When a loved one dies the family often asks the lawyer whether they will have to “go through probate.” Going through probate is the formal process of administering a decedent’s probate assets under the supervision of the probate court in the county in which the decedent resided at death. If the decedent left a will, then the court will admit the will to probate and appoint a personal representative, called an executor, to administer the probate assets in accordance with the terms of the will. If, however, the decedent did not leave a will, then the court will appoint a personal representative, called an administrator, to administer the probate assets under the Tennessee laws of intestate succession.
What are Probate Assets?
Not all assets go through probate. Only probate assets go through probate. Probate assets are assets in the decedent’s name at death and do not pass to another at the decedent’s death by operation of law or by contract. In Tennessee, real estate is not a probate asset; unless one or more exceptions apply that bring the real estate into the probate estate. If the decedent’s estate consists only of non-probate assets, then the family does not have to go through probate to gain access to such assets.
Where a decedent’s estate’s probate assets are limited, it may be possible – and advisable – to take advantage of one or more of the alternatives to formal estate administration that exists under Tennessee law. These alternatives are as follows:
Small Estate Administration
If the assets of the decedent’s estate consist only of personal property having a value not exceeding $50,000 and at least 45 days have passed since the decedent’s death with no formal estate being opened in the probate court, one or more of the decedent’s heirs or the largest creditor of the estate may file an affidavit seeking to administer the estate as a small estate under the Tennessee Small Estates Act. The affidavit must set forth 1) whether or not the decedent left a will (and if so, the original must be filed), 2) certain information regarding the unpaid debts of the decedent, 3) certain information regarding the assets of the decedent, 4) certain information regarding the persons entitled to receive any of the decedent’s property, and 5) whether or not the affiant chooses to give notice to creditors. If the affidavit is approved, the court will certify the affidavit and issue an order giving the affiant the authority to collect the estate assets, pay the decedent’s unpaid debts, taxes and administration expenses, and distribute the remaining estate assets under the will or, if none, under the laws of intestate succession. Under some circumstances, the affiant may be required to make bond in an amount equal to the value of the assets being administered.
Muniment of Title Probate
Under Tennessee law, title to real property vests at the moment of death in the persons to whom the real property is devised in the decedent’s will. The devisees of the real property may file a petition asking the court to probate the will for the limited purpose of establishing a muniment of title to the real estate. If the petition is approved, the court will issue an order which can be recorded at the Register of Deeds Office to complete the chain of title for title search purposes. The court will not issue letters testamentary and no further administration proceedings will be required. This is a one-time, one day process.
Affidavit of Heirship
Tennessee law provides that if the decedent did not leave a will then title to real property vests at the moment of death in the decedent’s heirs. Any person may execute an affidavit of heirship, which is a sworn statement setting forth the facts known to such person concerning the relationships between a decedent and the decedent’s purported heirs. This affidavit may be recorded at the Register of Deeds Office to complete the chain of title for title-search purposes. The affidavit may be used as prima facie evidence in future court proceedings involving a dispute on the ownership of property of the decedent named in the affidavit. If any person feels aggrieved by the recording of the affidavit, such person has up to six years to sue challenging the facts in the affidavit and, if the lawsuit succeeds, the affidavit will be expunged from the public records. It is a Class E felony for any person to willfully, corruptly and falsely swear to any statements in an affidavit of heirship which such person knows to be false.
Small Accounts at Financial Institutions
If at least 30 days have passed since the decedent’s death without an estate being opened with the probate court, then a bank having accounts in the individual name of the decedent which total not more than $10,000 may pay the funds in such accounts to the executor named in the decedent’s will. If there is no will then the funds may be paid to 1) a creditor for expenses of the decedent’s funeral, 2) a creditor for the expenses of the decedent’s last illness, 3) the decedent’s surviving spouse, and 4) the decedent’s next of kin, in that order. This same rule also applies to accounts held at savings-and-loan associations and credit unions.
Payments Owed to Decedent by U.S. Government
If no personal representative has been appointed within 60 days of the decedent’s date of death, the United States Treasury may pay the decedent’s federal income tax refund directly to the decedent’s survivor or survivors (i.e. heirs), assuming that the refund does not exceed $500.
Wages and Debts Owed to Decedent
If wages or other compensation not exceeding $10,000 are owed to the decedent at death and the decedent has not designated a beneficiary to receive payment thereof, the employer can pay these wages directly to the decedent’s surviving spouse or, if none, then equally to the decedent’s surviving children. This same rule applies to debts owed to a decedent by someone other than the decedent’s employer, except that such payment may not be made until at least six months have passed since the decedent’s death without the appointment of a personal representative. If the debt exceeds $10,000 such excess amount may only be paid to the court-appointed personal representative of the decedent’s estate or as otherwise ordered by the court.
There may be situations in which one or more of the above probate alternatives are available, yet it is preferable to administer the decedent’s estate in the traditional, more formal manner (i.e., “go through probate”). Although it is permissible to administer stocks and securities under the Tennessee Small Estates Act, the difficulties that the attorney and client often encounter when attempting to gain access to such assets using only a small estate affidavit and order may outweigh the benefits of avoiding a formal probate administration. If debts of the decedent’s estate are disputed or cannot be fully satisfied, a formal probate administration may be preferable so that a “notice to creditors” can be published, which triggers the running of the statute of limitations on filing claims against the decedent’s estate. Finally, in a formal probate administration, there are certain checks and balances that exist for protecting all interested parties – such as the requirements of bond, inventory, and accountings – which can be helpful when an estate is complicated by beneficiaries who either do not get along or are distrusting of one another.
Every decedent’s estate is unique and should be examined individually to determine whether any of the above probate alternatives may be utilized and, if so, whether using such alternatives is the best approach in dealing with the assets of the estate.