Decedents Estates

Why Is Probate Necessary?

When an Ohio resident dies owning probate property in the state, a legal proceeding to determine the deceased's assets, their value and the method of distribution to heirs is provided for by law. This proceeding is called probate, and it occurs whether the person dies with or without a will. Probate takes place in the probate court of the county where the deceased property owner resided. If the decedent also owned property in another state, additional (ancillary) proceedings may be necessary in that state. Probate is necessary to protect the assets of the decedent for the heirs, creditors and other persons due money from the estate, and to ensure the collection of money due to the estate. Probate provides for payment of outstanding debts, taxes and the expenses of administration and for the distribution of the remainder of the estate to the heirs.

Probate Administration Steps

Probating an estate requires the appointment of a person to conduct the administration of the estate. If there is a will, this person is usually named in the will and is called an executor. If there is no will, this person is appointed by the probate court and is called an Administrator. The executor or administrator may be an individual, a bank or a trust company. These persons are generally referred to as fiduciaries and they may be required to post a surety bond to protect the assets of the estate.

The executor or administrator takes care of the following tasks:

• Caring for all property of the decedent
• Receiving payments due the estate, including interest, dividends and other income
• Collecting debts, claims and notes due the decedent
• Determining the names, ages, addresses and degree of relationship of all heirs
• Determining the names, ages and addresses of all beneficiaries, if there is a will
• Investigating the validity of all claims against the estate and paying all outstanding obligations including federal, state and local estate and income taxes
• Planning for federal and state taxes and preparing and filing estate tax returns when required
• Carrying out the instructions of the probate court pertaining to the estate and distributing the assets of the estate to the heirs, subject to the inventory and accounting requirements of the Court

The probate court judge supervises the work of the executor or administrator. These actions require the preparation and filing of numerous legal documents, the publication of notices, hearings in court, an appraisal of the assets of the estate, an inventory of the assets, completion of final income tax returns and possibly gift and estate tax returns, an accounting of funds, final transfer of all assets to beneficiaries, termination of the probate proceeding, and discharge of the executor or administrator by the probate court. Because of the complexity of these procedures, the assistance of an attorney usually is required.

May an Estate Be Released From a Full, Formal Administration?

If the total value of all property in the decedent's individual name is $35,000 or less, the estate can be relieved from most of these administrative requirements. Where the decedent's spouse is entitled to inherit all of the estate's assets, the amount is increased to $100,000. A federal estate tax return may have to be filed depending on the total value of all assets of the decedent. Additionally, a summary administration may be allowed where the assets do not exceed the lesser of $5,000 or the costs of the funeral and interment of the decedent.

Cost of Probate

The costs assessed by the probate court are based on a schedule of charges established by law for each type of document filed in the court. Attorney fees charged for handling matters of the estate must be approved by the court and may be based on the actual services performed by the attorney. The probate court must also approve of other fees, including the fiduciary, appraisers, accountants and others.

Length of Probate

The legislature has recently provided that most estate administrations should be concluded within 6 months. However, if a federal estate tax return is required, the administration of the estate can last more than a year. (Estate taxes are not due until nine months after the decedent's death.) The audit of a federal estate tax return often takes another year, and an executor or administrator cannot safely distribute all of the estate assets until released from personal liability for estate taxes. An extraordinary case involving a contested will or complicated tax litigation may take three years or more. Claims against the estate may be made up to one year from the date of death. Additionally, probate may be delayed by the commencement of related lawsuits such as will contest, personal injury or wrongful death suits, land sale proceedings and others.

Avoiding Probate

"Joint tenancy with right of survivorship" is a form of co-ownership of property whereby two or more persons own property together. On the death of one joint owner, proceedings may still be required to transfer title of certain assets and to determine taxes. Joint tenancy can be a useful device in certain situations. However, the unrestricted use of this device can lead to adverse consequences. Often, litigation over bank accounts occurs to determine whether the creator of the joint tenancy wanted the survivor(s) to be the sole owner(s) of the property.

Other forms of property ownership that bypass probate include life insurance, retirement plans passing to a designated beneficiary, securities and real property designated to be transferred on death (TOD) to a named beneficiary, and assets within a revocable trust funded by the decedent during his or her lifetime (called an inter vivos trust).

Even if assets bypass the probate process, they may still be subject to estate taxes.

Will Information

A properly drawn will assures you that, upon your death, your property will be distributed as you intended. It is important that you review your will periodically with your attorney in order to keep it up to date. A will is also the mechanism for choosing the executor and commonly provides for the nomination of a guardian where there are minor children. A will can also dispense with the requirement of a surety bond which an administrator might otherwise have to post and which would become an additional cost of administration.

Wills must be filed in the probate court upon death. The law provides severe penalties for the withholding or destruction of a will.

If you do not make a will, your property will be distributed according to the Ohio Statute of Descent and Distribution.

Dying "Intestate"

When someone dies without leaving a will to spell out how they want their money and property (called their "estate") to be distributed to survivors, that is called dying "intestate."

Statute of Descent & Distribution

This is the state law that specifies what share of the probate assets in an intestate estate shall be distributed to each of the decedent's heirs after all valid claims have been paid. Generally speaking, the statute gives strong preference to those persons most closely related to the decedent. Following is a partial summary of some basic guidelines in Ohio's statute of descent and distribution: Please note: that the following discussion uses lay person's language rather than precise legal terms or definitions, and does not include an extensive list of additional survivorship situations spelled out in the statute.

• If a decedent is survived by a spouse and no surviving children or lineal descendants of deceased children, the entire estate goes to the spouse.
• If a decedent is survived by a spouse and one or more children or their lineal descendants, and all the children who survive or have lineal descendants are also the children of the surviving spouse, the entire estate goes to the surviving spouse.
• If a decedent is survived by a spouse and one child or the child's lineal descendants and the surviving spouse is not the natural or adoptive parent of the child, the spouse receives the first $20,000 from the estate plus one-half the remainder and the balance of the remainder passes to the child or the child's lineal descendants.
• If a decedent is survived by a spouse and more than one child or their lineal descendants, the spouse will receive the first $60,000 if the spouse is the natural or adoptive parent of one, but not all of the children, or the first $20,000 if the spouse is not the natural or adoptive parent of any of the children. The spouse will receive one-third of the balance of the estate and the children will receive two-thirds of the balance of the estate. Lineal descendants of a deceased child divide that child's share.
• If there is no surviving spouse, but surviving children or their lineal descendants, each of the children receives an equal share of the estate. Lineal descendants of a deceased child divide that child's share.
• If the decedent has no surviving spouse or children and no lineal descendants of deceased children, the estate goes to his or her surviving parent(s) or, if both parents have died, in equal shares to brothers and sisters or their lineal descendants.

The statute goes on at considerable length to cover other possible survivorship situations not covered in this summary. Readers are urged to consult an attorney for clarification of this information, and to seek professional advice before taking any legal action related to the administration of an estate.

Account Information

Within 6 months after his or her appointment, and at least once a year thereafter unless the court specifies otherwise, every fiduciary of an estate is required to file a report called an "account" with the probate court. This account must include an itemized statement of all receipts, disbursements and distributions received or made by the fiduciary during the reporting period. It must also list all estate assets and investments in possession of the fiduciary as of the date of the account, and show any changes in investments since the previous report. When distribution of all estate assets has been completed, the fiduciary files a "final and distributive" account with the court and is released from his or her duties. If all of the beneficiaries consent, certain accountings may be waived.

Characteristics of an Effective Administration

One of the keys to an effective administration is being highly organized. In the administration of a decedent's estate, it is essential to keep very careful records and to carry out all procedures required by the probate court in an orderly manner. It is also important to maintain a positive relationship with the decedent's heirs. This is especially true when the fiduciary is one of several surviving relatives of the decedent. The fiduciary will encounter far fewer problems and complications if he or she keeps all the decedent's heirs informed of what is going on and treats them as equals.

Legal Representative Role

Serving as a fiduciary involves serious legal responsibilities which may expose one to major financial liability if claims and assets are not properly handled. If you are appointed to serve as a fiduciary of an estate, don't rely on casual advice from friends and family members regarding your duties to the Court and the decedent's heirs. A lawyer can provide you with trained legal advice and professional judgment regarding the complicated laws involved, to help you avoid pitfalls and make the proper decisions. Moreover, if the fiduciary is not a lawyer, he or she is not permitted to practice law.

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