Administering an estate is not an easy process. Although typically not required, it is a smart decision for a personal representative to hire an attorney. As well as making the process more efficient, a probate attorney can help you avoid costly mistakes and personal liability.
Whether or not to hire an attorney is one of the first decisions that you must make if you have been named the personal representative of an estate. Even with simple estates, the best choice is to get representation from an attorney. The responsibilities of the personal representative are extensive and include making an inventory of and managing the estate's assets, paying debts and taxes, distributing the property and closing the estate. Throughout this process, many questions and complex legal issues often arise. An attorney can help the probate process go smoothly and protect the personal representative from personal liability.
In most cases, the law does not require that the personal representative hire a probate attorney. However, each state has its own rules and regulations about the probate process. In some courts, there are certain situations where it is required. For example, in Florida a probate attorney must be retained unless the personal representative remains the sole interested person or is a licensed Florida attorney himself.
A probate attorney's main job is to guide the personal representative through the estate's administration. The exact responsibilities will vary because every estate is unique. Common tasks that a probate attorney is responsible for include:
- Helping file the necessary paperwork with the probate court. There are many forms that the personal representative must submit to the probate court. A probate attorney will ensure that the paperwork is complete, correct, and filed on time.
- Filing state and federal tax returns. Several tax returns may need to be filed, including personal income tax (state and federal), estate income tax (state and federal), estate tax (state and federal), inheritance tax and trust income tax.
- Taking inventory of assets. Especially when valuing more complex property such as real estate and business interests, the expertise of a probate attorney is helpful.
- Paying creditors. An attorney can ensure that creditors are paid on time, in the correct order of priority, and in the manner that makes the most sense for the estate.
Hiring a probate attorney has several advantages.
A probate attorney is a specialist.
Every court has its own rules and procedures that can be confusing and overwhelming to individuals unfamiliar with the process. A probate attorney navigates this system every day. They can assume responsibility for completing time-consuming and complicated tasks while keeping you informed of the situation and answering any questions you may have.
A probate attorney can protect you from personal liability.
Making an accounting error, underpaying taxes, paying creditors and heirs in the wrong order or incorrect amount, or failing to obtain court authority before taking certain actions could all lead to personal liability. It is easy to make a mistake and mishandle the estate when you go through the process on your own.
A probate attorney can speed up the process.
If you are not an expert, you will delay the administration of the estate as you learn through trial-and-error. Probate attorneys have the experience to efficiently probate the estate, potentially shaving years off the administration.
Hiring a probate attorney will minimize stress on the family.
Most often, the personal representative is a member of the family. Adding on the burden of administering an estate while dealing with the grief of a loved one can be unbearable. A probate attorney can relieve some of this stress and give you more time to connect with your family.
With the strict requirements and many details involved with estate administration, there are countless ways in which mistakes can be made if you proceed without professional guidance. One of the most common mistakes is missing deadlines. In addition to having to file forms in probate court, notifications need to be made to beneficiaries and creditors, and tax returns must be filed. Not only will missing deadlines delay the administration, but you could also face steep fines.
Another common mistake is paying the decedent's debts too quickly. First, by waiting, you may end up not having to pay the creditor at all. There is a creditor claim period (usually around six months after you give notice). If the creditor does not make their claim within the period, the claim expires. Secondly, each state has rules about the order that you must pay creditors. It is critical to follow this order if the estate does not have a lot of property but has a lot of debt. In general, the personal representative will not be liable for the estate's debt. However, the personal representative could be held responsible if the creditor would have been paid but for a mistake being made in the administration.
The third mistake that unrepresented personal representatives make is distributing assets too early. If you distribute the property to the beneficiaries before paying the debts and taxes, it will be challenging to recoup the assets if needed, and the personal representative could be held personally liable. Additionally, the timing of certain distributions could reduce tax penalties if the beneficiaries are not in the same tax bracket.