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 Probate Process: Procedures Following Appointment as Personal Rep
Basics of Probate
Basics of Probate
Working the Case
Assuming you were the person appointed as the PR of the estate, your real work can now begin. Your tasks include deciding which family members might be entitled to special protections known as allowances or exemptions; notifying creditors; preparing an inventory of the estate; paying bills; distributing the remaining assets; and preparing a final accounting that describes how the property was distributed.
Notice to Heirs and Devisees
Within 30 days of your appointment as PR, you will need to notify all interested persons that you have been appointed. The notice must be sent to everyone named in the decedent’s will and to all persons with an interest in the estate.
Information to Heirs and Devisees,(P-340)
Unless an estate is so small that there will be nothing left after homestead, exempt property, and family allowances are paid, the PR must contact all known creditors of the deceased, plus place a notice in a local newspaper to start a 4 month period during which all claims must be presented to the PR.
The notice must be placed in a newspaper of general circulation in the community where the deceased lived and it must appear on the same day of the week, 3 weeks in a row. This typically costs $150 or more.
Notice to Creditors, (P-341)
You must also file an affidavit to show you’ve met the publication requirement.
Affidavit of Publication, (P-342)
Preparing the Inventory
Once the notice to creditors is published and the 4 month period for creditors has ended, you will then be in a better position to prepare an inventory of the estate. This should list all the property belonging to the deceased, plus all the valid bills that were presented by creditors.
Inventory of Property, (P-370)
After the 4 month window for creditor claims has closed, the PR must decide whether a claim is valid or not and whether there is enough money in the estate to pay all claims. Claims that have expired may not be paid. All claims are barred if not presented within the 4 month period. However, if the PR has not published notice to creditors, the claim can survive until three years after death.
Allowance and Disallowance of Claims
Upon receipt of a claim, the PR has several alternatives:
- He can do nothing in the 60 days after receipt of the claim, and the claim will be deemed to be allowed.
- He may send a notice of disallowance within 60 days, and include a warning that the disallowance will be final in 60 days if the claimant does not sue. A claim barred by the 60 day period cannot be later allowed.
- He can settle the claim.
- He can petition for a court order allowing the claim.
- He can allow the claim.
- He can deduct counterclaims on his own, or trigger litigation.
The Notice of Allowance or Disallowance is sent to the person who made the claim.
Notice of Allowance or Disallowance of Claim, (P-345)
Payment of Claims
Claims should be paid at the conclusion of the 4 month period. If there is not going to be enough to cover all claims, the law provides for priority of payment, with complete payment at the higher priority before any payment at lower levels, and pro rata sharing at the last level at which payment can be made. Priority, from first to last is as follows:
- costs and expenses of administration;
- reasonable funeral expenses;
- debts and taxes with preference under federal law and past due child support payments;
- reasonable and necessary medical and hospital expenses of the last illness of the decedent, including compensation of persons attending him;
- debts and taxes with preference under other laws of Alaska;
- all other claims.
Deciding Who Takes
Once all bills are paid, the PR can then begin to distribute assets of the estate. If anything is left after secured creditors have recovered their security, family protections have been paid, creditors have been satisfied, and taxes have taken their bite, the PR must then confront the "who takes what's left" question.
The PR must determine whether persons protected by statute from being cut off in a Will have rights despite its terms. To the extent the Will does not control decedent's property, or if there is no Will, the intestacy statutes control the balance of the estate (review the section on Intestacy if needed).
The Elective Share (for a surviving spouse)
Next, the PR needs to determine what portion would be due the surviving spouse under the “elective share” provision. Generally, this provision will not be invoked since the survivor's share under the Will or intestacy rules usually will be greater. At any rate, the PR should convince the spouse early either to renounce the right or to proceed with it.
The surviving spouse may elect to take a one-third share of the decedent's "augmented estate." The "augmented estate" includes not only property owned by the decedent at the time of death, but also the value of certain property transferred prior to death. The result is that the survivor gets one-third not just of what's left at death, but also much of what was transferred beforehand. The augmented estate then has three parts:
- What the decedent actually owns at death after claims, expenses, family allowance, etc. have been paid;
- The value of transfers to the spouse before or after marriage, if full value was not received;
- The value of transfers to others, if full value was not received.
Calculating the value of the “augmented estate” is extremely complicated and may very well require the assistance of a lawyer. Also, this provision, the Elective Share, applies only to persons domiciled in Alaska at death. The right to the elective share can be waived before or after marriage.
Distribution of property - In Kind or Cash
It is unusual after payment of expenses and claims that the remaining property available matches the distribution pattern which must be followed under the will or intestacy rules. What can the PR do without starting a war?
Once debts and taxes are paid, all remaining successors may agree in writing to rearrange for any distribution.
The PR can take the initiative and send a proposed plan at least 30 days before distribution. The failure of an interested party to file an objection within 30 days of notice validates the plan.
Invoke the court's help
If two or more successors are entitled to share an undivided asset, the PR may invoke court assistance through a partition action. Also, if there is a dispute of some sort on distribution, it will often pervade administration. It is wise to consider formal closing procedures in this situation
Distributions to Particular Successors
If the amount to be distributed is less than $5,000 in a particular year, it may be distributed:
- to the minor if married;
- to any guardian;
- to a bank account in the minor’s name, if the child is notified;
- to any person having the minor's care and custody with whom the minor resides.
Delivery can be made to a conservator as well as to a guardian, if no conservator has been appointed.
Once the PR has distributed the deceased’s property according to law, a Final Accounting will need to be filed with the court and sent to all interested persons. This is the form in which you describe how the deceased’s property was divided.
Final Accounting and Proposed Distribution, (P-380)
Closing the estate by Affidavit after Summary Administration
There are a number of ways a PR can close out an estate, depending upon the circumstances. If the estate does not contain sufficient assets to permit any creditors' claims to be paid, the PR may file a
Sworn Statement of Personal Representative Closing Small Estate,(P-350)
and distribute the assets according to the list below, and then close the estate with a sworn affidavit:
- survivors entitled to homestead, exempt propertyand family allowances;
- administrative expenses;
- funeral expenses;
- federal taxes and other debts; and
- last illness expenses
Informal Closing in Larger Estates
If the estate does contain sufficient assets to permit creditors to reach if they file claims, the estate can be closed by sworn affidavit. It may not be filed until 6 months after the first notice to creditors. A final accounting of the administration should be sent to all distributees. One year after filing the affidavit, the PR's office is terminated.
Sworn Statement of Personal Representative to Close Informal Estate, (P-355)
Any time after the claims period has run, the PR may request the court to:
- determine testacy;
- construe a Will;
- determine heirs;
- adjudicate final settlement and distribution; and
- discharge the PR.
Request to Close Formal Estate and Approve Distribution, (P-360)