Beginner's Guide to Estate Administration

How do I Probate an Estate?

Probate is the process of transferring property of a decedent to their heirs or legatees. When you own an item or asset, it is generally titled in your name to indicate your legal right of ownership. For example, if you own a car, you should have a “Certificate of Title” which describes your car by Vehicle Identification Number and lists your full name and address as the Registered Owner. If you sell this car, you will transfer title from yourself as the seller to the buyer. To ensure that theft did not occur, you would submit forms to the Maryland Department of Transportation (MVA) where they would approve the transfer thereby issuing a new Certificate of Title in the name of the buyer.

In the example of selling your car, you are alive and willing to sign the agreement of sale. But if you were deceased, who would have permission to conduct this transfer on your behalf?

In Maryland, we call this person your Personal Representative and they are generally named in your Last Will and Testament. This Personal Representative will need to submit forms to the Orphans’ Court in a process known as Probate to get permission for the transfer of title. Furthermore, they are obligated to only make sales or transfers on your behalf in accordance with Maryland law or your Last Will and Testament.

For those who have their property titled in Trust, the probate process is generally not required. However, if the person who passes away has no Trust in place, or their Trust was not properly "funded", their assets must be transferred via the probate process and distributed only with the approval of the Maryland Orphans’ Court system. Each county has their own Orphans’ Court, for example the Orphans’ Court in Baltimore County is in Towson, Maryland. This book will not be able to explain every detail of Probate and Estate Administration but aims to give you a solid orientation and a clear sequence of steps to fully Probate an Estate in Maryland. Note that this is not advice, but only educational material. We highly recommend the hiring of an Attorney specializing in Estates and Trusts when Administering or Probating an Estate in Maryland. There may be variances in the rules for each county, but the following educational information should be generally applicable to all counties in Maryland.

Steps to Administering an Estate in Maryland

Step 1. Determine whether You are the Personal Representative

Before taking any other action, first attempt to locate the most recent original version of the Decedent's (term for person who has passed away) Estate Planning Documents. These may be in their Home, in a Safe Deposit Box at a Bank (not a good idea), held by their Estate Planning Attorney in a Safe, or filed with the Register of Wills in any given county in the State of Maryland. Often a copy of Estate Planning Documents are found on a shelf of the Decedent's home with information about where the Original Documents are located and how to access them. The original documents will most likely be signed with blue ink.

Once these original documents are found, determine if you are named in a Document such as a Last Will and Testament or a Pour-Over Will as the Personal Representative. If someone else is named, these documents must be then given to that individual. However, if you are named as a Personal Representative or all other preceding named Personal Representatives have predeceased you, then you are effectively named the Personal Representative.

If no Estate Planning Documents are found, then you need to look to the Maryland Intestate Rules for the Order of Rights of Letters found under MD Est & Trusts Code § 5-104 (2021) to determine who would be next entitled to administer the estate.

The person named in the will would be first, if there is no known will the estate would be considered to be “Intestate”. The next in line would then be the surviving spouse and all children equally. If there are no living or willing children or surviving spouse, then it would fall to any individual receiving interest in the estate (legatee). This continues through the various classes of individuals until you reach “all other persons”. When you petition the court to be named as Personal Representative, other individuals with a higher priority will need to sign a consent to your appointment and other claimants will have the opportunity to challenge your request to be appointed.

Step 2. Petition to Probate the Estate

Once you have established your authority to be appointed Personal Representative of the Estate, you will then prepare a Petition for Probate of an Estate.

The Register of Wills provides forms to help you more easily submit the Petition for Probating an Estate, but there are different forms and requirements based on the size and conditions of the Estate. Let’s look at the various types and sizes of Estates to determine which form is correct for you.

Determining the Size of an Estate

An Estate may be either a Will of No Estate, a Small Estate, or a Regular Estate depending on the value of all Assets in the Gross Estate of the decedent. The Small Estate is also known as an Informal Estate where some of the requirements of a Regular Estate have been reduced.

Will of No Estate

A Will of No Estate is to Probate an Estate with $0.00 or less value. If there are no known Assets titled in the name of Decedent, or all assets are to be transferred via a Trust or Beneficiary Designation to a living individual or entity, then the Probate Estate is of no value. If you have either a Pour-Over Will, Holographic Will, Napkin Will, or Last Will and Testament, then you must file a Petition for a Will of No Estate. Please note that even if you don’t need to administer an Estate, any original Will MUST be filed with the Orphans’ Court as it is a misdemeanor to hold an original Will for a prolonged period after the date of death. Keep in mind that a Will of No Estate can still be subject to inheritance taxes, so these will need to be kept in mind for all distributions made outside of the Estate.

This petition to file a Will of No Estate can be submitted by completing the Maryland Register of Wills form RW1135 along with an Original Death Certificate.

Small Estate

A Small Estate is easier to Probate than a Regular Estate as it has fewer filing requirements of the Personal Representative. To determine if an Estate is "Small", we look to the following statute: 

MD Est & Trusts Code §5-601 (2021) notably section (b)

Section 5-601(b) basically states that if the total Fair Market Value of all Assets titled in the name of the Decedent at time of death, less any secured debt is less than $50,000.00 this is considered a Small Estate. However, if all Assets are to be left to the surviving spouse (depending on the Will or Rules of Intestacy) then the total value less than $100,000.00 and the Petition can be filed informally as a Small Estate.

To submit a Petition for a Small Estate, you will complete the form RW1103, include an original Death Certificate, and the last known Original Will signed by the decedent and no unrelated witnesses and any subsequent signed Codicils (amendments).

Form RW1103: Petition for Administration of a Small Estate (https://registers.maryland.gov/main/forms/RW1112.pdf) 

Regular Estate

If there is either over $50,000.00 in the Estate or if all assets left to a surviving spouse exceed $100,000.00 then this is considered to be a Regular Estate (also known as a Formal Administration). You can also file a Regular Estate if you believe there is a good chance that additional assets will be added to the Estate later in the Administration like a settlement. This will help to avoid the filing of a Petition to Convert a Small Estate into a Regular Estate at a later date.

To submit a Petition for a Regular Estate, you will complete the form RW1112, include an original Death Certificate, the last known Original Will with the ink signature and witnessed by two unrelated individuals and any subsequent Codicils (amendments).

Form RW1112: Petition for Administration of Regular Estate (https://registers.maryland.gov/main/forms/RW1112.pdf) 

 Although we will later review how to complete a Petition for Administration in greater detail, the Small Estate has a required "Schedule B" which is the sole inventory filed for this estate. You will need to list all assets and their fair market value in the estate with documentation of how you determined the value. More details on how to provide these details are covered in Step 4.

In the event that you believe there are assets in the Estate but you need to first be appointed as the Personal Representative to have the authority required to determine asset values, you can simply state in the Schedule B of this form "Requesting 30 days to discover assets related to this Estate" and later file an amended Schedule B after you are appointed Personal Representative. This will allow you get the Letters of Administration and substantiate the inventory.

The Letters of Administration are official documents issued by the Orphans’ Court that authorize you to act on behalf of the estate. Any bank or other financial institution will generally ask you for an original Letter of Administration before they give you any information or process any claims

Unlike the Schedule B inventory of a Small Estate, you will only list a very loose estimated value for each known asset in Schedule A known as form RW1136 to justify your assessment of the size of this Estate. This is broken in the total estimated value of any Real Property or Personal Property and does not need to reconcile with any subsequent accounting filed.

Form RW1136: Regular Estate Schedule A (https://registers.maryland.gov/main/forms/RW1136reader.pdf) 

This estimation at this point will generally not require any further substantiation submitted to justify this estimate. 

Additional Filings

In addition to a Petition, the Death Certificate, and the Last Will you may also want to file a few additional documents at this time. These include appointing an agent if you live outside of Maryland, a Bond for the Fees to Probate the Estate, a Bond to insure you against any losses of the Estate, or a Waiver of Bond if you choose to forgo this coverage. You also need to file a public notice to the local newspaper and a list of all interested persons. We will cover each of these in greater detail below.

Appointment of Resident Agent

If you live out of state of Maryland, you will need a resident agent with a primary residence in Maryland to be your proxy for service and other communication. If this appointment is not made, you can be removed as Personal Representative for failing to meet your required duties. Complete and submit Form RW1106: Appointment of Resident Agent to appoint a Resident Agent in Maryland to serve on your behalf. (see here: https://registers.maryland.gov/main/forms/RW1106.pdf) 

Consent to Appointment of Personal Representative

If there are multiple people who have a higher order right for appointment of Personal Representative, they may choose to complete a Consent to appoint you as the Personal Representative using Form RW1118.

If the other heirs or legatees are unwilling or unable to complete this form, you can still request to be appointed and the judge may schedule a hearing to allow all parties the opportunity to voice their opinions about the appointment.

Also note that his form can be completed by each party separately and filed together as a set of requests.

Form RW1118 Consent to Appointment of Personal Representative (http://registers.maryland.gov/main/forms/RW1118.pdf) 

Bonds of the Personal Representative

A Bond (Insurance Policy) submitted with Form RW1115 is required of the Personal Representative unless it's both waived as permitted in the Last Will and Testament, and if Form RW1117 is completed to Waive the requirement of being Bonded.

Form RW1115 Bond of Personal Representative (https://registers.maryland.gov/main/forms/RW1115.pdf) 

or RW1117 Waivers of Bond (https://registers.maryland.gov/main/forms/RW1117.pdf) 

You can get a Bond from Insurance Agencies such as Jet Insurance online. 

This often seems like a waste of money, but keep in mind that as Personal Representative of the Estate you are bound by the rules of Fiduciary Responsibility and are personally liable for any avoidable losses to the estate. Let’s say that you are appointed as Personal Representative, and two days later the stock market plumets and kicks into a long recovery period. These stocks are needed to cover costs of the estate and you are under pressure from the legatees to make distributions to them. They receive far less than expected and sue for unreasonable losses claiming that you should have moved the investments into a cash alternative account to protect the funds from market fluctuations. You could then be compelled to personally cover the losses of those assets, which could be sizable depending on the size of the estate. This Bond would cover those losses for you and protect your personal property from any issue arising as a result of administering the estate. If you waive the bond, you as Personal Representative are personally liable for the value of the Estate and all distributions made from it. 

In addition to the full Bond insuring the total value of the Estate, there is an additional Bond that cannot be waived to ensure that the Probate Fee will be paid to the Register of Wills and any other creditors. That is the nominal bond ( form: https://registers.maryland.gov/main/forms/RW1116.pdf ) 

List of Interested Persons

The court will need an updated list of all names, addresses, and relationships for any person with an interest in this Estate. These are the individuals who will also need to be mailed a certified copy of each filing you make to the court. Please maintain a copy of all certified mail to these persons for your records in case of a later dispute.

An interested person would be an individual listed in the Will, an immediate family member or heir with inheriting interest per the rules of Intestacy, a legatee (person receiving interest in an assets as a result of the decedent’s passing), or a Trust receiving interest in an asset of the estate. (see here: https://registers.maryland.gov/main/forms/RW1104.pdf) 

In addition to the list of all named Legatees (name to receive a distribution in the Will or by Intestate), any potential heirs that would be applicable if the Will was not upheld should be included as well. For example, if the decedent left everything to their spouse you would still list the children as well as Heirs. In subsequent filings you will not need to continue distributing copies of notice to these individuals not receiving an actual interest in the estate.

As mentioned earlier, each interested person must receive a copy of any petition filed. This document is required for you to sign attesting to having actually mailed proper notice and a copy of the petition to all persons listed on the Interest Persons filing.

This also gives the recipient the opportunity to update their address if they wish to receive subsequent notices elsewhere. If you have exhausted efforts to locate the individual, attach documentation describing in detail the effort made to locate the interested person in question. This will be up to the discretion of the judge as to whether sufficient effort has been made.

Notice of Interested Persons - This notice should be accompanied with the actual Certificate of Services documenting the delivery of a copy of the Petition to Open an Estate as submitted to each person listed on the Form RW1104 List of Interested Persons. (https://registers.maryland.gov/main/forms/RW1110.pdf) 

Certificate of Service - When the Notice from Form RW1110 is filed, this Certificate of Service must be signed by the Personal Representative and delivered with the Petition to Probate an Estate certifying the method with which these Notices where sent. (See here: http://registers.maryland.gov/main/forms/RW1285.pdf) 

 Notice of Appointment to Creditors and Unknown Heirs

At this point, you have determined the size of the estate and the names and address of all interested parties. This still leaves out any potential unknown heirs or creditors of the estate. An unknown heir could be a child out of wedlock or a long-lost sibling. Creditors could be anything from Credit Card Companies to the final invoice from the Hospice providing end of life care.

Generally, this notice must be published into a public record such as a local newspaper for a number of days, at which point they have the opportunity to either contest your appointment or file a claim against the estate for monies owed to them by the decedent.

If you are administering a Small Estate, then you would complete Form RW1109 (Small Estate).

 For a Regular Estate, you would complete and file Form RW1114 (Regular Estate) after publishing the notice of your appointment. 

With either of these forms, you will reach out to a local publication in the county where you are Administering the Estate to submit a Notice of Appointment to Creditors and Unknown Heirs in case any potential heirs were missed or unknown. A copy of this publication should later be submitted as a line item to the Register of Wills for this Estate.

Some of the counties are very friendly and will submit this request to the local paper for you and accept this filing with the petition to save you the time from coming back later only to file this notice.

In Baltimore County, the Register requests that this notice be published 3 times in the Daily Record.

For an example of these listings see the Daily Record Public Notice site 

How to Submit the Petition to Open an Estate

Once you've completed all the above forms, combine them into a paper clipped packet starting with the Petition itself. Remember that the original Last Will and Testament as well as the Death Certificate should be original documents.

The original Death Certificate typically is given to you by the funeral home.

Additional copies of the Death Certificate can be requested from the Maryland Department of Vital Records but keep in mind this can be a slow process.

If you only have a copy of the Will and cannot locate the wet signature original, then you will also need to include a Petition for the Admission to accept a copy of the Will using the following form:  https://registers.maryland.gov/main/forms/RW1430.pdf 

Visiting the Register of Wills and Obtaining Letters of Administration

When visiting the Orphans’ Court, try to arrive at the Registers Office either as soon as they open, or between 2pm and 4pm for the least busy times.

Tell the receptionist at the front desk that you would like to Open an Estate and sign in to be called back. Most Register of Wills offices are amazingly friendly and helpful, so don't be scared to ask questions. They are there to help you through this process. Once your Estate is opened, you will be assigned an Auditor so keep their contact information handy as you can reach out to them for additional questions later.

You will then be seated at a desk where someone will review your petition packet. They may suggest corrections, require additional information, or decide to accept and file your petition. It is a good idea to ask for a copy of the Petition with a date stamp on it for future evidence of the date the petition was submitted.

If this petition is accepted, there is a possibility that you could receive your Letters of Administration and be appointed Personal Representative right away. However, it is more likely you will need to wait for a Court Order approving the petition and can then return for your original Letters of Administration. I would suggest requesting a few extra Letters of Administration (about 10) for instances where institutions will only accept original stamped letters. If you need to scan a copy of the Letters of Administration, you may need to rub the edge of a Number 2 Pencil on the raised stamp for the scanner to see the seal. 

Need to Quickly Pay Expenses of the Estate

If you have a need to pay expenses of the estate such as funeral expenses or other expenses that are appropriate for the estate and need to be expediently paid, see Step 5 on how to open an Estate Checking Account. However, it is recommended to complete the inventory and assess inheritance taxes first if at all possible.

Step 3. Make an Inventory of the Estate

Now that you have been appointed Personal Representative and have received the Letters of Administration, you will want to request 4 pieces of information from each institution related to the estate assets. The first piece of information is confirmation of the titling of the assets (which should be the name of the decedent). Second is the primary beneficiary or transfer on death agent of the asset. Third is the exact value of the asset on the Decedent's date of death. Lastly, if this is a bank or financial account, a copy of all statements from the date of death through today. You will need to keep a copy of all statements through the date of liquidation for the accounting of the estate.

 Searching for Asset Information

A good starting place is to search the Decedent's residence to look for any paperwork in the home including an Estate Planning Binder. While gathering these documents, determine who their Accountant, Financial Advisor, and Estate Planning Attorneys were.

The Attorney may have records of their assets and should be a good source of information regarding this process. The accountant can provide the last tax filing, request one from the IRS, and help to file either the final tax filing of the decedent or to file taxes for the estate at a later date if applicable.

Next, search the Maryland Land Records website for any deeds in the name of the decedent to find related Real Property. To search Maryland Land Records you will need to create an account, then search each county for the decedents first and last name.

You can login or create an account with Maryland Land Records here. **Diana has a login 

Lastly, check for any unclaimed property at the Maryland Escheatment Claims website which is searchable by name here:

Maryland Unclaimed Property Search

If the decedent for which you are administering an estate from whom they would inherit from has unclaimed property listed, you will complete the Unclaimed Property Claim Form & Checklist COT/ST 912.

If the decedent has left you access to a list of online accounts and passwords, you can check here. Often times people have elected to “go paperless” and only keep records of assets in their email accounts. Keep in mind that cryptocurrency may also be an asset of the estate.

Organizing the Inventory

Now review the documentation gathered above and organize each asset into the following categories:
• Real Estate or Real Property
• Cash Assets (Bank Accounts, CDs, Cash)
• Business Interests or Business Ownership
• Savings Bonds
• Investments (Stocks, Mutual Funds, Brokerage Accounts)
• Life Insurance Policies
• Retirement Accounts
• Vehicles
• Tangible Personal Property

Listing the Date of Death Values

Now that these have been organized into asset types, create a spreadsheet that lists the Asset Name, Asset Category, it's value as of the Date of Death, its most recent estimated value, and the date of the most recent estimated value.

When you begin to review documents from each of these categories, update the spreadsheet with the most recent estimate amount and date of statement, as well as the value as of the date of death if available. To continue administering the estate, you will need to file an Inventory containing the date of death value and substantiation for how this was determined for each asset in the estate. I will now briefly describe the basic way an asset in each of these categories may be valued as of the date of death to be filed on the Inventory.

Real Property

The Date of Death Value can be the tax assessment value dated closes to the date of decedent’s death as found in the Maryland Department of Taxation Real Property Data Search. Begin by choosing a county and select street address to search for the real property. When you find the property, you will be presented with a Real Property Data Sheet which lists the current Owner Name and Assessment Values.

Cash Assets

You will need a Bank Statement that covers the date of death. On the statement you should see the last listed Running Balance on the bank statement for the beginning of the day on the Date of Death. If you do not have this statement, you will need to visit a local branch or submit a written request along with the Death Certificate and Letters of Administration for a copy of this statement.

Business Interests or Business Ownership

Documentation of Business Interest will either come in the form of Articles of Incorporation, however the valuation of the business should be conducted by an Accountant. It would be ideal to reach out to the accountant of the decedent first for assistance or a recommendation.

Savings Bonds

These will either be original issued bonds, or a receipt of digital bonds held at the US Treasury. If you are unsure, you can submit a request to discover unclaimed Bonds here.

To calculate the date of death value for known, visit the following estimation calculator:

US Treasury Savings Bond Estimation Calculator

 You will need to do this for every individual bond and summarize them on your spreadsheet. 

Investments (Stocks, Mutual Funds, Brokerage Accounts)

If you cannot determine a clear date of death for Mutual Funds or Brokerage Accounts from the statements, reach out to the Financial Advisor or Financial Institution for a Death of Death Value Statement and submit the Death Certificate and Letters of Administration along with your request.

For individual stocks, you will need to take the average of the markets low and high values for that stock on the date of death and multiply it by the number of shares.

You can use: BigCharts by MarketWatch's Historical Quote Calculator found here to find the high and low value for the date of death. Take the high value plus the low value divided by two for an average on that date.

Life Insurance Policies

A life insurance policy document should list a payout or coverage value. If the policy lists an individual as the beneficiary, it is not a Probate Asset and does not need to be included in the inventory. If the beneficiary designation is either deficient or only left to a predeceased individual, then the payout value should be listed in the Inventory. The accountant will also need this information for the final tax filing of the decedent.

Retirement Accounts

If you cannot determine a clear date of death for Retirement Accounts from the statements, reach out to the Financial Advisor or Financial Institution for a Death of Death Value Statement and submit the Death Certificate and Letters of Administration along with your request.

Vehicles

The Maryland Probate Court will generally accept a Kelly Blue Book estimation of the car. You can use the Kelly Blue Book Used Car Value Estimator for an approximate fair market value.

When in doubt you can always contact a professional appraiser for a more accurate value.

Tangible Personal Property

For all household items, you should hire a professional appraiser to estimate the total value for all other personal property. As Personal Representative, you are able to make an inventory of all household items and make a document containing similar items recently sold online for a reasonable attempted way to substantiate the value without an appraiser. Approval of this substantiation will be under the discretion of the judge.

Producing the Inventory Filing

Now that you have Date of Death values for all Probate Assets in the Estate, you can now use that documentation to complete the following forms for an Inventory of a Regular Estate (remember the Small Estate is only Schedule B). The Inventory is due three months after your appointment as Personal Representative. Register of Wills Form: RW1122 Inventory Summary and Supporting Schedule.

 Keep in mind, you will need a separate supporting schedule for each category of assets as listed on the Inventory Summary.

Once this has been completed, attach to all related substantiation of how you determined these values to the Inventory and corresponding schedules. For example, print the SDAT Listing Data Sheet showing the house value, the Appraisal Summary for Personal Tangible Property, the Kelly Blue Book page showing the car value, and so on.

This petition should be submitted in person to the Register of Wills similarly to how the Petition was delivered.

Remember that per MD Est & Trusts Code § 7-201 (2021) you MUST submit this Inventory within 3 months of being appointed Personal Representative.

 Step 4. Assess any projected Inheritance Taxes

Now that you know who the assets go to and what the estate is comprised of, follow the instructions found on the following form and submit to the court:

Form RW1124 Information Report

 nheritance Taxes generally are 10% for anybody receiving an inheritance that is not the spouse, sibling, parent, grandparent, child, or grandchild. These are also referred to as Non-Lineal Heirs and you will need to report if they are on any joint account (taxed on 1/2 the value), if they have been given anything in the past 2 years, or if they were the POD (Payable on Death) or TOD (Transfer on Death) beneficiary on any accounts.

When this Information Report is submitted, the Orphans’ Court will issue a Tax Bill which will be due upon receipt.

For the other assets that will be passed through the estate and listed on the accounting, the remainder of inheritance taxes will be due at that time. More information about how to calculate the final inheritance taxes can be found below.

The Maryland Estates and Trusts Code provides a few additional details regarding the inheritance taxes, when they are due, the penalties for failing to pay the tax bill, and how to receive a certificate of payment:

MD Est & Trusts Code § 7-307 (2021)

 If there is an overpayment of taxes, the estate will be issued a refund for overpayment and can be adjusted by requesting an application to fix inheritance taxes.

Please note that if the Estate is Directed to Pay Inheritances Taxes out of the Estate per instructions found in the Last Will, then the taxable rate may be included in the distribution of a taxable legatee, which will then in turn be a taxable benefit causing recursive taxation. In the end, these liabilities will produce a tax rate of 11.1111...% since that payments of the taxes will also be taxed.

 Step 5. Consolidate the Estate and Manage Expenses

At this point you've filed the Petition to Open the Estate, the List of Interested Persons, the Estate Inventory, and the Information Report. Good Job, you're doing great!!

Now you will begin preparation of the estate for management and distribution.

Open an Estate Checking Account

To open the Estate Checking Account, you will first need a new EIN (Tax Identification Number) from the IRS. We recommend that this filing be done by an Accountant, but you can get this by submitting the following form to the IRS:

https://www.irs.gov/businesses/small-businesses-self-employed/how-to-apply-for-an-ein

The above form can be faxed into the IRS or filed online at irs.gov to request a new EIN be created for the estate.

You will receive a letter from the IRS which includes the office EIN of the Estate. This means that when the Estate files it’s tax return, this is the new SSN it will be filed under. Next go to a bank of your choice with an original Death Certificate, EIN Letter from the IRS, and the Letters of Administration from the Register of Wills.

Ask them to open an Estate Checking Account on behalf of the decedent with yourself acting in your capacity as Personal Representative as the account holder.

Generally, this is the checking account where all Estate money will be deposited, all expenses paid, the final accounting reconciled against, and final distributions disbursed from.

Liquidation of the Estate

You will want to identify any specific distributions that are to be make in-kind (as they are) or any assets that the residuary beneficiaries may want in-kind such as an IRA rollover into their name to maximize the stretch-out period and minimize taxes. For any of those assets, reach out to the managing institution to place them into the name of the Estate for the time being and put them aside for now.

Take the remainder of the assets and attempt to liquidate them all (if it is safe to do so and the accountant confirms there is no unwanted tax consequences) into the Estate Checking Account.

Any other checks or payments received by the Estate like a refund for a cable bill should be deposited into this Estate Checking Accounts. All expenses of the estate should be paid from this account and receipts should be kept for later Fiduciary Accounting of the Estate.

Step 6. Prepare the Estate for Distribution and File an Accounting

Now that all in-kind distributions are set aside, all other accounts have been consolidated into the Estate Checking Account, you will now produce a Draft Fiduciary Accounting. This may be the most difficult step in the Probate Process for someone unfamiliar with this type of work. Our suggestion would be to reach out to your Accountant or Attorney for assistance with this, but if you would like to learn more, we've outlined the basic process here for you.

Overview and Purpose

You as Personal Representative are the steward of funds on behalf of the decedent and have a “Fiduciary Responsibility” to handle the assets as they are carried forward into a final distribution to the legatees. For this reason, our Maryland Legislatures have codified in law the right for a beneficiary to demand a full accounting of the Estate from the Personal Representative and require one to be submitted to the Probate Court for review by their Auditor and approved by the Orphans’ Court Judge in the county it was filed. According to MD Est & Trusts Code § 7-305 (2021) the Accounting is due within 9 months of being appointed Personal Representative, and if not a final accounting, then every 6 months thereafter.

An accounting of the Estate is also required at the close of the Estate or when stepping down as Personal Representative.

This Accounting starts with a snapshot of all fair market values as of the Decedent's date of death (as listed on the Inventory) and covers the period of time from the date of death until final distributions are made. This is why the first Schedule of Accounting starts with the Inventory (Date of Death Values), then shows any Misc. Receipts, then Gains or Losses of Assets in the Estate, then Income to the Estate, followed by any Expenses or Early Distributions, and finally the calculation of all Final Distributions. If this is not a final accounting (meaning all available assets have been distributed), then you will close the accounting with an updated carry-forward Inventory showing all assets still remaining in the Estate, and that will then become the starting Inventory of your subsequent Accounting.

Sample Accounting

Although the statute doesn't demand a specific structure of accounting, the State of Maryland is kind enough give a sample accounting on their website of their preferred format which you can see here:

2009 Maryland Sample Probate Accounting

As you can see from the Sample Accounting provided by the Register of Wills, the accounting is broken into separate schedules similar to the flow of accounting as described above. We will now review each Schedule and explain what is to be done for each. 

Accounting Schedules

Summary Page

The Summary page is used to summarize whether the Estate is “balanced”. Balanced means that what came into the Estate (Schedules 1, 2, 3, and 4) are always equal to what goes out of the Estate (Schedules 5, 6, and 7). This is very important and required for submitting an accounting to the Register. NEVER FORCE the balance amount to zero, instead use this summary to identify where the accounting error occurred. This represents the first two corners of the "reconciliation triangle". The “balance” figure is calculated by subtracting the TOTAL RECEIPTS intersection by the TOTAL DISBURSEMENTS intersection. All items listed should match a check register or all activity, and that check register should reconcile against the ending balances of each bank statement (including the Estate Account) containing transaction occurring after the date of death.

Schedule 1 – Beginning Balance

The beginning balance page (Schedule 1) is where we begin accounting for an Estate or any other Fiduciary Accounting such as being a Personal Representative of an Estate, Trustee of a Trust, Guardian of the Property, or a Power of Attorney. Fiduciary Accounting is generally for the benefit of another and always consists of a Begin and End Date. For Medicaid Qualification, this is 5 full years prior to the Application Submission Date, in Estate Administration this is from the Date of Death to the Date of Final Distribution, and for Trust Accounting it is the date the Trust was formed, funded, or triggered by a life event until the Final Distribution.

The figured entered into Schedule 1 MUST match the values exactly as the Filed and Approved Estate Inventory of Date of Death values. If this is not the First Accounting, but instead a Second Accounting or later, then Schedule 1 MUST match exactly to the Schedule 7– Not Final from the prior Approved Accounting. Note: The Schedule 7 is simply an intermediate inventory if the first accounting is Not Final. This schedule can be categorized in the same way as required on the Inventory.

Schedule 2 – Miscellaneous Principal Receipts

Any value owed to the Decedent but received after death is considered to be a Receipt of Principal. This could be a final paycheck, reimbursement for a security deposit, over payment to a Medical Insurance plan, or a check found in their house and dated after death.

These are to be listed, dated, and totaled on Schedule 2 – Misc. Principal as increases to the total value of the filed Inventory.

Schedule 3 – Gains & Losses

When an Estate is in custody of an item or stock, its value may increase or decrease during the administration process. This is accounted for on the Schedule 3 by showing the Inventory Value, and offsetting that from it’s current, distributed, or liquidated value. Kelly Blue Book may value a car for $5,000.00 but we could only sell it for $4,500.00 and took a loss of $500.00. Since the Inventory listed it as $5,000.00 we have to show the $500.00 shortfall from the low sale of the vehicle. This is generally done by dating the sale or liquidation transaction, describing what we did, and listing the received value. Below that is the Inventory Value originally listed, and one more line below is the subtotal of the difference and what happened to the funds. In this way, we show the total offset on the Miscellaneous Principal Schedule including the $500.00 loss.

Schedule 4 – Income

Any money made by the Estate after the Date of Death is considered income. This is most typically interest from a checking account, rent payments, or dividends from an investment. This would also more broadly include any checks that were made payable on a date after the Decedent's Date of Death.

Schedule 5 – Disbursements

Any expenses from administering the Estate are listed here. Each of the expenses should generally correlate to a line on your Estate Checking Account Register. These expenses should include any reimbursements to the Personal Representative or Potential Distributees (do not account for reimbursements on Schedule 6).

In addition, the payment of Inheritance Taxes (depending on the tax clause in the Will), the Probate Fee to the Register of Wills, and any Attorney’s Fees are also included on this schedule.

Generally, the first thing an Auditor will look for on Schedule 5 is evidence that you paid the invoice for the Newspaper Publication and the invoice for your Nominal Bond. These two dates and payment amounts should be listed first for their convenience.

Schedule 6 – Distributions

Once all other schedules are completed, we are ready to calculate the final distribution. This will be done based on the instructions of the Last Will and Testament, or the Maryland Rules of Intestacy if no Will exists. There are some examples in the sample accounting of how to show the distributions, but this isn’t a one-size-fits-all type of situation. The top of the schedule shows the Residual Balance available for distribution, which is Schedules 1 through 4 added together, minus Expenses in Schedule 5. If the Distributee is exempt from Inheritance Taxes, that should be noted under their name. Also, the section of the Will that substantiates their interest as stated should be referenced after their name. All subtotals should be calculated on this Schedule as well.

This final distribution should bring the balance of the Estate on the “Summary” page to Zero.

We recommend that you add an additional page to Schedule 6 as a Calculation of Final Distribution which does not need to be submitted with the accounting but is used for the reviewing final checks to be written out to the legatees. This is where you show the current balance of the Estate Checking account, less all pending reimbursements and distributions bringing the Estate Checking account down to Zero. These payments or transfers should only be made after this accounting is filed with the register, approved with a court order, and after you wait 23 days from the order date issued by the Judge. This is required to allow others a chance to challenge your accounting in court after approval.

Schedule 7 – Not Final

If this is NOT the Final Accounting (not all assets are to be distributed at this time), you will need to use Schedule 7 to produce an updated Inventory of all assets that are still in the Estate. For instance, if you have an order allowing an early distribution and it has been received, that should be reduced from the relevant category on Schedule 1 and entered onto Schedule 7. Also, if you have any gains, losses, or expenses, this inventory should reflect the value as of the accounting end date including the checking account as a cash asset and submitted as the new Inventory. The accounting end date would generally be the end date of the last bank statement reconciled against the Estate Check Register. This schedule should look very much like the initial Filed Inventory. Don’t forget to indicate on the headings of this accounting that it is a "Nth and Not Final" opposed to a "First and Final Account".

You will then create a new Accounting and update the “Schedule 1 – Inventory” page to reflect this Schedule 7 and also update the Summary Page to indicate it is now a “Second” and “Final” or whichever number or state you are on.

Additional Forms included in the Sample Accounting

In addition to this accounting, there are additional documents that must be submitted with your Accounting.

The Verification of Account is required and must be signed by the Personal Representative and the Attorney to affirm accuracy and to list all interested persons who have received a mailed copy of this Filed Accounting. Note: Be sure to get an auditor to pre-approve the accounting before preparing the mailings.

Petition and Order for Funeral Expenses is filed to either approve early distributions from the Estate for funeral expenses or to state the final amount of funeral expenses paid. There is an allowed amount of funeral expenses to be deducted from the estate prior to distribution without tax penalty if applicable.

Substantiation of an Estate Accounting

When submitting an Accounting, the first two things the register or auditor will look for is that the Bond for the Personal Representative was paid and accounted for on the Expenses, and that the Publication Notice went out, was paid and accounted for the on the Expenses (Schedule 5) as well. Print out each of these invoices and a copy of the check paying these expenses if available.

The only other items to be substantiated are for the purposes of clarifying a confusing or complex situation. For example, to show the evidence behind any gains or losses in stock value and show how the calculation was performed but is not always required.

The auditor may ask you to provide additional information at any time, so you should review your accounting with an auditor at the Register of Wills first before this is submitted and sent out to interested persons.

Claims Against the Estate

You should regularly check the docket on the Register of Wills Estate Search website to see if any claims have been filed against the estate. In general, you should have received these filings in the mail. These claims must first be resolved before the next accounting can be filed and approved.

In terms of resolving liabilities and debts of the Estate, there are guidelines as to the lawful priority of these payments.

Please note, an expense of the estate would be costs related to the managing and closing of an Estate. This might be a bond payment, hiring an Accountant, hiring an Appraiser, paying a realtor, expenses related to the sale of a house, etc.

MD Est & Trusts Code §8-103 (2021)

 A claim against the estate would be a debt owed by the decedent such as an unpaid bill or credit card. These debts should be presented to the estate by a submitting a Form RW1128: Claim Against Decedent's Estate 

Section 8-103 above generally states that these claims must be submitted within six months of the Date of Death. If you disagree with the claim and require additional substantiation as to the validity, there is a counter filing that you can submit Form RW1129 Notice of Disallowance where you then require the Claimant to petition the court and have the claim reviewed by the Orphans’ Court Judge.

Step 7. Check Taxes and Close the Estate

During the course of this process, you should check with an Accountant to be sure that the remainder tax year of the decedent's life was properly filed with the IRS and State of Maryland.

If there was any income to the Estate for the tax year elected with then you may need to file a Tax Return for the Estate.

It is also good to review the proposed distribution pattern of your final accounting with an Accountant prior to submission to check for any unexpected tax consequences of the beneficiaries.

Once all claims have been settled, the creditor period has concluded, the final accounting has been approved with a Court Order, and 23 days have passed since the date of that approval, you may then make a final distribution.

If this is in-kind it may come in the form of having an advisor re-title an account from the Estate to the name of the Beneficiary or Legatee. If this is real property, you will need to have a title company or attorney draft a deed and file it with land records to convey the property to the beneficiary. If this is cash, then you will write out a check to the beneficiary or into a Trust Account established for their benefit and delivered to the Trustee.

I hope that this brief educational guide has been helpful and wish you all the best during these difficult times. If you get stuck, just know that you are not alone. The Register of Wills is a great resource and there are many experienced attorneys in your area that are happy to guide you through this one step at a time.