Q: I was the named beneficiary on most of my loved one’s accounts, but there is one small account with less than $10,000.00 that has no beneficiary listed. Do I need to go through probate for one small account?
A: Typically, when a person passes with assets in their name alone that have no named beneficiaries, those assets require probate or administration in the Surrogate’s Court before the heirs can access them.
However, the probate process can be lengthy, especially when a complex family tree is involved. Thankfully, the Surrogate’s Court provides a simplified alternative for “small estates,” through a process called Voluntary Administration.
Voluntary administration is an expedited proceeding that can only be utilized when a fiduciary needs to transfer personal property valued at $50,000.00 or less. This includes bank accounts, automobiles, stocks, insurance proceeds, and other valuable tangible items.
It cannot be used for real estate, even when that property is valued at less than $50,000.00. Unlike probate, which can take several months or even years depending on the complexity of the estate, a voluntary administration proceeding typically has a turnaround time of less than eight weeks before the fiduciary is authorized to act.
In addition, when compared to probate, voluntary administration often has lower costs due to minimal filing fees.
The process begins with an “Affidavit in Relation to Settlement of Estate,” which should be completed either by the Executor named in the Will, or, if there is no Will, by the deceased person’s closest living relative. The attesting party must provide certain information about the deceased and identify each of their next-of-kin, as well as the names and addresses of all beneficiaries in the Will (if there is one).
They must set forth all of the assets of the estate and their approximate values, as well as all of the liabilities of the estate, including outstanding bills, rents, and other expenses.
From there, the Court notifies each of the next-of-kin that a proceeding has been filed.
While probate requires each of these parties to either appear in Court or sign a document called a “Waiver and Consent,” voluntary administration has no such requirement – resulting in a process that moves more swiftly through the Court system and avoids the expense of having to serve parties with documentation.
Once the Court appoints a voluntary administrator, they will issue one Certificate of Voluntary Administration for each asset named in the affidavit. Those Certificates grant the fiduciary limited authority to collect each asset. In other words, if there are additional assets that are discovered after the Certificates issue, the fiduciary will need to return to Court and update the proceeding to reflect the new asset total.
If that total exceeds $50,000.00, a full probate or administration proceeding is required.
While voluntary administration is a useful option to collect smaller assets more quickly, the fiduciary has significant restrictions compared to the powers granted by the probate process. Accordingly, it’s always a good idea to consult an estate attorney to determine which method is best for your loved one’s estate.
Frank Oswald, Esq. is an associate attorney at Burner Prudenti Law, P.C. focusing his practice areas on Trusts and Estates. Britt Burner, Esq. is the Managing Partner at Burner Prudenti Law, P.C. focusing her practice areas on Estate Planning and Elder Law. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.