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Administering an Estate without a Will

What does it mean when someone dies “intestate”?
Dying  intestate simply means that a person  died without a will spelling out how his or her property (called an estate) is to be distributed.

What is the role of the probate court? 
In each of Ohio’s 88 counties, there is a division of the common pleas court called the probate division, commonly referred  to as the probate court. The primary job of the probate court is to see that all debts, taxes and other financial  affairs of people who die in that county are resolved, and that the money and other property  left, after debts are paid, are distributed  to the persons  legally entitled to receive them.

Who handles the estate?
When the person who died (the dependent) leaves a will, the probate court appoints the person named in the will to serve as executor of the estate.  If the persons or the person’s will did not name anyone to be the executor, or the person(s) named in the will refuse or cannot act, then the probate court will appoint someone  to act as the administrator of the will. The executor (or the administrator) works with the court to see that the decedent’s financial affairs are resolved and the remainder of his or her estate is distributed according to the instructions spelled out in the will.

When someone dies intestate, the probate court will appoint an administrator of the estate. Like the executor or administrator of the will, the appointed estate administrator  will work  with  the court to see that the decedents financial  affairs are resolved and the remainder of his or her estate is distributed according to the law.

When appointing  an administrator of the estate, Ohio law requires that the court appoint the surviving spouse of the decedent, and if none, or if the spouse declines, the court will appoint one of the next of kin of the decedent. In any event, the administrator must be an Ohio resident. If there is no surviving spouse or next of kin resident of the state, or if the court finds such  persons to be unsuitable, some other suitable person will be appointed as administrator.

Before the court issues official letters of appointment naming an administrator, the appointed person  must sign an acceptance statement that spells out his or her duties and acknowledges that the court can fine or remove  an administrator for failure to perform those duties faithfully. The administrator must also post  a bond (paid from the dependent’s estate) to cover  potential  losses  that the estate might suffer through  error or mishandling of assets during the administration process.

What are the duties of an administrator?
The duties of an administrator are similar to those of the executor of a will, except that an administrator must follow the instructions of the probate court and the statute of descent and distribution rather than the terms of a will.  The basic duties of an administrator are:

1. Inventory and appraisal.  The administrator must identify and determine  the fair market value of all financial  assets and property that were owned by the decedent at the  time of death. The administrator must file an inventory listing  all of the decedents their date of death
court within three months of the administrator s appointment, unless an extension is granted
.

* (Important note: Most estates include what are known as non-probate assets, which generally do not have to be included in the inventory filed with the court.  Non probate  assets are assets that legally pass from a decedent  to a named beneficiary or to a co-owner
at the time of death without having to go through the probate court. Non probate assets include: insurance policies, IRAs and pensions that are payable on death to a beneficiary; and  a home, car or bank account that the decedent owned jointly with rights of survivorship. In many cases, the bulk of a decedent’s assets may be non-probate assets. The administrator must identify non-probate assets for tax purposes, but these assets are not otherwise included in the estate for which the administrator is responsible. When this pamphlet  refers to collecting or distributing a decedent’s assets, it refers only to those  assets that are subject to probate.

If the value of an asset is readily ascertainable for in a publicly  traded company or the balance in a bank account, appraisal is required however, items such as jewelry, art objects, antiques, real estate and any other possessions whose value cannot be readily established must be appraised by a qualified  person.

2. Collecting  assets.  The administrator must collect  all assets of the decedent.  This is very important especially because it is these assets that will be distributed to the heirs after debts  and taxes have been paid. Complications can arise in this process if assets legally owned by a decedent are in the possession of someone else at the time of death, or if property belonging  to the decedent  has been concealed or misappropriated by a third party. Sometimes collecting assets may require the administrator to follow through on a lawsuit in which the decedent was involved at the time of death,  or to file a lawsuit to complete a legal claim the decedent had not fully asserted while alive. For example, if the deceased was killed in an accident it may be necessary to file a suit to recover damages for wrongful death.

3.  Payment of debts and expenses. Creditors (people to whom the decedent, or his or her estate, owe money) have six months from the date of death to present their claims against the estate. In most cases, any claim not submitted within six months is barred forever. Claims must be in writing and sent directly to the administrator or mailed to the decedent’s address, and must be received by the
administrator within six months. In addition to ordinary bills the decedent owed at the time of death, other debts typically include expenses to keep up property; local, state and federal taxes; hospital and funeral expenses; and expenses of administration including probate court costs, bond premiums and fees charged by appraisers, attorneys and the administrator.
Even after accepting a claim as valid, the administrator must be certain there will be sufficient assets to pay all claims, including those not yet presented. Certain debts have priority. Generally, costs and expenses of administering the estate, funeral expenses and taxes must be paid first. If there are sufficient cash assets in the estate to pay debts, they will be paid out of cash. If there is not enough cash, then estate property will be sold (personal property first and then real estate if necessary) to raise the cash needed. If the total assets in an estate are not sufficient to pay all of the valid debts, claimants must be paid according to a priority schedule established by law.

4. Distribution of assets. When all debts, taxes, costs and expenses of the estate have been paid, the administrator must distribute the balance of the estate to the decedent’s heirs according to a strict formula spelled out in Ohio’s statute of descent and distribution. Because an administrator may be held personally liable for an error or excess distribution to an heir that cannot later be recovered, legal advice should be obtained before making a final disposition of estate assets. Sometimes an administrator will make a partial distribution of certain assets before all claims have been received. In such cases, it may be prudent to advise persons receiving early partial distributions that they may be required to return money or property to the estate if it is needed to satisfy valid claims.

What is the statute of descent and distribution?
The statute of descent and distribution, also known as the intestacy statute, is the law that spells out how the probate assets in an intestate estate will be distributed to the decedent’s heirs after all claims, expenses and taxes have been paid. Generally, the statute favors those heirs 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 and not precise legal terms or definitions, and does not include an exhaustive list of additional survivorship situations spelled out in the statute.

• If a decedent is survived by a spouse and no surviving children or 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 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 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 descendants.
• If a decedent is survived by a spouse and more than one child or their 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. Descendants of a deceased child divide that child’s share.
• If there is no surviving spouse, but surviving children or their descendants, each of the children receives an equal share of the estate. Descendants of a deceased child divide that child’s share.
• If the decedent has no surviving spouse or children and no 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 descendants.

The statute goes on at considerable length to cover other possible survivorship situations not covered in this summary.

What is an administrator’s account?
Within six months after his or her appointment, every administrator of an estate is required to file a report called a final and distributive account with the probate court. In certain circumstances, such as when an Ohio or federal estate tax return is due, an account is due 13 months after appointment and once a year thereafter. This account must include an itemized statement of all receipts, disbursements and distributions made by the administrator during the reporting period. When the administrator files the final and distributive account with the court, the administrator is released from his or her duties.

What are characteristics of an effective administrator?
One of the keys to being an effective administrator is to be highly organized. In the administration of a decedent’s estate, it is essential to keep complete, accurate records and to carry out all procedures required by the probate court in an orderly manner. Also, keeping a positive relationship with the heirs is helpful. This is especially true when the administrator is one of several surviving relatives of the decedent. An administrator is likely to encounter 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.

Who should assist the administrator?
Serving as an administrator involves serious legal responsibilities, and can expose you to financial liability if claims and assets are not properly handled. If you are appointed to serve as administrator of an estate, do not 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.