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51 Flavors: A Survey of Small Estate Procedures Across the Country | Polsinelli - JDSupra
Joseph Blumberg | Polsinelli Tweet Send
Properly navigating a probate administration in any one state can be challenging enough, but often the client’s estate—and the attorney’s practice—is not so neatly confined within one state’s boundaries. Fortunately, for certain types of assets and smaller estates, clients can avoid full probate proceedings and, in some states, any court involvement whatsoever. This article and the accompanying chart of state-by-state options seek to provide a starting point for attorneys who find their clients’ assets in unfamiliar territory.
The 50 states plus the District of Columbia generally implement one or both of two procedures for handling and disposing of assets in small estates: (1) a summary administrative procedure, whereby the personal representative must receive court approval to gather and distribute assets (“Summary Administration”); and (2) an independent affidavit procedure, whereby an appropriate person can prepare an affidavit to directly collect and distribute money or property owned by the decedent (“Affidavit Procedure”). In the simplest terms, Summary Administration requires court formalities before collecting assets, but the Affidavit Procedure requires no court action, that is, it is a self-executing affidavit. Another major point of distinction between the states is the maximum dollar amount, or “cap,” under which an estate can qualify for a small estate procedure. Although these major distinctions are apparent, each state’s experimentations have produced numerous fine distinctions—the 51 flavors of small estate administration.
Originally Published in Probate & Property, Vol 28, Number 4, by the American Bar Association - July/August 2014
Please see full Publication below for more information. Download PDF Real Property, Trust and Estate Law Section, American Bar Probate and
51 Flavors A Survey of Small Estate Procedures Across the Country By Joseph N. Blumberg Joseph N. Blumberg is an associate in Wealth Planning at Polsinelli PC in the firm’s St. Louis office. Any opinions expressed herein do not necessarily reflect those of Polsinelli PC. Properly navigating a probate administration in any one state can be challenging enough, but often the client’s estate—and the attorney’s practice—is not so neatly confined within one state’s boundaries. Fortunately, for certain types of assets and smaller estates, clients can avoid full probate proceedings and, in some states, any court involvement whatsoever. This article and the accompanying chart of state-by-state options seek to provide a starting point for attorneys who find their clients’ assets in unfamiliar territory. The 50 states plus the District of Columbia generally implement one or both of two procedures for han-
dling and disposing of assets in small estates: (1) a summary administrative procedure, whereby the personal representative must receive court approval to gather and distribute assets (“Summary Admin-
istration”); and (2) an independent affidavit procedure, whereby an appropriate person can prepare an affidavit to directly collect and distribute money or property owned by the decedent (“Affidavit Proce-
dure”). In the simplest terms, Summary Administration requires court formalities before collecting assets, but the Affidavit Procedure requires no court action, that is, it is a self-executing affidavit. Another major point of distinction between the states is the maximum dollar amount, or “cap,” under which an estate can qualify for a small estate procedure. Although these major distinctions are appar-
ent, each state’s experimentations have produced numerous fine distinctions—the 51 flavors of small estate administration. Key Distinction: Court Administration vs. Self-Executing Affidavit The key distinction among the states (including the District of Columbia) is a 17/34 split as to whether a person must go to court to collect any and all types of probate assets or whether individuals can gather at least some assets without court approval. Almost every state has a Summary Administration procedure as an alternative to full probate; the distinction here is whether such a court procedure is the only method available to collect the assets of a small estate. Must Go to Court—Summary Administration. In 17 states, Summary Administration in court is the only available small estate procedure. In other words, an individual must go to court before receiving the assets in question. Some of these states give effect to an affidavit upon a clerk’s approval, but oth-
ers require a judge’s approval. Others do not allow an affidavit procedure at all, instead facilitating property and title transfers via court orders or letters. The states in which Summary Administration is Published in Probate and Property , Volume 28, Number 4, ©2014 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. 1 Real Property, Trust and Estate Law Section, American Bar Probate and
the only available small estate procedure are as follows: Alabama, Arkansas, Connecticut, District of Columbia, Florida, Kentucky, Maryland, Missouri, New Hampshire, New Jersey, New York, Ohio, Rhode Island, Tennessee, Texas, Vermont, and West Virginia. Some Assets Available Before Going to Court—Affidavit Procedure. A total of 34 states have some variation of an Affidavit Procedure allowing a person to directly change title or collect property without a court order or approval. With some exceptions, the individual can use an affidavit without ever filing in court. Attorneys should note that a waiting period—typically 30 to 60 days from death—must elapse before an affidavit can be used. Many jurisdictions provide forms. Most, but not all, Affidavit Procedure states follow the Uniform Probate Code. These 34 states can be further divided, as follows: •	Pure Affidavit States: These 26 states allow an affidavit for a wide variety of assets, including any personal property and, in some cases, real property. These states are clearly the least restrictive in the nation, though the cap on such estates varies widely, from $10,000 to $100,000. (Alaska, Ari-
zona, California, Colorado, Delaware, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Michi-
gan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Carolina, South Dakota, Utah, Virginia, Washington, and Wisconsin.) •	Affidavit Anomalies: Eight more states allow some variation on the ability to collect assets with-
out court approval. Five of these states do not fit neatly in either category: Louisiana (affidavit only allowed if intestate); Massachusetts (affidavit must be filed with court); Oregon (affidavit effective 10 days after filing in court); North Carolina (affidavit only allowed if intestate and after delivery to the court); and Wyoming (affidavit must be filed with court). The other three states allow affidavits or independent re-titling, but only for a limited class of assets: Georgia (bank account up to $10,000); Oklahoma (bank account up to $20,000); and Pennsylvania (bank account up to $10,000, $5,000 in wages, and $11,000 in life insurance). • Hybrid Approach—Affidavit or Summary Administration, Based on Size of Estate. Many of the Affidavit Procedure states use a multi-tier approach, allowing self-executing affidavits for smaller estates and Summary Administration for mid-sized estates (for example, Iowa, $25,000/$100,000, and Minnesota, $50,000/$100,000). This approach maintains some level of court (and attorney) oversight for mid-sized estates—typically $25,000 to $100,000—without requiring full probate. As a result, courts are only involved when the costs of administration can be better absorbed by the estate, while the smallest transfers of probate assets can occur by an Affidavit Procedure. Maximum Value of the Estate Summary Administration and Affidavit Procedures are only available for small estates, but what con-
stitutes “small” is a matter of distinction among the states. States’ maximum values (“caps”) for small estate procedures range from $10,000 to $275,000. The most common amounts are either $100,000 (10 states) or in the $30,000 to $50,000 range (18 states). Utah has a cap of $100,000, but it also allows re-titling of four automobiles, boats, trailers, or semi-trailers, regardless of value. Some states have not increased their caps for decades. Two states (Alabama and Published in Probate and Property , Volume 28, Number 4, ©2014 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. 2 Real Property, Trust and Estate Law Section, American Bar Probate and
Michigan) allow the caps to increase based on inflation. The advantage of a cap indexed for inflation is that the figure is never antiquated; however, it also produces odd figures, along with the requirement for practitioners to “re-learn” the figure each year. Some states (Oregon, Nebraska, Arizona, and California, to name a few) create caps that vary based on the type of property at issue. For example, Arizona allows an Affidavit Procedure for up to $75,000 in personal property or $100,000 in real estate. See Ariz. Rev. Stat. § 14-3971. Oregon has the nation’s largest total cap at $275,000, but that includes a cap of only $75,000 for personal property and $200,000 for real property, and Oregon requires the affidavit to be filed in court before it becomes effective. See Or. Rev. Stat. § 114.505–114.560. Again, the majority of states do not allow small estate procedures for real estate. Some caps vary based on whether the spouse is the sole heir. For example, Maryland sets its cap at $50,000, but the cap is $100,000 if the spouse is the sole heir. See Md. Est. & Trusts Code §§ 5-601–5-607. Rather than provide a dollar amount for small estates, numerous states allow the Summary Adminis-
tration procedure “where the value of the estate does not exceed homestead and other allowances,” which typically includes family allowance, administration, funeral expenses, and medical expenses of the last illness. Publication Requirement The vast majority of states do not require a published notice for Summary Administration (many require direct notice to known creditors, which is at least arguably a constitutional due process requirement to bind known creditors). Only about five states require publication for all estates. Policy Considerations A variety of factors and policy choices are involved in a state’s choice of small estate procedures. Although the overriding goal may seem simple—to get a relatively small amount of assets into the hands of heirs with minimal cost and delay—the means of reaching that goal carry implications for beneficiaries, creditors, attorneys, and the courts. Perhaps the greatest state interest is in protecting against improper distribution of assets. Because every state provides for some type of small estate procedure, it is fundamental that each state intends to accept some risk of improper administration in exchange for reducing the costs and burden of han-
dling an estate. The question, then, is not if a state will accept risk, but how much. The two ends of the risk spectrum can be expressed simply: A low dollar cap with more procedural requirements will prevent a greater number of frauds, but a high cap with less red tape will allow more fraud. But even though a low dollar cap may prevent a greater number of frauds, this greater number is of smaller dollar amounts. A state’s broad interest is in preventing improper administration. The involvement of attorneys and judges indeed adds protection against fraud or negligent failure to follow the law and notify creditors. But at some dollar amount, the protections are not worth the costs. Published in Probate and Property , Volume 28, Number 4, ©2014 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. 3 Real Property, Trust and Estate Law Section, American Bar Probate and
Another state interest is in relieving the burden on the courts. A full probate proceeding typically lasts at least six months, and often years. Summary Administration, particularly in a state that requires pub-
lication, commonly lasts at least six months. Summary Administration reduces the courts’ dockets compared to full probate proceedings, but only the Affidavit Procedure takes those cases out of the court system altogether. Finally, attorney involvement is an important factor in some states. Certain states explicitly require small estates to hire an attorney. Others do so implicitly: although some individuals may be comfort-
able filing their matter in court without representation, very few would be comfortable drafting or han-
dling a publication notice. On the one hand, the additional costs of an attorney, publication, and bond (depending on the jurisdiction) may consume a relatively large share of the assets that would otherwise go to beneficiaries or creditors. On the other hand, attorney involvement should help ensure proper distribution of the assets, which may be particularly desirable for decedents without wills. Conclusion Because of the many competing policy goals regarding small estate procedures, states have developed a wide range of options and limitations for collecting assets without full probate proceedings, and some without any court involvement. Very few states deal with small estates identically, however. Attorneys and clients should be aware that simplified proceedings are available in all states, but they should nevertheless proceed with caution, as “simplified” does not mean “simple.” n Published in Probate and Property , Volume 28, Number 4, ©2014 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. 4 34 n July/August 2014
Published in Probate & Property, Volume 28, No 4 © 2014 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
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