What is Estate Administration?
If a person passes away and has significant assets, it’s likely that person has an estate that must be administered through the courts. Probate can be a confusing process, but we are here to make sense of it. Outlined below are the general steps that an executor or administrator (collectively referred to as the “personal representative”) will have to go through during the estate administration process:
Find the Will
The first step in estate administration is to locate the will. If the will is found, then the executor must be notified. The executor should then begin the process of hiring an attorney to help with the probate process.
If there was no will or one cannot be found, a close relative or friend should come forward and ask the Court to appoint them as the administrator of the estate.
The Probate Attorney Prepares the Necessary Documents
The next step rests upon the probate attorney. The lawyer should prepare the proper paperwork to open the estate and the personal representative will sign off on the documents. The probate attorney then files the documents with the Court, along with the original will. This process usually takes anywhere from a day or two to a week or so to complete.
Obtain Letters Testamentary
In Tennessee, each county varies as to whether a hearing is required to open an estate. For example, the Probate Courts in counties such as Davidson, Rutherford, and Williamson require a hearing. Sometimes this hearing can be heard before a special Probate Master and other times it must be heard by a judge. By contrast, in localities such as Montgomery County, Robertson County, Houston County, or Stewart County once the paperwork is filed with the Court, the Clerk and Master will review the paperwork and if everything is in order, Letters Testamentary will be issued.
These Letters are issued to the personal representative of the estate – the executor or administrator. The Letters validate to the world that the personal representative listed in the letters is the person responsible for handling the deceased’s affairs. Accordingly, these Letters act as a “golden ticket” for the personal representative to access anything that is in the deceased’s name after their death.
Publish Notice to Creditors
The Court Clerk will then notify a local newspaper such as the Nashville Ledger of the individual’s death and will publish a Notice to Creditors that will run for four (4) months. This Notice to Creditors is a public notice to let anyone that has business with the deceased know that they may come forward and file a claim with the Court against the estate.
Once the Letters are issued to the personal representative, they must notify any identifiable creditors directly. If the deceased owed money to any third party such a credit card company, bank, or other lender, written notification must be made stating that the individual has passed and that the creditor may file a claim with the Court to collect any debt owed to the creditor. Generally, if you have an attorney, he will handle this notification of known creditors or potential creditors.
Gather Assets, Obtain TennCare Release, and EIN for Estate
The personal representative should begin to locate and gather the assets of the estate and the attorney should obtain an EIN (Employment Identification Number) and a TennCare release. The EIN for the estate will allow the personal representative to open an estate account. This estate account can be used to pay the bills and expenses of the estate as well as be a depository for liquid assets during the term of the probate.
A TennCare release is required to be filed before the estate can be closed. This release states that TennCare is not owed anything for medical services and care provided to the deceased. If TennCare is owed money, that claim will have to be satisfied before the estate can be closed.
File Tax Returns
The personal representative should prepare and file the deceased’s final federal income tax return with the IRS for the year in which he or she passed away. The personal representative has until April 15 of the year after the deceased’s death in which to file this return. A certified public accountant would be able to assist the personal representative with this filing. Also, if the spouse survived the deceased and there is a large estate it may be worth filing a federal estate tax return and/or have the surviving spouse elect for portability.
Handle Any Claims Against the Estate
When the Notice to Creditors is first published in the newspaper, four months have to pass before the Court will allow the executor or administrator to close the estate. If a creditor files a claim with the Court, the personal representative should investigate the claim and determine whether it is worthy of being paid. If the claim is questionable or invalid, the probate lawyer should file an exception to the claim.
An exception to the claim against the estate is essentially an objection, stating that the debt should not be paid for whatever reason. The Court will then order a hearing to determine whether the claim should be approved. All approved claims by the Court must be satisfied and resolved before the Court will close the estate.
Once all claims are satisfied, the personal representative should disperse the remaining assets of the estate to the designated beneficiaries pursuant to the terms of the will. For example, if a spouse was to receive the house and the children all cash, the personal representative must make sure those wishes are followed. The probate attorney will prepare any deeds necessary to transfer real estate from the estate to the beneficiaries.
Close the Estate
Once all the assets have been distributed, the attorney should prepare all necessary documents to close out the estate. This is the final step in the estate administration process. The personal representative must make sure that all assets have been properly distributed, all creditor claims have been satisfied, and all estate accounts are closed. If all those objectives have been accomplished, the closing documents will be filed with the Court, and the Judge will sign off on an order closing the estate.