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Probate Administration

Probate in Ohio

When someone dies in Ohio with property, the heirs usually need to go through probate to get access to the inheritance. An heir is someone who inherits from someone who has died. We refer to the dead person as the “decedent” in the law. Before a bank will release money, before a car can be transferred to you, and before a house can be sold or deeded into your name, it must pass through probate unless the decedent made transfer-on-death plans during their lifetime.

Probate court exists to be a referee for those who cannot speak for themselves: typically, dead people, children, and incapacitated adults. The probate court will appoint someone as the administrator of an estate, and that person has a fiduciary duty to the dead person and must report their actions to the Court. The Probate Court makes sure that the fiduciary follows the legal process and estate planning, and also can order other people and companies to comply with the administrator’s needs (such as ordering a bank to turn over banking records).

Probate court, by the way, has nothing to do with probation; that is is a criminal matter and the similarity of the two terms is a frequent source of confusion!

An estate administrator has three phases of their job:

Phase One: Find the heirs, find a will, and file the paperwork to open the estate.

The first job of someone applying to administer an estate is to find the heirs to the estate. This goes on Form 1.0 with the Probate Court, and it is Form 1.0 for a reason–next of kin are entitled to know that an estate is being filed, because they have a right to be first in line to administer the estate. The administrator must be comprehensive; half-siblings, spouses of deceased cousins, and children who were placed in foster care but not adopted out will all stand as potential beneficiaries of the estate.

The applicant then fills out an application for authority to administer the estate (the Form 2 series). Based on whether there is a will or not, they will also prepare that form (the Form 4 series) with their probate attorneys. The Probate Court will then set a date of the hearing. The applicant will notify all of the people listed on Form 1.0 about the hearing date.

Most of the time, there is no issue with appointing the applicant as a fiduciary. If there is not a will, they are named the Administrator. If there is a will, they are an Executor. These terms are used interchangeably in Ohio and have little difference; if you are curious about the differences, ask your probate lawyer! The Administrator is a fiduciary for the estate. This means that they are responsible for putting money in the bank, paying the lawful debts of the estate, and distributing property to the beneficiaries. More on this later, especially about what an administrator is not responsible for doing.

The Court grants that Administrator a set of Letters of Authority. These Letters are a court order, and they essentially say “treat the person named in the Letters as if they had all the rights and authority of the dead person.” The Letters give an Administrator access to bank accounts, retirement accounts and all sort of sensitive financial information. They permit the Administrator to sign deeds and car title transfers. The Administrator can also use the Letters to access medical records and tax transcripts. In short, they can do almost anything that the dead person could do.

With an Administrator appointed and the Letters of Authority in hand, the estate moves into Phase Two.

Phase Two: Gather Assets and Sell What is Needed

The next job is to find out what the assets of the dead person were; this is often a house, a car, and bank accounts and retirement accounts. Sometimes it involves stocks or collectibles, or even more esoteric things, like music copyrights. These items and assets are identified, gathered, and secured by the Administrator.

Assets can be real property (that is, land and buildings) and personal property (everything else). They can be tangible assets, which means that you can touch them, or intangible assets; think about bank accounts, loans made to others, music royalties or copyrights.

An Administrator can only sell property under certain circumstances. Typically, this is only when the property needs to be sold to pay debts of the estate or when all of the beneficiaries agree to a sale. If the dead person had a house and nobody in the family wants it (or wants to be a one-sixth owner of it), then the house can be listed for sale. Your probate lawyer will also walk you through when it makes sense to transfer it to the family, and when it makes sense to sell through the estate (such as issues when a beneficiary may owe child support or have back taxes owed).

An executor typically can sell property without beneficiary consent, because most wills permit it. This will, of course, depend on what the individual will says.

We caution administrators and beneficiaries about fixing up property in probate. Administrators are not allowed to spend money to improve a piece of property without the Court’s permission, and they cautioned against keeping an estate open longer to fix up a property or improve it. The Administrator’s duty, according to the Court, is to make sure that the assets in the estate go to who they are supposed to go to–not to fix up something or improve it for a higher price. This also becomes an issue with cars; the administrator does not have a duty to fix a broken-down car. They have a duty to get it to the heirs, or sell it as-is on their behalf. Eager administrators who spend estate money without the consent of the heirs can find themselves personally liable for the bills!

Once the estate has identified the assets, it is time for Phase Three.

Phase Three: Pay the Debts, Distribute the Rest.

This final phase involves determining what lawful debts exist that the Estate has to pay. The State of Ohio has an order of priority for debts to be paid. Your probate attorney will advise you on what to pay and what to reject. We have seen do-it-yourself administrators ignorantly pay $30,000 or more to pay debts that the estate never had to lawfully pay, because they thought they were saving money by not hiring a lawyer.

This is also the phase where the decedent’s taxes are paid. If they did not file taxes during their lifetime, then the administrator has the unenjoyable job of catching up the taxes. If they are owed a refund, then the Administrator files the appropriate IRS paperwork to get the refund. The Administrator also pays the probate lawyer their legal fee from the estate account and pays themselves the fiduciary fee allowed under Ohio law.

Beware: most 401(k)s and other retirement accounts funded with pre-tax dollars have to be paid when the money is distributed. If it is distributed to the estate, the estate may pay as much as 40% tax on it, unless a tax professional and lawyer help make sure that it is properly distributed to the beneficiaries at the right time. This is another area where do-it-yourself Administrators routinely cost tens of thousands of dollars in other people’s inheritances because they think they can learn all of the work “on the job.”

Once the debts are paid, the money is distributed according to the will or Ohio’s laws on inheritance without a will. The estate will file a tax return every year, which is a Form 1041. Your probate lawyer should help you with this, and the 1041 can result in significant tax savings, even if the estate never made a profit. For example, if the estate sold a house that was worth $120,000 at the time of death, but only sold for $90,000 five years later because the family neglected it and did not call an experienced probate attorney for help, then the lost $30,000 may be a tax deduction for the beneficiaries. Same with the cost of the probate lawyer, tax professionals, real estate agents, and other professionals.

Frequently Asked Questions

Am I responsible for the debts of the person who died?

No, an Administrator is not responsible for the debts or liabilities of someone who has died. However, if an Administrator distributes money to beneficiaries before they have paid debts, or if they pay debts in the wrong order (because Ohio has a ranked order of who gets paid back first), then the Administrator has to pay those debts out of their own pocket. This is a foolish mistake and it usually happens when an Administrator thinks they are going to save some money by not hiring a lawyer and starts paying creditor bills as they come in.

Does the Administrator or Executor get paid a fee?

Yes, the Administrator gets 4% of the first $100,000, 3% of the next $300,000, and so forth. It is set out in Section 2113.35 of the Ohio Revised Code. The fee is less for a house that gets transferred to an heir without being sold. The fiduciary may also take a fee for non-probate assets that the fiduciary still assisted with (such as filling out life insurance policies or making sure a retirement account pays to beneficiaries).

What is the difference between an executor and administrator?

Executors and Administrators are both personal representatives; that is, they represent the dead person in Court.

An Executor is named in a will and an Administrator is appointed by the Probate Court when there is no will. The State of Ohio draws a slim difference between the two. The trend in Ohio law is to treat the two positions as mostly equal. An Executor’s powers are established by a will, and are often broad. For example, an executor may be allowed to sell real estate or fix it up without getting court approval. An Administrator has to rely on the powers given to them by the State of Ohio. An Administrator cannot sell a piece of property without consent from the heirs or court approval, but an executor can (if the will says they can).

It is important for someone to go through estate planning before they die and set up a will and trust. It can save a great deal of time and money for the heirs. Linn Legal can assist your family with estate planning and talk about options to avoid probate entirely. Sometimes a family hires us to set up an estate plan for their parents, which makes sense when you think about it–the children are the ones who truly benefit from their parents making a proper estate plan!

You may run into the terms “Executrix” or “Administratrix.” These are old Latin terms for when a woman is serving in the role. Officially, the State of Ohio and its courts do not use separate terms based on gender, so you will not see the two terms appear in the probate law. They sometimes crop up in old legal cases, or in new ones where a judge wants to show off that they studied Latin.

What happens if someone dies without a last will?

If someone dies without estate planning, then the State of Ohio has a set of laws that determine which family members inherit and in what order. This is called “intestate succession.” What happens if the deceased person had no children and no spouse? The first part of probate administration is to find the heirs, and the administrator and probate lawyer will go through the family tree and find someone with a heartbeat who will inherit the estate.

What happens if the dead person made a living trust?

Often, the goal is that the trust is a beneficiary of the estate and directly receives most of the decedent’s assets. The trustee then privately manages the trust administration and follows the instructions for distributing estate assets.

The goal of a trust is to skip probate entirely. Often, though, there are a few assets that never make it into the trust (such as cars or tax returns). These can usually be solved with a short probate administration process. Other times, someone did not finish their estate planning and never put assets in the trust. This means that they wasted money on their trust during their lifetime, because the family still has to open a probate estate to move the assets into the trust.

Can the bank take the house if there is a mortgage?

Banks do not take houses. When someone dies, a bank cannot take a house.

This is the most common question that we get at Linn Legal.

A bank gets their money back by forcing the house to be sold in a sheriff’s auction.

A bank has a loan that the dead person agreed to pay. The bank has a mortgage on the house that basically says “if you do not pay this loan, we can force this house to be sold in foreclosure to get our money back.” If nobody keeps the mortgage current, the bank will eventually file a lawsuit to foreclose on the house. It will be sold at a sheriff’s auction. The money that comes from the sale will go to pay back taxes and the amount owed on the mortgage. Any amount of money left over is the property of the dead person, and you need to open a probate estate to claim the money.

For example, if someone dies and their mortgage has a balance of $50,000 and nobody pays it, the bank will foreclose. If it sell at sheriff’s auction for $80,000, then the bank is only entitled to the $50,000 it is owed. They cannot take the rest. The County Treasurer will hold the money until someone opens an estate in Probate Court to claim the excess funds, which are then distributed to the heirs.

It is important to make sure that the mortgage gets paid every month when someone dies (ask your probate lawyer how to do this). Letting a house go to foreclosure after someone dies is the stupidest way of destroying intergenerational wealth. The heirs never get the money they would have gotten by opening up a probate estate and selling the house. We see families routinely waste tens of thousands of dollars in their inheritance because they assumed that the bank would take the house.

If the heirs want to keep the house, then they can take over the mortgage on the same terms as the dead person. The bank cannot change the terms of the loan or make the mortgage payable all at once. This is prohibited by a federal law called the Garn-St. Germaine Act. An heir does not need to apply for a loan or get denied if they have bad credit. The mortgage lender must accept them as they are.

Do I have to file the taxes for the dead person?

Yes, the Administrator is required to pay the dead person’s taxes due from the assets in the probate estate. The Administrator typically files at least two sets of taxes. The first set is for taxes due when the person was alive; these are the 1040 forms that you and I file every year with the IRS. They should file the taxes for the last year that the person is alive, and for any years in which that person did not file their taxes while alive.

The second set of tax forms is the 1041 set, which is for income or losses for the probate estate. Basically, you treat the estate as a separate, ongoing business. If it makes money or loses money each year, the estate reports that to the IRS and pays tax due, if any.

Taxes present a snag for any Administrator. There are several tax elections (that is, choices that the IRS lets you make) that are time-sensitive. They can help the estate and heirs save money. Estate administration attorneys can review these with you to help you decide if they make sense to choose. If you do not choose them in time, they expire forever.

Do I pay tax on my inheritance or retirement accounts?

If money went into a retirement account pre-tax (such as a traditional 401k), then someone has got to pay tax on it when it comes out. If the heirs are beneficiaries of the retirement account, then they typically pay it. If there are no beneficiaries, then the estate is the beneficiary and must either pay the money to the heirs and have them pay the income tax, or it has to pay the income tax within the estate. An estate pays much higher tax rates than individual taxpayers do. In 2024, income over $15,200.00 is taxed at 37%.

Ohio has no inheritance tax. The Federal inheritance tax exempts the first $13,610,000.00 in 2024. This means that the vast majority of heirs in Ohio do not pay any inheritance tax.

Taxes are complicated. Do not rely on this article for making tax decisions in a probate estate; talk to a tax professional!

Can an estate administration lawyer be an administrator?

Yes, and our office sometimes serves as both the lawyer and administrator of a case. This is typically when no heir feels up to the task, or they live out of state or have little connection with the estate. A probate lawyer is familiar with the probate process and can help get the estate moving along. Sometimes families feel that having an independent administrator can keep the peace in a family.

There are other scenarios where it can make sense to have your probate lawyer serve as the administrator. When the only assets are stocks, retirement accounts and bank accounts, the lawyer knows how to quickly work through the paperwork and get the family paid. Similarly, when the only asset is a house that the heirs want to sell, the lawyer can get the property on the market and cleared for sale with the court.

If a lawyer serves as the administrator of the estate, then they are entitled to take the fiduciary fee; however, most counties cut a lawyer’s legal bill in half when they do this. In our experience, it generally costs the estate about 2% more out of the total assets to have the lawyer serve as administrator.

Can the administrator fix up a house before selling it to get more money for the estate?

If the most valuable asset in an estate is a house that could use updates, it would make sense to fix it up and try to get the top dollar at a sale. However, this requires spending money out of the estate. I think it’s usually a bad idea to spend estate money to fix up a house before sale. In Ohio, the duties of an administrator do not include improving property, or even repairing it. The administrator must “prevent waste,” which means that they cannot allow property to badly deteriorate (and can get court approval to spend money to stop deterioration). However, the law does not empower an administrator to spend estate assets to power-wash a deck, put on a new roof, paint walls or replace a water heater. If all of the heirs consent to it in writing, most courts will allow an administrator to do all of these things. But it is a foolish administrator who goes in spending someone else’s money to fix up a property for sale; no good deed goes unpunished.

An executor may have the power to repair or improve a property if the will says that they can. We still advise caution on spending estate money, though. If an heir is set on fixing up a property, then they can buy it from the estate at an arms-length transaction and put their own money in to fix it up. People are much more hesitant to spend their own money instead of pressuring an administrator to spend estate funds.

Do you really need to hire an estate administration lawyer for a probate estate?

You can open a probate estate without a lawyer, just like you can do your own dental work without a dentist. It is simply more painful. Most probate lawyers will meet with you for a free initial consultation (and Linn Legal offers free consultations for probate cases). You can learn about how the lawyer can help your family and get a general estimate of legal costs and how long it will take.

Do you have to pay a probate attorney upfront?

No; the lawyer’s fees are paid out of the estate. They get paid at the very end. Nobody should have to pay money upfront to hire a probate attorney to open an estate. The judge looks over the legal bill and approves it or denies it. Most counties in Ohio have a guideline reasonable fee, and most of the lawyers in the county charge it. When you are hiring a probate lawyer, most of them will charge roughly the same amount as a flat fee. You should pick a law firm that has experience with probate estates and focuses on work in the probate court.

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