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Intestate Estates

Intestate estates are estates where there is no valid will. They occur when the decedent never had a will or when the decedent’s will was found to be invalid by the court. Wills may be considered invalid if they do not conform to the statutory guidelines and regulations, or were made when the person was not considered competent.

The biggest difference between intestate estates and testate estates is the distribution of assets to beneficiaries. With a testate estate the decedent has indicated what assets are to go to which beneficiary. In the case of an intestate estate the distribution of assets proceeds by statute, to the decedent’s surviving blood relatives and spouse.

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The Probate Court System of the State of Vermont puts out a detailed pamphlet called Instructions for Settling Estates. This Pamphlet is available at any Probate Court during business hours and can be downloaded from the Vermont Judiciary Website at www.vermontjudiciary.org. This pamphlet goes into greater depth than the general information included on these pages and is recommended to you for more information.

Brief Overview of Process:

In the case of an intestate estate, any interested party can petition the Court to open the estate. The forms to petition the Court are available from the link above or at the Probate Court during business hours. Once a petition has been filed, the Court will hold a hearing and appoint a person to manage the duties of probating the estate. If all the next of kin of the decedent sign a consent to the opening of the estate and the appointment of the proposed Administrator, then no hearing needs to be held. It is critically important that all interested persons be accurately listed on the petition. The definition of "interested persons" varies from one case to another. The legal definition is contained in Vermont Rule of Probate Procedure 17. The Court will often appoint the surviving spouse or other close relative if they are willing and able to handle the duties. In intestate estates the person who manages the estate is called an Administrator. (If the decedent had left a will then the person managing the estate is referred to as an Executor.) Executors and Administrators are often referred to as Fiduciaries, which means that they are acting on the behalf of another person, in this case, on the behalf of the decedent. Before an Administrator is appointed, he or she must file a bond as may be required by the Court. The bond assures faithful performance of the duties of the Administrator.

If you are the Fiduciary in charge of managing and distributing the Estate you have duties to both the Estate and also to the Court. As Fiduciary, the Court will give you a certificate of appointment which is a legal document giving you the authority to take control of the Estate. This certificate will be required by places such as financial institutions before you will be allowed to access the decedent’s bank accounts.

The first step after receiving your certificate of appointment is to determine the assets of the Estate and secure them. This may involve having items appraised or placed into storage. The goal is to establish the extent of the Estate at the time of the decedent’s death and make sure that none of the Estate is damaged or lost. Once you have established the extent of the Estate, you are required to file an Inventory with the Court. The forms and instruction sheets are available from the above link. The Inventory must be filed with the Court within 30 days of your appointment as Fiduciary. An extension must be obtained from the Court if you are unable to file the inventory within the 30-day period.

Once the assets of the Estate are established, it is time to determine the extent of the debts of the decedent at the time of their death and any debts accrued in the administration of the estate, such as appraisal fees etc. Do not assume that you know what the debts are and start paying bills out of the Estate assets. Under the law, you are required to handle the payment of debts in a particular manner and if you do not follow the required steps, you could be held liable. The first step is to determine all known debts. You will need to send a Creditor’s Claim Form to anyone who is known to have a claim against the Estate. Next, you need to publish in the paper a Notice to Creditors. By publishing the Notice to Creditors you place a four-month time limit on the presentation of claims by unknown creditors against the Estate. Any debts that are claimed after the four months have elapsed will be barred. However, if you fail to publish the Notice to Creditors, the time limit for presentation of claims becomes three years. Once all debts against the Estate have been determined, you need to ascertain if the Estate has sufficient resources to pay all of them. If the Estate does not have the required funds, it is considered Insolvent. Vermont Statutes determine the priority of each type of debt and if there is not enough money to pay all of them, then you must pay the ones that are considered by statute to have the highest priority. If the estate is insolvent you may petition the Court to order the distribution to creditors. In some cases, the Administrator is certain that all of the debts are known and the estate has sufficient funds to pay them. In such cases the publication of a notice to creditors may be unnecessary and can be waived by the Court. (Probate Court Form 33)

As Fiduciary, you are responsible for filing all State and Federal Tax Returns for the decedent and the estate. If you are confused as to what tax forms are needed or the amounts to be paid, please contact the IRS, the State of Vermont Department of Taxes, an accountant, or attorney who specializes in estates.

Once all debts and taxes are paid, the estate is usually considered ready for distribution. In the case of an intestate estate you must determine who is an heir of the estate and qualifies to receive a distribution of the assets. The priority of distribution is established by statute and is dependant on whether the decedent has blood relatives and how close the lineal ties are. For example, if the decedent has left a spouse and children, one third of the estate would go to the spouse and the remainder would be divided between the children. If the decedent was not married and had no children, the estate would go to their parents, if living. If the parents were not living, the estate would be divided among the decedent’s siblings. You will need to determine all of the living relatives of the decedent and their respective relationships before you can designate the heirs of the estate. In some cases, this will be a simple task and the names and locations of the decedent’s closest relatives will be known. In other cases, where the family is not close or the decedent does not have a close blood relatives, the task becomes more difficult. An attorney who has experience in estate work can give you advice when you are having problems locating the blood relatives of the decedent. In the rare case where the decedent has no living blood relatives, the estate escheats to the decedent’s town of residence, meaning that it becomes town property. However, this almost never happens.

Once all the debts are paid and you have determined who qualifies as an heir of the decedent according to Vermont Statute, you can file a Final Account with the Court. This final account sets forth the assets that the estate started with, any income acquired by the estate, the debts and taxes that have been paid, the remaining assets, the planned distribution to the heirs, and any Attorney or Fiduciary fees that need to be paid. No Attorney or Fiduciary fees of the estate should be paid prior to Court approval. The Court will determine if the fees are reasonable and then approve and allow the fees at which point you can pay them.

The Court will examine the final account and hold a hearing to determine if the estate has been properly handled and is ready for distribution. If the Court finds that everything is in order, it will issue a Decree of Distribution, which gives you the legal authority to distribute the assets to the heirs and close the estate.

You should carry out the distribution of the remainder of the estate promptly and make sure that you obtain a Probate Receipt from each beneficiary. Once all distribution has been completed, you need to file a Closing Report with the probate receipts attached with the Court. If the Court determines that everything is in order, you will receive a signed and approved copy of the Closing Report and a Discharge of Surety if you were required to post a bond. At this point, you are considered to have completed all required duties and are no longer obligated to the estate.

The Administration of most estates in Vermont is accomplished by ordinary people. It is likely that anyone who is careful and prudent can administer most simple Vermont estates. Where the estate is complex, contains real estate, is very large, or is subject to complex legal claims, it is likely that professional advice or help will be required. You should seek competent legal or tax advice concerning and estate. If you are in doubt it is better to err on the side of caution.

Individual Probate Forms

Probate Form Packets

Opening an Intestate Estate

File an Inventory

File an Interim or Final Account

Statutes & Court Rules

Probate Rules

Vermont Statutes

Vermont Judiciary
modified 05.14.2008 13:29
 
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