Eight Steps for a Personal Representative to Probate a Will and Settle an Estate in Maine

BY

The vast majority of wills requiring probate administration in Maine can be handled at low cost within a reasonable time period. Maine’s probate administration process provides a means to wind up a decedent’s affairs in an orderly fashion and assure that all bills and debts can be paid and that the decedent’s properties are properly distributed to the beneficiaries of the decedent’s selection. The probate process provides a structured procedure for the settlement of the decedent’s affairs and business which provides protection and finality for the family and fiduciaries.

Probate administration consists of collecting the assets of a decedent, paying or settling the decedent’s just debts and liabilities, and distributing the remaining assets to the beneficiaries named in the decedent’s will, or, in the absence of a will, to the individual’s legal heirs as defined by state law.

Below are eight steps in the probate process.

  1. File the Original Will and Death Certificate with the Probate Court: Upon the death of the decedent, file the decedent’s original Will and an original death certificate with the Court. As the applicant, you must pay a filing fee based on the estimated value of the probate estate. The fee varies depending on the size of the estate from $20.00 for an estate of $10,000 or less to $950.00 for an estate of $2,000,000 plus $100.00 for each additional $500,000. You must also pay a fee for publishing a notice to creditors of the decedent in the local newspaper, for mailing notice of the filing to the decedent’s heirs, devisees, and other interested parties, and, if the probate estate includes real estate, for recording a notice of the administration in the Registry of Deeds where the real estate is located.
  2. Petition the Court to Appoint You as Personal Representative: In Maine, petitions for the appointment of a Personal Representative and to prove the Will may be filed as early as 120 hours after the death of the decedent.
    1. You can proceed informally where there is no dispute: You have the option to proceed informally to obtain appointment and probate, usually with only minimal cost and delay. The process requires the filing of several standardized forms with the Probate Court consisting of an Application for Probate and Appointment, your Acceptance of Appointment form, and a Certificate of Value setting forth a rough estimate of the value of the decedent’s property which will require administration.Once the appropriate documents have been filed, the Register of Probate will review your filing to be sure that it is complete and will generally be able to make findings admitting the Will to probate and appointing you as Personal Representative promptly.Most probate cases in Maine are initiated through the use of informal procedures. There is normally minimal delay in obtaining the appointment of a Personal Representative, and the initial court costs of obtaining appointment as stated above are quite reasonable. In most cases, the Personal Representative can be appointed and acting within a day or so of the filing of the application.
    2. More formal proceedings are required where there is a dispute: In cases where there are disputes as to the validity of a Will or about who should serve as the Personal Representative or where there are parties in interest who cannot be readily located, more formal proceedings are likely to be required. Such formal proceedings require more formal service of notice on the interested parties and are likely to involve a formal court appearance before the Judge of Probate. Although the basic court filing fees are the same as in the informal process, the requirement of giving notice by certified mail or through personal service by a deputy sheriff or other process server and the possible need to publish a notice in the newspaper to heirs or interested parties whose whereabouts are unknown may result in higher cost and additional delay in obtaining your appointment as Personal Representative.
  3. Obtain Letters of Authority from the Court: Once you are appointed to be Personal Representative, the Court issues Letters of Authority which authorize you to collect and administer the decedent’s assets.
  4. Send Interested Parties Notice of your Court Appointment as Personal Representative: Upon receiving the Letters of Authority, you must send a notice to interested parties advising them of your appointment by the court as Personal Representative.
  5. Take Inventory of the Estate: After sending notice of your appointment as Personal Representative, you proceed to make an Inventory of the decedent’s property. An Inventory is simply an itemized listing of the decedent’s real estate, tangible personal property, and intangible personal property such as bank accounts, stocks, bonds, securities, and investments. Normally the Inventory will include an appraisal of real property by a disinterested appraiser. Such an appraisal is important for future tax purposes. The tangible personal property may also be valued. Values of the intangible personal property as of the date of death must be determined. Again, such valuations will be important for future tax purposes. Normally, the Personal Representative has three months to complete the Inventory, but additional time can usually be taken if needed. Under current procedures, the Inventory does not need to be filed with the Court but must be made available to any interested party who requests it.
  6. Identify and Settle Claims or Debts Against the Estate: Once the assets of the decedent have been identified and valued and brought under your control, the next step is to identify and settle any claims or debts against the estate. Under current Maine law, creditors have a maximum time limit of 9 months from the date of death to present their claims to the Personal Representative. The 9-month period can be shortened if you provide a written notice to the creditor and request that the creditor promptly file the claim.If you consider a claim in order, you would allow the claim.If you consider the claim deficient in some respect, you can disallow it and the creditor will thereafter have to initiate proceedings in Court to prove the claim.In cases where no claims are contested and where there are sufficient assets available to pay or satisfy all claims, you can proceed to pay or make adequate provision to pay all claims and distribute the remaining assets to the beneficiaries.
  7. Distribute the Estate Assets to the Beneficiaries. You can make the final distribution informally through a private accounting to the beneficiaries or formally with the approval of the Court after notice and hearing. The next step is to transfer the decedent’s assets into the names of the appropriate beneficiaries through appropriate deeds or instruments of distribution.If there are outstanding claims in contest, then there may be some delay in final distribution of the estate while these claims are resolved. However, the law does permit certain amounts to be distributed to the family which are exempt from creditors’ claims during the administration period, and it may be possible to make interim partial distributions if, in your judgment, the remaining assets of the estate will be sufficient to satisfy all creditors’ claims.
  8. If required, file the Estate Tax Return. The most frequent cause of delay in the settlement of larger estates is not “probate” but the process of settling the estate tax obligations of the decedent’s estate. The estate tax return, if required, is due 9 months after the date of death but is subject to audit after filing, which can result in additional delays before the tax liabilities can be finally determined. Generally speaking, unless the decedent has made taxable gifts during lifetime, the estate tax filing obligation in Maine arises in estates of $1,000,000 or more. While most property interests which pass to a surviving spouse can qualify for the “marital deduction” and thereby escape taxation in the decedent’s estate, such gifts must still be taken into account in determining if a return is required.

Note that for purposes of estate tax filing, the taxable estate includes many more types of property than the assets which are subject to probate administration. The estate subject to estate tax includes, among other things, property held in joint ownership by the decedent, property held in trusts in which the decedent had a power of revocation or amendment or a retained right to receive the income, insurance proceeds from policies in which the decedent had a retained incident of ownership, IRA or pension benefits payable to a designated beneficiary and other familiar methods of property ownership which are used to “avoid probate.” Contrary to popular belief, avoiding “probate” does not assure the avoidance of estate taxes.

Probate Avoidance Techniques

Having described what the probate process entails, what can be said for the various techniques of “avoiding probate”?

Joint Ownership and Beneficiary Designation

First, there is no question that for many married couples with no estate tax concerns, the traditional probate avoidance techniques of joint ownership with right of survivorship, jointly owned bank accounts and investment accounts, and proper designations of insurance and pension benefits can effectively eliminate the need for probate administration on the death of the first spouse. Many married couples find these simple techniques are perfectly adequate. However, such individuals should each have a Will to dispose of any separately owned property in which they may have an interest and to dispose of the property on the death of the surviving spouse. Further, the Will is the appropriate document to designate a guardian and conservator for any minor child and to designate a personal representative or executor to administer the estate. Such individuals should also consider the use of durable powers of attorney so that their interests in property can be managed in the event of disability or incapacity.

Revocable Living Trusts

Second, the widely touted alternative to “probate” is the use of the inter vivos living trust. While such trusts can serve a useful and valuable role in the estate plan, there are costs and administrative inconveniences involved in setting up and operating a revocable living trust. The principal advantages of such arrangements are that (1) the assets are held by trustees who can use the trust funds to provide for the support and care of the creator of the trust during times of incapacity or disability; (2) trust funds may be more readily accessible for the support of the surviving spouse and children during the period immediately after death than would be the case in a probate administration; (3) trust arrangements may provide more privacy, since documents relating to the trust do not become part of the probate court record; (4) probate court filing fees can be avoided; (5) property held in trust may avoid the probate claims process; and (6) the trust assets can be distributed without probate court delay.

On the other hand, setting up and operating a revocable trust does have costs and complexities associated with it: (1) there will be a cost of drafting a suitable trust document; (2) in order for the trust to enable “probate” to be avoided, assets must be transferred into the name of the trustee, which may result in costs of preparing deeds and other transfer documents; (3) the trust is a separate entity and assets held in the trust must be accounted for on an annual basis, resulting in the possibility of an additional accounting cost; (4) the trust is a separate entity for tax purposes and, even though the income will be taxable to the grantor of the trust, there may be a need to file an additional tax return for the trust on an annual basis; and (5) if a professional trustee is used, there will be a trustee’s fee to pay. Use of a trust to hold title to property may also result in unanticipated problems. For example, in the past banks were reluctant to make mortgage loans on property held by a trust. Many property tax relief programs were unavailable to property held in trust. Many banks, stock brokerage firms, investment houses, and insurance companies have required documentation as to the continuing existence of the trust and authority of the trustee in order to transfer assets to or from the trust.

Further, some of the claimed advantages of the revocable trust may be less significant than might appear on first blush. While the use of a funded revocable trust does provide a useful and effective means to plan for a possible disabling illness, for many persons with uncomplicated affairs, the durable power of attorney may be almost as effective and less costly. While it is true that the use of a revocable trust may result in the elimination or reduction in probate court costs and fees, as noted above, under the current Maine law, probate court costs and fees are quite modest. As noted above, the current basic filing fee for a $2,000,000 estate is $950. While the use of the trust might result in some savings in personal representative’s or executor’s fees, these savings would appear to be offset by the payment of trustee’s fees. Under Maine law, the propriety of a personal representative’s fee or trustee’s fee is evaluated under the same standards of reasonableness and there appears to be no significant savings through using a trust. While at first blush there may be some privacy benefits to the use of the trust, under the current Maine practice in which it is possible to administer an estate without filing any formal inventory or accounting with the court, the initial privacy advantage is not that pronounced. While it is claimed that the use of the trust results in the reduction or avoidance of claims and litigation, experience demonstrates that this is not the case. Tenacious creditors can find ways to reach assets which are held in trust. Estate tax authorities have the ability to reach assets which are held in trust. Disgruntled heirs and family members can bring litigation affecting the trust or claiming that the trust is invalid as the product of fraud, mistake, or undue influence. These typical probate disputes are not avoided; they are simply transferred to a different forum. Issues as to the proper construction and meaning of the trust document may arise, just as such issues arise in connection with the interpretation of a Will.

If the revocable trust is considered an attractive alternative, the grantor of the trust will still wish to have a Will to dispose of any assets which have not been transferred into the trust during lifetime, to designate guardians and conservators for minor children, and to designate a person to serve as Personal Representative should probate administration become necessary.

Consulting an attorney can often result in an effective program which can simplify and reduce estate administration costs and complexity.