Probate and Administration of Decedents' Estates (Portfolio 804)

Tax Management Portfolio, Probate and Administration of Decedents' Estates, No. 804-2nd, is an introduction to, and overview of, the process of probate and estate administration.

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Tax Management Portfolio, Probate and Administration of Decedents' Estates, No. 804-2nd, is an introduction to, and overview of, the process of probate and estate administration. Although the laws of each state differ with respect to the specifics of estate administration, there are sufficient common elements in estate administration in the various jurisdictions to justify the analysis in this portfolio. Since the portfolio does not rely on the probate law of any one state, extensive reference is made to the Uniform Probate Code (UPC), which has been enacted in only a minority of states, and the organization of the Detailed Analysis follows that of the UPC.
In addition to relying on the UPC, the portfolio makes extensive reference to the statutory and case law of the states where appropriate to illustrate the requirements of probate and estate administration, as well as to highlight the differing approaches taken in different jurisdictions. A practitioner seeking guidance as to the requirements of a particular state should make reference to the many excellent estate administration guides published by state and local bar associations and their continuing education affiliates.
The Detailed Analysis begins with a discussion of the purpose of the probate process and examines alternative methods for transferring property at death. It then addresses the issues of where the will should be probated and the appointment of the executor/personal representative. The responsibilities of the executor are described in detail, as well as the supervisory role of the probate court. Particular attention is given to the executor's role in marshaling the assets of the estate, the management of those assets, responding to claims of creditors, tax elections, apportionment of death taxes, sales of estate property, and distributing the estate to its heirs. The role of the attorney in representing the estate is also discussed, including the determination of attorneys' fees and their approval by the court. The portfolio also examines the ethical issues that may face the attorney for an estate, with recommendations as to how the attorney can ethically and competently represent the estate. The Worksheets include practice aids useful in an estate practice.
This portfolio may be cited as Bekerman, 804-2nd T.M., Probate and Administration of Decedents' Estates.

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Marc S. Bekerman is a solo practitioner who devotes substantially all of his practice to trusts and estates. Marc is also an adjunct professor at New York Law School where he was formerly the Associate Director of the Graduate Tax Program.
Marc received his Bachelors of Arts in Mathematics from the State University of New York at Binghamton, his Juris Doctor from Fordham University School of Law, and his Masters of Laws in Taxation from New York University School of Law. Marc is admitted to practice in New York, New Jersey and California, as well as several federal courts including the United States Tax Court.
Marc is a member of the Tax Management Estates, Gifts and Trusts Advisory Board for Bloomberg BNA. Marc currently serves in several capacities within the Real Property, Trust and Estate Law Section of the American Bar Association, including as co-chair of its standing committee on Community Outreach, as a vice chair of its standing committee on Communications, as a member of its standing committee on Continuing Legal Education, as a member of its advisory committee for the Skills Training for Estate Planners program, and as co-chair of the Skills Training for Estate Planners program. Marc is a member of the New York State Bar Association and serves on its standing committee on Legal Education and Admission to the Bar.
Marc has published articles in numerous publications, including Bloomberg BNA Tax Management Estates Gifts and Trusts Journal, Probate & Property, Estate Planning and The Practical Lawyer. He is a frequent lecturer for the American Bar Association, New York State Bar Association, New York County Lawyers Association, Suffolk County Bar Association, Practicing Law Institute, BNA Tax Management, University of Notre Dame, and other professional organizations on a variety of topics related to trusts and estates.
This Portfolio is dedicated to my wife, Lynn, and our two children William and Elizabeth, who have permitted me to share my time with others professionally with the hope that they know that they have never had to share my affection.


Detailed Analysis

I. Introduction and Overview

II. Goal of State Probate Law

III. Fundamental Role of the Fiduciary

IV. Must There Be Probate?

A. Title Issues

B. Exemptions Based on Size

C. Universal Succession

V. Taking Steps to Minimize or Avoid Probate

A. Basic Techniques to Avoid Probate in All States

B. State Rules Permitting Election Out of the Probate Process

C. Family Settlements

1. Scope of Family Settlements

2. Marital Deduction and Other Transfer Tax Issues

3. Necessity for Personal Representative to Join in the Agreement

4. Approach of the UPC

5. Property Interests Not Covered by the Settlement Agreement

VI. Where Should the Estate Be Probated? Issues of Jurisdiction and Venue

A. Why Probate a Will?

B. Where Must the Will Be Probated?

1. The Nature of Probate Courts

2. The Question of Venue

C. Domiciliary and Ancillary Administration

1. Domicile

2. Determining the Situs of Assets for Purposes of Jurisdiction and Venue

VII. Appointment of the Personal Representative and Key Issues with Respect to the Appointment

A. Classification of Executors, Administrators and Personal Representatives

B. Necessity of Appointment

C. Fitness of the Purported Executor

1. Particular Grounds for Denying the Executor's Appointment

a. Conflicts of Interest

b. Mental Capacity

c. Age or Physical Capacity

d. Residence

D. Renunciation

E. Grant of Letters Testamentary

1. General Rules

2. UPC Methods of Appointment

a. Informal Probate

b. Formal Proceedings

3. Impact of Improper Notice

4. Significance of the Issuance of Letters

5. Priority of Conflicting Letters

F. Can the Executor Be Removed after His or Her Appointment? Grounds for Removal of an Executor

G. The Representative's Bond

1. Amount of the Bond

2. Conduct Necessary to Discharge the Bond

3. Necessity for Additional Bond to Sell Real Estate

4. Forcing Representative to Obtain a Bond

5. Miscellaneous Bonding Issues

H. Extent of the Surety's Liability

VIII. A Job Description for the Personal Representative - An Overview of Rights, Duties, Powers and Potential Liabilities

A. The Representative's Fiduciary Duties and the Supervisory Role of the Courts

B. When Does the Representative's Authority Commence?

C. The Executor's Rights with Respect to Personal and Real Property

D. Powers of the Personal Representative

1. UPC Rules on the Powers and Duties of the Personal Representative

2. Special Issues Raised by Decedent's Business Holdings

E. Mandatory Duties of the Personal Representative

IX. Gathering and Inventorying the Estate - The First Essential Function of the Personal Representative

A. Overview

B. What Are the Assets of the Estate for Probate Purposes?

1. Different Treatment of Real Estate and Personalty Under Common Law and the UPC

2. Issues with Respect to Certain Classes of Property

a. Cash, Stocks, Bonds

b. Guardianship Issues

c. Property Subject to a Security Interest

d. Fraudulent Conveyances and Gifts in Contemplation of Death

e. Gifts

f. Constructive Trusts

g. Qualified Retirement Plans and IRAs

h. Causes of Action

i. Contract Rights

j. Life Insurance Proceeds

3. Timing and Valuation Issues

4. Tracking Down Assets

X. Hiring Agents and Attorneys to Assist in Estate Administration

A. Necessity of Hiring Counsel

B. What Can the Fiduciary's Agent Do?

1. Delegating Investment Functions

2. American Law Institute - Prudent Investor Rule

3. UPC Rules on Delegation to Agents

C. Effect of a Direction in a Will to Appoint a Specified Attorney or Agent

D. Co-Representatives’ Engagement of Separate Counsel

E. Scope of the Personal Representative's Liability for the Actions of Agents

XI. Attorneys’ Fees

A. Overview

B. Hourly Rates Versus a Percentage of Probate Assets and the Necessity for Reasonableness

C. Who Is Liable for the Fees?

XII. Managing the Assets of the Estate

A. The Scope of the Personal Representative's Liability - Generally

B. Fiduciary Duties of a Personal Representative

1. Duty of Loyalty

2. Duty of Care

3. Statutory Rules

C. Particular Issues with Respect to Managing Estate Assets

1. Duties in General

2. The Nonprofessional Person's Management of the Estate Assets

a. Impact of Will Provisions

b. Need for Prompt Action

c. Relying on Professionals

d. Overview of Particular Cases

(1) Closely Held Stock

3. The Professional Personal Representative's Management of Estate Assets

a. Conservatism

b. Closely Held Stock

c. “Blue Chip” Stocks

d. Other Factors

4. Brief Overview of the Personal Representative's Duties Under the UPC

5. Issues Unique to Real Property

XIII. Liability of the Executor in Contract and Tort

A. Executor's Personal Liability for Contracts Made in the Course of Administration

B. Executor's Personal Liability for Torts Committed in the Course of Administration

XIV. Handling Creditors’ Claims

A. The Nature of the Personal Representative's Responsibilities to Creditors

B. Nonclaim Statutes

1. Due Process and Nonclaim Statutes

2. Revisions to the UPC Following Pope

3. The Basic Structure of Nonclaim Statutes

a. Impact of Failure to Publish or Send Notice: The Response to Pope

b. Tolling of Nonclaim Statutes Because of Fraud

4. Known or Reasonably Knowable Creditors

C. What Claims Are Within the Nonclaim Statutes?

1. Claims Covered by Insurance

2. Contingent Claims

3. Claims Arising Out of Tort

4. Equitable Claims to Property

5. Federal and State Claims Against the Estate

6. Claims of Secured Creditors

7. Claims Arising at or After Death

D. Claims Procedures: From Giving Notice to the Representative's Response to a Claim

1. Form of Notice

2. Form of Creditor's Response

3. Representative's Duties upon Receipt

4. Challenges to the Allowance or Disallowance of a Claim

E. Impact of the Creditor's Failure to Comply with the Notice Provisions: Can the Nonclaim Statute Be Waived?

F. Insolvent Estates - Orders of Priority

G. Family Allowances and Their Role in the Claims Process

H. Rules of Abatement: How Property Is Used to Settle Debts

XV. Overview of Various Estate and Income Tax Elections

A. General

B. The Fiduciary's General Tax Responsibilities

C. The Decedent's Final Income Tax Return

D. The Decedent's Gift Taxes

E. Electing the Taxable Year of the Estate

F. Filing Estate Income Tax Returns

G. Valuation Elections

1. Alternate Valuation Date Election

2. Conservation Easement

3. Special Use Valuation

4. Qualified Family-Owned Business Interest Deduction

H. The QTIP Election

I. Income v. Estate Tax Deductions

J. Election to Extend the Time to Pay Estate Taxes Under § 6166

K. Other Extensions of Time to Pay Taxes

L. Stock Redemptions Under Code § 303

M. Generation-Skipping Transfer (GST) Tax

N. Distributions in Kind

O. Electing to Treat Revocable Trusts as Part of the Estate

P. Fiduciary Issues in Valuing the Decedent's Estate

XVI. Apportionment of Estate and State Death Taxes

A. In General

B. The Decedent's Intent

C. Statutory Structures

1. Probate vs. Nonprobate Assets - In General

2. Life Insurance Proceeds

3. Property Subject to a Power of Appointment

4. Charitable Recipients

5. Life Interests and Remainders

6. The Power of the Personal Representative to Collect an Apportioned Amount of Tax

7. Probate Court's Role in Determining Apportionment

XVII. Raising Funds in the Estate: Issues Associated with Sales of Estate Property

A. Flexibility (or Lack Thereof) Afforded the Personal Representative

B. Issues Arising in Connection with Real Estate

1. Typical Steps in Authorization Process

2. The Nature of the Representative's Deed

3. Statutory Protections Accorded to Buyers

4. Fiduciary Purchases of Property

C. Jointly or Commonly Held Assets

XVIII. Accounting for, Settling, and Closing the Estate

A. Overview

B. Procedural Steps in Making the Final Accounting

C. Substance of the Accounting Report

D. UPC Final Accounting Rules

E. Impact of the Final Accounting and Settlement

F. Liability of the Personal Representative for Mistakes and Inaccuracies

G. Other Persons Who May Move for a Final Accounting

H. Settlements upon Resignation or Death of Representative

I. Seeking Waiver of the Accounting

J. Objecting to an Accounting

K. Problems with the Accounting

XIX. Paying the Personal Representative

A. General Rules

B. Statutory Compensation Systems

C. Impact of Provisions for Fee in Will

D. Additional Fees for “Extraordinary Services”

XX. Ancillary Administration

A. Overview

B. Scope of Ancillary Representative's Authority

C. Property Subject to Ancillary Administration

D. Claims and Expenses

E. Transmission of the Assets

XXI. Joint Executors

A. Powers

B. Liability to Each Other and Others

XXII. An Overview of the Ethics Issues in Probate and Estate Administration

A. Introduction

B. The First Question: Does the Lawyer Have the Necessary Skills to Represent the Fiduciary?

C. Whom Does the Lawyer Represent?

D. The Role of Written Engagement Agreements

E. Multiple Representation

F. Transactions with the Estate


Working Papers

Table of Worksheets

Worksheet 1 Executor's Checklist

Worksheet 2 Lawyer and Paralegal's Checklist

Worksheet 3 Tracking Charts for Beneficiaries and Creditors

Worksheet 4 Fee and Confidentiality Disclosure Agreement

Worksheet 5 Conflict Waiver Agreement

Worksheet 6 Letter To Putative Executor/Personal Representative to Initiate Probate Process

Worksheet 7 Sample Letter Advising Beneficiaries About Probate Process

Worksheet 8 Sample Letter for Notice to Know Creditors

Worksheet 9 Sample Notice From Creditor re Outstanding Claims

Worksheet 10 Sample Letter Rejecting Claim

Worksheet 11 Sample Waiver of Spousal Rights in Revocable Trust Agreement



Uniform Acts


Treasury Rulings and Procedures