Probate and Estate Administration Problems
This is the third and last article in the series, What is Probate?, which is focused on providing some insight into what happens when a person passes and an estate may need to be opened in Surrogate’s Court.
The second article, Probate and Estate Administration, touched on some of the decisions and issues that might be involved in estate administration.
Moving Towards the End of Estate Administration
Eventually, when all estate administration matters have been handled, the estate may be “closed”. However, this may be more difficult for any number of reasons, including an inability to obtain all necessary documents. An estate may be formally “closed” through court proceedings. If that is not deemed necessary or desired, the attorney representing the fiduciary may file paperwork that “informally” closes the estate. In either case, there could be a necessary party or parties that are unable to act on their own or refuse to sign appropriate documents, including receipt and releases. These may include minors, incapacitated individuals, persons under a disability, unknown individuals, individuals that cannot be located or ascertained or are unwilling to sign necessary paperwork. This could lead to the inability to informally close the estate and leads to any number of further proceedings and delays, including, court appointed guardian ad litems by Surrogate’s Court and so on.
This aspect of finalizing estate matters requires an entirely separate article to delve into some specifics.
Knowing Estate Administration Red Flags and Creating Better Estate Plans
So, what could go wrong with probate/estate administration?
Of course, you know the answer by now from the last two articles - and, that, is - it depends!
Problems can occur due to any number of reasons - some maybe more foreseen and anticipated than others. When preparing your estate planning documents, it is always a good idea to think about and plan around what I call “red flags”. Even without those red flags, people are often surprised at some of the difficulties that are encountered through probate and estate administration.
Remember, knowing what may lay ahead in a probate/estate administration matter, means you have the opportunity to plan around the “red flags” along with your goals and desires with proactive planning!
Examples of Probate and Estate Administration Issues and Problems
What follows are some examples of issues or problems that can be encountered in the estate administration process. Each bullet point could be an article in and of itself.
“Wills” done without an attorney which includes use of an on-line or boilerplate form used by the individual or a handwritten document or even a document executed without attorney supervision
Found wills, old wills and those on file with Surrogate’s Court that are forgotten about or end up surprising people when a loved one has passed; these wills may contain outdated information and provisions, including beneficiaries and executor nominations and/or contain conflicting provisions with a newer will that is being offered for probate
Difficulty in determining or locating distributees (a/k/a relatives) or beneficiaries; on the one hand you have distributees who are necessary parties to open an estate and on the other hand you have beneficiaries who may not necessarily be distributees but need to be properly determined and noticed in opening the estate and then become necessary parties at the time of closing the estate; either way, “necessary parties” who cannot be determined or located will cause the need for further actions to be taken by the estate
Determining rights of non-marital children, children born after the decedent’s death or through artificial reproduction, adopted-in or adopted out children and so on (this alone can completely wreak havoc in determining a “family tree”, if you will, and truly cause incredible grief)
Difficulty with distributees (a/k/a relatives) or interested parties in agreeing to sign waivers to allow for initial executor or administrator appointments
Family exemption rights, especially when such rights will alter what a beneficiary may expect to receive through a will
Estranged spouses or spouses whose status as such may be questioned (and waivers or prenuptial/postnuptial agreements signed by spouses during life which need to be assessed)
Right of election claims filed by a surviving spouse
Objections to the will offered for probate or even the threat/delays/fees this causes the estate
Difficulty in handling personal property of the decedent
Dealing with safe-deposit boxes
Interpreting will provisions, if problems/issues exist
Claims of non-probate assets to be brought back into the estate
Claims of an agent, acting under a power of attorney, or guardian improperly acting during the decedent’s life and the need to investigate such actions
Out of state or international assets
Wrongful death claims
Personal injury actions surviving the decedent
Mishandling of estate assets
Not handling firearms appropriately
Difficulty in obtaining general information about the decedent’s assets
Difficulty in managing real estate that is part of the estate, including a person who does not want to willingly leave a residence so the estate cannot sell the real property (this became especially difficult during COVID)
Creditors including Medicaid, unpaid taxes and claims, medical bills, credit card bills, car loans, claims of loans to be repaid, judgments and so on
Business interests which must be managed and handled appropriately, including knowing if any buy-sell agreement exists
Guardianship appointments needed for minors or incapacitated individuals
Beneficiaries or distributees who pass after the decedent necessitating estates be opened for these individuals
Executor or administrators who pass after being appointed
Trustee appointments, especially with outdated wills and appointments for those who can no longer act or do not want to act as a trustee
Bequests to charities that no longer exist, without other language in the will
Insolvent estates meaning there are more in debts/expenses than estate assets
Estates that cannot meet all financial obligations, including the bequests under the will
Conflicts between family members/beneficiaries, at any stage in the matter
Executor/administrator mishandling estate assets
Executor/administrator not proactively handling the estate
Inability to informally close the estate for any number of reasons
Objections to an accounting
Judicial settlement matters
Heirship proceedings with unknown distributees or distributees who cannot be located
Guardian ad litem appointments at different stages of the probate/estate matter
COVID! No kidding here – it has caused more delays and backups!
Each Estate is Different
Estates are as different as the people, legal documents, assets/debts, family matters that are involved!
A seemingly “simple” estate where two children who dislike each other with estate assets totaling $50,001 can cause more problems than an estate where there are five children who get along and work well together with assets totaling $5,000,000. This is just an example of how the estate and the process the parties will go through is not about the value of the estate, alone, but all the other relevant factors.
One note here, an estate may not need to be “opened” in Surrogate’s Court or those involved may not want to open an estate or, potentially, a small estate proceeding can be used. These should be reviewed and discussed with your attorney for guidance on what you would need to do in your particular situation.
When you think about creating or revising your estate planning documents, you want to be open to tailoring your plans around the issues that may erupt causing delays, additional expenses and emotional turmoil in an estate proceeding. Even without the major issues, the desire to avoid probate may be one of your goals.
Are you ready to create or revise your estate plan?
Are you faced with a administering a challenging estate, and want some help?