PROBATE – How to Avoid Serious Trouble

Probate is a process supervised by the County Register of Wills and Orphans’ Court. If you take on the role of Personal Representative (just another term for Executor or Administrator) you need to be careful about your obligations and duties.

Here are important things to consider and know:

1. Think seriously about hiring an attorney to help. Except for unusual situations or where there is litigation, in Maryland, you can expect the cost to be less than 4% of the value of the Estate. In most situations, legal fees are paid from the Estate – not personally by the Personal Representative. And, the charges are less than the typical 6% charged by a real estate broker for the sale of a house. Many attorneys will provide a consultation by phone, in person, or some other way without charge. Just call. Some of the serious problems we have encountered started with someone thinking they could handle probate on their own. There are some estates that you can handle without an attorney. The easiest way to find out if yours is one of them is to take advantage of a free consultation. Just call one of us at 410-535-5500.

2. Think about the probate process as similar to preparing and filing a tax return. There are specific things you need to do within certain time limits and if you ignore them or procrastinate, just like with the IRS, it will end up costing you time, heartache and money.

3. Always keep detailed, complete and accurate records. Here is a provision I include in my retainer agreement. It is so important that I insist that my clients read it and then I go over it with them.

References in this Agreement to the Personal Representative also apply to appointment as a Special Administrator. Client acknowledges that Attorney has advised that if Client is, now or in the future, appointed Personal Representative of the estate that client will upon such appointment become a fiduciary and owe fiduciary duties to heirs if no Will, Legatees if there is a Will, creditors and others. Assets of the Estate must be kept separate and clearly marked to belong to the Estate. Investment accounts must be transferred into one or more accounts in the name of the estate. Money must be held in one or more accounts in the name of the estate. No cash transactions are allowed. No ATM transactions are allowed. Copies of all items deposited to such accounts should be kept so that deposits may be clearly identified. Records of all withdrawals must be kept so that the date, purpose, payee and amount can be identified at a later time. Distributions (other than personal property such as vehicles and household furnishings) should not be made until approved by a Court or directed by your Attorney. Personal property must be appraised and thus distributions should not be made until after appraisal. If in doubt, contact your Attorney. Personal Representatives must be bonded. Many bonding companies require that the Personal Representative have an attorney and advise the bonding company if the attorney is discharged or replaced. The Personal Representative is entitled to request a commission but like attorney fees the commission is subject to the statutes referenced in paragraph 2 above. Take no Personal Representative commission unless you have a court order approving it or statutory consents. Estate assets may not be used for any purpose other than to pay the costs of administration, estate expenses and approved Distributions. Use of Estate assets to pay the personal expenses of the Personal Representative without court approval would in most cases be a criminal offense and must not occur without specific authority.

4. Communication with everyone involved is crucial to smoothly moving through the probate process. Probably the source of most problems in probate can be traced to a failure to keep the beneficiaries informed. It’s a rare situation where a Personal Representative provides too much information. This is another reason to use an attorney. Attorneys who have a track record for success in handling probate estates are generally experts at communication.

5. Strict time limits apply for certain things. Paying creditors too soon or distributing assets too soon sometimes causes serious problems. If you make a mistake you could be held personally liable. Why take that chance when an attorney can help you avoid problems? I’ve never seen a Court criticize a Personal Representative for hiring an attorney to help with probate. However, I have seen criticism and removal of Personal Representatives based upon a failure to obtain legal help.

6. Tax returns almost always need to be filed. This is another area where people fail to do what is necessary. Again, why take the chance.

Some of the very first cases I worked on as a new lawyer when I started in June 1973 were probate matters. What I’ve written above is now based upon 47 years experience. Give us a call. 410-535-5500.

George E. Meng, July 2, 2020