by Anne M. McKinney
Anne M. McKinney, P.C.
Probates definitely aren’t a walk in the park. But with this step-by-step list, understanding the complexities of the system might just be a little easier.
How does probate work in Tennessee? We often hear horror stories about probate problems and long-lasting family feuds over estates. Should you be worried?
The good news: you probably have little to worry about, because the vast majority of estates are handled in Tennessee without “fussin’ and fightin’ among the kinfolk.” Here is a summary of the probate process in our home state:
1. The first task is to locate the will of the person who has died (or to determine that he or she died without a will). The search for the will normally extends to the safe deposit box, the fire-proof box at the house, the “home office” desk drawers, the shoe box at the top of the closet, and so on. In fact, one of our clients recently confessed (somewhat sheepishly) that he keeps his will in his freezer! You will be looking for the original will — the one that was actually signed by everyone, not a copy — because it is much more difficult to take a copy of a will through probate than it is to submit the original document to the probate court.
2. The next step is to figure out who is going to serve as the personal representative (PR) of the estate. (This person is typically called the “executor” when there is a will, or an “administrator” when there isn’t a will.) If there is a will, that document normally names someone to serve as the executor/PR; if that person is deceased or unwilling to serve, then you have to check to see if a back-up or alternate executor was named in the will. If there is no will, Tennessee law says who is entitled to serve as the administrator/PR of the estate, in the order of priority: the surviving spouse, then the “next of kin,” if any (usually one or more of the children of the deceased). If there is no surviving spouse or next of kin, a creditor of the deceased may be appointed to handle the estate. When more than one person is “next of kin,” and there is no agreement among those parties, the probate judge decides which one of them will serve.
3. Once you have located the will (or concluded there is none), and determined who is going to be appointed to handle the estate, you need to discover whether a bond or an inventory or accountings must be filed with the probate court. If there is a will, often that document will appoint the executor to serve “without bond, inventory, or court accountings.” If the person named in the will has agreed to serve, then there is normally no need to pay an insurance company for a bond (to insure that the executor won’t run off with the assets in the estate), or to file a detailed inventory in the court, or to provide the court with a listing of all of the receipts and disbursements the executor handled on behalf of the heirs of the estate. However, if there is no will, then the bond, inventory, and accountings will be required unless all of the estate beneficiaries are adults and they all sign a document agreeing that the bond, inventory and/or accountings, will not be necessary.
4. The next chore in this process is to file the paperwork in the probate court asking that the PR be appointed. If the probate judge approves this
paperwork, the PR will receive “Letters” from the court which make it official: He or she is now authorized to act on behalf of the estate to collect the assets; determine the proper debts, expenses, and taxes; carry out the wishes of the person who has died; and complete the estate settlement process.
5. The PR must notify the heirs of the estate, either by sending them a copy of the will or (when there is no will) by sending them a copy of the “Letters” issued by the court appointing the PR as the person authorized to settle the estate.
6. Then the PR is required to notify the creditors of the estate that the probate process has begun. An official notice is published in the newspaper, but it is also a good idea to send additional, direct notification to any “obvious” creditors such as doctors, hospitals, or credit card companies. If a creditor files a claim which the PR believes is not correct or appropriate, it is the PR’s responsibility to take exception to the claim within a short period of time to avoid having to pay for a debt of the deceased that may not be legitimately due.
7. In addition to paying the debts of the deceased, the PR must also pay his or her taxes, and the list of possible tax obligations can be long. For example, the PR must file (and pay from the estate) any past income tax return the deceased failed to file; the final income tax return(s) for the year of death; a Tennessee inheritance tax return (if the estate is worth more than $100,0000); and, in some cases, a federal estate tax return. If interest or dividends or other income is earned by the estate before the settlement is complete, then a separate federal income tax return (Form 1041) must be filed in the name of the estate.
8. Finally, after all the debts, taxes, funeral bills, attorneys’ fees, accounting fees, appraisal costs, and the PR’s fees are paid, the balance of the assets in the estate must be distributed to the heirs as directed in the will. If there is no will, then this balance of property is paid to the heirs of the estate as determined by Tennessee law. The PR must file a receipt and release from each estate beneficiary with the probate court before he or she can be released from the duties of the estate administration.
Anne M. McKinney has over 30 years of legal and tax experience. Anne practices in the areas of probate, trusts and wills, nonprofit and charitable organizations, taxation, business formation, and planning. www.ammtaxlaw.com