More so in this field of law, than in any other area I practice, the level of client participation and activity can be adjusted to match the needs and desires of the client. Sometimes, personally going through the steps of administration of the estate of a loved one, can be a cathartic process for one grieving their loss. Other times, the estate is more than the client can contemplate and he or she must depend more heavily on the attorney to perform the various functions necessary to fully administer the estate.
All estate administration can be divided into three very general, yet primary, duties, each of which has numerous sub-duties, depending on each particular estate. These three primary duties are:
1. Collection of information: Is there a will and if so, can it be probated? Contrary to popular belief, probate is the process by which a particular paper writing is accepted by the Court as the Last Will and Testament of the decedent, rather than the administration of the estate. Although probate can be seen as a part of the administration, the administration can only occur after completion of probate. This duty includes collecting the name, age and address of every beneficiary of the decedent, determination and discovery of all assets the decedent owned at the time of death or over which the decedent had a power of appointment, and determination of the name and address of each person, firm company or corporation the decedent owed money or even might’ve owed money, as of the date of death, or as I like to call it, the date of promotion. This entails running an advertisement in a local newspaper for all debtors and creditors of the decedent, as well as writing letters to all known and possible debtors and creditors to collect information; checking with the North Carolina escheats fund; running a search for judgment creditors in the judgment docketing area of the Office of the Clerk of Superior Court, monitoring the decedent’s mail and, in appropriate cases, writing to the Medicaid Recovery Section of the NC Department of Health and Human Services. This step also includes making a determination of whether there are grounds for a wrongful death or other civil action available, for which the estate might collect additional assets for the payment of creditor claims or for distribution to the heirs of the decedent. One should also make a determination at this stage, as to the need for filing any tax returns on behalf of the decedent and the estate and if so, can they be prepared by the client or counsel, or should a tax professional be consulted?
2. Collection of Assets and Payment of Debts: Once you know the location and value of all assets and debts of the decedent, the next general duty consists of determining how best to collect what is owned, determining whether there are sufficient assets to pay all debts in full, and prioritizing the debts in accordance with North Carolina General Statute §28A-19-6 in the event there are insufficient funds to pay all creditors in full. Some creditors may make claims of which you are skeptical. In this case you can simply deny the claim, forcing the creditor to take legal action to enforce the claim, or you can ask the Court, subject to the consent of all parties to the claim, to refer the issues of the validity and amount of the debt to a referee, which would be a local attorney appointed by the Court (often an attorney agreed upon between the parties beforehand). The referee will hear all arguments regarding the issues from both sides and then enter a non-appealable Order, awarding relief in full to one side or the other , or perhaps, in part to each.
It is important to note that the personal representative of the estate is personally responsible to the creditors for any amount they should have received from the estate, but did not because the personal representative paid debts inconsistently with the order set out by statute.
3. Distribution of the net estate to heirs of the decedent: When there is a Will, this step tends to be rather simple, as the Will itself contains instructions for the specific distribution of the net estate. It is a little trickier when there is no Will and you have heirs with differing levels of relationship to the decedent. An example is an estate I once administered for a family where the decedent left no Will but had accumulated a rather sizeable estate. We had to file a Petition to have the Court determine who the legal heirs were, in order to protect the personal representative from the claim of anyone mistakenly left out of the distribution. After the Hearing in which the Court determined there were over one hundred heirs, determination had to be made as to the age and competency of each of them, because a distribution to a minor or incompetent or even to another decedent who passed away during the term of administration of this estate, can only be made to one who has been appointed by the Court for such purpose and who presents a document sealed by the Court as evidence of such appointment.
The three general duties above constitute the interaction between the personal representative of the estate and the rest of the world. In addition, the personal representative or PR, has a relationship with the Court and must abide by certain reporting requirements within the time frame set up by statute. After all matters having to do with the qualification of a personal representative such as probate, filing an Oath, posting Bond or filing a Waiver of Bond should the requirement of bond not be waived in the Will, the personal representative is required to file an Inventory with the Court within ninety (90) days of the date upon which the PR was appointed as evidenced on his or her Letters of Appointment issued and sealed by the Court. On the annual anniversary of the date of appointment of the PR, an Annual Account is required to be filed with the Court by the PR, showing the amount available as of the last Annual Account (or Inventory if this is the first Annual Account), together with a showing of any additional funds or other assets collected by the personal representative and not previously reported, as well as any debts paid. The first Annual Account may be the Final Account in the case of a typical estate administration. If it is not, a Motion for Extension of Time needs to be filed with the Court, detailing why more time is needed to complete the administration and how much time is needed.
Attention must also be paid to the time deadlines for filing any tax returns or legal actions of whatever kind. With regard to taxes, penalties can and will be assessed by the taxing authority for the late filing of any return as well as the late payment of taxes. This additional expense becomes a personal liability of the personal representative. With regard to any legal action available to the estate, you must be careful to insure that a Complaint is filed prior to expiration of the statute of limitations set out in the North Carolina General Statutes or you could wind up being on the wrong end of a lawsuit by the beneficiaries. With this in mind, investigation of any claims should be made early on in the administration rather than waiting until the last minute.
As you can see from reading all of the above, estate administration, though not particularly difficult, is very cumbersome, with a lot to remember. More than any other specific area of law, the practice of estate administration interconnects with other areas of law, such as, domestic, real property, business and corporate matters, trusts, taxation and others. There are countless different matters and angles to consider in order to do it right and on time. When things are not handled the proper way, it is not unusual for the personal representative to be held personally and financially responsible by the Court, for remediating the situation. With all of this weighing on the personal representative, who may also be a close family member of the decedent, it is no wonder that the majority of people needing these services seek out and retain qualified lawyers to assist them. Should you ever find yourself in the position of having to administer an estate, make a claim against an estate, or are an heir or creditor of the estate having difficulty with the personal representative, you should be confidant in calling upon me to assist you, no matter what the situation. Having administered and assisted with the administration of literally hundreds of decedent’s estates, I am qualified to assist with whatever situation you may find yourself.