The answers to that question in this post assume that the estate is in Georgia. In any other state similar or dramatically different procedures will be used depended on how much that state’s probate code differs from Georgia’s.
A well-drafted will in Georgia, which excludes practically all do-it-yourself projects, contains a waiver of three requirements:
Obtaining a fiduciary bond.
Filing an inventory at the probate court of the estate’s assets.
Filing an annual report at the probate court of the estate’s accounts and activities.
When those requirements are not waived in the will, or there is no will, it is sometimes possible to obtain a court order to waive them. However, that usually requires that all the heirs and/or beneficiaries of the estate do not object to a motion for the court to grant that waiver.
When the filing of an annual report has been waived, the beneficiaries of the estate are still entitled to receive a report each year as to the money coming into and going out of the estate. The big difference is that report can be less formal than a court-filed annual report and therefore less expensive to prepare.
An often over-looked task for the executor, or administrator of the estate when there is no will, is to provide a receipt for the beneficiary to sign and return acknowledging delivery of the bequest to him or her. If the distribution is being made before all taxes and debts have been paid, the cautious personal representative (a term covering both executors and administrators) will include an acknowledgment by the recipient that it is logically possible that the distribution might be “clawed back” into the estate because of an unexpected gap between the assets still in the estate and previously unknown liabilities.
The really cautious personal representative (“PR”) will calculate the future cash flow requirements for the estate and then hold back a reserve of money that is three times the anticipated cash requirements. If not enough information is available to the PR to make that calculation, then no distribution should be made until there is. An example would be pending litigation against the estate with difficult to calculate damages allegedly to be paid from the estate’s assets.
Taxes are probably the biggest reason that any PR should not be in a hurry to make distributions. For example, does the PR know whether the decedent filed returns and paid all income taxes for the years prior to the death? What possible tax liability might exist for the estate’s income if the estate is open for multiple years?
With a very few estates there can be a federal “death tax” liability. Currently the exemption from that tax is $11.6 million. It is inflation adjusted each year and part of that exemption can be used to avoid gift taxes on lifetime gifts. Therefore the figure is an approximation.
These days I rarely see an estate that must file a tax return for the death tax because there are so few estates that large. In my opinion, estates under $6 million are unlikely to be taxed even if the exemption decreases during the foreseeable future.
Finally, there is the fairly common situation where the PR is also the only beneficiary of the estate. Most surviving spouses are in that situation when there is a will that provides “all to my spouse if she survives me and if not then equally to my children who survive me” and the spouse is serving as the PR.
Then the PR needs to look at whether formally closing the estate (with a court filing) is a good idea because there are known or potential creditor claims which are not easily resolvable. If those claims are disputed but no suit has been filed, then the PR may need to force the issue by filing a Petition for Discharge that, if granted, will close the estate. When the unpaid creditor is listed on the Petition for Discharge and served with a copy, it must file an objection to the petition. Failure to do so will result in the estate being formally closed and the creditor barred from subsequently filing a suit for the claim. It’s sort of a “put up or shut up” moment.
The most important point for any PR to remember is that consulting with an attorney, preferably one retained at the beginning of the estate administration, is a good idea. That way the PR can avoid future problems created by a failure to administer the estate in accordance with the terms of the will and/or the probate code.