Source: http://www.wa-probate.com/instructions/administering/
Timestamp: 2019-04-18 23:00:35+00:00

Document:
Review "Is a Probate Necessary?"
Are All Claims Subject to the Creditor's Claim Procedure?
Why Follow the Creditor's Claims Procedure?
Why Publish a Probate Notice to Creditors?
Why Send Actual Notice to Known Creditors?
Why Insist on a Creditor's Claim for Payment?
What Can "Go Wrong" Even Though You're Doing Everything "Right"?
What is a Preliminary Distribution?
Re-title all probate asset securities accounts from Decedent’s name to your name as Personal Representative.
Estate of George Washington, Martha Washington, Personal Representative.
You will need to check with each institution as to its preference. You should make all payments on behalf of the estate by check from the estate’s checking account and make sure that you keep an adequate record of the checks that you have written, most easily done by saving the monthly statements from the checking institution so long as those statements show not only the check number and amount of the check but also its payee. You may have advanced funds on behalf of the estate, such as the $200 Court filing fee and possibly $100 or more for publishing the Probate Notice to Creditors. An appropriate first check on the estate’s new checking account would be to reimburse yourself for those funds advanced upon your delivery to yourself of the receipts for those advancements. You should not, however, pay any Creditor’s Claims that you may have against the estate — only reimbursement of funds advanced on behalf of the estate. Payment of any of your Creditor’s Claims will be dealt with later.
Determine the net value of each item, as of Decedent’s date of death, after deducting the encumbrances, liens, and other secured charges against the item.
Note: Although the statute says the Personal Representative “shall” prepare an Inventory, practically speaking, preparing one is solely for your own benefit, as WA law no longer requires an Inventory to be filed with the Court. RCW 11.44.015(2) Exception: If a person interested in the estate requests one.
Print a Inventory & Appraisementform.
Discover all the assets Decedent owned at death. See: Assets That Slip Through the Cracks.
Take control over them, among other reasons to protect them for Decedent’s Heirs and Beneficiaries.
Inventory them, at least informally.
If Decedent was married at death: Characterize them as either separate, community, or quasi-community property, revealing the extent to which Decedent’s surviving spouse has any marital interest in the asset. See: Determining Decedent’s Surviving Spouse’s Marital Interest.
To categorize each (ie, as a probate or a nonprobate asset).
To set aside for the time being the nonprobate assets.
To focus exclusively on the probate assets.
If Decedent was married at death, to characterize each probate asset (ie, as community, quasi-community, or separate).
To inventory Decedent’s interest in the probate assets (ie, one-half of community & quasi-community and all of separate).
To inventory all of Decedent’s debts and other liabilities, whether a “straight,” unsecured debt (eg, charge accounts, utility bills, salary or wages to hired help, etc.) or a security interest in a probate asset (eg, a lien or pledge on personal property, such as a vehicle or securities; or a mortgage or note + deed of trust on real property, such as a home).
In his/her Will, Decedent identified and gave one or more items of TPP specifically to one or more persons (ie, they are specifically bequeathed to legatees; eg, “I give my diamond ring to my daughter, Susan, if she survives me”). 2003 King County Probate Policy & Procedure Manual, § 5.3.6.
Omit Partnership PropertyAny interest Decedent had in any partnership should be described in terms of his or her respective partnership share, but no inventory of partnership property is required. 2003 King County Probate Policy & Procedure Manual, § 5.3.6.
Inventory of Real PropertyThe description of any interest Decedent had in any real property should include its legal description, and its appraisement should include, in addition to its gross and net values, its current assessed value for property tax purposes.
Out-of-State Real Property — The Possibility of an Ancillary ProbateIf Decedent’s estate includes real property located outside Washington (examples: residential, commercial, investment, vacation, etc. property; oil & gas interests, other mineral interests, water interests, etc.; acreage, farmland, etc.), it will not be included in the Inventory of Decedent’s Washington probate estate, and its transfer will be subject to the jurisdiction of its actual location, not Washington. What will likely be required is a parallel probate proceeding in the out-of-state county were the real property is located. This probate, in what is known as the “foreign” jurisdiction, is known as an “Ancillary” Probate, as opposed to the “domiciliary” probate in Washington (the Decedent’s state of domicile, ie, residence).
With each spouses’ interest shown in terms of each spouses’ (or just the Decedent’s) one-half community interest.
Gross Value: $250,000, subject to a Note payable to The Washington Bank, whose principal balance at Decedent’s date of death was $75,286, secured by a Deed of Trust in favor of The Washington Bank.
Make Sure to Inventory Any Claim Against YouAny claim (eg, for money or other property owed to Decedent, even if forgiven in Decedent’s Will) that Decedent had against his or her Personal Representative (ie, you) should expressly be included.
As of Decedent’s date of death. RCW 11.44.015. Estate of Toomey, 75 Wn.2d 915 (1969).
Example of Attachment to Inventory for a Single Decedent.
Example of Attachment to Inventory for a Married Decedent.
requests in writing a copy of the Inventory & Appraisement after three months following your appointment, you are required to send him/her a copy of it within 10 days of your receipt of the request. RCW 11.44.015(2). If a person making such a request fails to timely receive the copy, he/she may complain to the Court (RCW 11.44.050), although the Court may grant an extension of time for up to six months to provide the copy for good cause shown. 2003 King County Probate Policy & Procedure Manual, § 5.2.
Timing: Complete the Inventory & Appraisement within 3 months after your appointment.
ENTIRELY OPTIONAL, UP TO YOU, & NOT REQUIRED BY LAW.
$100 or more to publish the Probate Notice to Creditors ($105 in King County).
What this means is that by following this procedure, when you distribute Decedent’s assets to his/her Heirs and Beneficiaries following the expiration of the 4-month period, they take those assets with virtually clear title, free of almost all potential claims — otherwise, the assets remain subject to potential claims for 2 years after Decedent’s death.
WASHINGTON PROBATE believes that the advantages of following the Washington Probate Creditor’s Claim Procedure in the great majority of cases far outweigh its effort and cost and urges you to follow it. All it takes is one dilatory creditor to make the $100 or so cost of publication a remarkably cheap investment.
Side-bar: Example of a typical published Probate Notice to Creditors.
Are All Claims Subject to the Creditor’s Claim Procedure?
Why Follow the Creditor’s Claim Procedure?
What Can “Go Wrong” Even Though You’re Doing Everything “Right”?What can “go wrong” is that the estate can run out of money before paying all the allowed Creditor’s Claims. If other assets remain in the estate, they will need to be sold (or used as security for a loan) to produce sufficient money to pay the Claims. If the estate is now or ever becomes unable to pay all of its debts, taxes, and other expenses, it is insolvent. For information on the legal consequences of an estate being or becoming insolvent, see: An Insolvent Estate.
Any creditor of Decedent has four months to present his/her/its claim against the estate or be barred.
Download and complete a Probate Notice to Creditors form.
Ignore for the moment the line stating “Decedent’s Social Security Number.” After your Probate Notice to Creditors is published, you will add Decedent’s SSN to a copy of your Probate Notice to Creditors and send a copy of that document to WDSHS.
File the original of the Probate Notice to Creditors with the Court (with a copy for conformation and return to you).Note: This is most easily done when you attend Court for your appointment, immediately following your hearing in Court and upon obtaining a copy of your Letters from the Clerk’s office.
Send a copy of the Probate Notice to Creditors to your chosen legal newspaper for publication and request that your Notice be published once each week for three successive weeks, beginning on the date of first publication stated in the Notice.Timing: Within 30 days after appointment.
Promptly following the third publication of the Probate Notice to Creditors, obtain and File an Affidavit of Publication.
The Issue: Putting the State on notice that if any Medicare reimbursement is due, the State (just like any other creditor) has four months to present its claim or be barred.
Caution: The Notice sent to WDSHS (ie, Washington Dept. of Social & Health Services) is required to contain Decedent’s Social Security Number (“SSN”), but GR31 prohibits filing Social Security Numbers with the Court. Consequently, make sure that you place Decedent’s Social Security Number on the copy of any form you send to WDSHS but not on any form that you file with the Court.
Download a Declaration of Mailing of Probate Notice Creditors to WDSHS form.
Complete and sign theform and make two copies of it.
Make three copies of your filed Probate Notice to Creditors.
To the original and the two copies of your Declaration, attach a copy of your Probate Notice to Creditors.
To the two copies to your Probate Notice to Creditors that are attached to the two copies (but not the original) of your Declaration, add Decedent’s Social Security Number.
File the original of your Declaration (with the copy of the Probate Notice to Creditors not having Decedent’s SSN) with the Court (with one of the copies of the Declaration + Probate Notice to Creditors) for conformation and return to you).
Mail the other copy of your Declaration + Probate Notice to Creditors to the WDSHS at the address shown on the form.
The Issue: Identifying possible creditors of Decedent — so that you can send them actual notice of the same information as in the Probate Notice to Creditors.
Make a list of each possible creditor found in your review.
The Issue: Sending to the possible creditors of Decedent identified in your review actual notice of the same information as in the Probate Notice to Creditors, effectively “inviting” them to make their claim or be barred.
Complete the Header (top half of first page of pleading) on the Creditor’s Claim form.
A Header-completed Creditor’s Claim form.
Do so at no sacrifice to the estate (eg, by extending the time that a Creditor has to timely submit a Creditor’s Claim past the statutory four month period).
Side-bar: How to ensure that you have made a reasonable review and sent actual notice to the possible creditors found in your review — see: Evidencing Your Reasonable Review.
The Issue: Has each creditor given notice of his/her/its claim according to law?
The creditor’s name and address.
If made by the creditor’s agent, the agent’s name and address and the nature of the agent’s authority as regards the creditor.
A statement of facts or circumstances surrounding the claim.
If the Claim is secured, the nature of the security; if not yet due, the date when it will become due; and if contingent, the nature of the uncertainty.
The Claim must be presented within the Statute of Limitations period.
The original of the claimant’s Creditor’s Claim must be filed with the Court.
A copy of the claimant’s Creditor’s Claim must be served or mailed (by first-class mail) to you.
The Issue: How do you lawfully respond to any creditor who has lawfully given notice of his/her/its Creditor’s Claim.
Rejected (in whole or in part) by notifying the claimant of the rejection.
2 months from the date of your receipt of the Claim.
30 days from the date of your receipt of the Claim.
The Issue: Can you lawfully pay a creditor who has not lawfully given notice of his/her/its Claim?
Your payment is made in good faith (eg, you believe the Claim to be valid — the other criterion for allowing a Creditor’s Claim). See Villegas v. McBride, 112, Wn.App. 689 (2002).
Bottom-line: If you receive a modest bill, have no qualms about paying it, and believe that it would not be cost effective to return it and insist on the submission of a proper Creditor’s Claim, then you may waive the defects and pay it without subjecting yourself to personal liability.
Caution: You may not lawfully pay any Creditor’s Claim that was presented after the expiration of the applicable statute of limitations period. RCW 11.40.090(4); Bank of Montreal v. Buchanan, 32 Wash. 480 (1903). Furthermore, a Personal Representative may not waive the defect of a Creditor’s Claim being presented after the expiration of the applicable statute of limitations. Osborn v. Old Nat’l Bank, 10 Wn. App. 169 (1973); Ruth v. Dight, 75 Wn.2d 660 (1969) By paying a Creditor’s Claim unlawfully (eg, one that was presented after the expiration of the limitations period), you are subjecting yourself to personal liability to the estate for the amount of your payment.
Declaration re Reasonable Review to Ascertain Decedent’s Creditors form.
Timing: Soon after 4 months after first publication of your Probate Notice to Creditors (ie, promptly after the expiration of the four-month statutory period).
Determining and paying the estate’s fiduciary income tax during its administration.
Notice Requirements: See Section 14.D.Federal of Opening the Probate Estate.
IRS Publication 559: Survivors, Executors, and Administrators, which details the issues at the Federal tax level.
As Decedent’s Personal Representative, you are responsible for filing Decedent’s final Income Tax Return (Form 1040) for the year of death, as well as any Returns not filed for prior years.
Example: Personal Returns are due on April 15 of the following year. If Decedent died on March 1, 2002, chances are that Decedent would not yet have filed his/her 2001 Income Tax Return (due 4/15/02) and surely would not have filed his/her 2002 Income Tax Return (due 4/15/03). The Personal Representative would be responsible for timely filing both the 2001 and the 2002 Returns.
If Decedent was married at death, the Personal Representative and the surviving spouse may file joint Returns for preceding and final years, except that the surviving spouse may not file a joint Return for the final year if he or she remarries before the end of the year of Decedent’s death.
Payments representing a distributive share or guaranteed payment in liquidation of the Decedent partner’s interest in a partnership.
The Decedent is a US citizen, no heir or beneficiary is a nonresident alien individual, and the estate has gross income of at least $600 during the tax year.
The Decedent is a US citizen and any heir or beneficiary is a nonresident alien individual, regardless of the estate’s gross income.
You may report the estate’s income on either a calendar (ie, due April 15 of the following year) or a fiscal year basis. If you choose the latter, the estate’s tax year may end on the last day of the month of any of month following Decedent’s date of death so long as it does not exceed 12 months.
Schedule K-1 (of Form 1041) . As part of filing your annual Form 1041, you are also required to file with it a separate Schedule K-1 for each heir or beneficiary together with his or her Tax Identification Number (SSN for individuals; EIN for entities) and send a copy of each Schedule K-1 to its respective heir or beneficiary. The income tax liability of the estate attaches to its assets, so as estate income is either required to be distributed or is actually distributed to an heir or beneficiary, the burden for reporting and paying income tax on such income shifts from the estate to the recipient heir or beneficiary.
Example: Decedent’s Will provides that all estate income is to be distributed when received to Decedent’s surviving spouse. On the Schedule K-1 of your annual Form 1041 for the year of distribution, you would report the surviving spouse as the recipient of that income, and he/she would be required to report the income on his/her individual income tax return (his/her Form 1040) as income in the year in which he/she received it to the extent of the estate’s taxable income, what is known as the estate’s “Distributable Net Income” — for you, your receipt and concurrent distribution of such income would effectively amount to a wash transaction, for which you would pay no income tax.
After any federal income tax return (either for Decedent or the estate) is filed, the Personal Representative, by filing a Form 4810, may request prompt assessment of any tax remaining due. By doing so, he/she reduces the time that the IRS has to make the assessment from its usual 3 years from the date of filing the return to 18 months from date of filing for the Request.
Request for Discharge from Personal LiabilityAfter filing any federal income or gift tax return for the Decedent, the Personal Representative (by letter, as there is no Form for it) may request to be discharged from Personal Responsibility for any remaining tax due. The IRS has 9 months after receipt of the Request to notify the Personal Representative of the amount of any remaining tax due or be barred from its collection.
WashingtonNotice Requirements: See Section III.C.Washington of Opening the Probate Estate.
Closing Department of Revenue Account: The Personal Representative should also close Decedent’s account with the Department of Revenue. See Close Your DOR Account.
For a Decedent dying between May 17 and December 31, 2005, if the sum of the value of Decedent’s estate plus his/her lifetime taxable gifts is less than $1,500,000, then no estate tax return nor estate tax should be required to be filed or paid, and you should be able to skip this section.
For a Decedent dying in 2006 or 2007, that amount increases to $2.000,000.
The estate tax is a tax levied on any property or interest in property held by a Decedent at death (plus the value of taxable gifts made by the Decedent during his/her lifetime). The estate tax is irrelevant to the great majority of estates, due to their having less than the minimum amount of property (including interests in property and lifetime taxable gifts) requiring the filing of an estate tax return, as stated above. For those few, larger estates requiring the filing of an estate tax return, the majority of them will likely avoid paying any estate tax, generally as a result of their qualifying for the estate tax marital or charitable deduction.
Is the estate large enough so that an estate tax return must be filed?
How much estate tax will be owed?
Timing: By 9 months after date of death.
Is governed by the property law of the State of Washington.
Is governed by the tax law primarily of the U.S. (the IRS code) and secondarily of Washington.
Summary: “Gross Estate” = Value of all of Decedent’s property & property interests, including the above.
The value of property passing to Decedent’s surviving spouse (the “marital deduction”) and to qualified charities (the “charitable deduction”).
Filing Requirement: If Decedent’s Gross Estate (plus lifetime taxable gifts) exceeds the pertinent Applicable Exclusion Amount, a federal estate tax return (Form 706) will almost certainly be required to be filed.
Paying Requirement: If Decedent’s Taxable Estate exceeds the pertinent Applicable Exclusion Amount, an estate tax will likely be required to be paid. Many estates are required to file a Form 706 although no actual estate tax is due, usually as a result of sufficient property passing to Decedent’s surviving spouse or qualified charities.
The federal estate tax sounds simple but is remarkably obtuse and arcane — and making sonorous music out of both of the income and the estate tax laws is just that more delicate. If you make a mistake regarding either tax, you may find yourself, knowingly or unknowingly, liable for substantially more tax, and possibly interest and penalties, than were necessary — or paying substantially more tax than was otherwise due.
If you, as Decedent’s Personal Representative, will likely be required to file a federal estate tax return (whether or not any estate tax is actually due), WASHINGTON PROBATE urges you to obtain legal assistance, preferably from someone having a specialty practice that includes estate tax planning and reporting. Substantial liability — or savings — may be involved.
Example: If Decedent died in 2002 or 2003 and “held” property worth $1 million or more at his/her date of death, you as his/her Personal Representative will almost certainly be required to file a federal estate tax return (Form 706) and may or may not be required to pay an estate tax, depending on the nature of Decedent’s beneficiaries.
In general: IRS Publication: Estate and Gift Taxes.
For the instructions for the federal estate tax return (Form 706): IRS Publication: Instructions for Form 706.
For the federal estate tax return (Form 706) itself: U.S. Estate Tax Return (Form 706).
On February 3, 2005, the Washington Supreme Court abolished the Washington estate tax. See: The decision.
Thereafter, the Washington Legislature passed and the Governor signed legislation imposing a Washington estate tax for Decedents dying after May 16, 2005, having a taxable estate of more than $1.5 million in 2005 or $2 million in 2006 or later. The Washington estate tax rates begin at 10% and increase to 19% for taxable estates greater than $9 million.
For purposes of this website, a “Preliminary Distribution” is a distribution of estate assets to one or more of its heirs or beneficiaries made before the expiration of the four-month Creditor’s Claim Statute of Limitations period (the “four month period”). Technically, a “Preliminary Distribution” is any distribution made before the Final Distribution, upon the closing of the estate.
To benefit the heirs or beneficiaries, by giving them prompt access to the property to which they are entitled.
The inherent problem in making a Preliminary Distribution is unknown creditors, specifically one who presents a substantial and legitimate Creditor’s Claim after the making of any Preliminary Distribution but before the expiration of the four-month period. Upon the receipt of such an unexpected Creditor’s Claim, the estate may no longer contain sufficient assets to satisfy the claim. In that case, the Personal Representative will need to re-acquire some or all of the assets that have been distributed in order to pay the claim.
Will be promptly returned, without the Personal Representative having to obtain a Court Order.
Therefore, in deciding what property may appropriately be the subject of a Preliminary Distribution, all property subject to specific gifts (eg, I give all my shares of Microsoft stock to the United Way”) should be distributed first, followed by all property subject to general gifts (eg, I give 100 shares of Microsoft stock to the United Way”), and so forth.
Probably the most likely case for a significant Preliminary Distribution to be made is following the death of a spouse where the surviving spouse is the Personal Representative and major heir or beneficiary. The surviving spouse will likely be aware of Decedent’s debts, and the commonality of the Personal Representative and the major heir or beneficiary makes the “un-needy” and “cooperative” heirs or beneficiaries requirement moot. Another likely case is following the death of a parent where one of the parent’s adult children is the Personal Representative and he/she together with his/her siblings are the major heirs or beneficiaries.
The estate has an estate tax filing or paying obligation to the IRS, and the Personal Representative desires not to close the estate before receiving the IRS closing letter, indicating the acceptance by the IRS that the estate’s obligations have been met.
The estate has an asset, typically a parcel of real property, that is subject to an option to purchase held by a third party, and the Personal Representative desires not to close the estate before the option is either exercised or expires.
Decedent’s estate includes a parcel of real property located out of state, necessitating an ancillary probate of that property in the foreign jurisdiction, and the Personal Representative desires not to close the domiciliary probate before the ancillary probate is closed.
The most bizarre example in your author’s experience was a Washington probate with a large number of beneficiaries and whose major asset was a portfolio of numerous viatical contracts on the lives of AIDS victims in Florida; viatical contracts are life insurance policies on the lives of unrelated parties that are bought solely for investment. Here, the problem was two-fold. First, dealing with the ancillary Florida probate. But more importantly, the Decedent had purchased the viatical contracts early in the AIDS epidemic, when no effective remedy for AIDS was known and the insureds had life expectancies of only a few years. Time had past, AIDS remedies were discovered, and the insureds were not dying as expected, allowing the Decedent’s investment to “pay off.” The Personal Representative and the beneficiaries were stuck with waiting far longer than the Decedent had anticipated. Other assets could be preliminarily distributed, but the domiciliary probate was put on hold for years.
The property received by the heirs or beneficiaries will become immune from (almost) all Creditor’s Claims presented after only four months following first publication of the Notice instead of after 24 months following Decedent’s date of death.
Wanting the probate process over and the assets transferred quickly after death may largely be had by making Preliminary Distributions, while also receiving the benefits of using the Washington Probate Creditor’s Claim Procedure.

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