Charting a Course for Family Security

Probate

GUIDELINES FOR PERSONAL REPRESENTATIVE

These guidelines have been prepared as a means of orienting individual Personal Representatives to their duties and to the long established "ground rules" to which they must conform. The title "Personal Representative" is used in Hawaii instead of administrator or executor. Asterisks "*" indicate those phases of the administration usually handled by the attorney when an individual is the Personal Representative.

Informal or Supervised

The first step that is taken is to determine whether to open an informal or a supervised probate. Informal probates are appropriate for uncomplicated estates where everyone is friendly and no disputes are anticipated. Otherwise, a supervised probate will be preferred.

  1. Opening an Informal Probate*.  The first step that is taken is to file with the Registrar of the Court a petition for probate. The Registrar will issue Letters Testamentary after 5 days if the Personal Representative is a Trust Company or a close family member. Otherwise Letters Testamentary will be issued after 30 days. In any event, the Personal Representative is required to give notice to all interested persons within 30 days.
  2. Opening a Supervised Estate*.  The first step that is taken is to file in the probate court a Petition for Probate. The probate court will then set a hearing date (usually 8-10 weeks after the filing) and notice of this date will be published in the newspaper together with a notice to creditors. At the hearing, the Will is proved, heirs and beneficiaries are determined, the Personal Representative is appointed, and Letters Testamentary are issued to the Personal Representative. In routine cases, the presence of the Personal Representative and his/her attorney at the hearing is waived. A hearing is only actually held where unusual matters or disputes arise.
  3. Officer of the Court. Each Personal Representative is an officer of the Court and subject to its orders and statutory provisions. A Personal Representative does not have as much freedom of decision or discretion in estate matters as in his/her personal affairs. Rather than overlooking even one question that should have been asked in advance, it is advisable that he/she consult with his/her attorney frequently by telephone, letter, or in person as to the propriety of or authority for even seemingly routine actions.
  4. Period of Administration. Creditors have the later of four (4) months after the first date of publication in a newspaper (which is optional) or sixty (60) days after written notice is mailed to them by the Personal Representative in which to present their claims to the Personal Representative. If notice to creditors is not published then creditors have 18 months in which to file their claims. The earliest time upon which the estate may be closed is upon conclusion of the creditors' claim period. Because of the time schedules and procedures in processing estate and income tax returns and the details of distribution and final accounting, a decedent's estate is seldom closed earlier than nine months to a year after the issuance of Letters Testamentary to the Personal Representative.
  5. Duties of Personal Representative. The basic duties of each Personal Representative are collection and preservation of the assets of the estate, payment of the decedent's proper obligations including income and estate taxes, and distribution of the remaining assets as directed by his/her Will or, if there is none, according to the statutory rules of descent. The Personal Representative's duties with respect to the preservation of the assets include supervising the investments, investing cash, and safeguarding the assets by securing them and providing adequate insurance. Click here to see a more detailed checklist entitled:
    "Probate Procedures Checklist for Personal Representative".
  6. Attorney's Duties. Asterisks in these guidelines indicate the phases of the administration customarily handled by the attorney when an individual is the Personal Representative. However, the Personal Representative can assist the attorney by assembling and furnishing basic data when requested, and promptly signing and returning documents to be filed in court.
  7. Tax Identification Number*. Each Personal Representative must have a taxpayer identification number for use on all documents to be filed with the Internal Revenue Service. An application for assignment of such number, on the form customarily used by employers (Form SS-4), should be filed promptly after the issuance of Letters Testamentary to the Personal Representative.
  8. Account Book. At the conclusion of the probate administration, a detailed accounting must be filed in the probate court showing all receipts and disbursements and the distribution of the net assets. Therefore, complete and carefully detailed records must be kept of all transactions. A simple 2-column book or sheet will suffice, though some prefer a third column for showing the balance on hand. In addition, it is advisable to keep a separate ledger sheet for each asset. After a receipt or disbursement is entered on the various ledgers, it should be posted on the individual asset ledger thereby showing not only the cash position of the estate but also the status of each asset. It is also advisable to make and retain a copy of each deposit slip on which the checks are listed separately and identified as to source, date and purpose for which paid. Similarly, the check register or stub must show the date, name of payee, amount and the obligation paid.
  9. Estate Bank Account. Even when the Personal Representative is the sole or major beneficiary, the funds of the estate must be kept entirely separate from all others. All amounts received should be deposited promptly in a checking or savings account in the name of the estate or that of the Personal Representative in his/her official capacity (as the bank may direct) against which only he/she can draw. A certified copy of the Order of Probate and Letters Testamentary must be obtained (*) and delivered to the bank for its records.
  10. Safe Deposit Box. Each depository has its own rules for safe deposit boxes. Call to arrange an inventory and be sure to bring the key. If the box is in the decedent's name only, close the box and transfer the contents to a safe deposit box or other secured location controlled by the Personal Representative.
  11. Vouchers or Receipts. Each current (interim) and final account must be accompanied by a canceled check, voucher or receipt for each disbursement or distribution listed unless all beneficiaries approve the accounts. It is advisable that even when payment is made by check, the Personal Representative obtain and preserve a bill properly receipted on behalf of the payee for each amount expended. 
  12. Claims and Notice*.Creditors of a decedent are allowed the later of four (4) months after the date of first publication of the notice to creditors or sixty (60) days after written notice is mailed to them by the Personal Representative within which to file claims with the Personal Representative against the assets of the estate. Publication of notice to creditors is optional. If notice is not published, however, the creditors claim period lasts for 18 months after the date of death. A claim not disallowed in writing within 60 days after the end of the creditors claim period is deemed to be allowed.
  13. Inventory *. Within thirty days after the issuance of Letters Testamentary to the Personal Representative, an inventory describing each asset of the estate and its value must be prepared. Though formal appraisals are not required, appraisals in certain instances may be advisable for tax purposes and where beneficiaries may be in disagreement over values assigned. Joint tenancy assets, though subject to federal estate taxes, are not included in the estate inventory. Subsequently discovered assets must be listed promptly in supplemental inventories.
  14. Exempt Property and Allowances. To provide a means for maintenance during the period of administration, statutes provide special allowances to the surviving spouse and/or children. The surviving spouse, in addition to anything that may be provided in the Will, is entitled to a Homestead Allowance of $15,000 (cash or property), Exempt Property (household furniture, auto, furnishings, appliances and personal effects) of a value not exceeding $10,000, and a Family Allowance of a reasonable amount for maintenance of the spouse and dependent children. The Personal Representative may determine the amount of Family Allowance up to $18,000 or $1,500 per month for one year. Any additional amounts must be approved by the probate court. If there is no surviving spouse, dependent children are entitled to share in the Homestead Allowance and Family Allowance, and all children are entitled to share in the Exempt Property.
  15. United States Estate Taxes. A United States Estate Tax return (Form 706) must be filed where the total value of the decedent's property (both probate and non-probate) exceeds the estate tax exemption at the date of death. This is a tax on the right of a person to transfer property to others by virtue of his/her death. It is levied against the estate as a whole and is based upon the "adjusted gross estate" (total gross value less deductions). It includes all assets in which the decedent owned any interest, with joint tenancy properties being included at full value (unless the surviving joint tenant is the decedent's spouse in which case only one-half (1/2) is included, or the surviving joint tenant can prove contribution to the cost of acquisition) and life insurance, regardless of to whom or how payable, in which the decedent had any "incident of ownership". When applying for life insurance proceeds, the insurance company should be requested to provide a 712 form. The return must be flied and the tax paid within nine months after the decedent's death unless an extension is granted by the IRS. The Personal Representative should hire a qualified accountant or enrolled agent to prepare this return.
  16. Hawaii Estate Tax*. This tax is equivalent to the state death tax credit taken on the federal estate tax return. If no federal estate tax is payable then, of course, there would be no Hawaii estate tax. If a tax is payable, the accountant hired by the Personal Representative will prepare the return. If no tax is due, the attorney will prepare a form M-6a for filing with the Hawaii Department of Taxation.
  17. Dates of Valuation. In computing the United States estate tax, the Personal Representative has the option of using the values on the date of death or on the same date six months later (alternate values). Assets sold or distributed during that period are exceptions and are included at their values on the dates of disposition.
  18. Income Tax Returns. The Personal Representative must file final federal and state income tax returns for the decedent covering the period from January 1 to the date of decedent's death. If the returns are made jointly with the decedent's surviving spouse, they include decedent's income from the beginning of the tax-year to the date of his/her death plus that of his/her spouse for the entire tax-year. (Joint returns are not permitted, however, if the spouse remarries before the end of the tax-year and files joint returns with the new spouse). The Personal Representative also must file fiduciary federal (Form 1041) and state (Form N-40) income tax returns for the period from the date of the decedent' s death to either December 31 of the year of death or end of a fiscal year as selected by the Personal Representative and for each year thereafter until the estate is settled. A decedent's estate is entitled to an annual federal income tax exemption of $600. After the first two years of administration, an estate must begin paying estimated tax, quarterly.
  19. Costs of Administration. The court filing fee is $125.00 and the cost of publishing notice to creditors (if you elect to do so) may be another $350.00. Other costs and fees include funeral expenses, debts, accountant's fees, appraiser's fees, taxes, title search fees, copying costs, postage, telephone charges, Personal Representative's fees and attorney's fees. The Personal Representative and attorney are entitled by statute to a reasonable fee. My fee as attorney for the estate is set forth on a separate retainer agreement.
  20. Final Account. Preparation of the final accounting is the responsibility of the Personal Representative or his/her accountant. The Personal Representative can be held personally liable to the extent of the value of assets distributed without reservation of adequate funds for unpaid claims or estate and income taxes or deficiencies thereon with interest and penalties, if any. Hence, complete distribution of the probate estate is usually withheld until after final determination of those matters.
  21. In closing, I hope the foregoing guidelines will be helpful to you in understanding the PROBATE process from beginning to end. This is a general summation and many details have been omitted in the interest of brevity. If you should have any questions during the probate process, please feel free to call us. We are here to serve you and guide you through these procedures with as little confusion as possible.  

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Pacific Guardian Center
733 Bishop Street
Suite 2357
Honolulu, HI 96813

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Kahala
1215 Hunakai St
Suite 209
Honolulu, HI 96816

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Newton Square
98-1247 Kaahumanu Street
Suite 221
Aiea, HI 96701

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Kailua
1247 Kailua Road
Suite D
Kailua, HI 96734