Estate Administration: Why Do I Need a Will?
In our latest post, we discussed the difference between a Small Estate Affidavit and Muniment of Title. Those two alternatives are typically cheaper and faster than a full estate administration. Sometimes, however, it is necessary to fully administer the estate of a deceased person (the “Decedent”). In this article we will discuss the different types of estate administration.
The primary consideration is whether the Decedent has a will at the time of death. If the Decedent drafted a will, the process would be to file an application to probate the will. If the Decedent did not have a will, an application to determine heirship and for estate administration should be filed. Throughout this post, we will refer to these two scenarios as “Probate of a Will” and “Intestate Estate Administration.”
Executor vs. Administrator
The person in charge of probating a will is called the “executor” and the person appointed to administer an intestate estate is referred to as an “administrator.” On occasion, both are referred to as the “personal representative.” Once an executor named in the will is qualified and approved by the court, the court will issue Letters Testamentary which simply proves that a person is the executor of a will. Likewise, an administrator, once qualified and approved, will be granted Letters of Administration by the court. Both Letters Testamentary and Letters of Administration serve the same function, they allow the administrator or executor to gather assets and deal with creditors on behalf of the Decedent’s estate.
Independent vs. Dependent Administration
A secondary consideration is whether the administration of the estate will be “independent” or “dependent.” Texas allows estates to be administered independent of court control and oversight. This means that after an independent administrator or executor is appointed and an inventory of the estate assets is filed with the court, the independent administrator or executor can wrap up the estate without court supervision.
In order to obtain an independent administration, the Decedent must have provided for independent administration in the will or all distributees under the will must agree to an independent administration. Since there is no will in an intestate estate administration, the only way to obtain an independent administration is for all of the heirs to agree.
If an independent administration is not granted, many of the actions necessary to administer the estate will require court approval. This typically results in a more expensive and lengthy administration process.
Administration of All Estates
Estate administration, whether by an executor or an administrator, is the management and settlement of an estate by the personal representative. The administration of an estate involves the following steps:
1. Collection of the Decedent’s assets;
2. Payment of debts and claims against the estate;
3. Payment of any estate taxes;
4. Determination of the heirs or distributees; and
5. Distribution of the estate assets.
Probate of a Will
Typically, a will is drafted to allow for independent administration and the Decedent will have named an executor. The following steps or requirements are necessary in order to probate a will:
1. A valid will is required.
2. The executor will file an application to admit the will to probate.
3. The court will admit the will to probate, appoint the executor and issue Letters Testamentary.
4. The executor will be required to publish notice to creditors.
5. The executor will provide notice to the distributees that the will has been admitted to probate.
6. The executor will respond to claims, collect assets and file an inventory of estate assets.
Intestate Estate Administration
In cases where the Decedent died without a will, a person interested in the estate can apply to be appointed the administrator of the Decedent’s estate. In order for an estate to be administered independently in the absence of a will all of the heirs must agree to the appointment and the independent nature of the administration.
The primary difference between the probating of a will and the administration of an intestate estate is who gets the property. In a previous post entitled “Dying Without a Will May Hurt Loved Ones,” we explored how Texas law affects who receives property in the event the Decedent dies without a will. The rules explained in that article determine the heirs of the Decedent. If an independent administration is desired, it is important to determine the heirs of the Decedent prior to appointing an administrator so all heirs can agree to the independent administration.
Once the heirs are determined and an administrator is appointed, an independent intestate administration is very similar to probating a will. The administrator will give the proper notices, collect assets, pay debts, pay taxes, file an inventory, and distribute the remaining assets to the heirs as determined by the court.
The Takeaway: Probating a will or administering an intestate estate are very similar in many regards, but it is important to know the differences. Dying without a will not only takes away your ability to determine who receives your property when you die, it also leads to additional costs in the administration of your estate. In order for your estate to be administered in the most cost-effective and quickest manner, be sure to name an executor and provide for independent administration of your estate.
– The Business Team
Scott | Josh | Jeremy