Estate administration is a phrase that generically describes the handling of the assets and funds of a person who is deceased (with the exception of guardianship estates). We do not often talk in terms of “estates” during our lives, but everyone who owns assets has an estate that must be administrated after we die according to law.
What law applies and whether an estate is to be handled through the “probate” process (probate administration), or non-probate processes, like trust administration, or other alternatives to probate, depends on the estate planning that was done (or lack thereof). When we talk of “estate administration”, we are speaking generically of the process of handling the estate of a deceased person, and usually, that means a probate estate.
The handling of an estate includes identifying all of those assets and funds, securing those assets and funds, protecting those assets and funds, paying off everyone who might be owed money, handling any claims that people might have, paying taxes, and, ultimately, transferring those assets into the hands of the people and/or entities that are the rightful recipients.
How Assets In The Estate Are Categorized
Estates may consist of assets in multiple categories. You might think of the categories as buckets, and those buckets may have different attributes. The default bucket is “probate.” One way to determine probate assets from non-probate assets is by the inclusion of a mechanism for transfer of death (or not). Assets that do not have a built-in mechanism for transfer on death are “probate” assets and are subject to the default process of probate (with some exceptions).
Assets that have built-in mechanisms for transfer on death, and are therefore non-probate assets, are assets held in joint tenancy or similar status with a “right of survivorship” (if a joint tenant survives), assets with payable or transfer on death designations and assets with beneficiary designations. These types of assets will transfer on death according to those built-in mechanisms. These types of assets include life insurance, IRA’s, 401(k)’s, 403(b)’s, other qualified plan assets, joint and survivor annuities and trusts.
Depending on the buckets in which the various assets “reside”, the administration takes on different characteristics. Probate assets are subject to the probate process, which is a court process unless the probate assets do not exceed the “small estate” thresholds. Small estates are handled pursuant to the Probate Act without the requirement of going through the court probate process. Assets held in Trust are subject to the administrative provisions of the Trust documents. Assets with beneficiary, payable on death or transfer on death designations are transferred to the designated persons. Some estates will involve a combination of some or all of those mechanisms.