Introduction to Dependent Administrations
The dependent administration of an estate usually occurs when a decedent dies without a Will. However, it may also be proper when a Will is probated yet fails to provide for an independent administration and the beneficiaries do not agree on the advisability of an independent administration. In contrast to an independent administration, a dependent administration is much more restrictive and must proceed with the court’s approval on each action taken by the Dependent Administrator, with few exceptions.
Another reason to pursue a dependent administration is in certain cases where the estate is heavily indebted. With a dependent administration, the court has much more oversight and there are certain rules and priorities with respect to paying creditor claims which make it more difficult for creditors to collect on their claims. In addition, if an Administrator anticipates that there may be disagreement amongst distributees, a dependent administration may be a better option so that the court is involved and may approve the decisions of the personal representative.
Steps in a Dependent Administration
Dependent administrations are most often opened when the decedent failed to leave a Will and the heirs cannot agree on the appointment of an Independent Administrator, when the will failed to provide for an independent administration and the beneficiaries do not consent to an independent administration, and when the decedent’s estate is heavily indebted.
Dependent Administration without a Will
When the decedent died without leaving a Will and the settlement of the estate requires an administration and heirship proceeding, an Application for Appointment of Dependent Administrator along with an Application for Determination of Heirship and Motion for the Appointment of Attorney Ad Litem should be filed. A Civil Case Information Sheet must also be filed at this time. Notice of the heirship proceeding must be served upon the heirs of the estate unless the heirs waive the service of such filings, as often happens.
Dependent Administration with a Will
If the decedent died testate but failed to provide for an independent administration or if a dependent administration is desired despite provisions in the Will for an independent administration, the Will may be filed for probate and the Application for Probate of Will should seek the appointment of an Executor or Administrator.
Determination of Heirship
With respect to a determination of heirship, once the Attorney Ad Litem has been appointed and has had an opportunity to file an answer, interview witnesses, and prepare the case, a hearing may be set with the court. At the hearing at least two witnesses may testify as to the family history of the decedent and the applicant may offer testimony in the form of a proof of death if an administration of the estate is being sought. If the judge signs the Judgment Declaring Heirship and appoints an Administrator, the Administrator will sign and file an Oath and post a bond, which is required in dependent administrations.
Notices to be Published, Filed, and Sent
Within one month of qualification, the Dependent Administrator must publish a Notice to Creditors in a newspaper of general circulation in the county where the Administrator was appointed. Such published notice must then be filed with the court. Within two months of qualification, the Administrator must send a Notice to Secured Creditors. The Administrator should consult his attorney as to the advisability of sending permissive notices to unsecured creditors of the estate. Sending permissive notices to unsecured creditors prompts creditors to present claims within 121 days, lest such claims be barred.
An Inventory, Appraisement, and List of Claims must be filed with the court within 90 days of the appointment of the personal representative, unless the court grants an extension. For more information about the Inventory, please see the relevant sections under “Independent Administration” on page seven herein.
The law requires the personal representative to account for all transactions and disbursements of estate property. An Annual Accounting is required to be filed each year within sixty days after the anniversary date of the personal representative’s qualification. The Annual Accounting reports the following information and must be verified and supported with vouchers and official letters from institutions managing cash and investments:
- Claims allowed, paid, or rejected by personal representative;
- Claims developing into a lawsuit and status of lawsuit;
- All property coming into the hands of the personal representative;
- Changes in estate property;
- Itemized list of receipts and disbursements;
- Description of property being administered;
- Condition and use of property being administered;
- Cash on hand and description of personal property of the estate;
- Status of tax returns and taxes of the estate; and
- Statement that bond premiums have been paid.
A Final Accounting is required before the dependent administration may be closed. In addition to providing the same information as an Annual Accounting, the Final Accounting lists the property that each heir or devisee has received, and once filed, the devisees have an opportunity to object if necessary. Once the Final Accounting is filed and approved, the personal representative may file an Application to Close, Discharge, and Release Bond, which essentially ends the personal representative’s duties to the estate. This Application should detail how the estate has been administered and distributed. When the judge signs the Order to Close, Discharge, and Release Bond, the court recognizes that the personal representative has completed his or her duties, discharges the personal representative, and releases the bond.
Dependent vs. Independent Administration
A key difference between dependent and independent administrations is that the personal representative is required to post bond. Because the personal representative has access to personal property belonging to the estate once the personal representative receives Letters, the bond acts as an insurance policy to ensure that the personal representative performs his duties appropriately.
The most important difference between independent and dependent administrations is that all acts by a personal representative require prior court approval except:
- Paying taxes;
- Paying a bond premium; and
- Insuring property.
The personal representative might wish to prepare a monthly budget to be filed as soon as practicable so that permission for the ongoing, routine expenses for a year may be sought. Expenses and transactions outside the budget require separate approval from the court. No attorneys’ fees or compensation can be paid without court approval.