The Basics of Probate
"Probate" is used to describe the legal process by which a deceased person’s affairs are settled and his property distributed to those who are entitled to receive it. This Classroom covers the basic issues involved in probate including the role of a personal representative, the special protections for family members, a review of the intestacy rules, which describe how an estate should be divided when there is no Will and the options to consider when deciding whether "to probate or not to probate." The second section discusses the actual probate process, from filing the probate petition to completing the work as the personal representative.
The Basics of Probate: The Role of the Personal Representative
Basics of Probate
Basics of Probate
The Role of the Personal Representative
The personal representative (also called the executor or administrator) is the person authorized by the court to act on behalf of the deceased's estate. If the deceased left a Will, the personal representative is the person named in the Will to distribute the deceased’s property after death.
The personal representative (PR) is responsible for preparing an inventory of all the assets in the estate, notifying creditors, determining whether anyone is eligible for any of the exemptions provided in the law, paying bills and taxes, and distributing any assets that are left.
If there is no Will and a judge has to choose a personal representative, preference is given to the closest relatives of the deceased.
Who Can be the Personal Representative?
A personal representative must be 21.
Priority to become the Personal Representative is as follows:
- an executor named in a Will;
- the surviving spouse, if he or she was given property in a Will;
- other devisees (i.e. people left property in the a Will);
- the surviving spouse if not a devisee;
- other heirs;
- a creditor, but only after 45 days after death.
In informal probate, the priority rules have to be followed, but in formal proceedings a person without priority may displace another with priority, usually after a court hearing.
Alaska law requires that the PR post bond unless:
- the Will expressly states it is unnecessary;
- all the beneficiaries agree bond isn’t necessary;
- a corporate PR is appointed; or
- the PR has otherwise deposited property with the court.
Despite this general requirement, the PR can ask the court to lower the bond amount or excuse it altogether. She should stress that no conflicts exist, the estate is small, and she does not want to deplete the estate with bond costs.
Duties of the Personal Representative
Generally, the PR is to proceed with her duties without a court order. This includes:
Control the assets
A PR is authorized to take control of all decedent's probate assets, but may leave particular items with beneficiaries presumptively entitled to them. The PR should insure all property, make repairs as necessary, and pay taxes.
Notify known creditors and publish notice in a newspaper to allow creditors to file their claims.
Notice of Appointment
Within 30 days of appointment, notice must be provided to heirs and devisees of any Will, whether probated or not.
Inventory and Appraisal
Within 3 months of appointment, the PR must create an inventory of the estate, listing all items and their value, plus creditor claims that have been accepted.
Provide for Spouse and Children
Statutory protections available to the decedent's surviving spouse and children have first claim on the decedent's estate. They include, in order of priority:
- Homestead Allowance
- Exempt Property Allowance
- Family Allowance
These these allowances are described more in the section “Special Protections for Family Members.”
The PR is responsible for filing the decedent's personal income tax return. To the extent that the estate generates any income, it is treated as a separate tax entity, and a federal income tax return must be filed for the estate.
Closing the estate
Prepare a final accounting of the estate describing how the estate was divided.
Care of the property before distribution
The PR has broad management powers, and can do anything the decedent could have done with the property, unless specifically limited in the Will.
- The PR may continue decedent's business for 4 months without a court order.
- The PR has broad powers to perform or refuse to perform decedent's contracts.
- The PR has power to borrow money, but this should be rare. If resentment among successors is antici¬pated, the PR should seek a court order approving the loan.
- The PR is authorized to incur and pay reasonable estate administrative expenses including the costs of good faith litigation, employed agents, and his own compensation.
The PR is not personally liable for contracts of the decedent unless he fails to identify that he is acting in his capacity as the PR or unless the contract specifically provides for personal liability.
Termination of Powers
Generally, the PR's powers and duties will terminate when the estate is closed, or a set period thereafter if a simplified closing alternative is used. Other methods by which a PR can be terminated are:
- resignation, but only if a successor is willing to accept the office;
- death of the PR, but the PR's PR is responsible for protecting the first estate until a successor is appointed;
- appointment of a conservator of the PR, but the PR's conservator is responsible for protecting the first estate until a successor is appointed;
- removal by the court “for cause”; or
- as a result of change of testacy status.
The Personal Representative’s Standard of Care
A PR is said to be a "fiduciary" under a duty to observe the standards in dealing with assets that would be observed by a reasonable person dealing with the property of another. This includes:
Duty to invest - Decide whether liquid assets should be placed in an interest-bearing or interest-free bank account;
Duty to preserve - The PR must make repairs, guard against theft, pay taxes and insure the property.
Conflicts of Interest
As a general practice, the PR should not deal with himself. This includes dealings with his attorney, spouse, agent, or an entity in which he has a substantial share. If he does, the transaction is voidable unless:
- all interested persons agreed in writing;
- the court approves the transaction; or
- the decedent authorized the transaction by contract