If a person close to you dies without a will, you need to know how to settle an estate if you are the decedent’s closest living relative. When there is no will, state laws dictate who becomes the administrator of the decedent’s estate and how the estate should be distributed. Usually, the decedent’s closing living relative, the surviving spouse or an adult child, who enjoys preference in being the administrator.
Settling the estate
The manner of settling an estate without a will first depends on the value of the estate.
Most states will have a simpler, easier, and faster way of settling an estate for small estates. Although values of small estates usually range at less than $50,000, you should consult your own state’s laws on the definition of a small estate to see if the decedent’s estate is covered and you can utilize a simpler and easier method of settling an estate.
If the decedent’s estate is not a small estate, you need to file a petition for the issuance of letters of administration. These letters of administration will allow you to manage the estate: gather the decedent’s assets, pay the debts and expenses of the estate, and distribute the proceeds to the heirs. The court issues these letters of administration to eligible heirs. Usually, those entitled to letters of administration are the decedent’s closest living relative, the surviving spouse and children, in that order of priority in preference. Consult your state laws for the order of priority in the issuance of letters of administration. In New York, the order of priority on who is given these letters of administration is provided under SCPA § 1001.
Determining the value of an estate
Determining the value of an estate might be tricky, and you might need an estates lawyer to help you. Sometimes, the gross value of the decedent’s estate can be in the millions, but the estate is considered small for purposes of estate administration. How? When most of the decedent’s properties are considered non-probate assets, the gross value of the decedent’s estate may be substantially higher than the property under the estate for administration. In fact, a decedent’s estate may be considered a small estate, even if the gross value of his estate is in the millions. This is because properties with a beneficiary designation or under trust, amongst others, are considered non-probate assets and pass directly to the beneficiary or trustee and do not pass through the estate.
Examples of non-probate assets are jointly owned property with rights of survivorship, retirement accounts with designated beneficiaries, life insurance policies with designated beneficiaries, bank accounts or brokerage accounts that are payable or transfer on death, and life estate properties.
So hypothetically, if the decedent had a retirement account worth $500k naming his spouse as beneficiary, life insurance policy worth $100K naming his child as beneficiary, a house in the Hamptons and a condo in Manhattan with a total value of $1M purchased with his wife while they were married, and a bank account worth $30K, the decedent’s estate for purposes of probate is a small estate because only the bank account worth $30K is a probate asset that needs to be administered under the estate.
An estates attorney will be able to assist you in determining the value of the estate for purposes of probate proceedings.
If the estate is small, whether or not there is a will, the estate is settled using a simplified court procedure. This procedure is usually concluded with the submission of court forms and affidavits.
State laws will define what is a small estate. In New York, an estate is small if the probate assets are personal property worth less than $50,000 and without real property.
Regular letters of administration
If the estate is not small, in order to settle the estate, a petition for letters of administration is filed in the probate court of the county where the decedent last resided. The person entitled to administer the estate is the closest living relative, who is usually the surviving spouse or the adult children. Once the court issues letters of administration, the administrator begins to have the power to manage the estate.
Settling the estate includes gathering the decedent’s assets, paying the debts and expenses of the estate, and distributing the proceeds to the heirs. When the decedent’s estate is substantial, it is recommended to get a probate lawyer to settle the estate since it will save you time, ensure you are compliant with legal processes, and minimize the risk of being personally liable as administrator.
State laws will provide the order of priority of payment for debts. You as administrator may be held personally liable if this order is not observed, especially when the decedent’s assets are not sufficient to pay the debts.
When there is no will, settling as an estate is usually governed by state laws. Since the decedent died without giving direction on how his property is to be disposed, state laws dictate the distribution of the decedent’s estate. Still, procedures have to be complied with so you may be able to access and gather the decedent’s assets, pay the debts, and distribute the net proceeds. The guidance of a probate lawyer is important at this stage so you can settle the estate in a timely, legal manner.
Should you need assistance, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York, NY, Brooklyn, NY and Queens, NY. You can call us at 718-509-9774 or send us an email at firstname.lastname@example.org.