Joe is a seasoned probate lawyer who has helped families and individuals with probate administration for more than 30 years in the metropolitan St. Louis area and beyond. He serves on the Missouri Bar Probate and Trust Law Committee, and is deeply passionate about helping families protect their assets and understand their options.
A probate decedent estate administration provides a procedure for the transfer of assets to those legally entitled to them after a title owner has died. This process occurs under the auspices of the probate court after the death of the owner.
A probate conservatorship proceeding provides a procedure for the use of a substantially disabled title owner’s assets for his or her exclusive care and benefit, under the direct supervision of the probate court. It entails not only the appointment of a “conservator” but also an annual accounting process to ensure that a disabled person’s assets and income are exclusively used for the disabled person’s care and benefit, as directed on an ongoing basis by the probate court.
A probate guardianship proceeding provides a procedure for the personal care of a substantially disabled or incapacitated person by a family member under the supervision of the probate court.
The probate process can be complicated and arduous. An experienced probate lawyer can guide family members through the process, including the appointment of an administration representative, the filing of the inventory of the estate, the creditor claim and settlement process, and the distribution of assets.
Supervised Administration is one where the Personal Representative (executor/administrator) cannot take any action without first obtaining written approval of the probate judge.
Independent Administration allows the Personal Representative to take action without a prior court order, but the actions that he/she takes are subject toreview and possible objection by creditors or beneficiaries.
In either instance the basic procedure and time frames remain the same. and are as follows:
Both types of administration start with the filing of a petition that informs the court that some individual, a resident of the county within the court's jurisdiction, has died. The petition further informs the court of the decedent's age, his/her last home address and whether he/she had a Will. The petition identifies the beneficiaries under the Will and, notwithstanding the existence of a will, the identity of the beneficiaries who would inherit under state law if there was no Will. It further requests the court to appoint the a personal representative to administer the decedent's estate according to law, and after that, make distribution of the assets of the estate according to either the Will or the intestacy code. Assuming there is no will contest proceeding initiated by disgruntled beneficiaries at law who are “cut out” under the will, and there is no one contesting the applicant’s right to serve as Personal Representative, the issuance of the letters testamentary ( the operators permit for the estate) will be issued as a matter of course.
Upon the grant of Letters Testamentary, in the event that a Will exists, or Letter of Administration, in the event that there is no Will, the legatees and heirs at law are notified of the issuance of the letters. This is the notice to heirs that administration of the deceased's affairs is about to commence.
Thereafter, within thirty days of appointment, the Personal Representative is required to file an inventory of the estate, displaying the identity and date of death value of the assets of which the deceased died sole or in common title holder at the time of his death. This inventory and all other documents are available for public inspection.
In many states inheritance tax assessors are then appointed to assess state tax obligations, although, increasingly states are opting to assess an estate tax in lieu of inheritance tax; because the labor of reviewing the return and contesting value then lays primarily with the IRS rather than a state department of revenue.
The Claim Period
Most states' decedent estate procedures allow for what is known as a claim period. This is the period of time during which creditors of a deceased person have their final chance to receive payment from the deceased person's estate. Most states' laws provide that if a creditor of the deceased person does not file a claim during the claim period, absent having a security interest in a specific asset, the creditor is forever barred from seeking repayment from the deceased person's assets. Most states' statutes provide for a claim period of six months' duration. This time period commences upon the publication of Notice of the opening of the estate in a legal newspaper of general circulation within the probate court's jurisdiction. In many states this publication provides the necessary notice to creditors to come forward and file there claims. However, some states also provide that if the Personal Representative has reason to know of specific creditors' existence, if he/she does not provide actual notice ( a notice actually mailed to the suspected creditor) the six month time frame is extended beyond the six month period.
Most states' statutes also provide that the limitation period on claims does not apply to state or federal taxing authorities.
Where the administration is supervised, it operates much like conservatorship administration. All expenditures and investments during the estate's administration are subject to the court's supervisory review, and the same risks and loss of family control prevail.
In an unsupervised administration, however, after filing the inventory, the personal representative has some measure of autonomy. Unless someone complains to the court that the personal representative is acting improperly or is failing to act, the court will not interfere, or even look at, for that matter, the personal representative's administration of the decedent's estate.
After all the appropriate tasks of administration have been performed, the executor is ready to close the estate and make distribution to the entitled persons, either under the will or according to law. This distribution is made by re-titling the estate's assets into the name of the appropriate beneficiary of the estate. In order to accomplish this, the executor must first publish and mail a Notice to the proposed beneficiaries that a Final Settlement will be filed upon a certain date and advising such beneficiaries to come forward and make any complaints which they may have regarding the estate administration. Upon the appointed day the executor files the Final Settlement which is audited. After the audit, which includes the approval of any Petitions for Ratification of Expenditures required by the audit staff, the court will review the Petition for Final Distribution which the personal representative filed at the same time as the Final Settlement.
This petition informs the court, in summary fashion, what has transpired during the administration process--that the estate is now in a condition to be closed. The petition also identifies the proposed distributees, as well as the proposed distribution of the estate's assets to such distributees. Assuming that the probate judge finds that all matters are in proper order, he will enter an Order of Final Distribution. This order directs the personal representative to make the distribution of estate assets and instructs the personal representative as to which assets are to be distributed to which beneficiaries so as to properly conform to the dictates of the Will or the Statute for distribution when there is no Will. Upon such distribution, the personal representative is required to obtain receipts from each beneficiary which acknowledge that said beneficiary has received distribution of the assets which constitute said beneficiary's share of the estate. When the personal representative files these receipts with the court to prove that proper distribution of estate assets has been complete the probate administration ends.
At the conclusion of an unsupervised administration, the personal representative (executor) files a Statement of Account in lieu of a Settlement. The Statement of Account is not audited as is a Settlement. Instead of a Petition for Final Distribution of the estate, the personal representative files a Schedule of Distribution that describes to the court the assets remaining for distribution after payment of all lawful expenses and lists the persons to whom distribution is proposed and in what proportion or amount. The court does not review these documents in an independent administration, as it does the documents filed in an audited supervised administration. Instead, a notice is sent to the proposed heirs and distributees informing them that the schedule and statement have been filed with the court and that for a period of time (usually 20-30 days) the documents may be reviewed. After that time, if no objection is made, distribution is made by the personal representative, without further review or order of the court. The personal representative is still required to obtain receipts to prove that proper distribution has been made. Upon the filing of such receipts with the court, the independent administration ends.
Although an unsupervised administration allows the personal representative a substantially greater amount of control during administration, both types of decedent estate administration should be avoided whenever possible because, whether supervised or unsupervised, the costs of administration can be identical and substantial.
The Curse of Service Fees in Decedent Estates
The largest source of complaint from decedent estate clients is the service fees engendered by the probate process . . . attorneys fees and personal representative or executor fees. Although there is variation in the methods, they distill down to two basic computations.
Reasonable compensation is the standard set in many states and it is left to the individual trial judge of the given jurisdiction to decide reasonable per-hour rates. Where reasonable compensation is the established system, the court reviews the tasks undertaken, the time spent per task and assesses an hourly rate of compensation.
Statutory Minimum fees:
However, in many states in lieu of, or besides, reasonable compensation, there is provided compensation in the form of a "minimum fee schedule." This is usually a sliding scale percentage of the asset value, or some part of it, under administration. For example, in Missouri, both the personal representative and the attorney for the estate are entitled to a minimum fee computed as follows:
Missouri's Minimum Fee Schedule
The following percentages apply to the value of the personal property administered and the proceeds of real property sold under order of the probate court (except residence):
On the first $ 5,000 5%
On the next $20,000 4%
On the next $75,000 3%
On the next $300,000 2 3/4%
On the next $600,000 2 1/2%
On all over $1,000,000 2%
According to a national survey, when the personal representative and attorney's fees are combined, on estates valued at more than $100,000, the national average percentage loss of estate value to service fees in probate is 7 1/2% of the gross value, as defined above. While 7 1/2% may not seem like a lot to some, most people are surprised at how large the actual number value is when seen in print. To give you an idea of the numbers I am talking about, see the chart which appears on the following page:
National Average Statutory Fees
Gross Estate Size Probate Fees
$ 100,000 $ 7,500
$ 200,000 $ 15,000
$ 300,000 $ 22,500
$ 400,000 $ 30,000
$ 500,000 $ 37,500
$ 600,000 $ 45,000
$ 700,000 $ 52,500
$ 800,000 $ 60,000
$ 900,000 $ 67,500
$1,000,000 $ 75,000
Remember, these percentages are applied against the gross value of assets, whereas beneficiaries inherit the net value, after payment of claims and expenses, including attorney and executors fees.
Thus, for many, the sad realization is that, along with your children and other intended beneficiaries there are substantial unintended beneficiaries--the service providers in probate, who often are the single largest beneficiaries of the estate!
Remember, too, that the only person with authority to "unlock" the title to real estate in case of title holder's death is the probate judge of the county in which the property is located. This means that, although you can only die once, you can have multiple probates and be susceptible to multiple probate fee assessments.
The statutory fee schedule causes inclusion of unanticipated beneficiaries to your estate: Your Executor and Your Attorney.
What's worse; they may inherit more of your estate than your intended beneficiaries.
In today's society, this is not very unusual. Perhaps you have a vacation condominium in a southeastern state. A condominium is an interest in real estate and requires a separate probate. How about that timeshare on Hilton Head Island where you vacation one week each year? Under South Carolina law, timeshare interests are considered real property. Upon a title holder's death there will need to be a probate in South Carolina as well as in the county of the individual's residence.
Probate court processes generate publicity at times when most individuals desire privacy. They also can subject your family to unwanted commercial solicitation, or worse, bunko schemes which take advantage of the unwary at times when they are most vulnerable. The probate process can also cause a loss of control of assets during the administration process; a time delay of distribution of assets due to the inherent probate process; and substantial, needless expense. Finally, as regard those service fees, I always say that if a client wanted to provide an inheritance for his/her lawyer, he/she would have included that lawyer in the list of beneficiaries. More often than not, the mere fact that you choose a will as your primary estate planning vehicle has that effect, whether you know it or not.