According to the Ohio Supreme Court, the number of probate cases in the state declined over a period of ten years, with five percent fewer cases filed in 2015 than in 2006. This decline in the number of Ohio probate cases is due to more people engaging in probate avoidance techniques, including the use of trusts. A Forbes article states that across the nation, Americans pay some $2 billion per year for probate case administration, with the filing fee for a “typical” probate case averaging about $350.00. This fee does not include executor fees, appraisal fees and attorney fees.
What is Probate?
Probate is a legal proceeding used when a person dies, whether they die with or without a will, to ensure all taxes and expenses are properly paid, and any remaining property is distributed to the rightful heirs of the decedent. The probate administration takes place in the county probate court where the decedent resided, however, if the decedent owned property in another state, additional probate proceedings in that state or states might also be required. Probate is a method of giving an administrator or executor the legal authority to control and distribute a decedent’s assets, as well as to pay any outstanding debts, including taxes.
Executors and Administrators
If a will exists, it probably names an executor, however if a person dies without a will (intestate), the courts will appoint an administrator. The administrator could be an individual or could be a trust company or a bank. Administrators and executors are responsible for the following tasks:
- Collecting any monies owed to the decedent;
- Determining who the heirs to the estate are, as well as where they currently live and the degree of relationship to the decedent;
- Investigating the validity of any beneficiary claims;
- Investigating the validity of any debt claims against the estate;
- Planning for relevant income taxes and estate taxes, and making the required payments at the appropriate time;
- Ensuring the heirs to the estate receive their inheritance after all debts and taxes are properly paid, and
- Carrying out the instructions from the probate court regarding the decedent’s estate.
Executors and Administrators—under the supervision of the court—also may prepare and file legal documents, provide notices, attend court hearings, secure asset appraisals, file an asset inventory, complete final income tax returns, deal with gift and estate taxes, provide an accounting of funds, and terminate all probate proceedings. Because these tasks and procedures can be extremely complex, it is recommended that the executor or administrator seek assistance from an experienced Ohio estate attorney.
What Properties Do Not Go Through Probate?
There are specific properties which are considered non-probate—not a part of the probate proceeding. These properties include any assets held in joint tenancy with another person and the decedent with right of survivorship, any payable on death accounts or transfer on death accounts to a named beneficiary and retirement or insurance benefits payable to a named beneficiary.
Exceptions to Ohio Probate Laws
In the state of Ohio, if the total value of all the property and assets belonging to the decedent (minus those assets exempt from probate, as listed above) is less than $35,000, some of the normal administrative requirements may be waived—in other words, the probate becomes simpler and less expensive. If the estate is worth less than $5,000, then no probate at all is required. If the decedent leaves a spouse who is legally entitled to all the assets in the estate, the amount which may be relieved from formal administration requirements increases to $100,000. If the decedent had a Living Trust, then any assets in the Trust are not required to go through probate, and if the assets left outside the trust do not amount to Ohio’s small estate limit, then no probate will be required. A simplified probate in the state of Ohio may take as little as 2-4 months.
Is Probate Expensive?
Typical complaints about probate proceedings usually center on the amount of time probate takes rather than the cost, although in some cases cost could certainly be a factor. The probate court typically charges somewhere in the neighborhood of $200, although attorney fees, executor fees and other fees can significantly increase the amount of probate costs. Under Ohio law, executors and administrators are entitled to a set fee which is based on the percentage of the property and assets to be probated as well as the value of non-probate property. If the executor or administrator is required to provide “extraordinary services,” he or she may request additional fees. Some administrators and executors may waive their fees, and these fees are taxable.
What is the Typical Length of Probate?
Ohio law allows claims against an estate to be made up to six months from the date of the decedent’s death, although a very small estate which has no creditor issues could potentially be completed within six months from the time the administrator or executor is approved by the court. If a federal tax return will be required, a probate can last more than a year—depending on when the decedent died, in relation to when taxes must be filed. Should an audit be instigated, the probate administration can take an additional year—a year during which none of the estate’s assets can be distributed until it is certain there is no tax liability against the estate. If a will is contested, probate could potentially take several years to complete, although will contests are relatively rare, usually only implemented when a potential heir alleges the decedent was not of sound mind or was unduly influenced when he or she prepared a will.
Why is Probate Necessary?
The ultimate purpose of probate is to ensure there is no fraud following a person’s death—essentially, probate “freezes” the estate until it is determined whether a will exists, whether the will is valid, whether all pertinent people have been notified, whether all the estate’s property has been identified and appraised, and whether the estate’s creditors and taxes have all been paid. Probate is most easily avoided when a Living Trust exists—a really good reason to discuss the potential benefits of a Living Trust with your Ohio estate attorney. It is also a good idea to have a knowledgeable Ohio estate attorney by your side if you are a named executor or administrator, or a beneficiary who may have questions about the probate process. The Lovett & House estate planning attorneys have many years of experience assisting those who need help managing their assets while they are alive, in times of incapacitation and after their death. Contact the law offices of Lovett & House to schedule an appointment to answer any questions you may have about probate or other estate planning issues.