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Administration After Death  

Estate Administration

Estate administration is the term used to describe the process by which a person's affairs are settled after death. The process varies depending on whether a person died leaving a Will, died leaving no document at all, or died leaving a Living Trust. If a person dies leaving a Will or with no document at all, then the person's estate (with certain limited exceptions) must go through probate at their death. If a person died with a Living Trust which was funded with their property at their death, then the trust goes through a process called trust administration to settle the person's final affairs.

Probate

Probate is the process by which a court transfers property of a person who dies to the person's beneficiaries or heirs. It requires that a petition be filed with the Superior Court and that an executor or administrator be appointed to inventory the estate, identify and collect assets, pay debts of the estate, account for expenditures and income of the estate, and ultimately distribute the estate to the persons entitled to it.


Why Does Everyone Want To Avoid Probate?

• Probate takes time. Even the simplest estate takes a minimum of 6 months to probate. A complicated estate or an estate involved in litigation can take years to probate. However, in most cases, when a person dies with one or two pieces of real property and other liquid assets, an estate can be probated in about a year's time.

• Probate costs money. Probate is a process involving a court. As a result costs associated with the court process (filing fees, bond premiums, appraisal fees) and attorney fees (set by law as a percentage of the estate, 2 - 4% depending on the size of the estate) will be incurred by the estate.


There Are Some Advantages To Probate

• Costs are controlled. Although probate costs will be incurred (see above), they are also subject to approval by the court. Ordinary fees are set by statute and extraordinary fees are reviewed and approved by the court. An attorney or executor only receives what the court approves. Attorney fees and trustee fees incurred in settling a Living Trust are neither reviewed by nor approved by the court and in some cases may be higher than fees for a probated estate.

• Probate involves court supervision. There are some situations where court supervision is desirable. When a person dies leaving minor children, for instance, it may be desirable to have the court involved and reviewing accountings of the executor or administrator. The court must also approve fees paid by the estate. These are significant advantages when beneficiaries are too young or otherwise unable to protect their own interests.


Trust Administration

While a Living Trust can substantially reduce the amount of work and costs when a person dies, there are nevertheless important legal steps that must be taken following death. At that time the remaining trustee or successor trustee should always consult an attorney to make sure that title documents to real property are prepared and recorded, to review the terms of the trust for proper administration, to make decisions regarding taxes and tax planning, to prepare necessary tax returns for the deceased person and the estate, to take steps to extinguish creditor rights, and otherwise to settle the affairs of the trust following the death of a trustee.

After a person's death, a trustee of a trust is generally required to assemble and inventory assets, pay debts and taxes, account for trust property during the trustee's administration, and distribute trust property according to the terms of the trust. While one of the purposes of a trust is to avoid the formalities of probate, there are nevertheless certain "formalities" which provide a measure of protection both for the trustee and the beneficiaries. These measures provide for limiting the time in which contests and claims can be made against a trust and limiting the personal liability of the trustee.

The guidance of an experienced attorney is important in this process for the protection of the trustee and the trust estate.

 

 

 

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