Petition for Probate
The probate proceeding is initiated by filing with the Superior Court the original Will and a petition for probate and for letters testamentary by the administrator of the estate. If the decedent died without a Will, a petition is filed to appoint a personal representative to administer the estate and the assets of the decedent pass by way of the intestate succession laws of the State of Washington. The court issues letters of administration in the case of a probate without a Will.
At the hearing, the judge will examine the petition. If everything is in order, the letters testamentary or letters of administration will be issued to the personal representative (PR) who will then be in a position to act on behalf of the estate.
Creditors of the estate will have four months from the date notice to creditors is published in a newspaper within which to file any claims they may have against the estate. Generally, if the claims are not filed within the four-month period, they will no longer be valid.
Independent Administration of Estates
The petition for letters testamentary or letters of administration will request that the court authorize the personal representative to administer the estate under Title 11 of the Revised Code of Washington (“RCW”). Title 11 allows the PR to do a number of things on behalf of the estate without the necessity of court authorization or approval. For instance, the PR can, unless restricted by the Will, do the following:
- invest estate funds in bank and insured savings and loan association accounts, and in direct obligations of the United States maturing not later than one year
- make ordinary repairs on estate property
- allow, pay, reject, contest or compromise claims against the estate
- pay taxes and assessments of the estate
Other actions may be taken by the PR which do not require court approval but do require that a notice be sent to the devisees, legatees and heirs of the estate.
The Personal Representative should keep track of his or her time as Personal Representatives are allowed to be paid for their services.
Since this discussion covers only a few types of actions which might involve the estate, always consult with your attorney prior to taking any action on behalf of the estate.
As administrator of the estate, the PR has the responsibility to keep an accurate account of all receipts of income and all expenditures that are made on behalf of the estate.
All receipts and expenditures on behalf of the estate should be deposited or charged to a bank account or accounts in the name of the estate. There should be a separation of these funds from the PR’s own personal accounts. It may be helpful for the PR to purchase a receipt and disbursement book or some other account diary to help keep track of all estate receipts and expenditures. The PR’s attorney should advise him or her as to the setting up of the estate checking and savings accounts. If these accounts are not established properly at the outset, it could result in confusion upon distribution of the estate, particularly if a portion of the assets is to be distributed to a trust.
Inventory and Appraisement
After the granting of letters testamentary to the personal representative and prior to final distribution of the estate, an inventory and appraisement of all estate property must be prepared. It is the responsibility of the PR to account for all estate assets.
Any information the PR may be able to supply to his or her attorney relative to the value of estate assets will be helpful in expediting the appraisal process and may avoid future misunderstandings.
Depending on the value of the estate, the federal government and the State of Washington impose a tax on the estate, taxing the estate’s right to pass property to its beneficiaries. At both the federal and state level, there is an unlimited marital deduction to surviving spouses inheriting from the decedent spouse. Thus, any assets passing to the surviving spouse will pass estate tax free to the surviving spouse.
Estate taxes can be substantial. Please review the information provided under the heading Federal and State Estate Taxes.
The federal and state estate taxes are also due and owing within nine (9) months of death. If the estate is going to be subject to estate taxes, an accountant or tax attorney should be engaged early in the probate administration to prepare the federal estate tax return.
The PR’s attorney will attempt to estimate the estate taxes applicable to the estate at an early stage in the proceeding.
The following are among the various tax returns that may have to be filed:
- Decedent’s Final Tax Return
The decedent’s final state and federal income tax returns (U.S. Form 1040) covering the period from the beginning of the decedent’s tax year to the date of death may have to be filed. If the decedent is survived by a spouse, the final returns may be joint returns.
- Returns for Year Prior to Year of Death
Individual income tax returns, state and federal, may be required for a tax year prior to the year in which death occurs, if no returns have been filed for that year.
- Fiduciary Returns for the Estate
If the probate proceeding is opened, a federal fiduciary income tax return (U.S. Form 1041) ordinarily will be required for each year from date of death to final distribution. The PR of the estate may choose either a calendar year or a fiscal year for the tax year of the estate. If a fiscal year is selected, it may be any period ending on the last day of the month not more than twelve months after the date of death. An accountant should be consulted at an early date to assist the PR with matters relating to the fiduciary returns.
- Returns for the Surviving Spouse
Tax returns for a surviving spouse may, for the year of decedent’s death, be joint returns with the PR, covering the survivor’s tax year and the decedent’s year to date of death. Tax decisions and preparation of the returns for the estate and for the surviving spouse are usually interrelated and an accountant should always be consulted in this regard.
There are other tax returns that may or may not need to be filed, including final returns for a trust terminated by reason of decedent’s death, employment tax returns, partnership and corporate income returns, and gift tax returns. An accountant should again be consulted in this regard.
Sales, Leases, Borrowing and Transfers
For several reasons, property in the estate may have to be sold or leased during the period of administration or funds may have to be borrowed. Reasons may include the need for cash to pay inheritance and estate taxes and/or creditor’s claims. It may be desirable to sell property to avoid a distribution of an undivided interest in property to heirs with different goals. The PR may find it desirable to lease property to provide income to the estate and to prevent the property from going to waste.
As previously discussed, all of the above matters may be subject to court supervision and it is important that the PR consult with his or her attorney before entering into any transaction on behalf of the estate.
The PR can be subject to personal liability for entering into third-party contracts which are not legally binding on the estate because they were not subject to proper court supervision.
When the four-month period for Will Contests and filing creditor’s claims has expired, and the inventory and appraisement has been filed, the estate may be in a position to close. Final distribution can be made at this time, and if required, a final report and account by the PR will be filed with the court.
The entire probate proceeding takes a minimum of four months and may take considerably longer depending on the circumstances.