How do you handle probate of a small estate?

How do you handle probate of a small estate?

My mother recently passed away. She has left no will or any power of attorney. She has no real property, only personal belongings which her children have already shared with each other. She has several bank accounts for under $60,000. She has six children, all living, who have agreed to split the money equally. They have elected me, her eldest daughter, to handle these matters. What about probate, taxes, debts, and other legal matters? I don't know where to start.


You should always begin the probate process with a consultation with an experienced probate administration attorney. In an estate as simple as yours, you may need no more legal help than the initial consultation. However, the hundreds of dollars will be well spent in that it may help identify potentially important issues which you might have overlooked. This is also important even if the estate is small and there are no technical issues because the last thing you want to do is to run into interpersonal difficulties with your siblings. It would be a shame, especially over a relatively modest amount of money per child, less than $10,000 each, to jeopardize a family relationship. Although the rules can differ dramatically from state to state, since there is no will, you will have to go through an intestacy proceeding. This is a proceeding where state law seeks to provide for how assets should be distributed and an estate administered when there is no will. You had mentioned that there is no power of attorney. The power of attorney is a legal document which authorizes a specified person, called an agent, to handle financial, legal, and other matters for the person signing it, called the principal. Powers of attorney generally lapse on death so that would not be relevant, particularly to your situation. After consulting with an estate attorney, or before, perhaps you should get some general background information on probate. A good basic primer is The Complete Probate Guide by John Wiley and Sons available through this website. (Yes, I like it because I wrote it). However, keep in mind that the rules, customs, and forms do differ pretty considerably from state to state. Perhaps your next step would be to consult with the clerk in the probate (it might be called surrogate, orphans, or some other name) court in the county where your mother was domiciled before she passed away. Contrary to what the people selling living trusts and other programs would have you believe in many courts the clerks are extremely pleasant, competent, and helpful. They might be able to give you advice as to what you could do alone and what you might need an attorney for. They could also, in many cases, provide you with samples or actual fill-in the blank forms that you need to commence the probate process. In some jurisdictions there are special simplified or streamlined probate procedures for smaller estates. $60,000 may or may not exceed the maximum you could use to qualify for a streamlined proceeding. Check with your court and an estate administration attorney in your area. You indicated that everyone has agreed that you as the oldest daughter should serve as administrator of the estate (the term executor is often used when there is a will, but the functions are the same). Whether or not you can be appointed and the procedures for how you must go about being appointed would depend on state law. State law will list an ordering of persons to serve as the administrator of an estate where there is no will. If you are the next in line under state law, then you would in fact be able to serve. If not, then the person who state law names to go before you would have to serve or decline to serve. Also, you cannot simply serve because your sibling said it was OK. What you will have to do is qualify formally with the local courts to administer the estate. This would generally require filing some amount of paperwork, providing a death certificate, and perhaps other documentation. You will eventually obtain a formal legal document from the court authorizing you to serve as administrator of the estate. Depending on the part of the country you are located in, this document might be called Letters Administration. You will want to get several copies of these since you will probably need one for each bank account and perhaps to deal with a car or other assets for which title might have to be changed. Title is the legal term for ownership. You had also inquired about taxes. There are no federal taxes for an estate under $675,000. Furthermore, this amount is scheduled to increase to $1,000,000 by the year 2006. As far as state taxes, your state may or may not have an inheritance tax. Even those states that do have some type of estate or inheritance tax, there is usually an exemption so that smaller estates are not taxed. For many states there is also a class of beneficiaries that might be excluded from an inheritance tax. Given the size of the estate and the fact that all the heirs appear to be children of the decedent, you might very well avoid any tax, but check the filing requirements to avoid penalties or worse problems. You indicated that the children have all agreed to split everything equally. While this is admirable and in fact maybe what the law provides, you must again start with what state law provides as required. You also should check the beneficiary designations and account titles of the various accounts. For example, if one of your mother's bank accounts was an IRA account, she may have designated one or more of the children but perhaps not all equally as beneficiaries to receive that account. Your mother may have listed other accounts as in trust for specific children. Be sure to go through all the formalities of verifying each account. Even though everybody seems so agreeable and the amounts may not seem large on a per child basis, it can't hurt to make sure that everybody receives a listing of all the assets of the estate, how everything is distributed, any expenses that were incurred and so on. This can be important to avoid any conflicts at a later date. More formally, this is what is typically done in order to protect the administrator or executors before distributions are made, or debts are paid. Depending on the state or even county, a notice may be published, creditors and a newspaper of record advising them of the death of the decedent so that it may cut off legally creditors' rights to make claims against the executor for debts owed by the decedent. Since you indicated there are debts involved, you should address this before making any distributions. Finally, before distributions are made, beneficiaries are often asked to sign a formal document acknowledging that they had received information about the estate and relinquishing any claims against the estate. If you are going to serve as the administrator responsible for everything, it can't hurt to have this simple document signed by everybody to avoid some type of challenge or even just a disagreement, later. Caution: Even for a small simple estate, there are traps for the unwary. While you can probably handle most matters on your own to minimize legal and other professional fees, it is always best to start with an initial consultation with an experienced estate administration attorney to assure that you have addressed all issues. Also, be certain to have the decedent's accountant file a final income tax return and advise you as to whether or not there are any estate income tax filing requirements.

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