When a person passes away, their estate is distributed to their heirs or devisees through a will, a trust, or through the probate process. Some estates take a long time to settle due to the size and complexity of the deceased’s property and any issues that may come up with named or unnamed beneficiaries.
But on the other end of the spectrum, there are a lot of estates that are smaller in property amount and size, without any of the legal complications that can arise with larger estates. To speed up the execution and distribution of these estates, most jurisdictions have provided an option for these situations known as small estate administration.
This streamlined process takes less time, paperwork, and costs than normal estate administration. This option is designed to resolve simple distributions quickly and clear up probate dockets for more complex cases. So how does it work?
What Qualifies for Small Estate Administration?
As stated above, every state has its own limitations on what estates can qualify for this form of expedited administration. The most obvious and prominent limitation is how much the estate is worth. The estate qualifies if that total dollar amount is below the jurisdictional threshold. Which assets must be included in that amount differ by state.
Some states may require that certain properties be included in the calculations, while another state does not. Other factors like taxes, real estate values, and other state-specific values will also affect the small estate administration cut-off.
For example, two of the largest states in the country are California and Texas. The cutoff is $75,000 or less in Texas, while California’s threshold is much higher at $166,250. In addition, some states will not consider small estate administration if the deceased had a will, while others allow administration for both testate and intestate situations.
What Should I Know Before Beginning the Small Estate Process?
If you want to settle an estate with an affidavit, you need to make sure that it is legally possible before you begin. Do so by asking yourself the following questions:
- Does the deceased person’s estate qualify?
- Was there a will in place?
- Am I allowed to use the affidavit?
- Has enough time passed?
Each state has different rules about what qualifies as a small estate. A small estate is typically defined by its dollar value. If a decedent’s assets are worth less than $50,000, it may be considered small. In some states, estates worth as much as $150,000 may be considered small, depending on the laws and counted assets. Generally, only probate assets are counted.
What is Included in a Small Estate Calculation?
While the specifics of what comprises a small estate inventory vary from state to state, a few common assets are included in the law of most jurisdictions. Non-probate assets are normally excluded from a small estate inventory, such as:
- Life insurance;
- Trust assets;
- Retirement benefits;
- Transfer/payable on death bank accounts; and
- Jointly owned properties.
Many states also exclude motor vehicles, registered watercraft, and out-of-state property.
Valuing a certain piece of personal or real property is an important part of determining small estate eligibility. Some states instruct executors to use the market value at the time of death, while others direct them to subtract the amount the deceased still owes on the property at the time of death. These little details can make a big difference in determining if the deceased’s estate qualifies or not.
Who Can Use a Small Estate Affidavit?
When a person dies without a will, the person who can use an affidavit may be limited to the surviving spouse, heirs, or administrators of the estate. In some cases, creditors can get a small estate affidavit to repay unpaid debts.
Whoever wants to use a small estate affidavit must be required by state law to wait until a certain amount of time has passed since the decedent’s death. This time period can be as long as two months.
Does a Small Estate Affidavit Need to be Notarized?
Many states require the notarization of a small estate to be valid. Even if it isn’t required in your state, you should consider notarizing it.
Some financial institutions require notarization, and a notary seal can help prove the document’s legitimacy, so you don’t encounter any problems during the process of claiming and transferring the deceased’s assets.
How Does the Administration Process Work?
States usually require a waiting period before a small estate administration can begin, usually between 30 and 60 days. The primary document is normally called a small estate affidavit and must be notarized, signed under oath, and filed in the proper court.
Once accepted, the person who will be in charge of distributing the property (the executor or an administrator, depending on the state) must file any necessary supporting documents required by state law. These usually include a death certificate, estate inventory, supporting appraisal paperwork, and a list of all debts.
Once all the proper documents are provided, the court will verify that the estate meets the state requirements and allow distribution to the deceased’s heirs, either stated in the will or designated as an heir by law. Some states require a brief court appearance that takes minutes, while others may not require one.
Still, others may choose either option depending on the circumstances of the case, such as documentation issues or questions about heirs and property values. If the affidavit application is approved and any issues cleared up, distribution can begin.
Are There Quick Probate Options for Non-Qualifying Estates?
What if you want to provide an easy probate path (or avoid it altogether) for your descendants but probably won’t qualify for small estate administration? Careful estate planning can help reduce any probate court interaction, no matter the size of the estate. Using a trust instead of a more traditional will gives the testator the ability to transfer property in and out of a protected legal entity and the flexibility to add certain conditions and protections that they can’t in a will.
Also, be sure to check property that can be non-probate assets, such as IRAs, 401Ks, life insurance, and even payable-on-death bank accounts. Legal ownership automatically transfers if you name a person or persons as specific beneficiaries. The property has to go through the traditional probate process if none are named.
Do I Need A Lawyer for Small Estate Administration?
All legal matters can be confusing, and this is especially true if you are in the estate planning process or starting property distribution after the death of a loved one. An experienced estate attorney can explain your options and help you plan the best path forward. Every state’s laws are different, and a local lawyer well-versed in your jurisdiction’s particular requirements can make a difficult process much easier.
Consider using LegalMatch’s large database of estate attorneys in your area. LegalMatch’s services can help you narrow down your search for a lawyer in your city or state, and you can use our database to select the specific issues involved in your case. You will never be charged a fee to present your case, and LegalMatch’s services are always 100% confidential.