Chapter 8 - Administration of the Estate Flashcards
Probate meaning
By definition, probate is the legal act or process of proving a will. To probate the will means to prove to the court that the instrument presented is the last
valid will of the deceased person. The proof must be made before a duly authorized person that the document presented as the last will and testament of a deceased person is, in fact, the document it purports to be.
Self Proving Will
Self-proving wills are now widely accepted. Self proving wills contain a notarized acknowledgment by the witnesses that they saw the testator, being of sound mind, voluntarily sign the will.
Methods to Avoid Probate
- Joint Tenancy
- Property Passing by Contract at Death (proceeds of life insurance, Social Security benefits, pension plan proceeds etc)
- Government Savings Bonds
- Totten Trusts and Payable-on-Death Accounts
- Deeds
- Living Trusts
- Small Estate Administration
Totten Trust
A Totten trust (also referred to as a “Payable on Death” account) is a form of trust in the United States in which one party (the settlor or “grantor” of the trust) places money in a bank account or security with instructions that upon the settlor’s death, whatever is in that account will pass to a named beneficiary.
Ancillary Probate
Filing for probate in other states can be considered Ancillary Probate. If the deceased owns property in another state a Ancillary Executor may be appointed.
Posting Bond
A bond or surety bond is a certificate in which a person or insurance company, the “surety,” agrees to pay up to and including the bond amount to the court if the personal representative does not perform, or improperly performs, the duties of administering the estate. Bonds protect the interests of beneficiaries, heirs, tax collectors, and creditors from suffering losses as a result of the representative’s improper or even negligent management of the decedent’s estate. When a corporate entity is appointed to represent the estate, bond is not required.
Letters Testamentary
After the bond is obtained, letters testamentary or letters of administration are issued by the court. These letters are certifications by the court that the named personal representative was granted authority to act on behalf of the estate during the administration period until he or she is discharged by the court, at which time the estate may be closed.
Advertising
The personal representative has an obligation to publicize the existence of the estate, thereby notifying all interested parties (including creditors and debtors of the decedent) that this personal representative has authority to act as the estate’s representative for all purposes. This is done by advertising in a local newspaper of general circulation and in a legal periodical in the county in which the estate is being probated.
Statute of Limitations
If creditors do not notify the executor of their claim within a fixed period set by local law (generally 3 to 6 months but certainly within one year of the advertisement), they will be barred from collecting any amounts owed to them by the decedent.
Order of Estate Debt Payment
(1) debts that have a special lien on property not exceeding the value of the property;
(2) funeral expenses;
(3) taxes;
(4) debts owed to the United States government and to the state;
(5) judgments of any court of competent jurisdiction to the extent that they are a lien against the property of the decedent at death;
(6) wages due to any domestic servant or mechanical or agricultural laborer for the year immediately
prior to the decedent’s death;
(7) medical expenses and services provided during the year preceding the death;
(8) all other debts and claims.
The administrator is the person named in the decedent’s will to settle the estate at the decedent’s death?
False
An administrator is a person named by the court when the decedent has failed to name an executor in the will, when the executor named in the will cannot or will not serve, or when the decedent dies intestate.
If a will does not contain a tax apportionment clause, the executor has discretion in directing how taxes are to be apportioned?
False
If there is no tax clause in the will, taxes are allocated according to the state statutory tax allocation scheme
A disclaimant may disclaim a part of an interest in property instead of having to disclaim the entire interest?
True
If any property is found after the estate is closed, it may be necessary to reopen the estate on a limited basis to have this property probated?
True
An executor has broad and discretionary authority to assemble and manage a decedent’s estate in order to settle and wrap it up?
True
