Probate and Trust Administration

Probate and Trust Administration

Probate is the name of the process for administering a will after a person’s death or distributing the assets of a deceased individual to the intestate beneficiaries if there is no will.

A trust administration would occur if a deceased individual had their assets in a revocable living trust.

Trust Administrationvs.Probate (Will)
File initial probate documents with will
Send Notice of Administration to all beneficiaries/heirsSend Notice of Administration to all beneficiaries/heirs
Obtain new EIN for TrustObtain EIN for Estate
File Non-Probate Notice to creditorsFile Notice to Creditors
Prepare inventoryPrepare inventory
File Estate Tax Return, if necessaryFile Estate Tax Return, if necessary
Distribute assets to beneficiariesDistribute assets to beneficiaries
Prepare closing Probate Documents

When a person dies, many steps are required to clean up the affairs of the deceased. Depending on the size of the estate and the assets owned by the estate, different processes are available to simplify the after death process of transferring the assets to the beneficiaries. The different processes available include beneficiary designations and account titles, an affidavit of small estate, an affidavit in support of community property agreement, an adjudication of intestacy, an adjudication of testacy, trust administration and probate. The information below will attempt to explain the steps involved in each process and when the process can be used.

For a general overview in a table format, click here.

Account Titles and Beneficiary Designations

A person can pass their assets at the time of their death using account titles and beneficiary designations. Generally, property, bank accounts and brokerage accounts that are titled as joint tenants with rights of survivorship will pass to the named joint tenant at the time of the decedent’s death. However, Washington State allows for super wills that allow decedents to change their mind on the survivorship benefit of the joint tenants with rights of survivorship and direct that the bank and brokerage accounts pass under their will and not to the surviving joint tenant. Bank accounts can also be titled as pay on death to a named beneficiary. Brokerage accounts and real property can be transferred using a transfer on death designation. The account does not belong to the beneficiary until the decedent dies. In comparison, a joint tenant could make an ownership claim during the life of the decedent.

Individual retirement accounts and other retirement accounts such as 401k, 403b accounts, annuities and life insurance, generally pass to the beneficiaries listed on the beneficiary designation and not as part of the last will and testament of the decedent. Although account titles and beneficiary designations appear to be easy ways to transfer property at the time of death, this can be problematic when one beneficiary receives more than another beneficiary and it is not coordinated with the estate plan as designated in the will. The beneficiary of an account generally provides the institution with a certified death certificate and collects the funds in the account. Some of the financial institutions require additional paperwork to be submitted. If there are creditors of the decedent, they are still able to attach the assets of the decedent even though there is no probate, therefore, a beneficiary may want to make sure that a nonprobate notice to creditors is filed if no probate is being filed or a probate notice to creditors is filed if a probate is filed. The original will of the decedent must be filed with the court clerk even if all of the assets are collected by beneficiary designation. If all of the assets owned by the decedent exceed the amount exempt from federal and Washington State estate taxes, then an estate tax return must be filed 9 months after the decedent’s death.

Affidavit of Small Estate

For an affidavit of small estate, the value of the deceased person’s assets to be collected must be less than one hundred thousand dollars ($100,000.00) and the property cannot include any real property. More than 40 days have to pass before the assets can be collected using a small estate affidavit. Notice has to be given to all of the beneficiaries that are to receive the property and they must consent to the person receiving the property on their behalf. The small estate affidavit states that all of the debts have been paid or provided for. If the deceased person had debts, a person who is receiving property via a small estate affidavit may want to file a nonprobate notice to creditors to make sure that all of the creditors are paid or are dealt with appropriately so that there are no surprises when a creditor comes forward within 24 months of the deceased person’s death and wants payment.  Notice of the deceased person’s death must be sent to the Office of Financial Recovery. If the deceased person had signed a will, the original will must still be filed with the county clerk of the superior court even if the will is not probated within 40 days of the deceased person’s death.

Affidavit in Support of Community Property Agreement

A spouse of a deceased person who had signed a community property agreement with the deceased person that gave the surviving spouse all of the community property at the time of the deceased spouse’s death, may use an affidavit in support of community property to transfer the ownership and name on the real property tax statement into the name of the surviving spouse. Not all community property agreements include the provision that the community property vests in the surviving spouse’s name at the time of the first death. In the past, many banks and brokerage firms have been willing to accept copies of an original community property agreement with the vesting provisions without receiving an affidavit in support of the community property agreement. My recent experience is that banks and brokerage firms are now asking for the affidavits in support of the community property agreements as well as the need to file them with the county auditor to show the transfer of ownership to the surviving spouse on the real property in the county. If the deceased person had signed a will, the original will must still be filed with the county clerk of the superior court even if the will is not probated within 40 days of the deceased person’s death. To change the name on the real property tax statement, a copy of the signed affidavit in support of community property agreement needs to be provided to the county assessor’s office.

Adjudication of Intestacy

An adjudication of intestacy can be useful if the deceased person had no will, the only property to be collected is real property, and there are no creditors and a limited number of beneficiaries. A petition and order are signed and filed with the court. Effectively, this opens a probate, but no personal representative is appointed. Notice is sent to the deceased person’s heirs under the laws of intestacy with a copy of the signed order of adjudication of intestacy. An heir still has 4 months in which to contest the adjudication of intestacy and the characterization of the property. Notice of the deceased person’s death must be sent to the Office of Financial Recovery. If no heirs contest the adjudication of intestacy, then the property transfers without any additional deed to the named heirs as set forth in the petition for the adjudication of intestacy. To change the name on the real property tax statement, a copy of the signed order of adjudication needs to be provided to the county assessor’s office.

Adjudication of Testacy

An adjudication of testacy can be useful if the deceased person had a will, the only property to be collected is real property, and there are no creditors and a limited number of beneficiaries.  A petition and order are signed and filed with the court. Effectively, this opens a probate, but no personal representative is appointed.  Notice is sent to the deceased person’s beneficiaries under the will and the deceased person’s heirs under the laws of intestacy with a copy of the will and the order of the adjudication of testacy. A beneficiary or heir still has 4 months in which to contest the adjudication of testacy. Notice of the deceased person’s death must be sent to the Office of Financial Recovery. If no beneficiaries or heirs contest the adjudication of testacy, then the property transfers without any additional deed to the named beneficiaries set forth in the petition for the adjudication of testacy. To change the name on the real property tax statement, a copy of the signed order of adjudication needs to be provided to the county assessor’s office.

Trust Administration

If the deceased person had a revocable living trust, then a trust administration occurs to transfer the assets to the appropriate beneficiaries. Within 60 days of the deceased person’s death, a letter is mailed to all of the beneficiaries of the trust as well as the deceased person’s heirs under the laws of intestacy. The beneficiaries and heirs at law then have 4 months from the time the letter was mailed to file suit to contest the revocable living trust. Notice of the deceased person’s death must be sent to the Office of Financial Recovery. The deceased person’s will is still filed with the Superior Court Clerk’s office even if all of the assets are in the name of the trust. If not all of the assets are in the name of trust and the assets not in the name of the trust are less than $100,000.00 and not real property, an affidavit of small estate can be used to transfer the assets to the trust. If the assets not in the name of the trust are in excess of $100,000.00 or there is real property, then a probate will need to be filed in addition to the trust administration. The successor trustee will obtain a new employer identification number for the trust if the deceased person was the trustee up to the end of his or her life. A prudent trustee will publish nonprobate notice to creditors. Publishing nonprobate notice to creditors will shrink the period in which a creditor can make a claim against the trust to 4 months instead of 24 months. The Trustee assembles an inventory of the assets of the trust on the decedent’s date of death. A beneficiary or creditor may request a copy of the inventory. Creditors are paid before beneficiaries receive distributions from under a trust. If the decedent’s assets exceeded the amount exempt from federal and Washington State estate taxes, then an estate tax return must be filed 9 months after the decedent’s death. The Trustee then waits to receive the closing letter from the Department of Revenue and Internal Revenue Service which can take up to 18 months if a request for prompt assessment is filed at the same time as the returns. After the Trustee has received the closing letter from the Department of Revenue and Internal Revenue Service, the Trustee can then proceed to distribute the assets to the beneficiaries of the trust as directed in the trust.

Probate

If a deceased person’s assets have not transferred by any of the processes mentioned earlier, then a probate is used to transfer the assets to the intended beneficiaries. A probate can be used whether the deceased person had a will or no will, whether the deceased person owned real property in his or her name or even if the deceased person’s debts exceed the assets. The deceased person’s will along with the initial probate documents – a petition, oath, a copy of the death certificate in Whatcom County and order are filed with the court clerk. When a judge or court commissioner signs the order opening the probate, then the personal representative receives letters testamentary which state that the personal representative has the power to act on behalf of the estate of the deceased person. Within 20 days of the personal representative being appointed, notice is mailed to all of the beneficiaries under the will and to the heirs at law under the laws of intestacy. The beneficiaries and heirs at law then have 4 months from when the order opening probate was signed to contest the will of the deceased person.  Notice of the deceased person’s death must be sent to the Office of Financial Recovery.  The personal representative will obtain an employer identification number for the estate of the deceased person. A prudent personal representative will publish probate notice to creditors. Publishing probate notice to creditors will shrink the period in which a creditor can make a claim against the estate of the deceased person to 4 months instead of 24 months. The personal representative assembles an inventory of the assets owned by the deceased person on the deceased person’s date of death. A beneficiary or creditor may request a copy of the inventory. Creditors are paid before beneficiaries receive distributions from under a will. If the decedent’s assets exceeds the amount exempt for federal and Washington State estate taxes, then an estate tax return must be filed 9 months after the decedent’s death.  The personal representative waits to receive the closing letter from the Department of Revenue and the Internal Revenue Service which can take up to 18 months if a request for prompt assessment if filed at the same time as the returns. After the personal representative has received the closing letter from the Department of Revenue and the Internal Revenue Service, the personal representative can proceed to distribute the assets to the beneficiaries of a will or according to the laws of intestacy if there was no will.

Conclusion

The exact process or processes needed to collect a deceased person’s assets will vary depending on account titles, beneficiary designations, types of assets owned and the estate plan of the deceased person or lack of estate planning.

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