Probate/Estate Administration FAQ’s

PROBATE/ESTATE ADMINISTRATION
FAQs

What Happens When Someone Dies?

What do I do when someone dies?

When a loved one has passed away, the following steps should be taken:

  • Notify the friends and family of your loved one (the “decedent”) who are not yet aware of the passing;
  • Determine whether the decedent had prearranged and/or prepaid for funeral arrangements;
  • coordinate the funeral arrangements;
  • Obtain at least five (5) certified copies of the decedent’s death certificate;
  • Notify the social security administration and any other government agencies that make payments to the decedent of the decedent’s death;
  • Locate the decedent’s original estate planning documents (i.e. will, trust, etc.) or copies if the originals cannot be found;
  • Review the decedent’s financial records (checking accounts, savings accounts, certificates of deposit, brokerage accounts, etc.) and obtain copies of the most recent statements for each account;
  • Locate other important documents of the decedent, such as documentation related to any of the following:
    • Safe deposit agreements and keys to safe deposit boxes;
    • Titles to motor vehicles;
    • Deeds to real estate;
    • Life insurance policies;
    • Securities – stocks, bonds, mutual funds, etc. (i.e. stock certificates, stock dividend statements, etc.);
    • Pensions, profit sharing plans and other retirement benefits;
    • Annuities, 401Ks, IRAs, and other retirement accounts;
    • Any promissory notes or other documentation under which the decedent was entitled to receive payment;
    • Any unpaid bills of the decedent;
    • Other debts of the decedent (i.e. mortgages, loans, credit cards, etc.);
    • Tax returns for the three (3) years prior to the year of decedent’s death;
    • All previously filed gift tax returns;
    • Leases;
    • Business ownership or business interests;
    • Divorce documentation;
    • Health insurance;
    • Automobile insurance; and/or
    • Homeowner’s, condo or renter’s insurance; and
  • Finally, make an appointment with a probate attorney to review all of the above documentation and determine what procedures are necessary to administer your loved one’s estate.
What is an estate administration?

“Estate administration” generally refers to the process of handling the financial affairs (the “estate”) of another. This section specifically refers to the administration of a decedent’s estate (the estate of a person who has passed away).

General Procedure

When a person dies, all of their financial affairs must be wound up and settled. This process, known as administering a decedent’s estate, usually involves the following steps:

  • Identification of the decedent’s heirs under Ohio law and the beneficiaries named in the decedent’s will (if the decedent left a will);
  • Identification and valuation of all of the decedent’s assets as of the decedent’s date of death;
  • Determination of the type of ownership of each asset;
  • Identification and determination of the validity of all of the decedent’s alleged debts and outstanding obligations;
  • Coordination of a full probate administration, a release from probate administration, or filing of other necessary probate documents as is required;
  • Calculation of the split of income produced by the decedent’s assets, creation of a spreadsheet allocating that income to the decedent (final 1040), the estate (1041), and/or other responsible taxpayers, and distribution of the spreadsheet to affected beneficiaries (where applicable);
  • Filing a final 1040 individual income tax return for the decedent (where required) and payment of any corresponding income taxes due from the decedent (if any);
  • Filing of a federal and/or Ohio estate tax return (where required) and payment of any corresponding estate taxes due (if any);
  • Payment of valid debts of the decedent (if any);
  • Distribution of the decedent’s remaining assets to those entitled to receive them;
  • Calculation of the split of probate estate income between the estate’s 1041 fiscal years for maximization of income tax benefits to the probate estate and its residual beneficiaries (where applicable); and
  • Facilitation and filing of the estate’s 1041 income tax return (if required).

Other Procedure

Other procedures involved in administering an estate, and specifically those relating to the distribution of assets to beneficiaries and heirs, vary depending on how each asset is owned. A decedent’s “non-probate assets” pass directly those who are entitled to receive them (see “what are non-probate assets”); whereas a decedent’s “probate assets” must pass through a process known as probate administration before being distributed to those entitled to receive them (see “what is a probate estate”and “what is probate administration”).

The Probate Process

What is probate?

Technically, “probate” is a procedure by which a decedent’s last will and testament is proved valid in the Probate Court of the county where the decedent (the person who passed away) resided. However, the term probate has come to refer generally to all procedures conducted through the Probate Court as they relate to the administration of a decedent’s estate.

The Probate Estate

A decedent’s assets do not all necessarily pass through probate subject to the supervision of the Probate Court. Only the decedent’s probate estate is administered through the Probate Court. A probate estate consists only of the decedent’s “probate assets” (see“what is a probate estate” and “what are non-probate assets”).

The Probate Process

If there are probate assets in the estate, the first step in the probate process is to determine whether the decedent left a valid will. If so, the will is admitted to probate and the decedent’s probate assets pass under the will according to the terms and procedures outlined in the will. If the decedent did not leave a will or the decedent’s will is found to be invalid, then the decedent’s estate is “intestate”. That means that the probate assets will pass according to the terms and procedures outlined in Ohio’s laws of descent and distribution rather than pursuant to a will.

For more detailed information regarding the administration of a probate estate, see “what is probate administration”.

What is the purpose of probate?

Probate administration provides an organized and equitable means of managing and distributing the property of a decedent who did not make alternative estate plans. There are four main purposes of probate:

  • To protect the decedent’s assets;
  • To ensure the decedent’s last wishes are followed:
  • To protect the rights of the decedent’s heirs and beneficiaries; and
  • To protect the rights of the decedent’s creditors.
What is probate administration?

Generally, probate administration is the process of administering another’s financial affairs (an “estate”) under the supervision of the Probate Court. There are several types of estates that are administered through the Probate Court, including the estate of a decedent, the estate of a ward in a guardianship administration, and the estate of a testamentary trust in a trust administration.

As used in this section, probate administration refers to the administration of a decedent’s probate estate (the probate estate of a person who has passed away; see “what is a probate estate”). Typically, a “full” probate administration involves the following steps:

  • Identification of the decedent’s heirs under Ohio law and the beneficiaries under the decedent’s will (if decedent left a will);
  • Filing a petition with the Probate Court to probate the decedent’s will and/or administer the decedent’s estate;
  • Court appointment of the person who will administer the estate (either the “executor” under the will or an “administrator” if decedent did not leave a will);
  • Providing notice of the probate of the decedent’s will to the decedent’s heirs and the beneficiaries under the decedent’s will (if the decedent left a will);
  • Filing a Certificate of Service of Notice of Probate of Will with the Probate Court (if the decedent left a will);
  • Identification of all of a decedent’s assets;
  • Valuation of all of the decedent’s assets as of the decedent’s date of death;
  • Determination of the type of ownership of each asset;
  • Identification of all of the decedent’s alleged debts and outstanding obligations;
  • Filing an Inventory with the Probate Court that identifies and values as of the date of death all of the decedent’s assets that are passing through the probate estate;
  • Assisting with the transfer of non-probate assets;
  • Collecting the assets of the decedent that are passing through the probate estate;
  • Selling some or all of the decedent’s probate assets (where applicable);
  • Determining whether the alleged debts and outstanding obligations of the decedent are valid;
  • Calculating the split of income produced by the decedent’s assets, creating a spreadsheet allocating that income to the decedent (final 1040), the estate (1041), and/or other responsible taxpayers, and distributing the spreadsheet to affected beneficiaries (where applicable);
  • Filing the decedent’s final (Form 1040) income tax return (if a return is due) and payment of any corresponding income taxes due (if any);
  • Filing a federal and/or Ohio estate tax return (where applicable) and payment of all federal and/or Ohio estate taxes owed (if any);
  • Payment of valid debts of the decedent;
  • Distribution of the probate assets to the beneficiaries under the decedent’s will and/or to the decedent’s heirs under Ohio law;
  • Filing an final estate account reporting to the Probate Court:
    • Any changes in the value of the probate assets during the administration;
    • All disbursements made from the probate estate; and
    • All distributions made to the beneficiaries under the decedent’s will and/or the decedent’s heirs;

    Calculating the split of probate estate income between the estate’s 1041 fiscal years for maximization of income tax benefits to the probate estate and its residual beneficiaries (where applicable); and

  • Filing an estate income tax return (Form 1041) reporting the income and deductions passing through the probate estate (if required).

Some smaller estates may qualify for a “release” from administration, which allows for an abbreviated administration process involving less time and paperwork than a “full” administration. However, specific criteria must be met in order for an estate to qualify for a release (see “what is a release from administration”).

What is a release from administration?

“Release from administration” refers to three abbreviated court procedures for the administration of a probate estate. Specific criteria must be met in order to qualify for a release. As detailed below, the type of release applied for determines the criteria that must be met to qualify.

Relief from Administration

As of 2011, there are two alternative sets of criteria to relieve an estate from administration:

  • Assets to Surviving Spouse – requires that:
    • The decedent left a surviving spouse;
    • The decedent’s estate is worth $100,000 or less; and
    • The surviving spouse is entitled to all of the decedent’s assets.
  • Assets NOT to Surviving Spouse – requires that:
    • The decedent’s estate is worth $35,000 or less; and
    • Someone other than the decedent’s surviving spouse is entitled to some or all of the decedent’s assets.

Summary Release from Administration

As of 2011, there are two alternative criteria to qualify for a summary release:

  • Surviving Spouse as Applicant
    • The applicant is the decedent’s surviving spouse;
    • The surviving spouse is entitled to 100% of the spousal support allowance;
    • The decedent’s funeral and burial expenses either:
      • Have been prepaid; or
      • The surviving spouse has paid them or is obligated in writing to pay them; and
    • The value of the decedent’s assets does not exceed the $40,000 allowance for support plus an amount of $5,000 or less for decedent’s funeral and burial expenses.
    • Applicant OTHER THAN Surviving Spouse
  • The applicant is someone other than the decedent’s surviving spouse;
  • The applicant has paid or is obligated in writing to pay the decedent’s funeral and burial expenses; and
  • The value of the decedent’s assets is the lesser of $5,000 or the amount of the decedent’s funeral and burial expenses.

Real Estate Only

As of 2011, there are three criteria for a real estate only procedure:

  • The decedent died more than six months ago;
  • No creditors of the decedent have filed claims; and
  • The decedent died owning no probate assets other than real estate.

A release from administration is advantageous as it takes considerably less time and requires much less paperwork than a full probate administration. Please note, however, that it is important to speak with an attorney about these procedures because the time of filing in relationship to creditor claims is crucial.

Do I need probate?

A probate administration is necessary if the decedent left probate assets (see “what is a probate estate”), although the type of administration may vary. Depending on the facts involved, a “full” administration may be required (see “what is probate administration”). However, if certain criteria are met, an estate may be “released” from administration, requiring only an abbreviated probate process (see“what is a release from administration”).

It is important to note, however, that even if a decedent did not leave any probate assets, certain documents may still have to be filed with the Probate Court (i.e. if the decedent left a valid will, if an Ohio estate tax return is due, etc.). It is important to speak with a probate attorney who can assist you in determining which probate administration and/or probate procedures are required.

Is there any way to avoid probate?

Unfortunately, once a person has passed away, whether or not a probate administration is necessary is already determined. If the decedent died owning non-probate assets (see“what is a non-probate asset”), those assets will pass outside of probate. If the decedent died owning “probate” assets (see “what is a probate estate”), some sort of probate administration will be necessary (see “what is probate administration”and“what is a release from administration”).

It is important to note, however, that even if a decedent did not leave any probate assets, certain documents may still have to be filed with the Probate Court (i.e. if the decedent left a valid will, if an Ohio estate tax return is due, etc.).

Where is a decedent’s estate probated

If the decedent was a legal resident of the state of Ohio at his or her death, the decedent’s estate will be administered in the Probate Court of the county in which the decedent resided.

Additional administrations may be necessary as well, if the decedent owned certain types of probate assets that are located outside the state of Ohio. In that instance, the out-of-state assets may have to be probated in the county of the state in which they are located pursuant to an “ancillary” administration (see “what if the decedent owned property outside the state of Ohio”).

The Probate Estate

Does all of the property of a deceased pass through probate?
Do assets held in a decedent’s trust pass through probate?

Assets that are held in a decedent’s trust do not pass through probate. However, depending on the type of trust involved, assets held in a trust may have to be included in a decedent’s “gross” estate for estate tax purposes.

What is a probate estate?

A probate estate consists of the assets of a decedent that are passing through the probate administration. Only probate assets are included in the probate estate. A “probate asset” is:

  • An asset that is owned solely by the decedent;
  • The portion of an asset a decedent owns as a tenant in common with another person or persons; or
  • An asset for which the decedent’s estate has been designated as the beneficiary.
What is a non-probate asset?

A non-probate asset is an asset that does not pass through a probate administration. Non-probate assets include:

  • Assets the decedent owned with another person or persons as joint tenants with the right of survivorship;
  • Assets owned by the decedent which have a designated beneficiary or beneficiaries;
  • Assets that are “payable on death” (POD); and
  • Assets that are “transfer on death” (TOD).

The difference between non-probate assets and probate assets is the method of transfer upon the decedent’s death. Ownership of probate assets legally passes from the decedent to the probate estate as of the time of the decedent’s death (i.e. not directly to the beneficiaries of the estate). On the other hand, ownership of non-probate assets legally passes from the decedent directly to the designated beneficiary/beneficiaries or joint owner(s) each non-probate asset at the time of death.

What if a decedent owned property outside the state of Ohio?

If a decedent was a resident of the state of Ohio at his or her death, but died owning certain types of probate assets such as real estate somewhere other than Ohio, a procedure known as an “ancillary” administration may be required. In that instance, a “domiciliary” administration would be opened in the county in Ohio in which the decedent died a resident. Then, an “ancillary” administration would be opened in the state in which the decedent’s out-of-state probate assets reside. Then, the domiciliary and ancillary administrations work together to fully administer the decedent’s estate.

What if the decedent has debt?

Even if a decedent owed debt when he or she passed away, that does not necessarily mean that any particular debt is a “valid” debt that must be paid. A creditor of the decedent must follow particular procedures in order for the debt to be valid. The timing of these procedures is critical.

Please note that if a decedent died owing debt, it is extremely important that you speak with an experienced probate attorney before notifying the decedent’s creditor(s) of the decedent’s death.

Wills

What is a will?

    A will, also known as a Last Will and Testament, is an instrument executed with certain legal formalities that, among other things, directs the disposition of the property of a person (the “testator”) upon that person’s death. Determining whether a valid will exists is the first step in the probate process. This determination is crucial because a will can significantly alter the procedures that will be followed during the probate administration (see “what if the decedent did not leave a will”).

What if the decedent did not leave a will?

It is important to note at the beginning that, even if the decedent did not leave a will, if the decedent left any probate assets (see“what is a probate estate”), those assets will need to pass through some sort of probate administration (i.e. a full administration or a release from administration). Hence, whether or not the decedent left a will, probate assets will still pass through a probate administration. The difference between having a will and not having one only determines the probate procedures that must be followed during the probate estate administration.

Probate Procedure – Will

There are many procedural differences between estates that involve a valid will and estates that do not. If the decedent left a valid will, the following characteristics are typical of the administration of the probate estate:

  • The will names the person who will administer the estate (the “Executor”);
  • The will waives the requirement that the Executor be bonded;
  • The will names the person(s) who will inherit the decedent’s assets; and
  • The will outlines what the Executor has the power to do (i.e. sell assets, set the price at which assets may be sold, etc.).

Probate Procedure – No Will

One the other hand, where a decedent did not leave a will (i.e. where the estate is “intestate”), the administration of the probate estate typically has the following characteristics:

  • Ohio law determines who will administer the estate (the “Administrator”);
  • Ohio law may require that the Administrator be bonded;
  • The Ohio laws of descent and distribution determine who inherits the decedent’s assets; and
  • Ohio law determines what powers the Administrator has and what procedures must be followed in order to exercise those powers.

Generally, where a decedent does not leave a will, additional procedures must be followed during the probate administration. This is because Ohio law does not grant Administrators as much discretionary power as is typically granted to an Executor under a will. Hence, the estate may take longer and be more costly to administer than it would otherwise be if there were a will.

What if the decedent’s will was made in a state other than Ohio?

To be valid in Ohio, a will made outside of Ohio must have been properly executed according to the laws of the state where it was made.

Does a will have to be presented to the Probate Court?

Even if there are no probate assets (see “what is a probate estate”), if the decedent left a will, the will must be presented to the Probate Court.

What if someone is hiding the will?

An action may be filed after the death of a decedent requiring any party who is intentionally, negligently or without reasonable cause withholding a will to produce the will. If the withholding party fails to produce the will upon Court Order, that party may be subject to legal consequences such as charges for contempt of Court.

What if someone objects to the will?

If someone disputes the validity of a will, he or she may file a civil action to contest the will if he or she is an interested party (i.e. a person having a legal interest in the outcome). The interested party must prove by clear and convincing evidence either that:

  • The testator (i.e. the person who made the will) was mentally incompetent during the making of the will;
  • The testator was subject to undue influence during the making of the will;
  • The will was not properly executed in compliance with the formalities required by Ohio law (i.e. signed at the end by the testator, witnessed by two disinterested persons, etc.);
  • The testator’s signature was forged; or
  • The testator’s signature was obtained by fraudulent means (i.e. the testator did not know that he or she was signing a will).

At the beginning of an estate, the Executor files a document called the Certificate of Service of Notice of Probate of Will, which certifies to the Probate Court that all interested persons were provided with or waived notice of the admission of the will to probate. The interested party contesting the validity of the will must file the will contest action within 3 months from the date the Certificate of Service of Notice of Probate of Will is filed with the Court.

Executors & Administrators

What is an Executor?

    Typically, when a will is made, the “testator” (the person making the will) names an “Executor” to represent and administer his or her estate. When the testator passes away, the Executor named in the will must apply to the Probate Court to be legally appointed as Executor of the estate.

    To be appointed by the Probate Court, the following must occur:

    • The will must be admitted to probate;
    • The named Executor must be willing and able to serve; and
    • The Probate Court must find that the Executor is suitable to serve.

    If all of the above requirements are met, the Probate Court will appoint the named Executor as the fiduciary of the estate (the person who will officially represent the estate during its administration). Then, the Court will issue Letters of Authority, which confer the power upon the Executor to perform all acts necessary to fully administer the decedent’s estate.

What is an Administrator?

An Administrator is person appointed by the Probate Court to serve as the “fiduciary” of a decedent’s estate (the person who will officially represent the estate during its administration). An Administrator is appointed when the decedent either:

  • Did not leave a will naming an Executor; or
  • Left a will, but the named Executor(s) are either unwilling or unsuitable to serve.

Certain people have greater priority to serve as the Administrator of a decedent’s estate based upon their relationship to the decedent (i.e. surviving spouse is first in line, surviving biological and legally adopted children are second, etc.). Persons of higher or equal priority must waive their right to administer the estate in order for someone else of equal or lower priority to be appointed as Administrator.

Once an Administrator is appointed, the Probate Court will issue Letters of Authority, which confer the power upon the Administrator to perform all acts necessary to fully administer the decedent’s estate.

Do I have to live in Ohio to be an Executor or Administrator?

The answer to this question differs, depending on whether a person seeks to be appointed as an Executor or Administrator.

Executor

A person named as Executor in a will need not be a resident of the state of Ohio if that person is related to the decedent either:

  • By “consanguinity” (i.e. by blood relationship such as biological children, parents, brothers or sisters); or
  • By “affinity” (i.e. by direct legal relationship such as a spouse or an adopted child).

Any other relationship requires that the named Executor be a resident of the state of Ohio in order to serve.

However, please note that local Probate Court rules may impose additional restrictions on the appointment of an out-of-state named Executor. For example, as of 2011, Franklin County Probate Court local rules require that an out-of-state named Executor comply with one of the following requirements in order to be appointed as Executor:

  • Place a substantial amount of the decedent’s personal assets in a custodial depository located in Franklin County;
  • Have a co-fiduciary who is a resident of the state of Ohio; or
  • Post a bond.

Administrator

On the other hand, in all circumstances, a person must be a resident of Ohio to serve as the Administrator of an estate.

How does an Executor or Administrator administer an estate?

The specific steps involved in administering an estate can vary widely. Numerous factors influence the procedures an Executor or Administrator must follow, including:

  • Whether there is a will;
  • The number of heirs and/or beneficiaries of the estate;
  • The type of assets held by the decedent;
  • The type of ownership of those assets; and
  • The authority granted to an Executor or Administrator to transfer and/or sell those assets.

Nevertheless, during a typical estate administration, Executors and Administrators are usually responsible for the following:

  • Determining whether there is a valid will and/or trust;
  • Determining the names, ages, addresses and degrees of relationship of the decedent’s heirs as required under Ohio law;
  • Determining the names, ages and addresses of all beneficiaries under the decedent’s will (if decedent left a will);
  • Identifying all of the decedent’s assets;
  • Obtaining all documents necessary to determine the date of death value of the decedent’s assets;
  • Obtaining all documents necessary to determine the type of ownership of each of the decedent’s assets;
  • Assisting with the transfer of non-probate assets;
  • Collecting the assets of the decedent that are passing through the probate estate;
  • Selling some or all of the decedent’s probate assets (where applicable);
  • Paying any valid debts of the decedent;
  • Filing the decedent’s final income tax return (Form 1040) if a return is due and paying any corresponding income taxes owed (if any);
  • Filing a federal and/or Ohio estate tax return if a return is due and paying all corresponding estate taxes owed (if any);
  • Distributing the probate assets to the beneficiaries under the decedent’s will or to the decedent’s heirs under Ohio law if there is no will; and
  • Filing an estate income tax return (Form 1041) with the IRS reporting the income and deductions passing through the estate to the residual beneficiaries of the estate.
What are the duties of an Executor or Administrator?

Executors and Administrators are both a type of representative known as a “fiduciary”. A fiduciary is a person appointed by and accountable to the Probate Court who has a legal duty to act primarily for the benefit of another. Ohio law mandates very specific duties that fiduciaries must follow. With regard to probate administration, some of those duties include:

  • Taking an inventory of any safe deposit box of the decedent;
  • Sending Notice of Probate of Will (if applicable) within two weeks of appointment;
  • Preparing and filing an inventory of the real and personal assets of the estate within three months after appointment;
  • Depositing estate funds into a lawful depository located within the state of Ohio;
  • Keeping estate funds in separate estate accounts at all times during the administration of the estate (i.e. no commingling of funds);
  • Paying and disclosing in the estate account all valid debts of the decedent;
  • Timely paying the appraiser fee and bond premium (if any);
  • Maintaining a positive balance in the deposit account for court costs;
  • Preparing and filing the final account within six months of appointment or such other times as extended by the Probate Court;
  • Filing all tax documents as required by law; and
  • Obeying all orders of the court.

As fiduciaries accountable to the Probate Court, Executors and Administrators accept numerous responsibilities they would not otherwise be responsible for (see “how does an Executor or Administrator administer an estate”). Executors and Administrators can be held in contempt of Court and are subject to removal as the fiduciary of an estate if they fail to fulfill their fiduciary duties. Additionally, Executors and Administrators are subject to civil and criminal penalties for improper conversion of property (i.e. commingling funds). In short, the role of an Executor or Administrator is a substantial obligation that should not be accepted without careful consideration.

Does the Executor or Administrator get paid?

When agreeing to serve as the fiduciary (representative) of an estate, Executors and Administrators take on many legal obligations and liabilities that they would not otherwise be responsible for (see “how does an Executor or Administrator administer an estate” and “what are the duties of an Executor or Administrator”). Accordingly, Ohio law has afforded them the option to take a fiduciary fee.

As of 2011, the ordinary fiduciary fee (i.e. the Executor’s or Administrator’s commission) is calculated by the following formula as is set forth in the Ohio Revised Code:

  • 4% of the first $100,000 of:
    • The personal property passing through probate;
    • The income earned on those probate assets during the administration; and
    • The proceeds of real estate sold; plus
  • 3% of the next $300,000; plus
  • 2% of the balance; plus
  • 1% of the value of real estate not sold; plus
  • 1% of all property:
    • That is not subject to the probate administration (non-probate assets); and
    • That is includable for purposes of computing the Ohio estate tax; but
    • Excluding joint and survivorship property.

Additionally, as of 2011, Ohio law permits Executors and Administrators to apply to the Probate Court for further allowances for extraordinary services rendered. This procedure allows the Court to award allowances in addition to the fiduciary fee where necessary to ensure that the total compensation to the fiduciary fairly reflects the reasonable value of both the ordinary and extraordinary services provided.

The Executor or Administrator has the option to waive the fee. If they elect to take the fee, they must report it as income on their individual 1040 income tax return.

Probate Administration

What court procedures are involved in probate administration?

    The different Probate Court procedures involved in the administration of a probate estate can vary widely depending on the facts of a particular case. Some of those factors include:

    • What type of assets the decedent owned;
    • The type of ownership of those assets;
    • The authority granted to an Executor or Administrator to transfer and/or sell those assets; and
    • Whether any disputes arise between heirs and/or beneficiaries.

    On the other hand, most probate administrations do generally include the following Probate Court procedures:

    • Filing a petition to probate the decedent’s will and/or administer the decedent’s estate;
    • Court appointment of the estate fiduciary (representative) – either
      • The “Executor” named in the will; or
      • An “Administrator” if:
        • The decedent did not leave a will; or
        • The named executor(s) are unwilling, unable or unsuitable to serve;
    • Providing notice of the probate of the decedent’s will (if the decedent left a will) to:
      • The decedent’s heirs; and
      • The beneficiaries named in the decedent’s will (if the decedent left a will);
    • Filing a Certificate of Service of Notice of Probate of Will (if the decedent left a will) certifying that:
      • Everyone that was required to receive Notice of Probate of Will has been provided with notice; and/or
      • There exists sufficient cause for not providing notice to any person(s) entitled to notice;
    • Filing an Inventory with the Court that identifies and values as of the date of death all of the decedent’s assets that are passing through the probate estate;
    • Filing of a federal and/or Ohio estate tax return (where applicable) and paying all corresponding estate taxes owed (if any);
    • Filing applications for sales and/or in-kind transfers of the decedent’s probate assets (if court authority is required); and
    • Filing an estate accounting reporting the following financial activity to the Court:
      • Addition of any probate assets discovered after the filing of the Inventory;
      • All changes in value to the probate assets (i.e. income earned on the assets during the estate administration, sale prices, etc.);
      • All disbursements from the probate assets (i.e. valid debts of the decedent, estate administration expenses, etc.); and
      • All distributions of the probate assets to the beneficiaries under the will or to the decedent’s heirs if the decedent did not leave a will.
How long does probate last?

Unfortunately, this is a very difficult question to answer.

Factors Affecting the Length of Administration

Numerous factors come into play when determining what administrative procedures must be followed and the length of time it will take before the heirs and/or beneficiaries receive their distributions. Some of those factors include:

  • The overall cooperation or lack thereof between the heirs and/or beneficiaries of the estate;
  • The existence of a will;
  • An election to take against the will by a surviving spouse;
  • Disputes over the validity or application of a will;
  • The number of decedent’s heirs and beneficiaries;
  • The quantity and type of assets held in the estate;
  • The forms of ownership of those assets;
  • The procedures for the transfer and/or sale of each probate asset;
  • The length of time it takes to sell probate assets (notably real estate);
  • The existence of disputed claims of debt against the estate; and
  • The need for an estate tax return.

Some smaller estates may qualify for a “release” from administration (see “what is a release from administration”), which takes considerably less time to complete than a full administration. Specific criteria must be met though, for an estate to qualify for a release.

Ohio Law Affecting the Length of Administration

On the other hand, Ohio law does set some guidelines as to how long a probate administration should last. More specifically, Ohio law requires that an estate be closed within 6 months from the date of appointment of the Executor or Administrator, only excepting estates in which:

  • An estate tax return is due;
  • The validity of a decedent’s will has been contested;
  • The surviving spouse has filed an election to take against the will;
  • The Administrator or Executor is a party to a civil action;
  • The estate is insolvent; or
  • The Probate Court determines within its discretion that it would be detrimental to the estate and its heirs and/or beneficiaries to not extend the administration.

Even in those limited circumstance though, the probate estate must still be closed within 13 months from the date of appointment (i.e. a 7 month extension). After that, the estate may remain open only for good cause as determined by the Probate Court.

Practically Speaking

To put things in perspective, many estates close in 6 months or less if none of the above criteria for an extension apply and no real estate needs to be sold. The majority of estates taking longer than 6 months do not typically exceed the additional 7-month extension.

If I am inheriting from a decedent, when will I receive my inheritance?

There are two answers to this question, depending on whether a probate asset or non-probate asset is involved (see “what is a probate estate” and “what is a non-probate asset”).

Non-Probate Assets

If you have inherited a non-probate asset, the collection of that asset is relatively simple. Typically, you need only provide proof of death of the decedent (a certified copy of the death certificate) and a tax release (if required). Typically, the tax release can be obtained from the Executor or Administrator of the estate.

Please note, however, that in all cases the Executor or Administrator will need to be informed of the identity and date of death value of the non-probate asset. This information will enable the Executor/Administrator to (1) obtain the tax release, if needed, and (2) evaluate whether any estate tax returns need to be filed.

Probate Assets

Inheriting probate assets is a more complex process. In the case of a full probate administration, a probate estate typically must be ready to “close” before final distributions are made to inheriting beneficiaries or heirs. In other words, the estate must be ready to file the final account before the final distributions will be made (see “what is a probate administration” outlining the steps prior to completion of the final account; see also “how long does probate last” for factors affecting the length of the probate administration). This is because all of the assets must be accounted for and all valid debts of the decedent, estate taxes (if any), and estate administration expenses must be paid before the attorney can determine the specific amount of money to distribute to each heir or beneficiary.

Nevertheless, there are some exceptions to this general rule, depending on the particular circumstances of each estate. For example, an Executor or Administrator might make cash distributions out of the probate estate prior to the close of the administration to satisfy certain “statutory allowances” as required by law (i.e. where the decedent left a surviving spouse or minor children). Additionally, given the proper circumstances, the Executor or Administrator may otherwise determine that it would be prudent to make “partial” distributions during the beginning or middle of the administration. Such distributions may either be (1) in cash or (2) “in-kind” (distributions of property other than cash or real estate; i.e. transferring a motor vehicle to a beneficiary).

Taxes

What taxes are involved when a person dies?

    There are generally three types of taxes involved in the administration of a decedent’s estate:

    While there may be other miscellaneous taxes that need to be paid during the administration of a probate estate (i.e. real property taxes on real estate held in the probate estate), the decedent’s final 1040, federal and/or Ohio estate tax returns, and the estate 1041(s) are typically the only tax returns that have to be filed.

What is a final 1040?

A decedent’s final federal, state and/or local individual income tax returns (Form 1040) must be filed for the year of the decedent’s death if the decedent earned enough income to require a return. The return runs for the duration of the year that the decedent was alive (from January 1st through the decedent’s date of death).

Only the income earned on a decedent’s assets prior to his or her date of death should be reported on his or her final 1040. This often creates an issue because 1099s typically report income earned for the entire year of death, not just the portion in which the decedent survived. Accordingly, in most cases where a decedent owned income-producing assets, an “income split” must be calculated to determine what portion of each income-producing asset’s 1099 income has to be reported on the decedent’s final 1040 (see “what is an income split and why is it necessary” for additional information).

What is an income split and why is it necessary?

Typically, when a decedent dies owning income-producing assets, only a portion of the income earned on those assets in the year of death is attributable to the decedent. More specifically, only the income earned on the decedent’s assets before his or her date of death should be reported on the decedent’s final 1040. All the income earned after the decedent’s date of death must be reported on the income tax return(s) of the subsequent owner(s) of each of the decedent’s income-producing assets, in proportion to the percentage of the asset that is passed from the decedent to its beneficiary.

This can be problematic because 1099s typically report all of the income earned on an asset during the decedent’s year of death, not just that portion attributable to the decedent or the subsequent owners. To that effect, if a decedent owned any income-producing assets at death, an “income split” will likely have to be calculated, splitting each asset’s year of death 1099 income between the decedent and the subsequent owner(s) of each asset. Such calculations are necessary to determine (1) whether the decedent must file a final 1040 and if so, how much income to report on that return, (2) what income must be reported on the estate’s 1041 (if required), and (3) how much income any subsequent owner must report on his/her/its income tax return for the year of death.

What are estate taxes (AKA inheritance taxes, death taxes)?

Estate taxes are taxes assessed on the property of a decedent upon his or her death. With regard to estate administration, there are two sets of estate taxes to consider – federal and state. Certain thresholds must be met before a federal and/or Ohio estate tax return is required to be filed.

For deaths occurring in 2011, a federal estate tax return is required if a decedent’s gross estate exceeds $5,000,000. Likewise, for deaths occurring in 2011, an Ohio estate tax return is required if the gross estate exceeds $338,333. A decedent’s “gross” estate consists of a decedent’s probate and non-probate assets, either in whole or in part (see“what is a probate estate” and “what is a non-probate asset”), along with certain other items as well (i.e. life insurance payable to the decedent’s estate, certain trust assets, etc.). In other words, avoiding probate does not mean avoiding estate taxes – the entire gross estate, including non-probate assets and some trust assets, are taken into account when calculating estate taxes.

Please note, though, that a number of credits and deductions apply in the calculation of estate taxes to be due (i.e. deductions for the decedent’s debts and for fees and costs of administration, the marital deduction, the charitable bequest deduction, etc.). Hence, even if an estate tax return must be filed, that does not necessarily mean that any estate taxes will be due.

What is an estate 1041?

In most cases involving a full probate administration, an estate income tax return (Form 1041) will have to be filed. A probate estate is a separate taxpayer with its own separate taxpayer identification number. It operates on a fiscal year and must file its own 1041 income tax return which reports the following:

  • All of the income earned on the probate assets during the administration;
  • All of the capital gains and/or losses incurred on the sale of probate assets during the administration; and
  • All of the estate administration and other applicable deductions incurred during the probate administration.

Usually, taxes must be paid out of the probate estate assets on the net income accumulated in an estate during its administration. However, distributions made to beneficiaries of an estate during the administration (DNI) can modify this estate obligation. The particular 1041 fiscal year for which a return is being filed also affects the estate’s income tax liability. In the final 1041 fiscal year, the estate is merely a “pass through” entity. In other words, the estate’s net income or deductions are passed through to the residuary beneficiaries of the probate estate via individual Schedule K-1s (Beneficiary’s Share of Income, Deductions, Credits, etc.) to report on their individual income tax returns (see “what is a fiscal year and why is it helpful” for more information).

What is a fiscal year and why is it helpful?

A fiscal year is a tax year, other than a calendar year (January 1st through December 31st), spanning 12 months or less, upon which certain income tax returns can run. For example, a probate estate can file 1041 income tax returns on fiscal years where sufficient income was accumulated within the probate estate during its administration. This ability to use fiscal years can be extremely beneficial when more than one estate 1041 must be filed.

An estate must pay income taxes on income earned in all fiscal years other than the final fiscal year. In the final year, the estate is merely a reporting entity in which its net income or deductions are passed through to the residuary beneficiaries of the probate estate via individual Schedule K-1s (Beneficiary’s Share of Income, Deductions, Credits, etc.).

When multiple 1041s must be filed, it is often feasible to manipulate fiscal years (rather than using calendar years or standard fiscal years) to better maximize the income tax benefits to the estate and its beneficiaries. This technique allows for the shifting of income and deductions among fiscal years, frequently making it possible to pass a deduction through to the beneficiaries of the estate instead of income. In that instance, the beneficiaries can then save money by using their share of the estate’s deduction on their individual income tax returns.

Probate Litigation

What is probate litigation?

    Probate litigation is a general term referring to the many contested issues that can arise in relation to an estate administration, such as actions to:

    • Produce a will;
    • Construe a will or trust;
    • Admit a lost, spoliated or destroyed will to probate;
    • Contest a will (i.e. a will contest);
    • Appoint a fiduciary (Executor, Administrator, Trustee, Guardian, etc.);
    • Remove a fiduciary; and
    • Address fiduciary and other misconduct with regard to the administration of an estate.

    Please note that timing is critical with regard to probate litigation. If the time allowed to bring an action passes (i.e. the statute of limitations runs), you may be barred from asserting your rights. If you believe you have a claim, please be sure to contact an attorney as soon as possible to identify and determine how best to protect your rights.

What if someone is hiding the will?

If someone is hiding or concealing a decedent’s will, an action to produce the will may be appropriate. This type of action is filed after the death of a decedent, and requires that any party who is intentionally, negligently or without reasonable cause withholding a will to produce the will. If the withholding party fails to produce the will upon Court Order, that party may be subject to such legal consequences as commitment to the county jail and/or disinheritance.

What if the terms of the will are unclear?

If the terms of a will are ambiguous or unclear, an action to construe the will may be appropriate. In this case, any interested party (a person whose legal rights will be affected by the outcome of the litigation) may file a civil action in the Probate Court to construe the terms of the will. The Court will hold a hearing to determine what the testator (the person who made the will) intended the ambiguous or unclear terms to mean.

What if the will is lost or has been destroyed?

If an original will is lost, spoliated or destroyed before or after the death of the testator
(the person who made the will), an action to admit of copy of the will to probate may be appropriate. In that instance, the Probate Court will admit a copy of the lost, spoliated or destroyed will if:

  • The person seeking to admit the will proves by clear and convincing evidence:
    • That the will was executed with the formalities required at the time of execution by the jurisdiction in which the will was executed; and
    • The contents of the will; and
  • No person opposing the admission of the will to probate establishes by a preponderance of the evidence that the testator had revoked the will.
What if the decedent was pressured into creating or changing his or her will?

If the decedent was pressured into creating or changing his or her will, a will contest may be appropriate. This type of action allows any interested party (i.e. a person having a legal interest in the outcome) to contest the validity of a will. The interested party must file a civil action and prove by clear and convincing evidence either:

  • That the testator (i.e. the person who made the will) was mentally incompetent during the making of the will;
  • That the testator was subject to undue influence during the making of the will; or
  • That the instrument was not signed or executed properly (i.e. forgery, insufficient witnesses, etc.).
What if there is a disagreement over who will be the Executor or Administrator of the estate?

In an estate administration, the fiduciary is the person who is appointed by the Probate Court to represent the estate (i.e. the Executor or Administrator). If there is a disagreement over who will serve as the Executor or Administrator of an estate, an action contesting the appointment of a fiduciary may be appropriate.

Will

If a decedent left a will, the Probate Court typically appoints the Executor named in the will without a hearing. However, an interested party (i.e. a person whose legal rights are affected by the outcome) may file an action to contest the appointment of the named Executor if the named person is unsuitable to serve as the estate representative.

No Will

If a decedent did not leave a will, the Court will appoint an Administrator to represent the estate. In choosing the Administrator, the Court takes into consideration the priority of different persons to serve based upon their relationship to the decedent. In that case, there may be more than one person with equal priority to serve as the estate representative (i.e. the decedent had no surviving spouse but was survived by more than one adult child). An action contesting the appointment of an Administrator may be appropriate when more than one person of equal priority seeks to represent the estate.

What if the Executor or Administrator is not performing their required duties as representative of the estate?

Ohio law requires that an Executor or Administrator be “suitable” to represent an estate. One factor the Probate Court takes into consideration in determining whether the appointed fiduciary is suitable is whether he or she complies with his or her fiduciary duties as required by law (see “what are the duties of an Executor or Administrator”). For example, a fiduciary may not be suitable to serve if he or she commingles his or her money with estate funds, takes advantage of estate finances for personal gain, or fails to comply with mandatory Court deadlines. In the case that an Executor or Administrator has failed to fulfill his or her fiduciary duties, an action to remove that fiduciary may be appropriate.

What if there is misconduct with regard to the administration of the estate?

Estate misconduct comes in many forms. For example, in certain circumstances, the following actions may rise to actionable misconduct:

  • Misappropriation of (i.e. wrongful taking) or self-dealing with regard to estate funds by anyone, including the fiduciary (i.e. Executor, Administrator, Trustee or Guardian);
  • Violation of a beneficiary or heir’s rights by a fiduciary;
  • Failure to fulfill the wishes of the decedent;
  • Failure to follow the law as required in the administration of an estate; and
  • Failure to manage estate assets under appropriate fiduciary standards.

If you suspect that an Executor, Administrator, Trustee or Guardian is not properly administering an estate, that some other person has committed misconduct with regard to an estate, or that your rights as a beneficiary or heir of an estate are being violated, we recommend that you speak with an attorney as soon as possible. An experienced probate attorney will help you identify your rights and advise you as to how you can best protect those rights.

Costs of Administration

How much does probate cost?

    There can be many expenses associated with a probate administration. The applicability and cost of each typical probate expense varies from estate to estate though. The costs most often associated with probate administration, as explained in further detail below, include (1) court costs, (2) appraisal fees, (3) bonding fees, (4) accountant fees, (5) fiduciary fees, and (5) attorney fees.

    Court Costs

    The amount of court costs involved in a probate administration depends upon which Probate Court procedures are necessary to fully administer the estate. A typical estate will incur around $300 in court costs. Costs vary though, depending on the type, size and complexity of the administration.

    Appraisal Fees

    The general rule is that a probate asset must be appraised if the value of the asset as of the decedent’s date of death is not “readily ascertainable”. For most probate administrations, the only appraisal fee incurred is for the appraisal of real estate passing through the probate estate. In that case, the Probate Court will appoint an appraiser to appraise the real estate. The estate will then be responsible for the payment of the appraiser’s fee. Such fees range, but often fall somewhere between $150-350.

    Bonding Fees

    The general rule is that an estate fiduciary (the Executor or Administrator appointed by the Probate Court) must be bonded. However, if the decedent left a will, this requirement is typically waived under the terms of the will. Additionally, even if the decedent did not leave a will, there are some circumstances where an Administrator will not be required to be bonded.

    Accountant Fees

    Typically, an accountant must prepare two tax returns during an estate administration – (1) the decedent’s final 1040 income tax return (if required), and (2) the estate’s 1041 income tax return (if required) (see “what taxes are involved when a person dies” for more information). The costs incurred for preparation of these returns vary depending on the complexity of the returns and the rate the accountant charges.

    Fiduciary Fees

    Ohio law allows an Executor or Administrator to take a fiduciary fee for having fulfilled the responsibilities and duties required to administer an estate. The fee is calculated using a statutory formula that takes into consideration such factors as the value and type of ownership of each of the decedent’s assets, the income earned on the assets held within the probate estate, etc. In some limited circumstances, the Probate Court may also award an additional allowance if the Executor or Administrator had to perform extraordinary services beyond the ordinary responsibilities of a fiduciary. (See “does the Executor or Administrator get paid” for more detailed information.)

    Attorney Fees

    Finally, attorney fees will be incurred for services provided to administer the estate. At Bodycombe and Associates, attorney fees are billed at an hourly rate. Our attorneys’ rates differ depending on each attorney’s level of skill and experience. At the end of the estate, our invoice is presented to the beneficiaries of the estate. The invoice details the date each service was incurred, the amount of time spent, and a detailed description of the services provided. The total fee is generally not paid until the end of the probate administration (when the final account is completed).

    Typically, the attorney, the Executor/Administrator, and the other persons affected by the attorney fees (the beneficiaries of the estate) handle the issue of attorney fees amongst themselves. If these parties cannot come to an agreement, though, the issue may have to be heard by the Probate Court. In that instance, the Court would (1) review the attorney’s fee, (2) determine whether it was, in whole or in part, of reasonable value to the estate, and (3) if necessary, adjust the fee accordingly. (See “about how much will attorney fees cost to administer an estate” for more information.)

About how much will attorney fees cost to administer an estate?

We are often asked to estimate in advance the cost of attorney fees that will be incurred during an estate administration. Unfortunately, that is a question that cannot be answered until the end of the administration. This is because it is impossible to know at the beginning of the administration, or even in the middle, what issues will arise in the future that must be resolved in order to complete the administration.

However, to provide some guideline, Ohio law does require that an attorney’s work be of reasonable value to the estate and that the attorney’s fee be reasonable. The Probate Court considers many factors, including the following, when determining whether an attorney’s fee is reasonable:

  • The time involved in administering the estate;
  • The complexity of the issues presented in the estate administration;
  • The attorney’s experience and ability in handling the estate;
  • Any time restrictions imposed by the client; and
  • The amount of contested matters and litigation involved in the administration.
How can I reduce the attorney fees incurred in an estate administration?

When an attorney bills hourly, the best technique to reduce attorney fees is to be as efficient and organized as possible. Essentially, the more work you can do, the less work the attorney has to do, and consequently, the less time the attorney will have to spend billing for services provided to administer the estate.

For example, providing any information requested by an attorney in a complete, organized and timely fashion will help to reduce fees. This will eliminate the time the attorney has to spend following up on the original request, reduce the time the attorney has to spend organizing the information, and help to eliminate some Probate Court procedures that may become necessary if Court deadlines are not met. For more detailed information on how you can prepare for your meeting with the attorney, see “how do I prepare for my appointment with the probate attorney”.

Meeting with the Probate Attorney

Do I need a probate attorney?

    It is not required that the representative of an estate have legal counsel. However, due to the complexity of the law, the multitude of estate administration procedures, the possibility of contested issues, and the serious legal consequences a representative’s actions can have on the rights of others, it is recommended that an estate representative consult with an attorney. An experienced probate attorney can help to expedite the estate administration process, avoid expensive errors, and protect the estate representative from being sued.

How do I prepare for my appointment with the probate attorney?

We suggest that you make a list of important items to review with the attorney and questions you would like to ask the attorney. If you have questions about a particular document, we ask that you bring a copy of the document to your appointment as well.

Additionally, if you have access to any of the following information, we ask that you be prepared to review it with the attorney:

  • The names and addresses of the decedent’s heirs (we will help you identify these persons when you contact us to schedule your appointment)
  • If the decedent left a will, the names and addresses of all beneficiaries named in the will
  • The birthdays of any heirs or beneficiaries who are minors (i.e. under the age of 18 years old)
  • A list of all of the decedent’s assets (see “what is a probate estate” and “what is a non-probate asset” above for a detailed description of same)
  • If the decedent had a trust, a list of the assets held in the decedent’s trust

Finally, if you have access to any of the following documents, we ask that you bring them with you to your appointment as well:

  • Certified copy of the decedent’s Death Certificate (or a photocopy of same if you cannot obtain a certified copy)
  • The decedent’s original Will (if any, or a copy if the original is not available)
  • A copy of the decedent’s trust (if any)
  • The most recent statements for each of the decedent’s financial accounts, such as:
    • Checking accounts
    • Savings accounts
    • Certificates of deposit
    • Brokerage accounts
    • Annuities, 401Ks, IRAs or other retirement accounts
  • Safe deposit agreements and keys to safe deposit boxes
    • Titles to motor vehicles
    • Deeds to real estate
    • Life insurance policies
    • Stock certificates and stock dividend statements
    • Certificate of deposit agreements (showing the terms of the CD such as the principal, interest rate, etc.)
    • Documentation related to pensions, profit sharing plans and other retirement benefits
    • Promissory notes or other documentation under which decedent was entitled to receive payment
    • Unpaid bills
    • Other debts of the decedent (i.e. mortgages, loans, credit card statements, etc.)
    • The decedent’s income tax returns for the past three years
    • All previously filed gift tax returns
    • Leases
    • Business ownership or business interests
    • Divorce documentation
    • Health insurance
    • Automobile insurance
    • Homeowner’s, condo or renter’s insurance