We often get the question, “Do I have to probate the estate?”

Unfortunately, the answer is often not so simple as “yes or no.”   Every estate is different. As a result, we always look at the facts presented in an effort to decide how to help those who are left to deal with the assets and debts left when a loved one dies.

What Does it Mean to Probate the Estate?

When we use the term “probate the estate” we are just talking about the process of rounding up assets, establishing a baseline for any debts that are owe, and then a distribution to heirs or beneficiaries under a will, once all of the debts of the estate have been paid. That’s a mouthful, but it encapsulates the process all at once. The first question that must be answered is did the decedent leave a will or not? If no will was executed then Tennessee Law determines how assets are administered under what is known as “intestate succession.” That’s a long phrase that simple means “died without a will.”  

When a probate estate is opened the first thing the court does is appoint what is referred to as a “Personal Representative.” The Personal Representative is often referred to as an Executor (or Executrix if female) if there is a will filed and as an Administrator (or Administratrix if female). The Personal Representative is responsible for really three things: (1) identifying and securing assets that were owned by the decedent (the loved one that passed); (2) determining what debts were owed by the decedent at the time of death; and finally, (3) distributing the assets that remain after administrative expenses and properly allowed claims are paid. Sounds simple. Sometimes it is.

Although one of the Personal Representative’s responsibilities is identifying and securing assets of the decedent, understand that not every asset that the decedent owned is part of the “probate estate.” What that means is that not everything will go through the probate court. One example is real estate. However, even real estate can be brought back into the estate if there are insufficient funds to pay all the claims of the estate along with administrative expenses like attorney’s fees and Personal Representative’s fees. So, it’s easy to see that if the decedent owed no debts, and had a bank account with money in it then the real estate will pass “outside probate.” Another example is assets that are held in what is known as a “revocable trust”. The IRS treats these assets as belonging to the decedent during their life. However, for probate purposes those assets pass under the terms of the trust document known as the Trust Agreement.

What if There Aren’t Many Assets?

Sometimes you may find yourself in a situation where the assets of the decedent’s estate are worth only a low amount of money. In those circumstances, it’s important to consider the alternatives available under Tennessee Law.

How Can I get the Last Paycheck?

Special rules permit employers to pay wages directly to the surviving spouse, or if none, then to the decedent’s surviving children equally, provided the amount is less than $10,000.00. In much the same way, if a non-employer owes the decedent less than $10,000.00 and six months have passed since the date of death and no Personal Representative has been appointed, they the money can be paid to the surviving spouse, or if none, then to the decedent’s surviving children equally. If the amount is over $10,000 in either case, then it can only be paid to a properly appointed Personal Representative. This is seldom a problem because in today’s society, if someone owes the decedent over $10,000 they aren’t going to be pushing to pay it out and will welcome a delay while a probate estate is opened.

What if the US Government Owes the Decedent Just a Little Money for Tax Refund

The time period is relaxed in the circumstance where the decedent was owed a federal tax refund that is no more than $500.00. After 60 days passes after decedent’s death the survivor(s) can request that money be paid directly to them. This would only come up if you don’t plan to open an estate and are looking for a streamlined way to get this small amount of money.

What About Bank Accounts?

One issue that arises frequently is the decedent died with money in the bank but not a whole lot of it. Although the bank is not required to do so, provided 30 days have passed since the decedent’s death, the bank is entitled under Tennessee law to pay the amount of the account to the Personal Representative designated in the decedent’s will. However, if there’s no will, then the bank could pay the money to: (a) an entity that is owed money to pay for the decedent’s funeral; (b) an entity who is owed money for expenses incurred by the decedent during his or her last illness; (c) the surviving spouse; and (d) the decedent’s next of kin. The payments must be made in the order listed. This authority applies only to accounts with no more than $10,000.00 in them.

Because banks (including credit unions) are risk averse it is unlikely that they will want to make the decision to follow this provision of the law. Most often they will want an estate opened. Remember, it’s in their discretion whether to do this.

Open an Estate Solely for the Purpose of Muniment of Title

Sometimes the only asset remaining at the time of death is real estate. This occurs most frequently when the decedent has planned in advanced a distribution of their assets and have not left indebtedness that needs to be addressed through the formal process of probating the estate.

In this circumstance, there Tennessee Law allows the individuals under a will to file a petition in the probate court asking the court to probate the will for the limited purpose of establishing a “muniment of title.” A “muniment of title” simply means a legal document that establishes ownership of property. When this type of petition is filed the court does not issue letters testamentary or appointed a personal representative. The court simply accepts the will as the last will and testament of the decedent and closes the estate. Remember that you would need the original will and the death certificate to file with the petitions. If all of the individuals who received the property under the will join in the petition this can often occur in one day once you have all the information and the petition ready. Once the order is entered a certified copy of the order should be recorded in the register of deeds office where the real property is located.

What if There is Only Real Property But no Will?

While opening the estate for the purposes of “muniment of title” do not apply where there’s no will, Tennessee Law provides another mechanism albeit not often satisfactory under the specific circumstances which is referred to as filing of an Affidavit of Heirship.

As noted above, real property vests in the heirs of the decedent at the time of death if there is no will. Any person can execute an “Affidavit of Heirship” setting forth under oath the relationships between a decedent and the decedent’s heirs and record it in the register of deeds office where the real property is located. That affidavit can be used in court if a dispute arises over the ownership of decedent’s property. Here’s the difficulty: any person who believes that they are damaged by the filing of the affidavit can file a lawsuit challenging the facts in the affidavit for up to 6 years after the affidavit is recorded. If the lawsuit is successful, the court can order the affidavit to be expunged from the public records. So, you can see, this provision is not nearly as useful as opening the estate would be to clear title to property. That’s why it is seldom used.

Be careful if you are asked to file an Affidavit of Heirship when you are not confident that the facts stated in the affidavit true. In order to dissuade the filing of false affidavits the criminal statutes make the signing of such Affidavit of Heirship willfully, corruptly, and falsely to be a Class E Felony.

What if There is no Real Property?

Tennessee Law also provides for what is known as “Small Estate Administration” where there is no real property of the decedent and the total value of personal property (non-real estate property) does not exceed $50,000.

In this circumstance, no formal estate is opened. One of the heirs of the decedent, or a creditor of the decedent can file an affidavit in the probate court seeking to administer the estate under the “The Small Estates Act.” This portion of the probate law may be found in Tennessee Code Annotated 30-4-101 through 30-4-105. The statute sets forth specifically what must be included in the affidavit, including: (1) whether the decedent left a will (and if so, the original must be filed), (2) certain information regarding the unpaid debts of the decedent, (3) specific information regarding the assets of the decedent and who is in possession of those assets, (4) specific information regarding the persons entitled to receive any of the decedent’s property, and (5) whether or not the affiant chooses to give notice to creditors.

In some cases, the affiant may be required to establish a bond in the amount of the total value of the assets being administered. If the court approves the affidavit, then the affiant acts in much the same way as a Personal Representative would in collecting the assets, paying taxes and administrative expenses, and then distributing any remaining assets in accordance with the will or if not will then as the laws of intestate success provide. While we don’t recommend utilizing this process because it doesn’t provide some of the protections to the individual administering the estate that a regular probate would provide, in limited circumstances proceeding under The Small Estates Act may be beneficial.

Traditional Administration of the Estate is Recommended

Although the mechanisms set forth above are available under Tennessee Law utilizing the traditional process of opening an estate in probate and following those requirements provides a level of certainty and protection. Two items should be noted. Banks and Securities Companies will always accept the Letters Testamentary (with a will) or Letters of Administration (without a will) and give you access to information and the assets. Second, the claims process essentially establishes specifically who is entitled to be paid from the assets of the decedent. There’s no guesswork that could fall back on the person simply trying to do the right thing.

Of course, there are costs associated with opening a probate estate. However, in Tennessee the costs are often insignificant compared to the level of certainty and protection provided.

Because every decedent’s estate is different you should consult with an experience probate attorney and seek their guidance. There’s just no reason to try this alone. The clerks at the probate court, while always wanting to be helpful, are not lawyers trained to watch out for potholes or “Gotha’s.”

C. Dan Scott is an experience probate attorney who represents clients in estates probated in Sevier County, Knox County, Jefferson County and Blount County, Tennessee. He can be reached at 865-246-1050.