Detailed Answer
Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance specific to your situation.
Under Arkansas probate law, determining what assets remain in an estate after paying debts and fees involves four key steps: creating an inventory, identifying valid debts and expenses, calculating administration costs, and subtracting these from the total estate value.
1. Inventory and Appraisement
The personal representative (executor) must file a complete inventory of the decedent’s assets within three months of appointment. See Ark. Code Ann. § 28-46-103. Assets typically include real property, bank accounts, investment accounts, vehicles, and personal property.
2. Identifying and Valuing Assets
Each asset must be valued at its fair market value as of the date of death. For real estate, obtain a current appraisal. For publicly traded securities, use the closing price on the date of death. Personal items may require a professional appraisal or a reasonable estimator if low in value.
3. Paying Debts and Administration Expenses
Arkansas law requires notice to creditors and sets deadlines for claims. The executor must:
- Publish notice to creditors in a local newspaper within one month of appointment. See Ark. Code Ann. § 28-46-201.
- Allow six months (for most claims) from the date of first notice for creditors to file. After the deadline, only certain claims remain enforceable.
- Pay valid claims in priority order: funeral expenses, court costs, administration expenses, secured creditors, unsecured creditors, and finally taxes. See Ark. Code Ann. § 28-46-401.
4. Calculating Fees and Final Net Assets
Personal representative and attorney fees are paid from estate assets. Under Ark. Code Ann. § 28-71-201, customary fees often follow a sliding scale (e.g., 5% of the first $5,000, 3% of the next $45,000, and 2% of amounts over $50,000). Court costs and tax preparation fees also reduce the estate value.
To find the net remaining assets, use this formula:
Total Estate Value – (Total Debts + Allowed Claims + Administration Fees + Taxes) = Net Estate.
Hypothetical Example: Jane’s estate includes a $150,000 home, $20,000 in bank accounts, and $10,000 in personal property (total $180,000). Debts and valid claims equal $30,000. Administration costs (fees, court costs, taxes) total $10,000. Net estate equals $180,000 – ($30,000 + $10,000) = $140,000.
Helpful Hints
- Start early: File the inventory promptly to avoid court penalties.
- Obtain professional appraisals for high-value assets.
- Keep detailed records of all payments and receipts.
- Verify creditor claims before payment to prevent overpayment.
- Consult a probate attorney if disputes or complex assets arise.