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Probate and Trust Administration

Posted by attorney David Lutrey

What is Probate Administration?

Most of the time, people use the term “Probate" to refer to the Court supervised procedure needed to implement and enforce a Will. In this context, Probate is the process by which a judge determines that a particular Will is valid and then makes sure that the Will’s terms are followed after someone dies.

However, Probate can extend to other situations as well. The two main types of these other situations are: (1) when a person dies without a Will; and (2) when a person needs a guardian. A person might need a guardian if he is unable to manage his own affairs due to cognitive disability or is a minor child with significant assets or no available parent.

The Probate concept is not always intuitive. One way to more easily understand Probate is to separate the guardianship estates from the decedent’s estates. Decedent’s estates can then be categorized as either “testate" (when a person dies leaving a Will) or “intestate" (when a person dies leaving no Will). This section will focus on both types of decedent’s estates; i.e., testate and intestate. Guardianship's are discussed in greater detail elsewhere.

In both testate and intestate estates, the Court will appoint a representative to administer the estate. The representative in a testate estate will be the person named in the Will as the executor. The representative in an intestate estate will usually be a family member determined by applicable law.

Both types of representatives have the same basic job, which is to Administer the estate. The process of Probate Administration involves many steps, including the following:

  • Open the Probate estate;
  • Provide notice to all heirs and beneficiaries;
  • Provide notice to all creditors;
  • Publish notice for creditors in a local newspaper;
  • Collect all of the decedent’s Probate assets;
  • Pay the decedent’s final expenses, taxes and claims;
  • Defend against any lawsuits;
  • Prepare and disseminate an Inventory and Final Accounting for the estate assets;
  • Make distribution to all beneficiaries; and
  • Close the Probate estate.

“Opening" a Probate estate means initiating a Probate proceeding in the Probate Court. “Closing" a Probate estate means ending a Probate proceeding in the Probate Court. The purpose of a Probate estate is to efficiently wind up a decedent’s affairs. This process may take up to a year or more. Probate estates are not created for the purpose of holding assets for more extended periods of time.

The representative has a duty to perform her function with the utmost good faith and fair dealing according to the terms of the Will and/or the law. Once the Probate estate is closed, the representative is discharged of liability.

Personal liability can attach to a representative for the acts she performs during Probate Administration. Accordingly, it is important that a representative fully understand her obligations and carry them out as required. No representative should attempt Probate Administration without an attorney’s assistance.

What is Trust Administration?

Trust Administration is similar to Probate Administration in concept. However, court involvement is rarely necessary for Trust Administration.

The trustee has the following basic duties:

  • Collect all of the Trust’s assets;
  • Invest the Trust assets for a period of time;
  • Make distributions to current beneficiaries as required by the Trust Agreement;
  • Pay the Trust’s expenses, taxes and claims;
  • Defend against any lawsuits;
  • Prepare and disseminate an Inventory, annual Accountings and ultimately a Final Accounting for the Trust assets; and
  • Make final distribution to all beneficiaries.

Unlike Probate Administration, Trust Administration may take many years. People often create trusts for purposes other than the mere settlement of a decedent’s affairs. For example, a person might establish a trust for the purpose of holding money for the benefit of a minor child until that child attains the age of majority.

Even though Trusts are not monitored by a Court, personal liability can still attach to the trustee. Accordingly, it is important that a trustee fully understand her obligations and carry them out as required. No trustee should attempt to administer a Trust estate without an attorney’s assistance.

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