not subject to probate court oversight and filing requirements. A trustee is responsible for collecting, managing and investing trust assets, distributing trust income and assets under the trust terms, filing tax returns, following laws applicable to trusts, and providing reports to trust beneficiaries. The trustee’s role is to carry out the creator’s intentions and trust terms, within the boundaries of the law. Depending on the type, purpose, and terms of the trust, the administration process may be simpler and faster than probate, or it may be much more complex. Some trusts terminate shortly after the creator’s death while other trusts may last for decades or even generations.

TYPES OF PROBATE ADMINISTRATION:

Probate estate administration is not the same for every individual or family. There are many different types of probate administration proceedings. The three most common types of probate estate administration proceedings in Ohio are: Summary Release From Administration, Full Estate Administration, and Real Estate Transfer Only Administration.

Summary Release From Administration

A Summary Release From Administration, which is sometimes referred to as a small estate administration, is an abbreviated or summary proceeding for estates of very small value. The assets of eligible small estates can be distributed to beneficiaries quickly and inexpensively without going through a cumbersome full estate administration probate proceeding. A surviving spouse can file for a Summary Release From Administration if the deceased spouse’s probate estate is worth $40,000 or less. A non-spouse who paid funeral and burial or cremation expenses for the decedent may be able file for a Summary Release From Administration if the decedent’s probate assets are worth $5,000 or less.

Real Estate Transfer Only Administration

If a deceased person’s home or other real estate is the only asset that requires probate administration and at least six months have passed since the property owner’s death, many Ohio courts will permit a Real Estate Transfer Only Administration. A probate proceeding for the sole purpose of transferring real estate also bypasses full estate administration and permits real estate to be transferred to beneficiaries or heirs more quickly and inexpensively.

Full Estate Administration

A Full Estate Administration is what most people think of as “probate.” In a full administration proceeding, the court will appoint an executor or administrator to collect and disburse the decedent’s assets, evaluate and pay creditor claims, carry out the terms of the decedent’s Will (if there is one) and the law, and resolve any lingering legal, tax, or other problems the decedent left behind. Depending on the value of the estate and complexity of the administration process, most full estate administration proceedings take between six and thirteen months to complete, though some take longer. Some of the specific steps involved in the full administration of a probate estate are detailed below.

Probate estate administration is sometimes viewed negatively and considered something to avoid whenever possible. Although it is true that probate administration can be more costly and time-consuming than non-probate administration, there are considerable benefits as well. Probate court oversight can prevent fiduciary mismanagement or misbehavior, provides protection for minor or special needs beneficiaries who cannot defend their own interests, and ensures that the deceased person’s wishes and the law will be carried out and enforced.

THE FULL ESTATE ADMINISTRATION PROBATE PROCESS:

A full estate administration probate proceeding may be quite simple or extremely complex, depending on the assets, claims, and people involved in the process. While the precise steps may vary from one estate to another, there are certain steps that are common to most probate estates:

  • If the deceased person left a Will, it must be validated by the probate court and formally admitted to probate
  • The estate fiduciary (executor or administrator) must apply to the probate court for authority to administer the estate and the court must formally grant that authority
  • Beneficiaries or heirs of the estate must be identified and notified
  • The executor or administrator must gather information about the decedent’s assets, bills, taxes, and any unresolved legal issues
  • The decedent’s assets must be collected, safeguarded, inventoried, and sometimes appraised
  • Assets may have to be liquidated or sold
  • The executor or administrator must open and maintain one or more bank accounts for the estate under the unique taxpayer identification number assigned by the IRS
  • Bills and creditor claims must be validated and paid in a particular order of priority
  • The decedent’s income tax returns must be prepared and filed (if the decedent was required to file)
  • The estate may also be required to prepare and file tax returns
  • After creditors, taxes, and costs of estate administration are paid, the remaining estate assets must be transferred or distributed to beneficiaries under the terms of the Will or to heirs according to statute
  • An accounting of the estate administration (including itemization of all receipts and disbursements) must be prepared, filed with the probate court, and provided to beneficiaries and heirs

The executor or administrator of an estate carries out these administration steps under the supervision of a probate court. Serving as the executor or administrator of an estate is a big responsibility.

You are not required to have the assistance of an attorney to probate an estate in Ohio. However, most people struggle to successfully navigate the probate process on their own and could benefit from counsel. Moreover, unrepresented executors and administrators are held to the same legal standards as those who are represented by an attorney. If you make any mistakes during the estate administration process, you could be held personally liable for the value or cost of your errors.

TOP 7 THINGS NOT TO DO WHEN A LOVED ONE DIES:

Losing a loved one is stressful. Family members and friends often compound this stress by demanding that you act quickly, before you have the opportunity to contact an attorney. Though you may have good intentions, please do not do any of the following seven things without consulting with an attorney first:

#1 DO NOT give away any of the deceased person’s property – Family members and friends often want to collect property specified in a Will or keepsake items right away. However, these items may have to be inventoried, appraised, or sold to pay creditors.

#2 DO NOT sell any of the deceased person’s property – Until an executor or administrator is appointed by the probate court, no one has legal authority to sell the decedent’s property. Selling someone’s property without authority may be considered theft or conversion.

#3 DO NOT pay any of the deceased person’s bills or creditor claims – There is a very specific statutory order of priority for paying bills and creditor claims after someone has died. You could be held personally liable and responsible for paying debts out of order or paying invalid claims. In addition, there are steps we can take in Ohio to avoid paying some general creditor claims. If you need to pay utility bills or homeowner’s insurance premiums to safeguard a decedent’s home in the interim, this is permissible but keep complete written records of all bills paid.

#4 DO NOT notify the bank when an account holder dies – Many banks freeze accounts when someone dies, meaning utility bills, mortgage and car payments, homeowner’s insurance premiums, and other essential bills on auto-pay won’t be paid.

#5 DO NOT allow the homeowner’s insurance coverage for the deceased person’s home or other real estate lapse – In many cases, the home or other real estate are the most valuable estate assets and must be continually insured against loss.

#6 DO NOT drive the deceased person’s vehicles – After the vehicle owner passes, the vehicle may not be covered by insurance if an unauthorized person drives it.

#7 DO NOT delay too long – There may be strategic reasons to delay opening an estate, such as avoiding general creditor claims. But delaying probate may have unintended negative consequences, including mortgage and tax lien foreclosures, vehicle repossession, and barring legitimate family member claims. An attorney can help you determine when it is advantageous to delay opening a probate estate and when it isn’t.

DO WILLS HAVE TO BE PROBATED IN OHIO?

If there are probate assets that need to be transferred following the owner’s death, the deceased owner’s Will must be probated. Probate assets include accounts and property the deceased person owned that do not pass to a joint owner, designated beneficiary, trustee, or surviving spouse. If there are no probate assets, a deceased person’s Will does not need to be probated. However, it may be a good idea to file the Will for record with the local probate court in case additional probate assets are discovered in the future.

My dad died while my brother and I were both still teenagers. My parents were divorced, so a local bank was appointed to administer his probate estate. We didn’t understand the process or know what to expect, and no one took the time to share information with us. I remember how frustrating and scary it was to be constantly surprised by deadlines, taxes, creditor claims, and the sale of our dad’s property. With 20+ years of probate and estate administration experience, it is my personal mission to ensure no client will ever feel as lost or uncertain about the process as we did. I understand that this is a difficult time for you and your family, and I can help.