The probate proceeding is initiated by the administrator of the estate filing the original Will and a petition for probate and for letters testamentary with the Superior Court. If the decedent died without a Will, a petition is filed to appoint a personal representative (PR) 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.
In most contemporary common-law jurisdictions, the law of intestacy is patterned after the common law of descent. Property goes first or in major part to a spouse, then to children and their descendants; if there are no descendants, the rule sends you back up the family tree to the parents, the siblings, the siblings' descendants, the grandparents, the parents' siblings, and the parents' siblings' descendants, and usually so on further to the more remote degrees of kinship. The operation of these laws varies from one jurisdiction to another. In Washington, the laws of intestate succession can be found at RCW 11.04.015.
At the probate hearing, the Judge or Court Commissioner will examine the petition. If everything is in order, the letters testamentary or letters of administration will be issued to the PR who will then be in a position to act on behalf of the estate.
The petition for letters testamentary or letters of administration will request that the court authorize the PR to administer the estate under Title 11 of the Revised Code of Washington (“RCW”). The Court may grant nonintervention powers to the PR (nonintervention powers allow the PR to administer and close the estate without further interaction with or supervision by the Court). For instance, the PR can, unless restricted by the Will, do the following:
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.
After the granting of letters testamentary to the PR 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.
Creditors of the estate will have four months from the date Notice to Creditors is published 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. If actual Notice is not sent to all known creditors, the statute of limitations for those creditors’ claims against the estate will be twenty-four (24) months after the date of the decedent’s death.
There is no longer a Washington State inheritance tax imposed on the beneficiaries of an estate. Washington State gift taxes have also been abolished.
However, 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. There is an unlimited marital deduction for surviving spouses inheriting from a spouse dying after December 31, 1981. Thus, an estate will pass to a surviving spouse tax free.
With regard to non-spousal inheritance, there is a credit from estate taxes for all estates. The current equivalent exemption from State of Washington estate taxes is $2,000,000. In other words, if the assets of the estate, less deductions, are less than $2,000,000, no Washington State estate taxes will be imposed.
The federal and state estate taxes are also due and owing within nine (9) months of death. Federal estate taxes can be substantial. 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 the decedent’s death, employment tax returns, partnership and corporate income returns, and gift tax returns. An accountant should again be consulted in this regard.
For a number of 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 a number of 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 appropriate period for 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 will 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.
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