Introduction to Probate: Probate is the legal process that takes place when an individual dies while owning real or personal property in his own name. Probate generally involves filing the decedent’s will with the court, identifying and inventorying the decedent’s property, paying debts of the decedent (including estate tax), and distributing the decedent’s remaining assets as directed by will or by state law if there is no will.
Opening Probate Estate: The probate process begins when a representative for the decedent’s estate files a Petition for Probate, Bond of the Personal Representative, and Notice of Appointment. These documents are filed with the Register of Wills for the county in which the decedent was domiciled. The Petition for Probate is the formal application to open an estate. The Bond of the Personal Representative mandates that every personal representative obtain a bond to secure the payment of all debts, inheritance taxes, probate fees, court costs, and inheritance taxes, even if the bond requirement is expressly waived by the will. The Notice of Appointment is used to inform creditors and unknown heirs that (a) a person has died, (b) a personal representative has been appointed to administer the estate, and (c) claims against the decedent can be made within a specified period to the personal representative.
Notifying Creditors and Unknown Heirs: Once an estate is opened, the Register of Wills will place the Notice of Appointment in a local newspaper once a week for three weeks (at the expense of the estate). The personal representative is also under a duty to deliver a copy of the Notice of Appointment to all known creditors of the decedent. Creditors must file claims within the earlier of (a) six months of the date of death, or (b) two months after actual notice is mailed to the creditor. Upon the expiration of the six-month period, the personal representative must pay all legitimate claims against the estate.
Notifying Interested Persons: A List of Interested Persons must be filed within twenty (20) days of the appointment of the personal representative. The List includes the name, address, and relationship to the decedent of each person named as a beneficiary in the will as well as any person who would be entitled to inherit by Maryland law in the absence of a will. At the expense of the estate, the Register of Wills must send a copy of the newspaper Notice to each person on the list unless these individuals expressly waive their right to receive such notice.
Filing Inventory and Information Reports for Decedent’s Assets: An Inventory Report and an Information Report must be filed within three (3) months of the appointment of the personal representative. The Inventory Report lists the assets held in the decedent’s individual name or as tenants-in-common, and provides the value of such assets. Certain assets require an appraisal by a qualified and disinterested appraiser. The Information Report lists all property that the decedent owned or co-owned that is not listed on the Inventory Report and that is passing to someone who is subject to the Maryland inheritance tax.
Accounting for Estate’s Financial Activity: An initial account must be filed within nine (9) months of the appointment of the personal representative. Although no specific form exists for filing an account, a personal representative is required to account for all property shown on all inventories and all financial activity of the estate. This includes an itemized list of all payments and disbursements, and receipts to verify such payments. The account will also disclose the proposed distribution to beneficiaries. The Register of Wills is required to audit the account. After the audit, the account is then submitted to the Orphan’s Court for approval. After the initial account, the personal representative must file subsequent accounts at intervals on the first to occur of (a) six months after the prior account is approved by the Orphan’s Court, or (b) nine months after the prior account was filed. When the Orphan’s Court approves the final account and the assets have been distributed, the estate is considered closed.
Paying Fees of Estate: There are various fees that will be incurred by the estate as part of the probate process. First, every estate must pay a probate fee to the court. The amount of the fee depends upon the value of the assets of the estate. In addition, the personal representative of the estate will likely retain an attorney to oversee the administration of the estate. Attorneys charge fees either on an hourly basis or a fixed-rate basis as a percentage of the total value of the assets of the estate. If an estate tax return is required to be filed, the estate may retain the services of an accountant. If the decedent owned assets with value that is not readily ascertainable, the estate will need to pay an appraiser to set the value of these assets. Finally, the personal representative is entitled to receive a commission for his services.
Taxes: Federal and/or state estate taxes, state inheritance taxes, or income taxes may be owed by the estate. In some instances, an estate tax return may be required to be filed even when no taxes are due.