Oklahoma Bar Journal
Navigating a Probate: A Primer for the Personal Representative
By A. Daniel Woska
After an individual’s death, his or her assets will be gathered, business affairs settled, debts paid, necessary tax returns filed and assets distributed as the deceased individual (typically referred to as the “decedent”) directed. These activities generally will be conducted on behalf of the decedent by a person acting in a fiduciary capacity, either as a personal representative or a trustee, depending upon how the decedent held his or her property.
As a first step, it is helpful to know the meaning of a few common terms:
- Fiduciary: An individual, bank or trust company that acts for the benefit of another. Trustees, executors and personal representatives are all fiduciaries.
- Grantor: (Also called “settlor” or “trustor.”) An individual who transfers property to a trustee to hold or own subject to the terms of the trust agreement setting forth his or her wishes. For income tax purposes, the same term is used to mean the person who is taxed on the income from the trust. It is confusing, but they are different concepts.
- Testator: A person who has made a valid will. (A woman is sometimes called a “testatrix.”)
- Beneficiary: A person for whose benefit a will or trust was made; the person who is to receive property, either outright or in trust, now or later.
- Trustee: An individual or bank or trust company that holds legal title to property for the benefit of another and acts according to the terms of the trust. This can be confusing in that you can sometimes be both a trustee and a beneficiary of the same lifetime (inter vivos) trust you established or a trust established by someone else for you at his or her death (testamentary trust).
- Executor: (Also called “personal representative” – a woman is sometimes called an “executrix.”) An individual or bank or trust company that settles the estate of a testator according to the terms of the will or, if there is no will, in accordance with the laws of the decedent’s estate (intestacy), although a person acting in intestacy may be called by a different name, such as administrator.
- Principal and Income: Respectively, the property or capital of an estate or trust and the returns from the property, such as interest, dividends, rents, etc. In some cases, gain resulting from appreciation in value may also be income.
As a general rule, the administration of an estate or trust after an individual has died requires the fiduciary to undertake certain routine issues and follow several standard steps to collect and then distribute the decedent’s assets in accordance with his or her wishes. These guidelines focus on activities that occur in an estate or trust immediately after the individual has died.
UNDERSTANDING THE WILL OR TRUST
It is very important to read and understand the will or trust so that you will know who the beneficiaries are, what they are to receive and when, and who your co-fiduciaries are, if any. Does the will give everything outright, or does it create new trusts that may continue for several years? Does a trust mandate certain distributions (i.e., “All income earned each year is to be paid to my wife, Nancy”), or does it leave this to the trustee’s discretion (i.e., “My trustee shall distribute such income as she believes is necessary for the education and support of my son, Alan, until he reaches age 25”)? The document often imparts important directions to the fiduciary, such as which assets should be used to pay taxes and expenses. The document will usually list the fiduciary’s powers in some detail.
Most fiduciaries retain an attorney who specializes in the area of trusts and estates to assist them in performing his or her duties properly. An attorney’s advice is very helpful in ensuring that you understand what the will or trust and applicable state law provide. For example, at an initial meeting, it is common for the attorney to review, step by step, many of the key provisions of the will or trust (or both) so you will understand your role. Be mindful that if you accept the appointment to serve as an executor or trustee, you will be held responsible for understanding and implementing the terms of the trust or will.
MANAGING ESTATE ASSETS
It is the fiduciary’s responsibility to locate and keep safe assets comprising an estate or trust. Especially when a fiduciary assumes office at the grantor’s or testator’s death, it is crucial to secure and value all assets as soon as possible. Some assets, such as brokerage accounts, may be accessed immediately once certain prerequisites are met. Typical prerequisites are an executor’s obtaining formal authorization, sometimes referred to as letters testamentary, from the court and producing a death certificate. Other assets, such as insurance or retirement benefits, may have to be applied for by filing a claim.
You may need a professional appraiser to value the decedent’s tangible personal property, like household furniture, automobiles, jewelry, artwork and collectibles. Depending on the nature and value of the property, this may be a routine activity; however, you may need the services of a specialist appraiser if, for example, the decedent had rare or unusual items or was a serious collector. Real estate, whether residential or commercial, and any business interests also must be valued. Besides providing a valuation for assets that may be reported on a court-required inventory or the state or federal estate tax return, the appraisal can help the fiduciary gauge whether the decedent’s insurance coverage on the assets is sufficient.
Appropriate insurance should be maintained on the assets throughout the fiduciary’s job. The fiduciary also must value financial assets, including bank and securities accounts. Bear in mind that for federal estate tax returns for estates that do not owe any federal estate tax, certain estimates are permitted. This might lessen the appraisal costs that must be incurred.
HANDLING DEBTS AND EXPENSES
It is the fiduciary’s duty to determine what bills remain unpaid at death and what expenses to incur in the administration of the estate. In some cases, the estates may be harmed if certain expenses, such as property or casualty insurance bills or real estate taxes, are not paid promptly. Oklahoma requires a written notice to any known or reasonably ascertainable creditors. While most bills will present no problem, it is wise to consult an attorney in any unusual circumstances, as the fiduciary can be held personally liable for improperly spending estate or trust assets or for failing to protect the estate assets properly, such as by maintaining adequate insurance coverage.
The fiduciary may be responsible for filing a number of tax returns. These tax returns include the final income tax return for the year of the decedent’s death, a gift or generation-skipping tax return for the current year if needed and any prior years’ returns that may be on extension. It is not uncommon for a decedent who was ill for the last year or years of life to have missed filing returns. The only way to be certain is to investigate. In addition, if the value of the estate (whether under a will or trust) before deductions exceeds the amount sheltered by the estate tax exemption amount, a federal estate tax return will need to be filed. Even if the value of the estate does not exceed the estate tax exemption amount, a federal estate tax return may still need to be filed. Under the concept of portability, if the decedent is survived by a spouse who intends to use any estate tax exemption the deceased spouse did not use, an estate tax return should be filed.
Since the estate or trust is a taxpayer in its own right, a federal tax identification number must be obtained, and a fiduciary income tax return must be filed for the estate or trust. A tax identification number can be obtained online from the IRS website. You cannot use the decedent’s social security number for the estate or any trusts that exist following the decedent’s death.
It is important to note for income tax planning that the estate or trust and its beneficiaries may not be in the same income tax brackets. Thus, the timing of certain distributions can save money for all concerned. Caution should also be exercised because trusts and estates are subject to different rules that can be quite complex and can reach the highest tax rates at very low levels of income. Some tax return preparers and accountants specialize in preparing such fiduciary income tax returns and can be very helpful. They are familiar with the filing deadlines, will be able to determine whether the estate or trust may pay estimated taxes quarterly and may be able to help you plan distributions or other steps to reduce tax costs.
Most expenses that a fiduciary incurs in the administration of the estate or trust are properly payable from the decedent’s assets. These include funeral expenses, appraisal fees, attorney’s and accountant’s fees and insurance premiums. Careful records should be kept, and receipts should always be obtained. If any expenses are payable to you or someone related to you, consult with an attorney about any special precautions that should be taken.
FUNDING THE BEQUESTS
Wills and trusts often provide for specific gifts of cash (i.e., “I give my niece $50,000 if she survives me”) or property (i.e., “I give my grandfather clock to my granddaughter, Nina”) before the balance of the property, or residue, is distributed. The residue may be distributed outright or in further trust, such as a trust for a surviving spouse or a trust for minor children. Be sure that all debts, taxes and expenses are paid or provided for before distributing any property to beneficiaries because you may be held personally liable if insufficient assets do not remain available to meet estate expenses. Although it is usual to obtain a receipt and refunding agreement from a beneficiary that states they agree to refund any excess distribution made in error by the fiduciary, as a practical matter, it is often difficult to retrieve such funds. In Oklahoma, you need a court approval before most distributions may be made. Where distributions are made to ongoing trusts or according to a formula described in the will or trust, it is best to consult an attorney to be sure the funding is completed properly. Tax consequences of a distribution can sometimes be surprising, so careful planning is important.
TRUST ADMINISTRATION
Trusts are designed to distinguish between income and principal. Many trusts, especially older ones, provide for income to be distributed to one person at one time and principal to be distributed to that same person at a different time or to another person. For example, many trusts for a surviving spouse provide that all income must be paid to the spouse but provide for payments of principal to the spouse only in limited circumstances, such as a medical emergency. At the surviving spouse’s death, the remaining principal may be paid to the decedent’s children, charity or other beneficiaries. Income payments and principal distributions can be made in cash or at the trustee’s discretion by distributing securities as well as cash. There is no such thing as a “standard” distribution provision – read these documents carefully.
Unless a fiduciary has financial investment experience, he or she should seek professional advice regarding the investment of trust assets. In addition to investing for good investment results, the fiduciary should invest within the applicable state’s prudent investor rule that governs the trust or estate and with careful consideration of the terms of the will or trust, which may modify the otherwise applicable state law rules. A skilled investment advisor can help the fiduciary decide how to invest, what assets to sell to produce cash for expenses, taxes or outright gifts of cash and how to minimize income and capital gains taxes. Simply holding the investments the decedent owned will not be a defense if an heir claims you did not invest wisely or violated the law governing trust investments. It is important to have a written investment policy statement stating what investment goals are being pursued.
During the period of administration, the fiduciary must provide an annual income tax statement (called a Schedule K-1) to each beneficiary who is taxable on any income earned by the trust. The fiduciary also must file an income tax return for the trust annually. The fiduciary can be held personally liable for interest and penalties if the income tax return is not filed and the tax paid by the due date, generally April 15.
CLOSING THE ESTATE
Estates may be closed when the executor has filed the final account and has a court order on the payment of debts, expenses and taxes; has received tax clearances from the IRS (if necessary); and has distributed all assets on hand. Trusts terminate when an event described in the document, such as the death of a beneficiary, or a date described in the document, such as the date the beneficiary attains a stated age, occurs. The fiduciary is given a reasonable period of time thereafter to make the actual distributions. It is a good practice to require all beneficiaries to sign a document prepared by an attorney in which they approve of your actions as fiduciary and acknowledge receipt of assets due them. This document protects the fiduciary from later claims by a beneficiary. These formalities are recommended even when the other heirs are relatives, as that alone is never an assurance that one of them will not have an issue and pursue a legal claim against you. A final income tax return must be filed and a reserve kept available for any due but unpaid taxes or estate expenses.
COMMON QUESTIONS
How Do I Title (Own) Bank and Other Accounts?
Each bank, trust company or investment firm may have its own format, but generally, you may use, for a trust, “Alice Carroll, Trustee, Lewis Carroll Trust dated Jan. 19, 1998,” or, in a shorthand version, “Alice Carroll, Trustee under agreement dated Jan. 19, 1998.” For an estate, you should use “Alice Carroll, Executor, Estate of Lewis Carroll, Deceased.”
Where Do I Sign My Name in a Fiduciary Capacity?
An executor signs: “Alice Carroll, Executor (or Personal Representative) of the Estate of Lewis Carroll, Deceased.” A trustee signs: “Alice Carroll, Trustee.”
Where Do I Hold the Estate or Trust Assets?
You should open an investment account with a bank, trust company or brokerage company in the name of the estate or trust. All expenses and disbursements must be made from these accounts, and you should receive regular statements.
How (and How Much) Do I Get Paid?
Because being a fiduciary is time-consuming and often difficult, it is appropriate to be paid for your services. The will or trust may set forth the compensation to which you are entitled. If the documents do not, many states either provide a fixed schedule of fees or allow “reasonable” compensation, which usually takes into account the size of the estate, the complexity involved and the time spent by the fiduciary. Executor’s or trustee’s fees are taxable compensation to you. Several states do not permit you to pay your own compensation without a court order, so ask your attorney before you write yourself a check. Many fiduciaries in the same family as the decedent are quick to waive fees. Before doing this, however, consult with an attorney for the estate and be certain you understand the full scope of your duties and any ramifications of waiver.
What if a Beneficiary Complains?
Even professional fiduciaries, such as trust companies, receive complaints from beneficiaries from time to time. The best way to deal with them is to do your best to avoid them in the first place by consulting with an attorney experienced in estate administration. Many complaints arise because beneficiaries are not kept up to date about the administration of the trust or estate. Frequent communication with beneficiaries is a must. The best approach in all instances is to be proactive by communicating throughout the estate or trust administration process and handling all matters with appropriate formality. If a complaint involves more than routine issues, consult with an attorney who practices trust and estate matters.
Can I Be Sued or Held Personally Liable?
Your errors or mismanagement of a trust or estate can subject you to personal liability. Common pitfalls include not paying taxes or filing returns on time, improper investment choices (whether too conservative, too speculative or favoring one beneficiary over another), self-dealing (buying assets for yourself or a family member from the estate or trust, whether at market price) or allowing property or casualty insurance to lapse, resulting in a loss to the estate or trust. Your best protection is to get good professional advice as early as possible in the process, communicate regularly with the beneficiaries, treat everything with appropriate formalities as if you were not a related party (even if you are) and fully document your actions and decisions.
How Am I Discharged as Fiduciary at the End of the Administration? What if I Want to Resign?
Whether you stop acting as a fiduciary because the estate or trust has terminated or you wish to resign before the conclusion of your administration, you must be discharged either by the local court or the beneficiaries. In some states, discharge is a formal process that involves the preparation of an accounting. In other states, you can be discharged with the use of a relatively simple document signed by the beneficiaries. If you are resigning prior to the conclusion of your administration, check the will or trust document to see who succeeds you as fiduciary. If no successor is named, you may need a court proceeding to appoint a successor before you can be discharged.
CHECKLIST/GUIDE FOR PERSONAL REPRESENTATIVES
For the Attorney and Client to Both Use
DEFINITIONS
- Decedent: The term used to identify the person who has died and whose estate is being managed.
- Estate Administration: The legal process whereby the final affairs of the deceased person are managed and the estate distributed according to the laws of intestate succession. The process can look very similar to the process for probate of a will.
- Personal Representative: The person who has been appointed by the court to administer (manage) the affairs of the decedent (with or without a will). This position was previously known as executor/executrix, and you will still hear those terms occasionally.
- Probate: The court process whereby the last will and testament is officially submitted to the court, and the statutory process for handling the estate is completed.
TASKS AND GUIDANCE
Here are some, but not all, of the issues/tasks you should consider and complete in your role as the court-appointed personal representative of an estate. (Initial and date each task as completed, and make notes.)
_____. As quickly as possible, research whether the decedent had a prepaid funeral plan and/or a prepaid funeral policy. Locate the policy documents, if possible, and contact the funeral home for a copy of the memorial planning if that is available. Such a plan is binding on the family and friends.
_____. Right after you are appointed personal representative of the estate, consider having the mail forwarded to you. This will allow you to identify lots of information you're going to need throughout the probate process. You can begin this task by going to usps.com, and in the search option at the top right of the screen, search for "mail addressed to the deceased," and you will find instructions. You may also go to the post office in person.
_____. Watch the mail for bills of every type. Make a copy of each different creditor for the probate attorney, as we (you) are obligated to send a notice to all the creditors that are either known or could have been reasonably identified had you given the search reasonable effort. You need not copy multiple statements from the same creditor as that wastes the attorney's time and your money.
_____. At the very beginning of the case (or as soon as reasonably possible), draw/write a family tree for the decedent. This is important, and some aspects may not seem necessary. You must include offspring of deceased children of the decedent if they left children or grandchildren of their own. Even more unexpected for some people is that you must also list the decedent's children who were adopted by other persons in the past. Some people find it even more surprising that children whose paternity was never actually legally established should be listed because those children have a right to inherit if they can prove they are the child of the deceased. Be very careful with this effort because the risk that accompanies you leaving someone out is rather substantial.
_____. Be sure to advise your probate attorney if there is anyone who is a surviving spouse or who might claim to be a surviving spouse of the deceased person. You must keep in mind that Oklahoma still recognizes common-law marriages. There does not have to be an official marriage license, and there doesn't even have to be an official marriage ceremony of any sort. Keep in mind that you are not the judge, and you should not be deciding whether someone is or is not a common-law spouse. If they claim to be one, list them and let the judge figure it out.
_____. Do your best to identify all the decedent's financial accounts of every type. Keep in mind that not all financial institutions continue to mail their statements through postal service mail. It is quite likely, and appears to be becoming much more common, that statements are only sent through email.
_____. One of your fairly early tasks will be the creation of the inventory and appraisement. This is essentially just a list of assets belonging to the estate and their corresponding values. The entries are usually quite simple. For example: 2015 Dodge Grand Caravan in good condition, $__________ (insert the value you research online or from someone quite knowledgeable in vehicle values); or checking account at First State Bank with account number *1234, $9,423.15.
_____. Occasionally, the personal representatives will use a report of an estate sale as part of the inventory and accounting if the company that conducts the sale keeps detailed records of items sold and the price received. (Whether to hold an estate sale is largely dependent on the personal property available if family members first receive items.)
_____. Consider carefully the wisdom of allowing the heirs and beneficiaries the first opportunity to shop at the estate sale. If little brother thinks the sofa was underpriced, maybe he will just buy it rather than cause a ruckus. It is also possible, with a little planning, to allow heirs/beneficiaries to bid at an estate auction using funds they have not yet inherited, but this does require some serious paperwork and coordination and usually calls for the heir to pay at least the sales tax due. (Yes, sales tax is due on an estate sale.)
_____. Take great care in identifying all the names under which the deceased person has done business so that you will be able to assist your probate attorney in providing clear title and administering all assets. This is sometimes more problematic with those who have been married more than once. It is also an issue for those of us who do not generally use our first name in our business affairs, and yet, the government and some businesses still insist that we do certain transactions using our first names. Therefore, it is important to list all the names used by the decedent during their lifetime unless it was so many years ago that there is no reasonable possibility that there are any business matters in that name. I recommend you default on the side of listing all the names, even if you're not confident they are useful.
_____. Be sure to investigate all contracts the decedent may have. Please keep in mind that some of these contracts might be just a few dollars a month for a cell phone, internet service, an alarm system and so forth. Be sure you provide all of these to the probate attorney as soon as reasonably possible.
_____. You will likely need to terminate some ongoing services the decedent had been paying for. For example, you may want to turn off the cell phone, but even if you do, I suggest you keep the cell phone and keep it charged, as there may be important personal information on the phone, and it may be information that cannot easily be found somewhere else. Please note that if the decedent had a house and household goods, it may be wise not to terminate the alarm system contract or the monitoring; however, you likely need to change the alarm codes to ensure that only the people authorized to represent the estate will have access to the house and the valuables therein.
_____. Identify all insurance held in the decedent's name. Life insurance is an obvious one to look for. You can often find insurance policies by looking backward over the previous years of bank transactions. If you find an insurance company notated there, you should investigate. Watch for automobile insurance. If the decedent owned an automobile, you will want to keep it insured until it is passed on to the beneficiary or sold. The same would apply to boats, vacation homes and many more such items. In fact, you may not even know to look for the watercraft until you find the policy that has been insuring it, so watch these issues very carefully.
_____. It is very important that you determine whether the house or houses of the decedent are insured. If they are insured, you probably need to notify the insurance company that the decedent has passed away and that you are the personal representative of the estate. This will probably require some changes in the policy. Unfortunately, it may also require some additional insurance premiums. But it's better to pay the premiums than to have a claim denied because you failed to keep the insurance company updated.
_____. Keep the house secured! You may need to change the locks and the alarm codes, and you may even need to have the windows and doors secured with plywood to stop burglars and others from entering the property and spoiling it. Another way you can help secure the property, especially if it is in an urban neighborhood, is by reaching out to the neighbors and asking them to watch for any activity – give them your telephone number so they can reach out to you if they see something that seems to call for intervention (after they call the police, perhaps).
_____. Be mindful of the weather and the effects it could have on assets. If it is fall or winter, be sure the house has enough heat to keep the water lines from freezing. Likewise, if it is a humid time of year, you may need to keep some air conditioning running to keep mold from growing inside the property. Such incidents can cause great financial damage, and someone may see you as the culprit because you are, in fact, responsible for taking care of estate property.
_____. The general rule, and it's a pretty reliable rule, is that you should not drive vehicles belonging to the decedent, and you should not allow others to do so either. If you have a wreck or if someone else has a wreck after you allowed them to drive the car, it is highly likely that the heirs and beneficiaries of the estate are going to be deeply unhappy with you, and it is entirely possible that you will have to write a big check.
_____. Please keep in mind that estate assets do not "belong to you." You are more like a manager and not an owner. You are not free to give away estate assets. Those estate assets do not belong to you! If they have cash value that could reasonably be received on behalf of the estate, you are generally not allowed to distribute those to anyone without a court order.
_____. Keep a separate notebook or ledger (list) of all the expenses you incur on behalf of the estate. If you drive to the courthouse and pay $4 for parking, write it in a notebook and keep track of it. Keep track of your mileage. Keep receipts for yard work, utilities, copies, stamps and other such costs. You will likely spend your money on behalf of the estate, and you will want to be reimbursed. That will be much easier if you have a log of expenses and receipts matching those expenses.
_____. You are not required to personally sweep the house. You are not required to operate the garage sale and so forth. You should treat your task as a management position. You are to identify the right people and businesses to do the work in an honorable and reasonably priced fashion, but you are not required to do all the work yourself. If, however, you are the only person inheriting, you might choose to ignore this piece of advice because you know that you are receiving 100% of the estate anyway. But please keep in mind that things don't always go the way we expect, and if a creditor appears to take the estate, you may wish you had not contributed large chunks of your time to the work.
_____. Be careful to keep the heirs and beneficiaries advised of what's going on in the probate matter. In my experience, one of the biggest causes of friction and wasted legal fees is family members becoming frustrated because the executor of the estate will not talk to them about what's going on.
_____. You, the personal representative (and your spouse), are generally not allowed to purchase anything from the estate! Not stock, not a house, not a car, not a used toaster. If you want to purchase anything from the estate, you need to talk to the attorney, and the attorney needs to either have someone else become the personal representative (at least for the sale of the thing you want to buy) or get a specific court order that can, in certain circumstances, allow you to purchase from the estate. But the general rule that must be followed almost 100% of the time is that personal representatives and their spouses cannot purchase from the estate, neither directly nor indirectly.
_____. Watch for retirement checks and retirement account statements. Often, such accounts either terminate on death or have beneficiary designations that keep them out of the probate, but it is important that the institutions where these accounts are held be notified of the death so the accounts may be distributed correctly. If you find that an account has a named beneficiary, you should advise the beneficiary how to identify the account to the institution and allow the beneficiary to retrieve the benefit left for them. But please keep in mind that many people do not have beneficiaries even on their retirement accounts, and many retirement accounts have cash value even after death.
_____. You're going to need a good bit of information concerning the deceased person, so we often try to have the death certificate in hand when we begin the application. Your tax preparation expert can also be a great help with this task.
_____. Keep your attorney informed. When you learn new information, such as there being another car, another child, an insurance claim or any other significant financial change in the estate, please notify the attorney quickly and with as much detail as you can provide. You likely don't need to give them a 50-minute speech about the incident; a two-paragraph email is often enough, and using efficient communication can keep your expenses under control.
_____. Inquire about the possibility of safe deposit boxes at the bank(s). Many times, a safe deposit box will have very important information, such as a last will and testament, marriage license, deeds, abstracts of title and, occasionally, even significant amounts of cash or jewelry. Therefore, it is good practice for you to inquire of every bank where you think the decedent may have done business as to whether they had a safety deposit box in their institution.
_____. Review the county land records or request that your attorney look at them, watching for evidence of liens, mortgages or lawsuits. Any of these can help you find assets or debts, as these must be identified to the probate court and handled appropriately.
_____. Be very mindful of tax returns! There are two really important reasons for this. First, you can be held personally liable by the IRS if you fail to file tax returns that are due. That's a big deal. Second, you are going to be obligated to swear upon your oath and under penalty of perjury that you have paid all the taxes that are due. If you've not even had the tax returns prepared, how can you possibly assert truthfully that you have paid all the taxes that are due? You can't. So get the taxes filed and get them paid.
_____. Make sure that you and the probate attorney know where the decedent passed away and where the decedent kept their home. Keep in mind that if they passed away in a hospital, that hospital is presumed to be a creditor of the estate, and it is an obligation under the law to provide the hospital a copy of the legally required notice to creditors. If you fail to provide this notice, the probate may not terminate the rights of the hospital to bring a lawsuit later. You can usually learn where the decedent passed away by reading the death certificate. The death certificate almost always identifies the place of death. If that's a hospital, that hospital must be listed on the affidavit at the mailing of the notice to creditors.
_____. Watch for real estate owned in a different state. Oklahoma courts cannot control the ownership of real estate in any other state, but you have an obligation to identify – to the best of your reasonable ability – all the assets of the decedent and to administer those appropriately. That will sometimes include the necessity of hiring a probate attorney in a sister state to handle real property located there. Among the ways you can locate such assets is by looking through past years of bank statements and watching for payments to county treasurers or the like in other states and other counties.
_____. It is usually a very good idea to look at more than one year of bank statements. If the decedent has been ill for a year, it is entirely possible that they have allowed some important matter to slip by. So if you go back to the year before, you may be able to identify payments that will lead you to creditors or assets. Therefore, carefully review at least a significant number of past bank statements. I would suggest that you go back a year prior to the decedent becoming seriously ill.
_____. Be careful to advise your probate attorney of the cause of death. There are a couple of good reasons for this. First, if the cause of death arose out of a car wreck, poor medical care, poor treatment in a long-term care facility or anything similar to these, it may be important that a wrongful death attorney be consulted. Next, and fortunately uncommon, is that if the decedent died at the hands of someone who was related to them, it is likely that person cannot inherit.
_____. Be very careful when you are selling assets that belong to the estate. You have a fiduciary duty to maximize the benefit to the estate. Therefore, you should not sell assets at bargain prices to your friends, children or other loved ones. That will likely be a breach of your fiduciary duty and may cause you great distress and financial loss when others, such as the judge, learn about the sale. Seek input on value, keep track of where you got the information and note the information you received. For example, if the decedent owned a house, seek out a couple of opinions of value. Two well-qualified opinions from different real estate agents may keep you out of trouble and assure that you maximize the benefit to the estate. If there is a vehicle, look online – kbb.com for example – and be careful to enter accurate information about the vehicle, use the correct year model, mileage, equipment and so forth. Print out the search results and allow those to guide you to ask the best value for the estate. Of course, you will also adjust the valuation for existing damage or increase it for an exceptionally nice v
_____. Do not list real estate for sale without a court order allowing you to do so unless your attorney advises that a "power of sale" in the will has been admitted to probate. There are at least two more ways to sell real estate during an Oklahoma probate, but both require court orders. Don't just jump out there and hire a real estate agent before you get that court order from the judge.
_____. Advise the heirs and beneficiaries to understand that they should contact you with updated addresses if they move, and you should provide those addresses to your attorney. Further, you should examine future court documents prepared by your attorney to make sure they have the most up-to-date address possible on those documents. A failure to provide notice to an heir or beneficiary, or even a creditor, can result in great discomfort and expense to you.
_____. Don't allow your friends, your family, the decedent's family or anyone else to use or abuse the decedent's "stuff." It is best to secure personal property with a new lock and key. You are doing a service to the estate, and you are entitled to be paid for your service, but as a result, you have an obligation to protect the assets of the estate. Protecting those assets requires that you maintain control of them and not risk wear and damage that can be avoided.
_____. Do not use money from accounts with a joint owner or a beneficiary without specific written permission from that owner or beneficiary. Let me give you an example: If I pass away and my child is the joint owner of my checking account, the executor is not at liberty to go to that account, withdraw money and use it to pay for the funeral. I know this might feel counterintuitive, but this is the law. Once the decedent passes away, their interest in accounts that have a beneficiary or a joint owner is almost always gone.
_____. Attorneys give more notice rather than less. If you think Grandpa might have owed Uncle Bill some money but Uncle Bill has not said anything to you about that, you should still identify Uncle Bill and that possible claim to your probate attorney. This generally applies to all sorts of notices you will be given. I have never known anyone who was sad that they had followed the law too carefully and correctly.
ABOUT THE AUTHOR
Daniel Woska of Edmond has practiced law since 1978 with experience in many different areas, including probate, tribal law, securities, taxation, contracts, estate planning and litigation. He has participated in jury and nonjury trials, arbitrations and mediations for more than 45 years.
Originally published in the Oklahoma Bar Journal – OBJ 95 No. 9 (November 2024)
Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.