I previously wrote about “Understanding ‘Probate’ Terms” and “Why probate a Decedent’s Estate?” to set out a basic understanding of this thing called a court-supervised estate administration. This post sets out in some detail the actual steps in administering a typical decedent’s estate.
As I said in my previous post, estate administration has three main objects and phases:
- Collecting property and making reports;
- Paying debts and taxes; and
- Distributing property.
Generally speaking, in a court-supervised estate administration, things run something like this:
- Some responsible person locates the original will and makes an appointment with the family attorney to begin the process.
- The attorney, often having some knowledge of the decedent’s affairs and the situation, will prepare several documents to start the estate—a petition, court officer oath, designation of attorneys, confidential information submittal, order admitting will to probate, application for taxpayer number.
- There is usually a conference among the attorney, executor, and/or interested family members to gather basic financial information, original will, sign documents. If the attorney did not have enough information to have the documents prepared, the attorney would adjourn the meeting, prepare the documents, and arrange with the necessary parties to get the documents signed. (The idea that there is a “reading of the will” is a mostly an invention of television and movies.)
- The attorney files the original will and court documents mentioned above and seeks an order appointing the executor and admitting the will to probate. If the executor is not a resident of the state, this requires a judge’s review and approval, and the judge will order either the attorney or the clerk to serve as a “resident agent for service of process.” If there is no will, this step also includes getting a bond for the administrator set or waived.
- The attorney applies for a taxpayer identification number for the estate.
- The attorney arranges for publication of notice of estate administration in the newspaper.
- The attorney electronically notifies Iowa Estate Recovery, which is charged with recovering any debt owed the state for Medicaid payments.
- The attorney arranges for mailing of notice to the spouse, heirs, beneficiaries, and certain creditors.
- If there is a surviving spouse and/or children, the attorney will prepare a notice concerning support payments.
- The executor should be collecting, or at least identifying, the decedent’s property.
- The executor should be notifying income payers of the estate’s taxpayer number.
- The attorney and/or executor need to collect information on the date of death value of the decedent’s assets and liabilities. It should be noted that this can sometimes be a long and difficult process.
- Within 90 days of appointment, the attorney will prepare and file a report and inventory of the estimated date-of-death value of the decedent’s assets.
- The gross value of the decedent’s assets sets the statutory compensation available to the attorney and executor, and the attorney will prepare the compensation application, affidavits, and a proposed order allowing compensation to accompany the inventory. Often there will a waiver of compensation at this point because the executor is frequently a residuary beneficiary.
- Four months following the second publication of the notice of probate in the newspaper, the period for filing claims against the estate and for challenging the will itself ends. At this time, the statutory liability imposed on an executor for distributions also ends. At this point, there begins the possibility for making distributions.
- Within nine months of death, the executor must file the federal estate tax return and the Iowa estate or inheritance tax returns, if any such tax returns are due.
- The executor collects the decedent’s personal income tax information, and the attorney or another tax preparer will prepare and file the decedent’s final personal income tax return. (Death and taxes… Whether you die on January 1 or December 31, April 15 always rolls around.)
- Within 15½ months of death, fiduciary income tax return is due. This is typically the last thing that gets done in the estate administration.
- Often, around the time of preparing the fiduciary income tax return, the attorney will prepare a final report. With the executor’s assistance, the beneficiaries receive a formal or informal accounting with the final report.
- It is normal, at this point, for the executor, in consultation with the estate’s attorney to make distributions and to ask the beneficiaries to give a receipt for the distributions and a waiver of a hearing on the final report.
- When the Department of Revenue gets around to it, it will review the decedent’s personal income tax and the fiduciary income tax returns. If the decedent and the decedent’s estate are all paid up and there are no issues, the Department of Revenue will issue an “Income Tax Certificate of Acquittance.” With this magical document in hand and having filed everything else with the probate court, the estate can be closed.
- If the beneficiaries have provided “Receipts and Waivers,” the attorney files these with the probate court with the final report and acquittance. A “Probate Referee” then reviews the court file and prepares a report indicating whether the matters required by statute have been completed.
- If the beneficiaries have not provided a waiver of a hearing on the final report, the attorney will ask the court to set a date and time for a hearing. The interested parties will then be notified. The final report typically would have a plan of final distribution. Interested parties could object and appear in Probate Court to ask for a ruling on the particular objection.
- If the Probate Referee’s report is in good order and if waivers have been filed, the attorney can put the file in the hands of the presiding judge along with a proposed order for discharge of the executor.
- After reviewing the file and settling any disputes if there has been a hearing, the Court will issue an order discharging the executor, which closes the estate.
Again, this is a general outline. Decedent’s estates vary dramatically in the scope of work and the time involved. Deadlines and timelines frequently are adjusted under the unique circumstances of each estate. There are also numerous matters that are not addressed here, e.g., will contests, claims against the estate, beneficiary disputes, insolvent estates, wrongful death claims, and dealing with “non-probate” property.
Estate administration can seem like a bit of a plodding process. Sometimes, there is the perception that “if I can’t see you doing something, it must not be happening,” but like many other legal matters, an estate administration has many moving parts that not everyone sees. If the tree falls and no one is there to see it, yes, it does make a sound — but unless you are tuned in, its fall may be imperceptible. Moreover, there is not going to be a tree falling every second of the day. Hopefully, setting out the nuts and bolts of what happens during administration of the decedent’s estate will aid understanding about parts of the process that occur both under the bright spotlight and behind the scenes.