At some point in your life there is a very good chance you will be involved in the administration of an estate. You might find yourself appointed as the Executor of an estate or volunteer to be the Administrator. You could also be involved as a beneficiary, heir, or creditor of the estate. Regardless of the reason, you will find it helpful to have at least a basic understanding of what is involved in estate administration. Given the unique nature of estate administration, specific questions and concerns should be addressed to your California estate planning attorney; however, the following are some steps common to the administration of most estates.
Preliminary Considerations – Is It a Testate or Intestate Estate?
Before the estate administration process, also known as “probate,” can begin it needs to be determined if the decedent died “testate” or “intestate.” A testate estate is one in which the decedent executed a Last Will and Testament prior to death while an intestate estate is one in which no Will was left behind by the decedent. In a testate estate the Will is used to determine how estate assets are distributed whereas in an intestate estate the California intestate succession laws dictate how assets are distributed. In addition, if a Will was left behind, the person named as the Executor in the Will is the person who will oversee the administration of the estate. In a testate estate, anyone may volunteer to be the Administrator of the estate. The Administrator serves basically the same function as an Executor during the probate process and are collectively referred to using the generic term “Personal Representative.” The Personal Representative is responsible for petitioning the appropriate court to initiate the administration of the estate.
Does the Estate Qualify for an Alternative to Formal Probate?
The formal probate process is costly, both in terms of time and money, for everyone involved. Fortunately, the State of California offers streamlined alternatives to formal probate for estates that qualify.
Immediately following the death of the decedent, the Personal Representative must identify, locate, and secure all estate assets. Estate assets may include both real and personal property as well as both tangible and intangible assets. A date of death value may also be required for all estate assets. Once the estate assets have been identified, they must be classified as probate and non-probate assets in order to determine which assets are required to be part of the probate process and which assets may bypass probate.
Estate Creditors and Taxes
Shortly after probate is opened, creditors of the estate must be notified and provided an opportunity to file claims against the estate. Unknown creditors receive notice via publication in a local newspaper. Creditors then have the later of the following deadlines within which to file a claims against the estate:
- Four months after the date letters are first issued to a general personal representative.
- Sixty days after the date notice of administration is mailed or personally delivered to the creditor.
The Personal Representative is then in charge of going through an evaluating each claim to decide if the claim is valid or not. Valid claims are paid out of available estate assets. If sufficient assets are not available to pay all claims, claims are paid according to priority. Personal income taxes, as well as gift and estate taxes, must be prepared and any debt paid before assets can be distributed and the estate administration process concluded.
Wrapping Up the Estate Administration Process
After all creditors are paid, and all tax obligations handled, the remaining estate assets may be transferred to the intended beneficiaries or heirs of the estate. The Personal Representative is responsible for preparing any documents necessary to transfer titles. Finally, when all estate gifts have been taken care of, a final inventory may be required by the court.
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