WHAT IS ESTATE ADMINISTRATION?
Estate administration is the process of collecting a decedent’s property, paying his or her final bills and the costs of administering the estate, filing all necessary income, gift, estate tax and other returns, and then distributing the decedent’s property as directed in his or her will and other estate planning documents. Administration of an estate is completed by presenting an account showing all property received and how it was distributed. Generally beneficiaries have the right to review the account and object to transactions they feel were improper.
WILLS AND PROBATE
Most often a will is one of the primary estate planning documents. A will governs property that is in the decedent’s name alone at his or her death, and which is not governed by beneficiary designations. This type of property is sometimes called “probate property.” Examples of probate property are real estate, stocks and other securities, furniture, artwork and other property held in the decedent’s name alone. The key is that the property is held in the decedent’s name alone at his or her death. Property the decedent held jointly with another person, or life insurance, IRA’s and 401K’s which have written beneficiary designations as well as property placed in trust before a decedent’s death is not probate property and is not governed by the decedent’s will.
A will is not a will and the Personal Representative named in the will has no power until it is processed in the probate court. The will must be filed in the probate court after the decedent’s death, notice that the will has been filed in the court must be given to the interested parties and the interested parties must be given a chance to object to the will or the Personal Representative named.
RESPONSIBILITIES OF PERSONAL REPRESENTATIVE
Generally, the Personal Representative only has authority over and responsibility for the probate property. Joint property passes immediately to the surviving joint owner and never passes through the Personal Representative's hands. Property governed by beneficiary designations is generally distributed directly to the beneficiaries and never passes through the Personal Representative's hands. Property placed in trust before a decedent’s death is managed by the trustee. However, the Personal Representative has the responsibility of making sure estate taxes are paid on all of the decedent’s property, not just the probate property.
Many people use trusts in their estate plans. The trust document will say how the property which ends up in the trust is disposed of after the decedent’s death. Some people transfer cash, securities and other property into the trust before their deaths. Others set up trusts during their lives but don’t fund them. They use their wills to fund the trusts after their deaths by leaving some or all of their property to the trust. The trust terms then dictate how the property is to be held or distributed.