About Estate Administration
What is estate administration?
Estate administration is the process of administering a will through the probate process, moving an intestate estate through courts, or helping trustees manage their duties under a trust agreement. There may be different rules and procedures that apply to each situation. Whether you are an administrator, executor, or trustee, you will have defined responsibilities under Tennessee law; and it is important that you are aware of them and get the guidance you need when necessary.
What is probate?
Probate is the process of proving a Last Will & Testament in court, and it is the formal method, under court supervision, in which a decedent’s estate is opened, administered, and closed. Generally, probate will refer to both testate (with a will) and intestate (without a will) administration.
To begin the probate process, the court will appoint a Personal Representative to collect the probate assets, pay taxes and bills of the estate, and distribute any estate assets to the beneficiaries of the estate. This individual has a fiduciary responsibility to the estate and the beneficiaries of the estate to responsibly manage the probate assets.
Not all assets are probate assets and subject to court supervision. Generally, probate assets will include all property that was owned by the decedent in his or her name alone. This can also include any assets in which the decedent (or his or her estate) was named as a beneficiary.
Other assets may transfer automatically without the need for court-supervised administration. Payable on death accounts, jointly held assets, assets with beneficiary designations, and assets held in a trust, such as a Revocable Living Trust, are typically not probate assets.
What is the probate process?
There are a number of steps that must be taken before and during the administration process:
An interested party must file a petition with the court to be named Personal Representative of the estate that complies with Tennessee law, as well as swear an oath that they will faithfully perform their duties as Personal Representative in managing the estate’s assets. If a decedent died with a will, the valid original will should be submitted alongside the petition.
If the petitioning party has fulfilled all of the requirements needed to open the estate and be appointed as Personal Representative, the court will issue Letters Testamentary (or Letters of Administration). These Letters give the Personal Representative authority to collect and transfer assets, and otherwise act on behalf of the estate. Depending on circumstances of the will and/or the petition, the Personal Representative may be required to post bond before being issues the Letters.
The next step is to begin administering the estate and fulfill all of the requirements under Tennessee law. This includes, but may not be limited to: timely provide proper notice to all creditors, the Bureau of TennCare, and beneficiaries of the estate (including potential beneficiaries); opening an estate bank account and securing a federal tax ID number; and filing initial and interim inventories and accountings with the court.
Once the estate has been fully administered and the Personal Representative has complied with all legal requirements, the Personal Representative may move towards satisfying all debts, fees, and expenses, as well as making any required distributions, he or she may look to close the estate.
There are also a number of ways to administer an estate in Tennessee, including common form v. solemn form probate, small estate administration, muniments of title, and probate avoidance. Each method has its respective advantages, disadvantages, and applicability.
This is not a comprehensive list of the probate process and one method will not fit every situation. Factors such as the size and nature of the probate estate, disinherited individuals, the form of the testamentary document, disputes between beneficiaries, and a myriad of other potential factors will need to be assessed and taken into account.
About Administering A Trust
Unlike the probate process, administering a trust is generally not under the supervision of a court. Depending on the nature of the trust estate, or even family dynamics, this can be either a benefit or detriment to the administration of the estate. A smoother process can result in increased privacy of the deceased estate, lower costs, and timelier distribution of trust property. If there is a dispute between beneficiaries, trustee malfeasance, or questions regarding the validity of the trust, most of those benefits will be lost.
Under Tennessee trust laws, the acting trustee - i.e. the individual or corporation responsible for managing the trust estate - has a fiduciary duty to administer the trust in accordance with the trust terms and the laws of Tennessee. In theory, this duty is pretty straight forward. And we find that most trustees proceed with good intentions.
However, confusion occurs most often when trying to interpret trust language or understanding the process of transferring property to the beneficiaries. There are also a number of fiduciary responsibilities that fall upon the trustee that he or she may not initially be aware of - e.g. taxes, reporting requirements, compensation, or maintaining absolute impartiality.
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