What is probate in general?
What are the tax deadlines?
What are the executor's duties?
What are the trustee's duties?
What happens if someone objects to the Will?
Does probate administer all property of the deceased?
Do I get paid for serving as an Executor?
How much does probate cost? How long does it take?
Q: What is probate in general?
Probate in General
Probate is the court-supervised public proceeding used to change title of assets from the name of an individual who has passed away into the name of the living beneficiaries. It is also the process by which creditors of a decedent file claims to collect their debts and where interested parties, who have a complaint regarding the deceased, can file a complaint (a Will contest).
Certain types of assets called “non-probate assets” do not go through probate. These include:
- Property titled as joint-tenants with right of survivorship
- Retirement accounts (IRAs, 401(k)) with beneficiary designations
- Life insurance policies with beneficiary designations
- Bank accounts with “pay on death” (POD) designations or “in trust for” s (ITF) designations or "transfer on death"- (TOD) designtations
- Property owned in a revocable trust (or living trust)
Upon the passing of an individual, assets titled under the sole name of the decedent will enter into probate. If there is a Will, the executor or personal representative named under the will, shall file the Will with the probate division of the Circuit Court of the domicile of the decedent, and will be appointed executor or personal representative in this process.
An individual dies intestate when there is no Will. The person who will handle the transfer of assets to family members is called an administrator instead of an executor or personal representative. Each state has an intestacy statute which directs the order of priority among the family members.
Miorini Law PLLC assists executors and administrators with the appointment process and advises them with the estate administration including taxes. We can serve in an advisory role when the executor feels confident he/she can handle most of the tasks or we can be a full-service firm where the executor will review and approve the probate filings.
We also represent beneficiaries of estates or trusts to ensure that their rights are respected and protected. Our representation is based on a pragmatic approach where we look at the big picture and help clients set priorities. We endeavor to preserve family harmony when possible.
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Q: What are the tax deadlines?
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Income Tax
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Form
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Deadline
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Taxable Period
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Decedent Income
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Federal: 1040
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By April 15 of the following year
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From January through the date of death
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For DC resident: D40
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By April 15 of the following year
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Same
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For VA resident: 760
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By May 1 of the following year
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Same
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Fiduciary Income
For Estate
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Federal: 1041
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3 ½ month after the estate year ends (e.g. 7/15/08)
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From date of death to the prior month of following year (e.g. date of death is 4/09/07, then the estate year is 4/09/07 - 3/30/08)
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For DC resident: D41
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Same
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For VA resident: 770
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One month later than for 1041
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Fiduciary Income
For Trust
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Federal: 1041
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By April 15 of the following year
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For DC resident: D41
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By April 15 of the following year
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For VA resident: 770
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By May 1 of the following year
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Estate Tax
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Form
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Deadline
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Federal: 706
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9 months from the date of death
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As of 2011, for estate above $1 million
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DC: D-76
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10 months from the date of death
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For estate above $1 million
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VA: Est-80
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9 months from the date of death
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Currently repealed. May follow the federal repeal act mentioned above.
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Q: What are the executor's duties?
It is important to understand your duties as executor of an estate in order to avoid any future liabilities. The executor should seek legal advice to understand his/her duties set in the will and under the applicable state law.
The executor will have to pay funeral expenses, debts of the decedents, and sometimes estate and/or inheritance taxes. The executor will have to prepare and file the final income tax return of the decedent, and for income received during the administration of the estate, a fiduciary income tax return (federal form 1041) will need to be prepared.
The executor’s obligations regarding the timing of the distribution of the estate and the responsibility to invest assets during the estate administration vary from state to state.
Often a surviving spouse will have certain rights to claim a share against the estate, to stay in the home of the decedent for a certain period of time, and to receive an allowance.
Executors are entitled to a commission based on the difficulty of the administration and the value of the estate. The standards of a reasonable commission vary from one jurisdiction to another. Miorini Law PLLC advises executors on their duties, responsibilities, and how to prevent conflicts with the beneficiaries of the estate. We can provide the simple service of answering questions or we can prepare all the documents for the executor, who then only has to approve them.
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Q: What are the trustee's duties?
Although, most of the time, there is little to no court supervision, it is important that the trustee seek legal advice to understand his/her legal obligations. We have seen an increased number of suits against trustees for breach of their fiduciary duties.
Many people believe that when there is a revocable trust, nothing needs to be done upon the death of the grantor/settlor/creator. There is definitely less work to be done than with a simple Will. Work can usually be done without court supervision, but you have to ensure that you take all of the right steps to avoid liability and maximize the tax advantages available at the death of an individual.
Upon the death of the grantor/settlor/creator of a revocable trust, the trust become irrevocable and the successor trustee will have to apply for a tax identification number with the IRS, and notify certain interested parties of the new situation.
If there is no executor appointed, the trustee will have to pay the funeral expenses and debts of the decedent, including preparing and filing the final income tax return of the decedent. Very often, fiduciary income tax returns (federal form 1041 where you report the income of the trust) will have to be prepared and filed.
The trustee is responsible for the investment of the trust assets. The trustee can be assisted by a financial advisor, however, this delegation will not prevent the trustee from liability for poor investments. Certain steps can be taken in order to protect the trustee.
Finally, depending on the instruction in the trust documents, new trusts will be created or the trustee will have to distribute the trust assets to the beneficiaries.
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Q: What happens if someone objects to the Will?
An objection to a Will, also known as a “Will contest,” is a fairly common occurrence during the probate proceedings and can be incredibly costly to litigate.
In order to contest a Will, one has to have legal “standing” to raise objections. This usually occurs when, for example children are to receive disproportionate shares under the Will, or when distribution schemes change from a prior Will to a later Will. In addition to disputes over the tangible distributions, Will contests can be a quarrel over the person designated to serve as Executor.
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Q: Does probate administer all property of the deceased?
Probate is primarily a process through which title is transferred from the name of the deceased to the names of the beneficiaries.
Certain types of assets are what is called “non-probate assets” and do not go through probate. These include:
- Property in which you own title as “joint tenants with right of survivorship”. Such property passes to the co-owners by operation of law and does not go through probate.
- Retirement accounts such as IRA and 401(k) accounts where there are designated beneficiaries.
- Life insurance policies.
- Bank accounts with “pay on death” (POD) designations or “in trust for” designations.
- Property owned by a living trust. Legal title to such property passes to successor trustees without having to go through probate.
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Q: Do I get paid for serving as an Executor?
Executors are reimbursed for all legitimate out-of-pocket expenses incurred in the process of management and distribution of the deceased's estate. In addition, you may be entitled to statutory fees, which vary from location to location and depending on the size of the probate estate. The Executor has to fulfill his or her fiduciary duties on behalf of the estate with the highest degree of integrity and can be held liable for mismanagement of estate assets in his or her care. It is advised that the Executor retain an attorney and an accountant to advise and assist with his or her duties.
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Q: How much does probate cost? How long does it take?
The cost and duration of probate can vary substantially depending on a number of factors such as the value and complexity of the estate, the existence of a Will and the location of real property owned by the estate. Will contests or disputes with alleged creditors over the debts of the estate can also add significant cost and delay. Common expenses of an estate include executor fees, attorney fees, accounting fees, court fees, appraisal costs, and surety bonds. These typically add up to 2% to 7% of the total estate value. Most estates are settled through probate in about 9 to 18 months, assuming there is no litigation involved.
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