Smuda & Ramirez, P.C. represents persons in their probate estate needs in the state of Missouri only. Finalizing the financial affairs of a loved one is an emotional time for many persons. We assist our clients through the process.
The following is a brief overview of the probate of decedent estate. However, our attorneys handle all matters arising in the probate court, including but not limited to, guardianships, conservatorships, small estates, creditors rights, among others.
Brief overview of probate issues in Missouri:
What is probate: Probate is the process by which the probate court, with the help of a personal representative, determines who receives the property and assets of a deceased person. Probate of a decedent estate clears title to property, determines tax liability, settles legitimate debts and wipes out others, and distributes the property of the estate to the persons entitled to receive it under the terms of the Will or the laws of intestacy. The court and personal representative ensure that this takes place in accordance with Missouri law.
When a Will exists, probate includes (1) "proving" a Will by providing the signatures of the deceased and the witnesses and (2) securing admission of the Will by the probate court as the last Will and Testament of the deceased. This step is initiated by the filing of a petition, together with the Will, in the probate court. The petition requests the appointment of the personal representative for the decedent.
When there is no Will, probate includes identifying the heirs of the deceased person by blood. Again, this step is initiated by filing a petition in the probate court which requests that the court give its authority to the applicant to act as the personal representative of the decedent's estate. If more than one party has an equal right to administer an estate, waivers by those parties must be attached before the court will allow the applicant to act.
The probate process is governed by a statute of limitations and must be started before one year after the date of death. Thereafter the law allows for another process.
Who/What is a personal representative: The personal representative is a person or institution authorized by the probate court to be the deceased person's representative for purposes of terminating the decedent's affairs in accordance with the rules and regulations prescribed by law. The personal representative brings to an official close the business and financial relationships that the decedent had in everyday life. Ultimately, the personal representative must distribute the property to others in accordance with the terms of the Will, if a valid one exists, or by the laws of intestacy, if there is no Will.
Authority to act: When the probate court is satisfied of the authenticity of the Will, it admits the Will to probate and issues "Letters Testamentary" to the personal representative. Letters Testamentary are the court's authority to the personal representative to act on behalf of the estate.
When there is no Will and the court is satisfied that the applicant has a legal right to serve, it issues "Letters of Administration" to the personal representative. Letters of Administration are the probate court's authority to the personal representative to act on behalf of the estate.
Type of administration: A Will may provide for "independent administration". Such a provision restricts the court's involvement in the administration of the estate. If the Will does not provide for independent administration, the Court will "supervise administration" of the Estate, unless otherwise requested by the legatees and/or devisees.
If there is no Will, it is possible to request that there be "independent administration", but all heirs have to agree.
Bond: If the Will provides for the appointment of the personal representative without the filing of a bond, the court will act accordingly. Otherwise, a bond in a sum not less than the value of the personal property belonging to the decedent must be filed.
If there is no Will, a bond in a sum not less than the value of the personal property belonging to the decedent must accompany the petition and be filed with the probate court.
Personal representatives' duties: The personal representative must assemble all of the assets of the estate, prepare an inventory of the property left by the decedent, together with an appraisal of the value of each item of property, and file the inventory with the probate court. This is due thirty (30) days after Letters Testamentary or Letters of Administration are issued by the court.
The personal representative receives all the income and collects all debts due the estate. The personal representative also determines the liabilities of the estate, considers the merits of all claims filed against the estate, and pays the just debts of the decedent. Any taxes due by the decedent, whether to the federal, state, or city governments, must be paid. The personal representative must make certain that there is enough money to pay the costs of administration, court costs, fees, taxes, plus claims.
The personal representative must keep track of the records of all transactions involving the Estate. An accounting must be filed in the court at the close of administration.
Notice to claimants: During the administration of a probate estate, the court enters an Order, which has to be published, requiring all claims against the estate to be filed by a certain date (a six-month period from the date of first publication). It is incumbent upon all claimants to file their claims on or before that certain date. If the claims are not filed with the court on or before that date, the claims cannot be allowed and cannot be paid out of the estate, unless all the heirs agree to the payment. The personal representative must personally notify any of the estate's creditors who are "known or who may be reasonably ascertained" of the opening of the estate.
If the personal representative determines that a claim is just, due, and owing, it may be paid without court action. The payment may be made before the six-month period. However, a personal representative needs to be careful not to pay claims too quickly, in the event more claims are filed after payment, but before the six-month period has run.
Statutory rights: If a surviving spouse and/or minor children are involved in the estate, there are certain statutory rights which are accorded to them. Time limitations for obtaining some rights are imposed.
Taxes: There are two "death tax" returns that must be filed during the administration of the estate, if the assets exceed a statutory amount. The first, commonly known as the "706", is the U.S. Estate Tax Return filed with the federal government. The second is the Missouri Estate Tax Return. Both returns are due and the taxes must be paid within nine months from the date of death. These "death tax" returns must be filed if the entire estate (not just the probate estate) has assets in excess of a statutory amount.
In addition to the above tax returns, an estate must file a final income tax return for the decedent for the final year of that person's life. This return is due on April 15 in the same manner as a normal income tax return. Finally, the estate may have to file federal and state income tax returns on behalf of the estate itself for the income generated by the probate assets after the estate is opened. The estate can elect to file this return on a calendar year or fiscal year basis.
It is important to note that assets transferred by probate take the value as of the date of death. Assets transferred through joint tenancy or via a trust keep the value on the date of purchase of the asset.
Compensation of personal representative and attorneys: In Missouri, the personal representative and attorneys are allowed, as compensation, certain percentages of the value of personalty of the estate. Those percentages are as follows:
5% of the first $5,000.00
4% of the next $20,000.00
3% of the next $75,000.00
2-3/4% of the next $300,000.00, etc.
The above referenced fee schedule may or may not cover the actual work of the personal representative or the attorney, and thus may not be sufficient to compensate the personal representative for services provided or the attorney for legal services. As a general rule, the percentages are sufficient. However, where an estate requires significant legal services due to specific problems, the statutory compensation may not cover the actual work performed.
The compensation due to the personal representative and the attorney usually is paid when the final accounting is made to the probate court.
Close of administration: A simple estate will be open for a minimum of six months from the date the personal representative is appointed and notices are mailed to creditors. This term is mandated by statute and is instituted to allow creditors of the decedent an opportunity to file claims against the estate. After the expiration of the time period for filing of claims and if the estate is in a condition to be closed, a notice must be filed in a legal newspaper. A financial report and statement of distribution must be filed with the court.
Assuming there are sufficient assets to pay court costs, compensation, and taxes, all claims are to be paid. The personal representative can then distribute the remaining assets of the estate in accordance with the financial report and statement of distribution filed with the court, collect receipts from those persons receiving shares of the estate, and close the probate estate.
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