Posted in Estate Planning, John Polgrean, Wills & Estates
This blog is intended for informational use only. The information contained herein should not be construed as offering legal advice or a legal opinion.
Most New Hampshire families know a friend or relative who has been involved in “probating an estate” of a friend or loved one. However, confusion still persists about the probate process.
Probate is the process through which a deceased person’s property, known as the “estate,” is passed to his or her heirs and legatees (people named in the will). The entire process, supervised by the probate court, can take up to a year to fifteen months.
The death of a close family member is an emotional time. It is understandable that there will be confusion about the financial and legal steps the survivors must take. These tasks may come on top of commitments to family and work that can’t be ignored.
These are the steps the surviving family members should take.
First, secure the tangible property. This means anything you can touch, such as silverware, dishes, furniture, or artwork. You will need to determine accurate values of each piece of property, which may require appraisals, and then distribute the property as the deceased directed. If property is passed around to family members before you have the opportunity to take an inventory, this will become a difficult task.
Second, take your time. You do not need to take any other steps immediately. While bills do need to be paid, they can wait a month or so without creating creditor problems. It’s more important that you and your family have time to grieve (One exception: Social Security should be notified within a month of death. If checks are issued following death, problems may arise).
When you’re ready, meet with an experienced New Hampshire probate attorney to review the steps necessary to administer the deceased’s estate. Bring as much information as possible about finances, taxes and debts. Don’t worry about putting the papers in order first; the lawyer will have experience in organizing and understanding confusing financial statements.
The rules of administering estates, in general, include the following steps:
1. Filing the will and petition at the probate court in order to be appointed executor or administrator (NH) or personal representative (MA). In the absence of a will, heirs must petition the court to be appointed “administrator” of the estate.
2. Marshaling, or collecting, the assets. This means that you have to find out everything the deceased owned. You need to file a list, known as an “inventory,” with the probate court. It’s generally best to consolidate all the estate funds to the extent possible. Bills and bequests should be paid from a single checking account, either one you establish or one set up by your attorney, so that you can keep track of all expenditures.
3. Paying bills and taxes. If a State or Federal estate tax return is needed—generally if the estate exceeds $1 million in value (for Massachusetts residents) —it must be filed within nine months of the date of death. If you miss this deadline and the estate is taxable, penalties and interest may apply. If you do not have all the information available in time, you can file for an extension and pay your best estimate of the tax due.
4. Filing tax returns. You must also file a final income tax return for the decedent and, if the estate holds any assets and earns interest or dividends, an income tax return for the estate. If the estate does earn income during the administration process, it will have to obtain its own tax identification number in order to keep track of such earnings.
5. Distributing property to the heirs and legatees. Generally, executors do not pay out all of the estate assets until the period runs out for creditors to make claims, which can be as long as a year after the date of death. But once the executor understands the estate and the likely claims, he or she can distribute most of the assets, retaining a reserve for unanticipated claims and the costs of closing out the estate.
6. Filing a final account. The executor must file an account with the probate court listing any income to the estate since the date of death and all expenses and estate distributions. Once the court approves this final account, the executor can distribute whatever is left in the closing reserve, and finish his or her work.
Some of these steps can be eliminated by avoiding probate through joint ownership or trusts. But whoever is left in charge still has to pay all debts, file tax returns, and distribute the property to the rightful heirs. You can make it easier for your heirs by keeping good records of your assets and liabilities. This will shorten the process and reduce the legal bill.
If you need help with probate or estate administration please contact Attorney John S. Polgrean for an initial consultation.