The Probate Court is established in each county of Ohio to supervise the administration of the estate of a decedent (the person who has died) who was a legal resident in the county at the time of his or her death. Each transaction involved in the administration of an estate (such as paying a decedent's bill) is subject to the examination and approval of the Probate Court. Other matters within the Probate Court's jurisdiction are: issuance of marriage licenses, adoptions, guardianship proceedings, and the involuntary commitment of the mentally ill.
A probate estate is a legal proceeding provided for by Ohio law to determine: the assets of a deceased person who was an Ohio resident at the time of death; the value of those assets; and how those assets should be distributed. If a will is involved, the Court will generally follow the terms of the will as to who should serve as executor of the estate and who should inherit the assets of the estate. If the decedent had no will or if a will is deemed to be invalid, the Court will follow Ohio statutory laws to determine which relatives are to inherit.
A probate estate is necessary to protect and conserve the assets of a decedent for the heirs, creditors, and other persons interested in an estate. The probate estate will provide for the payment of outstanding debts, the payment of taxes, and the distribution of the remaining assets to the persons entitled to receive them either under the decedent's will or by law.
The probating of an estate requires the appointment by the Probate Court of a suitable person to supervise the administration of the estate. The person appointed is called an executor, if named in a will, or an administrator, if there is no will. The executor or administrator may be an individual, a bank, or a trust company. Typically, the executor will need the aid of an attorney to help with the Probate process.
The duties of an executor or administrator are:
The law provides that if: (a) the total value of all property in the decedent's name is $35,000 or less; or (b) for dates of death on and after September 14, 1993, with assets of $100,000 or less and where the surviving spouse is the sole heir at law or under a will, the estate can be relieved from administration. This essentially means that a streamlined process can be used which takes less time and effort than would normally be the case.
Court costs are based on a schedule of charges established by the state legislature for each type of document filed in the Probate Court. Executor or administrator fees are established by the state legislature and are based on a percentage of the estate. The percentages range from 1% to 4%, depending upon the nature and value of the assets. Some courts set a minimum legal fee, and allow an hourly charge by an attorney for work not compensated for by the fee schedule. All taxes due on or after the death of the decedent must be paid by the executor or administrator of the estate. The taxes that must be paid are: real estate taxes, personal property taxes, local, state, and federal income taxes, and Ohio and federal estate taxes.
An Ohio estate tax is levied by the State of Ohio on the estate of a decedent who was a resident of Ohio at time of death. Estates that have a value in excess 338,000 are now subject to taxation in Ohio. However, surviving spouses do not pay any taxes.
For a detailed discussion of estate planning concepts and federal estate taxes, see our Estate Planning FAQ page. In a nutshell, if you are leaving everything to your spouse, there is no federal estate tax problem. If that is not the case, for estates with a value of more than $3.5 million (for 2009, no federal estate tax in 2010, and a return to $1 million in 2011), federal estate taxes will be due on everything above that number and range between 37 and 55 percent!
As discussed above, smaller estates can be "relieved from administration" and this process typically takes 3-4 months. For other estates, the length of time involved can vary greatly, depending upon the complexity of the assets owned. If real estate and business interests are involved, this will likely stretch out the administration process. Also, to allow creditors of the decedent to become aware of the death and to make their claims with the estate, a minimum of 6 months must lapse from the date of death before the estate can be closed. Therefore, in most instances, if you stand to inherit from someone's estate, you will wait at least 6 months to receive your money.
Like any other Court proceeding, an estate is a public matter. Any documents which have been filed in an estate may be reviewed. If you stand to inherit from an estate, you can review the various reportings that need to be made by the executor or administrator. For example, the executor needs to file an inventory of what the decedent owned at the time of death. The executor will also need to file a final accounting which shows what monies were paid out of the estate and to whom they were paid. If the decedent had a will, it is on file with the Court and can be reviewed.
As explained above, the purpose of the probate estate is to insure that a decedent's bills and taxes get paid and that the remaining assets are efficiently distributed to the proper parties. When people speak of avoiding probate, they are normally talking about avoiding the costs and attorney's fees associated with a probate estate, as well as avoiding the length of time involved in processing the estate. Others are concerned about having their financial affairs become open to the public. To address these issues, attorneys can use various estate planning techniques. One such technique is the use of a trust. A living trust is one which is created during life and into which the creator of the trust transfers his or her assets. At death, there are no assets to be probated because the decedent doesn't own anything -- the trust does. The trust document that was created by the decedent functions much like a probate estate and directs how the assets in the trust are to be managed and distributed. For persons with a large amount of assets (normally hundreds of thousands of dollars), trusts can help avoid the attorney's fees that are necessary for a probate estate, and may significantly reduce the amount of state and federal taxes that might otherwise be owed.