By Mary Ellen Flynn, Esq., 301.563.6685
When someone passes away and owned property, the person administering the decedent’s Estate is called the Personal Representative. They will have to go through the Probate process to settle the decedent’s Estate. The process can be confusing. Below are several essential questions to ask when beginning the Maryland probate process.
1. Who is the Personal Representative?
The Personal Representative should be identified in a decedent’s most recent original copies of their estate planning documents, such as their Will. Once the Personal Representative is determined, the decedent’s estate planning documents should then be given to that individual.
If you cannot locate any estate planning documents for the decedent, Maryland Law (MD Est & Trusts Code § 5-104) prioritizes nominating the decedent’s spouse, then children, grandchildren, parents, siblings, and so on. Suppose you do not know of anyone who qualifies to be nominated. In that case, you may petition to be appointed the Personal Representative.
2. What if the Will is in a Safe Deposit Box?
If the decedent’s Will is locked in a safe deposit box in their name alone, the only way to access the safe deposit box is to file a Petition for a Limited Order (Form 1147) and Schedule C (Form 1148). When the Limited Order to Locate the Will (Form 1149) is issued, the financial institution will be authorized to enter the safe deposit box in the presence of the Register of Wills or its agent for the sole purpose of locating the Will for delivery to the Register of Wills office. For these reasons, we tell our clients not to store their Will in a Safe Deposit Box.
Similarly, if the Safe Deposit box contains the decedent’s assets, but the amount of the assets is unknown, you may petition for a Limited Order to Locate Assets (Form 1150). The Order authorizes the financial institution to disclose the values of assets titled in the decedent’s sole name. However, the Order will not permit assets to be transferred from the safe deposit box.
3. What Should I do Before Opening the Estate?
It is important to note that after opening the Estate, the Personal Representative must perform an inventory of all of the assets owned by the decedent. Doing so may be difficult because the Personal Representative may not have all of the records of the decedent’s assets. The Personal Representative should contact the decedent’s accountant, financial advisor, or estate planning attorney to determine if they retained a copy of the decedent’s last tax return. In addition, a search of the Maryland Land Records website for any recorded deeds in the name of the decedent may be beneficial.
Upon being appointed as the Personal Representative, they should open a checking account for the Estate and apply for an Employer Identification Number (EIN) from the Internal Revenue Service.
Further, the Personal Representative should identify any bequests to be made to beneficiaries in-kind (as they are) to ensure that those assets are not liquidated. They should also consult a CPA regarding the tax implications for liquidating the assets that have reverted to the Estate. Following liquidation, any payable income to the Estate should be deposited into the Estate checking account. All expenses incurred or payable by the Estate must be paid from the Estate checking account.
4. How do I Open the Estate?
An administrative probate must be filed to open the Estate. An administrative probate is a proceeding initiated either by the indicated Personal Representative or by a person due to inherit from the Estate (called an “interested person”) to allow a Personal Representative to be formally appointed and for a Will to be probated. The proceeding is initiated with the Register of Wills. If there is no Will, an administrative probate is still undertaken to determine who the decedent’s heirs are.
To initiate an administrative probate, the Personal Representative or interested person files a Petition for Probate of an Estate in the county of the decedent’s residence.
5. What is the Size of the Estate?
Before filing the Petition, it is essential to identify the size and value of the Estate that is subject to administration. It is important to note that the Estate’s value does not include jointly held property that passes by operation of law to the other joint owner and does not include assets that had named beneficiaries. The value is determined by the fair market value of property minus the debts secured by the property as of the date of death. The property of the decedent subject to administration is called a Regular Estate if it is established to have value over $50,000.00 (or $100,000.00 if the decedent’s spouse is the only person inheriting from the Estate). A Small Estate is established to have a value of $50,000.00 or less ($100,000.00 or less if the decedent’s spouse is the only person inheriting from the Estate). Small Estates have fewer rules and steps than Regular Estates.
a. What Documents do I have to File with the Register of Wills?
The following documents must be completed and filed with the Register of Wills to open the Estate:
- Petition for Administration (Form 1112) and either Schedule A (Form 1136, for Regular Estates) or Schedule B (Form 1137, for Small Estates).
- Notice of Appointment (Form 1114)
- In the event of a Judicial Probate, this form must be filed immediately after the Court appoints a Personal Representative or Special Administrator.
- For Small Estates – Notice of Appointment, Notice to Creditors, Notice to Unknown Heirs (Form 1109) must be filed if the value of the assets in the Estate exceeds the allowable funeral expenses, applicable family allowances, and costs to the Register combined.
- For either Estate, the petitioner will need to contact a local publication in the county where the Estate will be opened to submit a Notice of Appointment to Creditors and Unknown Heirs if any potential heirs were missed or unknown. A copy of this publication should later be submitted to the Register of Wills for the Estate. In Baltimore County, the Register of Wills requests that the Notice of Appointment be published three (3) times in the Daily Record.
- A Nominal Bond (Form 1116) or Bond of Personal Representative (Form 1115) – depending on whether a bond is excused by the Will or written waiver.
- For Regular Estates – A Bond of Personal Representative (Form 1115) must be filed only if the Estate is valued at $10,000.00 or more after payment of allowable expenses and if a bond is not excused by the Will or written waiver.
- Consent to Appointment of Personal Representative (Form 1118) – required by all interested persons who have greater priority to be appointed Personal Representative than the petitioner, e.g., if the person named in the Will or entitled to appointment is not applying to be appointed Personal Representative.
- Appointment of Resident Agent (Form 1106) – only if the petitioner is not a Maryland resident.
- Proof of Execution of Will – only if Will lacks an Attestation Clause
- List of Interested Persons (Form 1104) – to be filed within twenty (20) days after appointment under administrative probate or at the time of filing a Petition for Judicial Probate
- Copy of Death Certificate
Upon completing the forms mentioned above, submit the forms together in one package with the Petition for Administration. Be sure to include the original Will and Death Certificate with your filing. Suppose you cannot obtain an original copy of the Will. In that case, you will need to file a Petition for Admission of Copy of Executed Last Will and Testament (Form 1430).
6. What happens after I file the Petition for Probate?
After filing the Petition for Probate, if everything is in good Order, the Register of Wills will “admit” the Will to probate and appoint a Personal Representative. The appointment is effective upon the Register issuing Letters of Administration. In addition, the Register of Wills will give a schedule of mandatory filing deadlines. The Personal Representative is required to make a reasonably diligent effort to seek and provide a list of the decedent’s creditors’ names and addresses and deliver notice of appointment to these creditors within twenty (20) days of appointment. In addition, the Personal Representative is required to file an Inventory of the Estate and an Information Report within three (3) months of appointment; and an accounting of the Estate within nine (9) months of appointment.
7. Can the Estate be Exempt from filing the Inventory and Account forms?
A Regular Estate can be exempt from filing the Inventory and accounting if it qualifies for Modified Administration. An estate qualifies for Modified Administration if the only beneficiaries of the Estate are the Personal Representative, people, or businesses that are exempt from inheritance tax, and the Estate is solvent and able to satisfy all gifts to beneficiaries.
8. How do I Calculate Inheritance Taxes?
Maryland imposes an Estate Tax and an Inheritance Tax when a decedent’s property is transferred to their heirs after death. The Estate Tax is imposed on the Estate. In contrast, the Inheritance Tax is payable by the beneficiaries who receive the assets of the Estate. Such taxes are imposed on all property that passes under a Will, Trust, Deed, or by operation of law.
Maryland’s inheritance tax is ten percent (10%) of the property’s fair market value minus other expenses. Notably, beneficiaries who are close relatives, such as a spouse, children, stepchildren, former stepchildren, grandchildren, or any other lineal descendant, parents, stepparents, siblings, grandparents, spouse of a lineal descendant, surviving spouse of a deceased child, or lineal descendant (if the surviving spouse has not remarried) are exempted from all inheritance taxes. Exemptions also apply for beneficiaries that are businesses (if all owners are legally exempt) and Maryland non-profits and charities. You should consult a probate attorney or CPA to determine your exemption status, as well as any other taxes payable by the Estate.
9. How do I complete the Inventory Forms?
The Inventory Forms are only filed when opening a Regular Estate. The Inventory Forms must provide, in reasonably descriptive detail, all property solely owned by the decedent or the decedent’s interest in property owned as a tenant in common. The forms must indicate the gross fair market value of the property as of the date of death and any liens that may exist on the property. To assist in completing the forms, you should consult with a qualified and disinterested appraiser to assess the property’s actual value as of the date of death. Any appraisals containing the word “approximate” or similar qualifying words are not acceptable. Examples of property that the Personal Representative may need to appraise include:
- Motor Vehicles
- Corporate Stocks (listed on a national or regional exchange or over the counter securities)
- Debts owed to the decedent such as Bonds, Notes, and Loans
- Bank Accounts and Money
- IRAs, annuities, and life insurance proceeds payable to the Estate or with no named beneficiary; and
- Real and Leasehold Property
10. How do I Complete the Information Report?
The Information Report should include any assets that do not follow the terms of the decedent’s Will or the Maryland intestacy laws. These would include, but are not limited to:
- Jointly held assets
- Any Interest in an Annuity or other Public or Private Employee Pension or Benefit Plan
- Any held Life Estates/Terms of Years
- Payable-On-Death or Transfer-On-Death accounts
- Real or Leasehold property owned by the decedent and located outside of Maryland
11. How do I Prepare the Accounting?
The accounting that needs to be filed with the Register of Wills must include a summary of Total Receipts and Total Disbursements, including any payments paid to the decedent after their death, increases and decreases in the value of the property held by the Estate, any income received by the Estate after the Date of Death, any expenses incurred from administering the Estate, including payment of inheritance taxes, attorney’s fees, and filing fees, and all distributions to beneficiaries.
After all claims have been settled, and a final accounting has been approved, the Personal Representative can then make a final distribution and close the Estate. I often assist and represent Personal Representatives in all their duties and responsibilities.
Often, the Probate Process can take a long time and be time-consuming and complicated. It is highly advisable to consult ahead of time with an experienced estate planning lawyer if you want to structure your Estate so that the Probate process can be avoided – such as by creating a Living Trust. If you have questions or need legal guidance on opening an estate in Maryland, or you are interested in creating your Will or learning about Living Trusts and how to create one, don’t hesitate to contact me. You will be doing your family a huge favor by taking care of your Estate Planning now.
About Andalman & Flynn, P.C.: Founded in 1998 in downtown Silver Spring, Maryland, Andalman & Flynn has forged a distinguished reputation for legal excellence. The firm represents individuals seeking disability benefits throughout the country and practices family law throughout Maryland and the District of Columbia. The firm focuses on cases that impact the rights of everyone, and are there for clients when responsive legal help is most critical. The firm has provided legal analysis on national and local television and radio, and their attorneys often testify before legislative bodies and are routinely invited to contribute to prominent legal publications. For more information about Andalman & Flynn, please visit the website at andalmanflynn.com or call 301.563.6685.