Estate Administration

The death of a loved one is a trying time. We often counsel our clients that no one is at their best when a family member departs. Emotions run high, and reason can often take a back seat. This is one of the reasons why, even with a current, comprehensive estate plan, administration of an estate can be a difficult process.

We hope everyone has prepared for the inevitable with an estate plan, but with or without prior planning, your estate, whether it's large or small, must be administered.

The most significant part of estate administration is the probate process. Probate is the process of administering your estate through the court system after you die. The purpose of the probate process is to pay the debts you owe and distribute the remaining assets to your beneficiaries. In Virginia, probate is handled in the circuit court of the county or city where you last lived. Residence in a nursing home generally is disregarded for this purpose.

During the first step of probate, a personal representative will be appointed by the court. This will be an executor (if you die with a will) or administrator (if you don't have a will). A separate bank account should be set up for the estate: a personal representative should never mix the estate's funds with their own.

Following appointment of your personal representative, notice of probate will be filed, your property inventoried, your debts paid and your remaining assets distributed.

Often there is difficulty finding a will. Family members who believe that a will exists should conduct a thorough search. A safe deposit box is a likely place to look, and Virginia law allows the spouse, next of kin or court clerk to open the box solely for the purpose of locating a will. If the person in possession of the deceased person's will refuses to deliver it, a court order can be obtained to force delivery. (Fraudulent concealment or destruction of a will is a felony under Virginia law).

Not all of your assets are included in the probate process. Assets that pass by operation of law are called non-probate assets. These include property owned as joint tenants with right of survivorship, typically real estate, but often including joint bank accounts or brokerage accounts. The survivor owns these assets outright. Other non-probate assets include life insurance, annuities and retirement accounts such as 401(k) and IRA plans, where you name a beneficiary in the contract. Other financial assets may be designated as "payable on death", and also pass outside of probate. Administration of these assets typically involves providing a copy of the death certificate in order to obtain the funds.

Beneficiaries must be patient. Distributions cannot be compelled until six months after the appointment of the personal representative. An accounting must be filed no later than 16 months after appointment. If your will is contested, this process could take years to resolve.

Your personal representative is entitled to reasonable compensation for the administration of your estate, to be approved by the court. Under Virginia's guidelines the fees are calculated on a sliding scale, starting at 5% of the first 400.000.

Other factors that may complicate the probate process include owning real property in another state. This property must be probated in the state where it is located, through the process of ancillary probate, which can be expensive.

Finally, for some estates, a personal representative does not have to be appointed in order to transfer the assets to the beneficiaries. For small estates under $15,000, where no real estate passes under the will (e.g., where real estate was owned as joint tenants), assets may be transferred without the appointment of a personal representative. Additionally, title to vehicles can be transferred by the transferee filing a statement with the Department of Motor Vehicles, without qualification of a personal representative.

This is a brief overview of some of the issues that may be encountered in administering an estate. The attorneys at Wilson Stoyanoff, PLC will be happy to discuss your issues in detail.