Probate and Trust Administration

Probate Administration

The administration of an estate is the process by which the decedent's assets are gathered, the decedent's debts are paid, and the decedent's property is transferred either to designated beneficiaries or heirs at law. If the decedent had executed a Will, the process is known as testate administration. If the decedent died without a valid Will, the administration is intestate.

Administration of an estate is begun by the filing of the decedent's Will (if one exists), a death certificate and a petition for administration in the Probate Court. If the decedent's Will names an Executor or alternate who is able to serve in that role, the Court usually appoints that person. If there is no Will, or a named Executor is unable to serve, the Court will appoint an interested party as the Administrator. Executors and Administrators serve the same function and have the same authority.

The Probate Court will require that the Executor furnish a bond, the premiums for which are paid by the estate. The Executor must file numerous forms with the Court that identify the beneficiaries of the estate and report the nature and amount of estate assets. The Executor must file with the Probate Court either annual accounts of the estate which detail every item of income and expense or informally share this information with the designated beneficiaries or heirs at law. Once the time has passed in which creditors may file suit against the estate, the estate may be closed and the remaining assets distributed either in accordance with the Will or the laws of intestacy. If the decedent's Will has established a testamentary trust, then the trust must file annual accounts with the Probate Court until the trust terminates, unless accounts are waived in the will or by the beneficiaries of the testamentary trust.

If a decedent has structured his or her estate so that there are no assets which are subject to the jurisdiction of the Probate Court, the named Executor will file the decedent's Will and death certificate, with a statement that probate is unnecessary. From that point, there will be no need to report to the Court.

Trust Administration

The administration of a trust is governed by the terms of the trust as well as applicable law. In general, a trustee must take control of trust assets, invest trust assets as a reasonably prudent investor would invest his or her own assets, pay all legal obligations of the trust, file annual income tax returns and distribute the trust property to the beneficiaries in accordance with the terms of the trust. Only the trustees of a trust created under a Will are required to account annually to the Probate Court, unless waived under the terms of the will or by the beneficiaries of the trust. The trustees of all other trusts are required to account to the beneficiaries of the trust on an annual basis, without Court supervision, unless the trust expressly provides otherwise.

The administration of trusts is discussed in much greater detail in A Client's Guide to Trusts, available to our clients without charge.

Post Mortem Tax Planning

Even though death and taxes may be inevitable, there are ways to minimize the taxes due as a result of death even after death occurs. In some circumstances, through the use of qualified disclaimers, assets may pass to beneficiaries who would be exempt from taxes. Careful allocation of assets to different trusts can also reduce the tax burden on beneficiaries.

Tax Returns

Filing tax returns is an important part of estate and trust administration. The Executor must file an income tax return for the decedent, reporting income earned prior to death, and must file annual income tax returns of the estate.

Large estates (generally those with over $5,490,000 in total assets for 2017) may be subject to Federal Estate Taxes. These tax returns must be filed, and applicable taxes paid, within nine months of the decedent's death.

Even an estate comprised of an intervivos trust that is not subject to probate may be subject to tax filings and deadlines. In those cases, it is usually the Trustee of the Trust who must file the necessary returns and pay the taxes.

If a decedent made lifetime gifts subject to Federal Gift Tax and did not file gift tax returns, the Executor will be required to prepare and file those returns prior to filing the Federal Estate Tax return. Ansell & Anderson is able to assist the fiduciary in preparing and filing tax returns.Contact Us