One of the most important decisions to make after someone dies is how to administer their probate estate. Many times family members rush to qualify as Executor without understanding the issues involved with being an executor.
Before you qualify as Executor you should determine the value (best estimate) of the probate assets (those assets solely titled in the decedent’s name and not assets that are owned jointly with right of survivorship, have a transfer/payable on death, beneficiary designation or transfer by operation of law) and the amount (estimate) of the debt owed by the decedent. You should then talk to an attorney specializing in estate administration matters.
Depending upon the value of the decedent’s assets you will have four options on how to probate the estate – if the probate assets are less than $25,000.00 you can qualify under the Small Asset Estate administration. There is no requirement to file an Inventory or Accounting so the process is usually inexpensive and quick. If the probate assets are less than $50,000.00 then you can use a Small Estate Affidavit. In order to use the Small Estate Affidavit, you must wait at least 60 days after the decedent’s date of death. The third option is if the probate estate exceeds $50,000.00 in which case you need to do a full-blown administration – a Commissioner of Accounts is appointed to oversee your role and you will have to file an Inventory and an Accounting, among other documents. The fourth option is to take no action regarding the probate estate.
If the Probate Estate is solvent (assets exceed debts) then someone should administer the probate estate. However, if the Probate Estate is insolvent (assets are less than the debts) then you should be very careful before you decide to qualify as Executor and to probate the estate. In fact, some people may not take any action at all if the probate estate is insolvent. The Executor of an insolvent estate can be held personally liable to the decedent’s creditors if the Executor pays the debts out of the statutory order.
Virginia Code Section 64.2-528 spells out the order the Executor must pay the debts of an insolvent estate. There are several provisions in the law that can also assist the Executor in making sure they are not personally liable for the decedent’s debts – a Debts and Demands hearing and a Motion for Show Cause Against Distribution. This will increase the time it takes to administer the estate but it also protects the Executor from personal liability.
Whether the Estate is Solvent or Insolvent the surviving spouse and/or dependent children of the decedent, if any, should consider filing the Family Allowance, Exempt Property and Homestead Allowance ($64,000) since they have priority over all other payments except the cost and expenses of administration.
If you are named as an Executor then I recommend you contact the attorneys at Midgett Preti Olansen PC, so we can advise you on the course of action for administering the decedent’s estate and avoiding personal liability as executor.