Tag Archive for: probate administration

Probate Administration 101: What Is It? And What To Do?

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When a person dies, the distribution of assets happens according to their will or estate plan. Sometimes this distribution runs into conflicts and disagreements amongst family members and creditors.

When disagreements occur, a case is filed with a local court system to review the conflicts. At the start of 2021, the South Carolina State Court Administration office reported that there were over 50,000 probate cases in the statewide court system.

Probate administration means distributing these possessions consistent with an existing will. If you were recently appointed as a will’s executor, read more here on the process.

Probate Administration Defined

Probate administration means managing someone’s personal property after they die. When someone creates their will, the legal process will validate their last wishes after their death. This process also helps execute their instructions and distribute their assets.

When someone dies without a will in place, the local probate court decides on how to allocate the remaining property.

What Happens After a Letter of Administration in South Carolina?

Receiving a Letter of Administration in South Carolina marks a significant step in the probate process when someone passes away without a valid will. This document officially appoints an individual, known as the Administrator, to manage and settle the deceased person’s estate. While obtaining the letter is a crucial milestone, it is merely the beginning of a complex series of responsibilities. The Administrator is now tasked with a fiduciary duty to act in the best interests of the estate and its beneficiaries, ensuring all legal requirements are met before the estate can be formally closed.

Understanding the Letter of Administration

A Letter of Administration is a legal document issued by the South Carolina Probate Court. It grants the appointed Administrator the authority to act on behalf of the deceased individual’s estate. This is necessary when a person dies “intestate,” meaning without a will, or if a will exists but doesn’t name an executor, or the named executor is unable or unwilling to serve.

The letter serves as official proof of the Administrator’s power to access bank accounts, sell property, pay debts, and distribute assets according to South Carolina’s laws of intestate succession. Without this formal appointment, financial institutions and other entities will not recognize an individual’s right to manage the deceased’s affairs.

Initial Steps After the Appointment

Once the Letter of Administration is issued, the Administrator must take several immediate actions. The first crucial step is to obtain an Estate Identification Number (EIN) from the Internal Revenue Service (IRS). This is like a Social Security number for the estate and is required for opening an estate bank account and filing tax returns.

Next, the Administrator should open a separate bank account in the name of the estate. All funds belonging to the deceased should be deposited into this account, and all estate-related expenses should be paid from it. This separation of funds is vital for maintaining clear financial records and avoiding commingling of assets, which can lead to legal issues.

Gathering and Valuing Assets

A primary responsibility of the Administrator is to identify, locate, and take control of all assets belonging to the deceased. This includes real estate, bank accounts, investment portfolios, vehicles, personal belongings, and any other valuables. Once identified, these assets must be properly valued.

Real estate may require a professional appraisal, while personal property might be valued through a combination of appraisals, online research, or estimates.

It’s important to differentiate between probate assets (those that pass through the estate) and non-probate assets (such as life insurance policies with named beneficiaries or jointly owned property with rights of survivorship), as non-probate assets do not fall under the Administrator’s direct control for distribution. An inventory of all assets and their values must be filed with the Probate Court within a specified timeframe, usually 90 days from the appointment date.

Notifying Creditors and Paying Debts

South Carolina law requires the Administrator to notify potential creditors of the deceased’s passing. This is typically done by publishing a notice in a local newspaper, informing creditors that they have a specific period (usually eight months from the first publication date) to file claims against the estate.

The Administrator must also send direct notice to any known creditors. All valid claims must be paid from the estate’s assets before any distributions can be made to heirs. If the estate’s assets are insufficient to cover all debts, South Carolina law provides a specific order of priority for paying creditors. The Administrator must carefully review all claims and challenge any that appear invalid or excessive.

Managing Estate Finances

Throughout the probate process, the Administrator is responsible for the prudent management of the estate’s finances. This includes paying ongoing expenses such as utility bills for real estate, mortgage payments, insurance premiums, and property taxes.

The Administrator must also handle any income generated by the estate, such as rental income or dividends from investments. Accurate and meticulous record-keeping is paramount. Every transaction, including receipts and disbursements, must be documented. The Administrator is also responsible for filing the deceased’s final individual income tax return and any necessary estate income tax returns (Form 1041) with the IRS and the South Carolina Department of Revenue.

Distributing Assets to Heirs

Once all debts, taxes, and administrative expenses have been paid, the Administrator can proceed with distributing the remaining assets to the legal heirs. In South Carolina, if there is no will, the law of intestate succession dictates who inherits the property.

Generally, this means assets are distributed to the surviving spouse, children, parents, or other close relatives in a specific order. The Administrator must ensure that distributions are made correctly according to these laws. Before making final distributions, it’s often advisable to obtain a release from the heirs, acknowledging receipt of their share and releasing the Administrator from further liability.

Filing the Final Accounting

Before the estate can be officially closed, the Administrator must prepare and file a detailed Final Accounting with the South Carolina Probate Court. This document provides a comprehensive summary of all financial activities of the estate from the time of the Administrator’s appointment until the final distributions.

It includes a listing of all assets initially collected, all income received, all expenses paid, and all distributions made to heirs. The Final Accounting demonstrates that the Administrator has fulfilled their fiduciary duties and managed the estate’s assets appropriately. Interested parties, such as heirs or creditors, typically have an opportunity to review and object to the accounting if they find discrepancies.

Closing the Estate

After the Final Accounting has been approved by the Probate Court and all assets have been distributed, the Administrator can petition the court to formally close the estate. This involves filing a Petition for Discharge, requesting that the Administrator be relieved of their duties and liabilities.

Once the court grants the discharge, the estate is legally closed, and the Administrator’s responsibilities are concluded. This final step provides legal closure and protects the Administrator from future claims related to the estate, assuming all duties were performed diligently and lawfully.

Potential Challenges and Considerations

The administration of an estate can present various challenges. Disputes among heirs, unexpected debts, difficulties in valuing or selling assets, and complex tax issues are common. The Administrator may also face personal liability if they fail to properly fulfill their fiduciary duties, such as mismanaging funds or failing to pay legitimate debts.

It is highly recommended that an Administrator seek legal counsel from an experienced South Carolina probate attorney. An attorney can provide guidance on legal requirements, assist with court filings, mediate disputes, and help navigate any complexities that arise, ensuring the process is handled efficiently and in compliance with state law.

Probate Administration Terms

Probate administration involves terminology that can appear overwhelming when you’re already handling a great load of personal grief. Some probate terms you’ll need to learn include:

Decedent

Decedent is a legal term used in estate planning and probate matters. This term refers to the deceased person whose estate is subject to probate proceedings.

Personal Representative or Executor

This is the person responsible for executing the final instructions contained within the will. This role is also called a personal representative.

Letters of Testamentary

These documents come from the local probate court to authorize the executor to begin executing the will.

Notice to Creditors and Notice for Probate

These are written notices sent to any interested party in the estate in question.  Executors send these notices to creditors and identified heirs.

Informal Probate Procedures

Those states that adopt a Uniform Probate Code don’t conduct probate court hearings. This code applies whether the estate is small or large.

This system also applies if the deceased left no will. If someone contests a will, they can’t use this informal system.

Steps to Navigating the Probate System

Your case is determined by your own state’s laws. But most probate cases will go through this process.

Probate Opens

Executors will file a petition with the probate court where the deceased lived. Executors must “prove” a will. They can’t distribute any estate assets until they complete this step.

Send Notice

When the probate court approves the will and appoints the administrator, they should notify interested creditors or other parties. “Interested parties” refers to those specified in the will, as well as other relatives. Probate law refers to these people as the “next of kin.”

An administrator can post a notice in their newspaper if an interested party’s address can’t be found. Interested parties can include:

  • Relative(s) who might inherit an estate in the absence of a will
  • Creditors that the executor learns about after processing the decedent’s financial papers

Itemize Assets/Property

Probate administration also includes calculating the estate’s total value at the time of death. Executors calculate these assets themselves or consult a professional appraiser. Executors might also consult a broker to calculate the value of personal investments (i.e., stocks and bonds) at the time of death as well.

Executors send inventory lists to the estate’s heirs as well as the probate court. An itemized asset list can help demonstrate that the estate was evenly distributed amongst the heirs and creditors.

Distribute Assets

“Asset distribution” doesn’t only apply to making sure beneficiaries receive their inheritance. Distributing assets also include paying out the estate’s outstanding taxes or debts. Asset distribution also includes closing any of the decedent’s existing bank or retirement accounts.

Distributing assets also includes following the laws to leave money designated for minors. A minor can’t legally inherit funds directly. The executor creates a trust to hold the money until the minor is an adult and manages that trust until the minor grows up.

Close the Estate

The last step in probate administration is to close the estate. The executor files a petition to disband the estate and closes the case. This petition is filed once all the assets have been sold, discarded, or distributed and the executor’s and necessary court fees are paid.

What Is Probate Court?

Probate court is the legal forum when conflicts arise with probate administration. Probate judges can review a case if major disagreements come up. Here are some examples of when a probate judge can intervene.

When a will is uncontested that means all involved parties agree that it’s valid. If someone disagrees with a will or that it contains errors, the case is submitted to the court. That’s when a judge will decide if these concerns are accurate

Creditors to an estate must claim outstanding debt within certain deadlines. If an executor denies a creditor’s claim, a judge will rule on the matter

Sometimes executors need to sell estate assets, just to settle outstanding creditor debt claims. If they disagree with those creditor    claims, executors can ask a judge to rule on these matters as well

Beneficiaries may disagree with the way the executor is performing their duties. These beneficiaries can bring their concerns to a judge to review

What Is a Probate Lawyer?

One of the main players in probate administration is the probate lawyer. A probate lawyer can file petitions to appoint an executor and report to the court what the executor completed during his/her administration period. Probate attorneys receive creditor’s claims and send notices to heirs and beneficiaries that the case is opened or closed.

They also handle all required procedures in the courts. For example, they may file a will or contest who becomes the executor. They can handle creditors’ claims and gives notice to creditors, and heirs, beneficiaries, and other people who should receive notice of probate.

Next Steps in Probate Administration

If you are an estate’s executor your first step is to file a petition with the probate court where the deceased lived. You can’t distribute the estate’s assets until you finish this step. The local court will then decide if the will is valid.

Prepare your notices to beneficiaries. Review all creditors’ claims filed against the estate. Itemize the value of the estate and then distribute the assets according to your local court laws.

If you encounter problems along the way with probate administration, don’t hesitate to give us a call. The De Bruin Law Firm is ready to help you with your probate responsibilities.

South Carolina Probate Process Part 1

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When an individual dies, typically, at least some of the property that individual owned will be subject to probate. This means that the property must go through a formal probate process to be distributed according to the individual’s will. Even if the individual did not have a will, that individual’s property may still pass through probate.

Understanding Probate in South Carolina

Probate is the legal process through which a deceased person’s assets are identified, gathered, debts are paid, and the remaining property is distributed to their heirs or beneficiaries. It is a necessary step to ensure the orderly transfer of wealth and to validate the will, if one exists. In South Carolina, like many other states, the probate court oversees this process, ensuring that the deceased’s wishes are honored and that all legal requirements are met. While the concept might seem straightforward, the actual process can be complex, involving numerous legal procedures and strict timelines. 

What Property is Subject to Probate in South Carolina?

In South Carolina, a wide array of assets can be subject to probate. This typically includes any property owned solely by the deceased at the time of their death that does not have a designated beneficiary or a joint owner with rights of survivorship. 

Common examples include: 

  • Land, houses, and other real estate held in the individual’s name alone.
  • Vehicles, such as cars, boats, and motorcycles, also fall under this category if they were solely owned.
  • Personal effects, like antiques, jewelry, art, and other valuable collectibles, are also part of the probate estate.
  • Financial assets are frequently subject to probate, including stocks, bonds, mutual funds, and bank accounts (checking, savings, CDs) that do not have “payable on death” (POD) or “transfer on death” (TOD) designations or joint ownership.

 

Unless all of the individual’s property was meticulously placed into a revocable living trust, or otherwise structured to avoid probate, the estate will almost certainly need to go through the probate process to legally transfer ownership to the rightful heirs.

What Property Is Exempt from Probate?

While many assets are subject to probate, it’s equally important to understand what property is typically exempt from this process. Assets that pass directly to a named beneficiary or joint owner generally bypass probate. This includes life insurance policies and retirement accounts (like 401(k)s, IRAs) where a beneficiary has been explicitly named. 

Upon the death of the account holder, these funds are paid directly to the designated individual without court intervention. Similarly, property held in joint tenancy with right of survivorship, such as a joint bank account or real estate owned by two or more people where the surviving owner automatically inherits the deceased’s share, avoids probate. 

Assets held within a properly funded revocable living trust are also exempt because the trust, not the individual, legally owns the assets. These non-probate assets can significantly streamline the estate settlement process and provide immediate access to funds for surviving family members, highlighting the importance of proper estate planning.

What is the Role of the Executor in South Carolina?

The executor plays a pivotal role in the probate process, acting as the personal representative of the deceased’s estate. This individual is typically named in the will, but if no executor is designated or if the named executor is unable or unwilling to serve, the probate court may appoint one. 

The executor’s responsibilities are extensive and legally binding, requiring diligence and careful attention to detail. Their primary duty is to ensure that the deceased’s final wishes, as expressed in their will, are carried out, or if there is no will, that the estate is distributed according to South Carolina’s intestacy laws. This role involves significant legal and financial responsibilities, making it crucial for the chosen individual to be trustworthy and capable of managing complex administrative tasks. The executor is accountable to the court and the beneficiaries, and any missteps can lead to legal complications.

Initial Steps for the Executor

The first crucial step for the individual named as executor is to meet with the clerk of the probate court in the county where the deceased resided. This initial meeting formally begins the probate process. During this meeting, the executor must present several vital documents. An original copy of the deceased’s will, if one exists, is paramount, as it outlines the deceased’s wishes regarding their property distribution. 

The death certificate is also a mandatory document, serving as official proof of death. Additionally, the executor must provide comprehensive contact information for all known relatives and heirs, as they are interested parties in the estate and must be notified of the probate proceedings. This initial filing allows the court to formally recognize the executor’s authority and initiate the legal framework for administering the estate. Without these foundational documents, the probate process cannot proceed.

Safeguarding Estate Assets in South Carolina

Once the court has officially appointed the executor, a critical responsibility is to ensure that all of the assets within the estate are identified, noted, and meticulously safeguarded. This step is vital to prevent loss, theft, or unauthorized access to the deceased’s property during the probate period. 

For instance, if the estate includes multiple bank accounts, the executor must take immediate steps to ensure that no unauthorized withdrawals are made from these accounts until the probate process is complete and the assets can be legally distributed. This might involve notifying financial institutions of the account holder’s death and requesting that the accounts be frozen or transferred into an estate account. 

Similarly, physical assets like real estate, vehicles, and valuable personal property must be secured. This could mean changing locks on properties, ensuring vehicles are stored safely, and inventorying valuable items to prevent their disappearance. The executor is legally obligated to protect the estate’s value for the benefit of the heirs and creditors.

Locating All Assets

One of the most challenging tasks for an executor can be locating all of the deceased’s assets. If the deceased maintained thorough and organized records, the executor is indeed fortunate, as these records may clearly list all accounts, investments, and pieces of property owned. However, this is often not the case. 

A good starting point when records are scarce is to obtain a credit report for the deceased. This report can reveal open bank accounts, lines of credit, credit cards, and other financial relationships that might indicate hidden assets. Next, a careful review of the deceased’s past tax returns can be highly illuminating. Tax returns often show receipts of interest, capital gains from investments, dividends from stocks, rental income, or business income, all of which can point to specific financial accounts or properties. 

If, after these steps, there is still uncertainty about whether all assets have been located, or if the estate is particularly complex, hiring a private investigator may be a necessary measure to conduct a more thorough and comprehensive search. This can uncover assets that were not immediately apparent from standard financial documents.

Unclaimed Property Search in South Carolina

Beyond personal records and financial statements, South Carolina offers an additional valuable resource for locating potential assets: the “Unclaimed Property Search” available on the state treasurer’s website (www.treasurer.sc.gov). This program serves as a central repository for funds and property that companies or other agencies have been unable to return to their rightful owners. 

This can include forgotten bank accounts, uncashed checks, dormant safe deposit box contents, utility deposits, insurance proceeds, and even stock dividends. When these entities cannot locate the owner, they are legally required to report and remit the unclaimed property to the state’s unclaimed property program. It is a straightforward process to conduct a search on the website using the deceased’s name, and it is a crucial step for any executor to perform, as it can uncover significant assets that might otherwise remain undiscovered and undistributed to the heirs.

Identifying Debts and Liabilities

Just as important as locating assets is the executor’s responsibility to identify any debts or liabilities the deceased had at the time of death. This can be equally, if not more, difficult than finding assets, as creditors may not be immediately known. South Carolina law provides a specific procedure for notifying potential creditors. 

The executor is required to publish a notice in a local newspaper once a week for three consecutive weeks, formally announcing the death and inviting creditors to file claims against the estate. If the executor is already aware of specific creditors, such as mortgage lenders, credit card companies, or medical providers, they may also send direct written notices to these debtors. 

Creditors who receive direct notice have 60 days from the date they receive the notice to file a formal claim with the estate. For creditors unknown to the executor, or those who did not receive direct notice, they have a longer period of 8 months from the date of the first newspaper publication to file their claims. This structured notification process ensures that all legitimate debts are identified before assets are distributed.

Valuing Estate Assets

Once all assets have been located, the executor is responsible for determining their fair market value as of the date of the deceased’s death. This valuation is crucial for several reasons: it helps in calculating any potential estate taxes, ensures equitable distribution among heirs, and provides a clear accounting for the probate court. 

Different types of assets require different valuation methods. For real estate, a professional appraisal is typically necessary to determine its market value. Stocks and bonds are valued based on their trading prices on the date of death or an alternative valuation date if elected. Bank accounts are straightforward, reflecting the balance on the date of death. Personal property, especially valuable items like antiques, jewelry, or collectibles, may require appraisals from specialists. Accurately valuing all assets is a significant undertaking that ensures transparency and compliance with legal and tax requirements throughout the probate process.

Paying Debts and Taxes in South Carolina

After all assets have been identified and valued, and all legitimate claims from creditors have been received and verified, the executor’s next critical duty is to pay all outstanding debts and taxes of the deceased. This step must be handled with extreme care, as there is a specific order of priority for payments under South Carolina law. 

Generally, administrative expenses of the estate (like court fees, attorney fees, and executor commissions) are paid first, followed by funeral expenses, then certain government claims (like taxes), and finally, other secured and unsecured debts. It is imperative that all legitimate debts are satisfied before any distributions are made to beneficiaries, as the executor can be held personally liable if assets are distributed prematurely and then debts cannot be paid. 

This phase also involves addressing any federal estate taxes (though most estates do not meet the federal threshold) and the deceased’s final income taxes. Proper accounting and record-keeping during this stage are essential for a smooth probate closing.

Distribution of Assets in SC

With all debts and taxes paid, the executor can finally proceed with the distribution of the remaining assets to the rightful heirs or beneficiaries. If the deceased left a valid will, the executor must strictly adhere to its instructions, distributing specific bequests to named individuals and dividing the residuary estate as directed. If there is no will, the estate is distributed according to South Carolina’s laws of intestacy. 

These laws dictate how property is divided among surviving spouses, children, parents, and other relatives based on a predetermined hierarchy. The executor will prepare a final accounting, detailing all assets, income, expenses, and proposed distributions. This accounting is typically presented to the court and to the beneficiaries for approval. Once approved, the executor will transfer ownership of assets, such as deeding real estate, transferring stock certificates, and distributing cash, formally concluding the distribution phase.

Closing the Estate

The final stage of the probate process is closing the estate. Once all assets have been collected, all debts and taxes paid, and all distributions made to beneficiaries, the executor must file a final accounting with the probate court. This accounting provides a comprehensive summary of all financial transactions that occurred during the administration of the estate, demonstrating that the executor has fulfilled all their duties according to the law and the will (if applicable). 

The court will review this final accounting to ensure everything is in order. Upon approval, the executor will typically be formally discharged from their duties, releasing them from further responsibility for the estate. This official closing signifies the completion of the probate process, allowing the estate to be fully settled and all legal obligations to be met.

If you need assistance with the probate process, contact our attorneys

At the De Bruin Law Firm, our estate attorneys understand how difficult it is to manage an estate while grieving the loss of a loved one. We are here to provide the guidance you need through each step of the probate process.

The attorneys at the De Bruin Law Firm understand that estate matters are emotional and stressful. We are available to provide objective advice and guidance to our clients. To schedule a free consultation, call 864-982-5930 or use the link below.

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