Wednesday, February 10, 2021

Estate Administration Basics

What should you do when a loved one dies? How and when does the estate get administered?

Administration is defined as Court-supervised distribution of an estate during probate. Also used to describe distribution process for a trust. Probate means proving the will, but it can also be used to indicate a court process to handle a deceased person’s estate.

When a loved one dies, there is often confusion and panic about what legal and financial steps should be taken by survivors.  There may be little information about the finances of the decedent, and spouses or children are left to sort through what may seem like a never-ending mass of papers.  It can feel like a scavenger hunt with few clues.

There is almost nothing that must be done immediately, so take time to grieve, and to come together with family and friends to celebrate the life.

If there is an executor or personal representative nominated in a will, that person will usually be responsible for making sure the following steps are taken.  If there is no will, family members may have to decide who should be responsible.

Your first step should be to secure the home and the tangible personal property.  If there is no one living in the home, the locks should be changed to prevent people from coming into the home.  Make sure the personal property is not taken out of the home because that property may have been intended to be given to an heir or beneficiary.  Have the mail forwarded and any newspapers or packages stopped from being delivered so that it is not obvious that the home is empty. As soon as possible, an inventory of the property should be made.

Usually, the funeral home will notify Social Security of the death, but if they do not notify SS, SS should be notified within 30 days of the death.  If the decedent (the person who has died), was receiving SS benefits and did not live until the end of the month, Social Security may take back any money that was direct deposited into the decedent’s account.  If there was no direct deposit, you may have to send the money back to SS.

Next, when you are ready to deal with the decedent’s estate, make an appointment with the attorney to determine what steps need to be taken.

If the decedent had a will, find the original will and take it with you to the attorney’s office.  A probate petition may need to be filed if the decedent had property that he or she held in his or her name alone.  You will want to find deeds and financial statements to determine the ownership of assets. If the decedent owned assets in his or her name alone, there is no one with the legal authority to access those assets, so the main purpose of the petition to probate is to get someone appointed as a personal representative who then has the legal authority to administer the estate.

If all assets were held jointly with another person, or had beneficiary designations, there may be no need for a probate petition to be filed.  However, the original will must be filed with the probate court.

If there was no will, the process is called an administration, and a petition for administration will have to be filed to get an administrator appointed to take care of the decedent’s intestate (intestate means without a will) estate.

  • First, the assets must be collected. This is sometimes called “marshaling” the assets. In Georgia, the will can specify that the personal representative does not have to file an inventory with the probate court. However, the personal representative should compile a list of all the assets. Consolidate accounts so that there is one checking account to pay the bills and from which to make distributions.
  • Second, pay the bills. The creditors should be notified, and Georgia probate courts generally require that a notice to debtors and creditors be filed in the legal newspaper. In general, in Georgia, the process of notifying creditors and paying the bills takes at least 6 months and can usually be accomplished within a year.
  • Third, pay the taxes and file the tax forms. In Georgia, there is no state estate tax – sometimes called a death tax. The federal estate tax credit will be 11.7 million dollars per person in 2021, so unless the estate is worth at least 11.7 million, the personal representative probably does not have to worry about estate taxes. However, if an estate tax is owed, estate tax forms must be filed within 9 months of the date of death.

    File the tax returns.  If the estate earns income such as interest or dividends, the personal representative will need to file a return on behalf of the estate. The estate will have to get a tax identification number and report any earnings using this tax i.d. number.

    Also, the personal representative may have to file a final tax return for the decedent for any income the decedent may have earned in the last months of his or her life.

  • Fourth, once the bills are paid and the taxes are paid, the personal representative may begin making distributions. Generally, the personal representative may have to wait to make full distributions until all of the creditors have filed their claims, though the personal representative may make some distributions before the period has run. Under Georgia law, there is a priority for which bills get paid and in which order, so if there is not enough money to pay all of the creditors, the personal representative will have to figure out who must get paid first and who may not get paid at all. Be sure to consult an attorney to help you with this process.

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