How is a Dependent Administration Created?
A Dependent Administration can be created in a multiple of ways, the most common being that the heirs or beneficiaries do not agree on an independent administration. When a person dies with a Will, but the Will does not have the necessary language for the Executor to serve independently, then a dependent administration is created absent agreement from all the beneficiaries otherwise.
If a person dies intestate, meaning without a Will, and there is a need for an administration, then a dependent administration is created. Likewise, the heirs can agree to allow the administrator to serve independently.
If there are minor or incapacitated heirs or beneficiaries involved, then consent will be an issue. In these circumstances, the Court will create a dependent administration.
What Happens in a Dependent Administration?
In a typical probate proceeding, certain actions must be taken within the administration process, including giving notice to creditors and filing an inventory or an affidavit in lieu thereof. These actions must still occur in a dependent administration. However, a Dependent Administrator must also follow certain rules throughout the process.
- Ongoing Expenses – These are expenses to maintain property, such as yard maintenance, storage fees, water service, electric service, etc. A Dependent Administrator must file an application for ongoing expenses with the Court and receive a Court Order before any funds can be spent to pay bills. The only exception to this is the payment of property insurance, taxes, court costs, or bond premiums.
- Payment of Claims – Claims are the debts that are owed by the Estate. These may be credit cards, loan payments, medical bills, etc. There is a detailed process for giving notice to creditors and handling claims, but it is important to know that a Dependent Administrator must have a Court Order prior to paying any claims of the Estate.
- Attorney Fees – A Dependent Administrator cannot pay their attorney out of the Estate funds without prior Court approval. The Attorney should file an application for payment of fees and obtain a Court Order prior to receiving payment.
- Reimbursement – As everything else, a Dependent Administrator must have approval from the Court before reimbursing themselves for any expenses paid out of pocket.
- Investments – A Dependent Administrator must have Court approval in order to invest any of the Estate funds.
- Selling Estate Property – This includes not only real property, but also tangible personal property, such as furniture, vehicles, recreational vehicles, boats, etc. Selling property in a Dependent Administration is a two-step process and can be time-consuming.
- Step 1 is to obtain Court authority to sell the property through an application to sell. Once that authority is obtained from the Court, then the Dependent Administrator can locate a buyer.
- Step 2 is to obtain authority from the Court to complete the sale. Once a buyer is identified, the Dependent Administrator is required to file a Report of Sale and a Decree Confirming Sale with the Court to obtain authority to finalize the sale and transfer the property. The Report must be on file a minimum of 5 days to allow time for objections. Once the Decree is signed, then the Dependent Administrator can complete the sale and transfer the property to the buyer.
- Distributions – Whether partial distributions or a full and final distribution, the Dependent Administrator must, again, apply to the Court to allow the distribution of assets to the beneficiaries or heirs.
In addition to the above requirements, a Dependent Administrator must also file an Annual Account every year within sixty (60) days of qualification. Accurate and organized record keeping is essential to assist with the preparation of this accounting each year the Estate is open.
How To Avoid Dependent Administration?
One of the easiest ways to avoid the possibility of a Dependent Administration is to make sure you have a valid will prepared by an experienced estate planning attorney. The Will must contain specific language that allows for an Executor to serve independently. Without the necessary language, a dependent administration may be necessary.
Many times, a person has already died so amending or changing a Will is not possible, or the person passed without a Will at all. In this situation, try to obtain consent from all beneficiaries under the Will or from all heirs. An experienced probate attorney can assist with identifying the appropriate heirs. Obtaining consent is typically easy when all beneficiaries or heirs have a good relationship with each other. Sadly, this is not always the case.
Contact an Experienced Probate Attorney Now
If you are facing the possibility of a dependent administration, do not hesitate to contact our office. We can evaluate your situation and provide you with guidance on steps that may help avoid a dependent administration. If there is no way to avoid a dependent administration, our experienced probate attorney can represent you in the process and ensure that all requirements are met and completed. Don’t risk personal liability for mistakes made during the process. Protect yourself and protect the Estate. Contact us today for a consultation.