Estate Administration: The Transfer and Management of Family Assets
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An estate is created upon a person’s death and it consists of the decedent’s property. A decedent’s property may be transferred by will, called probate property; or through will substitutes where such property passes to a joint surviving owner or a named beneficiary by operation of law. The decedent’s probate estate will be “administered” by the personal representative: an executor if the person died with a valid will or an administrator if the person died without a valid will. A will is a document that directs who is entitled to receive the decedent’s property upon his death and names an executor (a person or persons or a corporate entity) who, among other responsibilities, will be required to carry out the terms of the will.
If a person dies without a valid will, then the person is said to have died intestate. In this case, an administrator will be appointed by the probate court to wind up the decedent’s affairs. The intestacy laws of the state where the decedent was domiciled at death will dictate who may serve as the administrator and how the decedent’s assets will be distributed.
The probate process begins when either the person named in the will (executor) or the next of kin, (if the person died intestate), makes an application to the probate court to be recognized as the personal representative of the estate. Once the court either admits the decedent’s will to probate, and grants the executor named in the will Letters Testamentary, or the court grants the next of kin’s petition for the administration of the decedent’s estate by issuing Letters of Administration, then the personal representative is legally recognized and he or she has the authority to administer the decedent’s estate. The administration of a decedent’s estate is a time consuming job that often takes between 9 months to 3 years (and sometimes more) to complete. Estate administration not only includes the admission to probate of the decedent’s last will (if he/she had one) but it also includes the collection of assets, payment of debts, filing tax returns (income and estate), and the distribution of the decedent’s assets to those beneficiaries who are entitled to them. How, when and to whom the decedent’s property passes will depend upon whether the person left a valid will, the terms of such will, whether such person implemented will substitutes and the beneficiaries of such assets, and whether the decedent had organized an effective estate plan.