Probate Administration
Angela M. Kirby, J.D., C.P.A.
Certified Specialist in Estate Planning & Probate Law
Rogers Townsend & Thomas, PC
220 Executive Center Drive, Winthrop Building
Columbia, SC 29210
(803) 771-7900
akirby@rtt-law.com
www.rtt-law.com
What is Probate?
Probate is a court-supervised process to accomplish
the transfer of property from a Decedent to the
Decedent's beneficiaries as identified in the Decedent's
Will or by the laws of intestacy if there is no Will.
The Personal Representative (PR) is appointed by the
Probate Court to handle the administration of the
estate. The PR is a fiduciary with responsibilities to
the Probate Court, the beneficiaries, and the creditors
of the estate.
Is Probate Really Necessary?
In order to determine if Probate is Necessary,
you must Gather Information about the
Decedent, the Decedent’s Heirs and the
Decedent’s Assets.
See Tips for Gathering Information on Pages 278 to 280
and the Items Needed at the Initial Meeting on Page 297
A Family Tree is Critical to the Process
Don’t be Afraid to Ask Questions: How many times was
Decedent married? Do you have a copy of the divorce
decree? Do you have a marriage license? How can you
prove that you are the common law spouse? Have any
children been born out of wedlock? Have any children
been adopted? Have any children been taken care of by
Decedent but not legally adopted? Request copies of the
birth certificates, marriage license or divorce decrees if
necessary. TIP: See Page 277 for other factors that may
reduce an intestate heir’s share!
IF NO WILL then you look to the laws of INTESTACY to control
the DISTRIBUTION of probate assets:
Married w/ no children:
Married with children:
Single w/ children only:
Single w/ no children:
all to spouse
one-half to spouse and one-half to children
all to children
all to parents
If no parents then all to siblings
If no siblings then all to nieces and nephews
If no nieces and nephews all to grandparents (maternal and paternal)
If no grandparents then all to aunts and uncles (maternal and paternal)
If no aunts and uncles then all to cousins (maternal and paternal)
**If no blood heirs then stepchildren and if no stepchildren then the State
See SC Code of Laws Sections 62-2-102 and 62-2-103
If There is No Will At All. . .
Then the Administration of the estate is controlled by state law starting
with the fact that the State selects the heirs even if the Decedent
never ver met them!
All heirs inherit a pro-rata share of everything unless they can agree
otherwise and submit a private agreement to the Court for approval
– and this sometimes leads to fighting over who gets what
A Minor child’s share is monitored by a Court appointed Conservator
and is distributed at age 18
The PR may have to be Bonded and they will have no Authority to
Sell Real Estate without a Petition and no authority to sell personal
property valued over $5,000
All heirs may have to pay a pro-rata share of estate taxes if applicable
Non-Probate Assets vs. Probate Assets
Non-Probate Assets are assets that will transfer
automatically at death to a new owner by operation of law
because of the way they are titled or by virtue of a
beneficiary designation.
Probate Assets are the assets that are in the Decedent’s
name as of death and do not transfer upon death without
the appointment of a Personal Representative. The
distribution of probate assets will be either pursuant to the
Will or the laws of intestacy.
Examples of Non-Probate Transfers
• Joint Property titled as “Joint tenancy with right
of survivorship” (bank accounts, brokerage
accounts, cars) BEWARE: Dig a little deeper in
determining how the bank accounts became
JTROS – were they created by Decedent or a
POA of the Decedent
• Assets passing by operation of law with
beneficiary designations (such as life insurance,
IRAs, pension plan benefits, etc.)
• Payable-on-death accounts
• Real Property with the magic language “with
right of survivorship”
• Funded Trusts
Only Probate Assets are Controlled by the Will
Examples of Probate Assets Include:
*Real Estate titled solely in the Decedent’s name or titled as Tenants in
Common (**Another Common Misconception and unique to SC- we
do not recognize Tenancy by the Entirety – which in other states is an
automatic transfer at death between husbands and wives owning real
estate together)
*Stocks or Brokerage Accounts solely in the Decedent’s name or titled as
Tenants in Common
*Cash accounts solely in the Decedent’s name (Most joint accounts are
Joint Tenants with Right Of Survivorship)
*Insurance or Annuities payable to the Estate
*Personal Effects (cars, boats, etc) in the Decedent’s name
Which Probate Court Do I File My
Petition With in SC?
Typically, the County where the Decedent was
domiciled or where the Decedent owned real
property.
TIP: If the County or State listed on the death
certificate differs from the County where you are
filing the Petition to open Probate then file an
Affidavit of Domicile
Small Estate Administration
•
•
•
•
Assets less than $10,000 and NO Real Estate
Must wait 30 days after date of death
No Personal Representative is appointed
Cannot proceed if creditor files a claim at the
Court
• Applicant must typically provide proof of a
paid funeral bill
(More information can be found at Page 278)
Finding, Reading, and Interpreting the
Estate Planning Documents
*
*
*
Original Last Will and Testament and all Codicils
Revocable Trust Agreements and all Amendments
Memorandum for Personal and Household Effects
Locating the Will: Safe deposit box; fireproof safe at the home or office;
home office or work office; check with family attorney or drafting
attorney if a Copy can be found; Inquire of Trust Departments, CPA,
Insurance Agents, Financial Advisors, Brokers, Relatives; or Advertise
in local publications or Bar publications.
Finding the Estate Planning Documents
Practical Tip: If the original Will cannot be located,
you may want to consider filing a Copy of the Will
and utilizing a Private Agreement but it must be
executed by all of the Testate and Intestate Heirs.
This topic is more fully discussed under Private
Agreements on Page 291 and SC Code of Laws
Section 62-3-912.
Reading and Interpreting the Estate Planning Documents
It is your responsibility to read these documents and to fully
understand all of the provisions. If any provisions are
ambiguous, it is the attorney’s responsibility to assist the
Personal Representative with filing any necessary actions to
determine the proper interpretation of these documents.
Look for Critical Clauses such as Reference to PHHE
Memorandum, Powers to Sell Real and Personal
Property, Specific Bequests, Age of Distributions, How to
Pay Taxes, Rest and Residue Clauses, etc.
Getting Started with the
Probate Administration
The probate process is very forms driven, and the
official Probate Court forms may be downloaded from
the SC Judicial Department website (Page 280):
www.judicial.us.state.sc/forms/search
or by visiting your local probate court website.
You may also buy a software program.
(See Alphabetical Index of Probate Forms at Page 294)
Commencing a Probate Administration
**Informal Application or Formal Petition(Form 300PC): The
probate administration is commenced by filing Form 300PC to request
the informal or formal probate and appointment of a PR. This form was
recently revised as of June 2010. A Summons and $150 filing fee is only
required for Formal Petitions.
**Certified Death Certificate from DHEC (Page 278)
**Initial Filing Fees for Creditor’s Notice & Probate Court Fees
Renunciation of Right To Administration/
Nomination/Waiver of Bond (Form 302PC)
This form is typically only necessary for intestate estates or in the event
that the nominated Personal Representative and successors are deceased
or unwilling or unable to serve. This form may be utilized to avoid
formal probate for intestate estates when all heirs agree on who should
serve as Personal Representative. In addition, this form can also be used
to avoid the Personal Representative from having to expend estate assets
to post a fiduciary bond for informal probate.
See Page 280 and §62-2-901(a)(8); §62-3-603(A)(1)
Once the Certificate of Appointment is issued by the
Probate Court then You Must Complete the
Probate Critical Dates Checklist
Name of Decedent:_________________________________
Probate Court:____________________________________
Probate Case No:__________________________________
Date of Death:______________________________________
Date of Appointment of Personal Representative:__________
Date of Publication of Creditor’s Notice: ________________
Most all of the critical dates stem off of the above events
See Page 292 for the complete form
Probate Critical Dates Checklist
**Notice to Creditors (Form 370PC): Runs 3 Consecutive
weeks after Appointment and the Certificate of Publication
(Form 370PC) must also be filed with the Court – Retain a
filed copy for the file – some Probate Courts contract with the
newspapers and the Affidavits are filed directly with the Court
**Information to Heirs and Devisees (Form 305PC): Due
30 days after Date of Appointment of Personal
Representative (PR)
**Proof of Delivery (Form 120PC): Due 30 days after Date
of Appointment of PR as evidence of service of Form 305PC
and used to comply with Demand for Notice
Probate Critical Dates Checklist
**Inventory and Appraisement (Form 350PC): Due 90
days after Date of Appointment of PR
**Estate Tax Return (IRS Form 706): Due 9 months from
Date of Death
**Decedent’s Personal Income Tax Return (IRS Form
1040) and Gift Tax Return (IRS Form 709): Due April 15th
in year following Date of Death
Probate Critical Dates Checklist
**Expiration of Creditor’s Claim Period: Earlier of 8
months after first date of publication found on the Certificate
of Publication (Form 370PC) or 1 Year from Date of Death
**Estate Income Tax Return (IRS Form 1041 and
SC1041): Due 4 months and 15 days after closing of fiscal
estate year or calendar year if PR elects a calendar year
**Interim Accounting (Form 361PC): Due Annually from
date of appointment if the estate remains open for longer than
a year due to litigation or taxable estate
Probate Critical Dates Checklist
**Closing of the Estate: Due 3 to 4 months after the
creditor’s claim period expires or within three months of
receiving a closing letter from IRS if a taxable estate – Closing
forms include Petition for Settlement (Form 412PC), Final
Accounting (Form 361PC), Proposal for Distribution
(Form 410PC), Notice of Right to Demand a Hearing
(Form 416PC), Receipts and Releases (Form 403PC),
Deeds of Distribution (Form 400PC), and Waivers of
Notice (Form 111PC)
**Motion for Extension (Form 352PC): Due immediately if
any of the above dates cannot be met in a timely fashion
Obtaining Tax Identification Numbers
An estate is a separate taxpayer. As a result you will have to
apply for a tax identification number (“TIN”) for the estate.
This TIN will be used by the PR when opening any bank or
other accounts in the name of the estate. This number will
also be required for the filing of the estate’s fiduciary income
tax return (Form 1041). The PR is required to file this return
each year during the estate administration if the estate sales
assets or earns more than $600 in income.
Finding, Protecting, and Valuing Assets
After the PR has been appointed, the PR must file an Inventory and
Appraisement (Form 350PC**), which describes and places a value on
all of the assets of the estate and the debts secured by liens on estate
assets. This Inventory must normally include a listing of all property.
This typically includes both "probate assets" and "non-probate" assets.
The values of the assets are established by various means.
**Form recently revised as of June 2010
Inventory and Appraisement Form 350PC
Schedule A: Real Estate
Schedule B: Stocks and Bonds
Schedule C: Cash and Receivables
Schedule D1: Insurance Payable to the Estate
Schedule D2: Insurance Payable to Beneficiary (Not Estate)
Schedule E: Joint Property With Right of Survivorship
Schedule F: Personal Property (including PHHE)
Schedule G: Transfers During Life (Trusts and POD accts)
Schedule H: Powers of Appointment
Schedule I: Annuities (IRAs, pensions)
Encumbrances: Only Secured Liens
Finding the Decedent’s Assets
Tax Returns, Bank Statements, Canceled Checks,
Brokerage Statements, Insurance Policies, Pay Stubs,
Decedent’s Mail, Safe Deposit Box, Public Records for
Deeds and Mortgages, Veterans Affairs, Credit Bureaus,
Other Estate Paperwork that Decedent was a Beneficiary.
Look back to the List of Items Requested at the Initial Conference
with PR on Page 297
Valuing the Decedent’s Assets
You must use Fair Market Value as of the Date of Death for the
Probate Court forms. Although you do not have to have a formal
appraisal on all assets, there are good reasons to have one. The
beneficiaries typically get a step up in basis and having an accurate
value on the assets inherited will reduce capital gains tax paid by the
beneficiaries of an estate. Also, if the estate is taxable the IRS will be
less likely to challenge the valuations if appraisals are attached to the
estate tax return.
PHHE: If all parties are getting along then I do not recommend an
appraisal of PHHE. It is costly. If litigation pursues, you may have
no choice. Typically, PHHE is valued at a nominal value.
Probate Fee Schedule
South Carolina Code Section 8-21-770(B)
Property Values Based on the Inventory
Fee Due
Property Valued at Less Than $5,000
$25.00
Property Valued $5,000 but less than $20,000
$45.00
Property Valued $20,000 but less than $60,000
$67.50
Property Valued $60,000 but less than $100,000
$95.00
Property Valued over $100,000
$95.00** **plus
.15% times over $100,000 up to $600,000
**plus .25% times the amount over $600,000
NOTE: Sample Calculations on Page 293
Ongoing Probate Estate Administration and Duties of PR
**Setting up Estate checking account
**Transferring Decedent's assets into estate accounts
**Protecting assets from waste, destruction, or reduction in value.
**Ensuring that property and liability insurance is in place to protect
both the property and the PR from personal liability.
**Filing claims to obtain life insurance proceeds or retirement accounts
for the estate or a beneficiary.
**Finding and inventorying any safe deposit boxes.
**Paying all proper debts of the decedent.
**Paying all proper debts incurred by PR you during the administration
**Reviewing investments to determine whether the particular investment
should be retained by the estate.
**Selling inappropriate estate assets.
**Complying with probate court filing requirements and laws.
**Filing the final income tax return for the decedent.
**Filing required fiduciary income tax returns.
**Paying all specific bequests.
**Filing the federal and/or state estate tax return, if applicable.
**Filing with the probate court any required interim and final fiduciary
accountings.
**Paying the remaining estate assets to the residuary beneficiaries.
Transfer of Real Estate. The PR also has a duty to file a Deed of
Distribution (Form 400PC), with detailed legal descriptions of any real
property which the decedent may have owned. This document evidences
the transfer of title from the decedent to the beneficiary.
TIP: A title search is not absolutely necessary, but add “No Title Search
Performed” to the Form 400PC and always compare the Property Tax
Notice to the Deeds into the Decedent’s and compare for accuracy. If
discrepancies are apparent then a title search is recommended to avoid
problems with title in the future. SC has a lot of heirs property and it can
be discovered and corrected with proper research.
Creditor Claims
Creditors are directed to file their claims within the required period after
the first publication of notice or their claims will be barred. All claims
arising before the decedent's death must be presented within the dates
specified by state law. Claims must be filed with the PR and with the
probate court. The lawyer should advise PR on payment of claims and
recommend appropriate dispositions of each creditor’s claim. It will be
the PR’s responsibility to review all claims and to disallow any improper
claims.
Final Accounting. Upon the settlement and closing of the estate, the PR
must file with the probate court a final accounting showing all of the
decedent's assets owned at death and all receipts, disbursements, and
interim distributions. Simultaneously, the PR may file a Proposal for
Distribution detailing the distribution of the remaining assets.
TIP: Accurate financial record-keeping is absolutely imperative. The
PR should keep careful and detailed records with respect to all assets
paid to the estate and all disbursements of any kind made by PR,
including dates of payment, amounts paid, and reasons for payment.
TIP: Get duplicate statements sent to law firm and review
statements with PR while entries are easily remembered.
Personal Representative's Fee
The PR is entitled by law to receive a commission. The method of
computation is determined both by the nature of the assets and by state
law. The commission will be income to the PR and taxable when
received by PR. The PR is not required to accept the commission.
TIP: PR is entitled to 5% of the value of the Probate Assets listed on
Schedule B, C, D1, F, and I (if estate is beneficiary) along with 5% of the
net proceeds from the sale of real estate and 5% of income to the estate
(See page 287 and SC Code of Laws Section 62-3-739)
Closing the Estate
After all of the assets have been collected and the debts and taxes paid,
the PR must then distribute the remaining assets to those remainder
beneficiaries entitled to receive them. Distributions of estate assets to
beneficiaries can be complex. SC Forms: Petition for Settlement
(Form 412PC), Final Accounting (Form 361PC), Proposal for
Distribution (Form 410PC), Notice of Right to Demand a Hearing
(Form 416PC), Receipts and Releases (Form 403PC), Deeds of
Distribution (Form 400PC), and Waivers of Notice (Form 111PC)
along with a Proof of Delivery (Form 120PC) evidencing the closing
documents were served on all remainder beneficiaries.
Time Period for Estate Administration
It is usually not possible to complete the administration of an
estate in less than about one year. Normally, an estate
administration takes up to eighteen months due to the various
income tax returns that are required to be filed. If there are
disputes with heirs or creditors, it can take even longer. If the
estate is required to file an estate tax return, then the estate
administration period might be two to three years from the
date of death.
Estate Taxes:
Who Pays Them and How Much?
As of press time, we are still awaiting
the final verdict for 2010.
Will Congress reinstate the $3.5 million dollar
threshold for estate taxes?
Will Congress increase the threshold?
Will Congress do nothing at all and allow the
threshold to go back to $1 million dollars?
Have you addressed the possibility of estate taxes
in your estate planning?
Threshold for Estate Taxes
2009
2010
2011
$3,500,000
$
0
$1,000,000
Max. Rate
45%
0%
55%
Estate Taxes
*Due nine months from date of death (IRS Form
706) if in a year with estate taxes
*The Estate planning documents outline who has to
pay the estate taxes and in what proportions – if
not addressed then pro-rata based on inheritance
*Charities and spouses do not pay estate taxes on
bequests and are typically treated as a deduction
on the estate tax return
*Currently, SC does not impose an estate tax
Decedent’s Income Tax Returns
The PR is also responsible for the final state and federal income tax
returns of the decedent, not only for the year in which the decedent
died, but also for all previous years, if any, for which returns were or
will be due but have not been filed. Thus the PR must determine if
sufficient income was received by the decedent during the year of
death and for previous years in order to determine whether income
tax returns are due.
Fiduciary Income Tax Returns
If the estate receives income during any year, a federal "fiduciary"
income tax return must be filed for the estate. A state fiduciary
income tax return must be filed as well for any state in which the
estate earned income during the estate’s administration.
Guardianships and
Conservatorships
Does Your Adult Client Have a Power of
Attorney or a Health Care Power of Attorney?
• Is it a Durable Power of Attorney? Special
language must be in the document to make it
durable (ie. Language that the document is still
effective regardless of Incapacity of the Principal)
• Does the Power of Attorney have a springing
power of attorney? What are the requirements for
springing into effect?
• Has the Original Power of Attorney been recorded
in the County Register of Deeds office?
What happens if no Durable Powers of
Attorney or Health Care Powers of Attorney
have been executed or are found?
If no DPOA or HCPOA, then a Petition for
Guardianship (Form 530PC) and
Conservatorship (Form 540PC) will need to be
filed in the Probate Court to have a relative or
friend appointed to handle an incapacitated
adult’s medical and financial affairs and the
Court will monitor the actions of the court
appointed fiduciary annually until the
incapacity terminates.
See Pages 288 to 290 for more details
Conservatorships for Minors
• $10,000 or more left via Will, Beneficiary
Designation, JTROS, Worker’s Comp Benefits,
Personal Injury Settlement
• Fiduciary Appointed until Minor is 18
• Money is conservatively invested and subject to a
Bond and/or Restricted Account Agreement
• Annual Financial Reporting to the Court
• Petitions for Expenditures and Orders required to
spend funds on the Minor