When a family member passes away, its hard to know where to begin. The loss can often be overwhelming, and we are left with questions as to how to handle a loved one's affairs:
- What do I do now?
- What assets did he or she have?
- Do I need to pay off debts?
- Do I need probate?
Answers to these questions are not always apparent. Wrapping up the affairs of a family member who has passed in Kentucky can be time consuming and confusing. Having a skilled Hopkinsville probate lawyer to assist you in these matters is important. When you first meet with that attorney, they should ask several critical questions regarding your loved one's estate:
- Is there a will?
- If there is a will, who is the executor of the will?
- Who are the heirs and beneficiaries of the deceased's estate?
- What assets did the deceased have in his or her name only?
Once the probate lawyer has answers to these questions, they can begin to put together a plan as to how best to resolve and close out the affairs of your family member.
How Probate Works in Kentucky
Simply put, probate is the process of administering a deceased person's estate. What that means is that when someone passes away assets must be gathered, debts must be paid, and property ultimately distributed to the heirs or beneficiaries.
In Kentucky, the probate begins with the probate lawyer filing a petition with the court to open an estate. If the deceased person had a last will and testament at his death, then that will should be presented to the Court. The Court will review the will and appoint the executor to serve. Be aware that sometimes an executor named in the will has passed away may refuse to serve in that capacity. In that case, you should look for a named alternate executor listed in the will.
If the deceased person had no will, then someone must step forward and be willing to serve as the administrator of the estate. The administrator is appointed by the Court and has the authority to act on behalf of the estate in much the same capacity as an executor.
Administering the Estate in Kentucky
Once an executor or administrator is appointed by the probate court, they first must discover a few things:
- What assets did the deceased have?
- Where are they located?
- What debts did the deceased have?
- Is there life insurance?
Answers to these questions often requires looking through the paperwork of the person who passed away. Look for bank accounts, insurance statements, investment records, bills, and other important documents. The information in these documents will significantly help identify the status of the deceased's affairs.
Once answers to these questions are discovered, the executor or administrator (collectively referred to as the “personal representative”) must then take several actions:
- File a formal inventory with the court
- File final income tax returns
- Ensure that the Kentucky inheritance tax is satisfied
- Resolve any claims against the estate
Kentucky law requires that the personal representative file an inventory within sixty (60) days of the appointment of the personal representative. An inventory is a list of the assets of the estate. Filing this list with the court provides clarity to the beneficiaries and heirs as well as to the Court as to what the assets of the estate are. Sometimes the personal representative may not be able to find all the assets within this time. That is ok. The personal representative should still timely file the inventory based on the assets known. The inventory can always be supplemented if assets are discovered later.
File Income Tax Return
When a person dies, there is a need to file a final federal and state income tax return. The personal representative should gather the requisite information such as W-2s and 1099s. The personal representative may have to contact the deceased person's employer and accountant to help with the preparation of these final returns.
Kentucky Inheritance Tax
Kentucky has an inheritance tax that applies to particular beneficiaries under certain circumstances. Before any estate can be closed in Kentucky, the personal representative must file a statement with the probate court that that the estate has complied with all reporting requirements of the inheritance tax.
Resolve Creditor Claims
In July 2020, Kentucky General Assembly updated the statute regarding creditor claims. Here is what the current law says:
- If an estate is opened, and no notice is given to creditors, creditors have six (6) months from the date of the appointment of the personal representative to file a claim against the deceased's estate.
- If the executor or administrator gives creditor's direct notice, creditors have sixty (60) days in which to file a claim.
- If no estate is opened, creditors have 8 months from the date of death in which to file a claim.
If a creditor files a claim against the estate, that claim must be resolved before it can be closed. Not every claim is valid and the executor does have the ability to challenge the claim before the probate court. If the claim against the estate is valid, then the personal representative must pay the creditor.
Note that there are certain claims and expenses that come before any claims of general creditors though. For example, Kentucky courts give priority to funeral expenses, administration expenses, and taxes
Closing the Estate
Once all of the administration of the estate is complete, the next step is to close the estate. A personal representative may do this in two ways: formal settlement or informal settlement. A formal settlement requires the personal representative file a detailed accounting of:
- All income and expenditures of the estate
- Distributions of the estate to the beneficiaries or heirs
- Attorney fees
- Compensation to the personal representative
By contrast, an informal settlement simply requires the beneficiaries or heirs sign a notarized waiver of accounting and settlement. Once these waivers and all closing documents are filed with the probate court, the judge will close the estate.
Small Estates in Kentucky
So what if a loved one passed owning minimal assets? Good news. Kentucky has certain provisions that allow for smaller estates to be administered effectively and without undue delay.
If a decedent died owning assets of less than $15,000.00 then a formal probate may not be required. In order to qualify to avoid a full probate, the personal representative must show the court that:
- The only persons inheriting are the surviving spouse and/or children
- The estate has less than $15,000.00 in assets after all preferred claims are paid (funeral expenses, taxes, etc.)
If these requirements are satisfied, then the District Court may allow the funds to be distributed directly to the surviving spouse and/or children.
In addition, if all assets passed through joint ownership or to beneficiaries on accounts, then there may not be an absolute need to open a formal probate. In those cases, Kentucky allows the District Court to “dispense with administration.” The will is filed with the Court but no formal administration will be required.
Contact a Hopkinsville Probate Lawyer Today!
If a loved one has recently passed away, you likely have many questions. What do I do? How do I start probate? We are here to answer those questions and to help guide you through the Kentucky probate process. Give us a call at 270-569-0006. Our job is to make your job easy.