The primary reason for Administration of an Estate is to provide a process of orderly transfer of assets upon death. Simply stated, someone must be authorized to sign the decedent’s name to transfer assets. Upon the passing of an individual, there are certain steps and phases of administration that every estate goes through – regardless of size.
These phases are:
- Get Acquainted, Review and Evaluate the Situation and Retain the Law Firm
- Authority to Handle the Estate Affairs is Conferred Upon the Person Who Will Be In Charge
- Assets/Inventory and Appraise
- Plan and Reposition
- Report and Account/Protect Heirs, Beneficiaries and Trustees
- Receipts and Close
The following briefly defines these phases to give you more information to help you understand the Administration Process:
- Get Acquainted, Review, Evaluate and RetainInitial contact between our office and the family of the decedent. We will meet with members of the family, however only the individual who is the Executor, Trustee or who will be in charge will be our client. During this time, we would like to review:
- All estate plans, trusts and/or wills
- All other legal documents of decedent
- All assets and liabilities within your knowledge
- All family information including the names, addresses and telephone numbers of decedent’s spouse, children, parents and brothers and sisters
- We will discuss family dynamics and family concerns. Please note that this is a general review only and may not go into details.
- Authority to Handle the Estate Affairs is Conferred Upon the Person Who Will Be In Charge: During the administration period, someone must be officially and legally appointed in charge of handling the details of the administration. This authority will be used to wind up the decedent’s affairs and to transfer the assets to the heirs and beneficiaries.During Administration all assets must be marshaled, creditors must be paid and tax returns must be filed and taxes paid if necessary. The person placed in charge is generally referred to as the Personal Representative. A personal representative is placed in charge either by Court Order, by Operation of Law or by a Trust Appointment.
- Assets/Inventory and Appraise: The personal representative will now search for and gather all assets. Those assets are then appraised and value on the Date of Death is determined. This is required by law.
- Creditors: Generally, after a thorough review of the decedent’s files and records, a determination is made identifying valid creditors and a Notice of Death is given to those Creditors. A determination is then made regarding appropriate payment and if required, payment is made at the appropriate time.
- Plan and Reposition: After all details of assets and liabilities are ascertained and thoroughly reviewed we can now create the plan for repositioning assets and preparing them for distribution. This may mean that real property is sold, stock and bonds are sold, bank accounts are collected and consolidated and all other assets are collected into the control of the personal representative. The plan is to reposition those assets for distribution in the most effective way and under the terms of any estate planning documents established by decedent.
- Taxes: The final tax returns are completed. These are necessary for the last year of decedent’s life and at the end of the administration. After the IRS and the Franchise Tax Board approves the tax returns, the estate can close.
- Report and Account/Protect Heirs and Beneficiaries: The Report and Account phase requires a report of actions of the personal representative including an accounting that is prepared setting forth all assets on hand on the date of death, receipts, disbursements and any distributions during the administration. This report is required by law to be given to all heirs and beneficiaries. This gives all heirs and beneficiaries a full report and peace of mind so that they know the administration was properly handled.
- Distribute: It is at this point that the final costs and fees can be calculated and paid. Estate administration fees can be paid in installments, either hourly, flat fee or a percentage of the estate. All probate’s fees are paid at the end and only after court approval. Once all fees and costs are paid, the remaining assets can be distributed, either by Court Order, by Operation of Law or by the terms set forth in the Trust document.
- Receipts: After all assets are distributed, the personal representative is required to obtain receipts of distribution from each heir or beneficiary.
- This outline is a summary only and does not describe the detail that must be done in each of these phases. Often we will be working in more than one phase at a time. For example, we do not need to wait until we know all of the assets to begin determining the creditors. However, we will not pay creditors until all assets are identified and valued. We will keep you informed of which phase we are in as the administration proceeds and the details of what needs to be completed at that time. We look forward to meeting with you and are honored you would consider us to aid you in the administration of your loved one’s estate.