An executor does not necessarily have to wait until the very last probate filing before making any distribution to beneficiaries.
But that does not mean an executor should distribute the entire estate simply because cash is available.
The practical question is whether the executor can safely make a distribution while retaining enough money and property to satisfy everything the estate may still owe.
Estate money is not automatically beneficiary money
Before the balance of an estate passes to beneficiaries, the estate may need to address funeral expenses, expenses of administration, taxes, valid creditor claims, property expenses, attorney and accounting fees, unresolved claims and other obligations having statutory priority.
Rhode Island generally provides creditors six months from first publication to present claims, subject to applicable exceptions.
Partial distributions can sometimes be appropriate
There are estates in which it becomes reasonably clear that the estate possesses substantially more money than will be needed for the remaining obligations. A partial distribution may be appropriate in those circumstances while the executor retains an adequate reserve.
In practice, the important part is not selecting an arbitrary holdback. The executor should first understand what remains unresolved and what those issues could realistically cost the estate.
Why I am cautious about final distributions
A recurring problem in probate administration is that beneficiaries understandably focus on the amount currently sitting in an estate account. The executor has to focus on something slightly different: what could still have to come out of that account.
A tax obligation, creditor claim, legal expense, property charge or reimbursement request discovered after the estate has been emptied can place the executor in the difficult position of trying to recover money that has already been distributed. It is ordinarily much easier to retain an appropriate reserve than to recover money afterward.
EOHHS claims require particular care
Rhode Island estates involving a decedent who received Medicaid can present additional issues. An executor should identify a potential EOHHS estate-recovery claim before making final distributions.
Read: Rhode Island Medicaid Estate Recovery and EOHHS Claims
Taxes also matter
Before making a final distribution, the executor should determine what Rhode Island and federal tax filings remain outstanding. An estate may need an RI-706 and Notice of No Tax Due even though Rhode Island estate tax is ultimately zero.
Read: Why File an RI-706 When No Rhode Island Estate Tax Is Owed?
Distribution and closing are different events
Making distributions does not itself close the probate estate. The executor still must satisfy the requirements necessary to demonstrate complete administration.
Read: What Does an Executor Have to Do Before Closing a Rhode Island Estate?
Speak with a Rhode Island probate attorney
Attorney Mark C. Hamer assists executors, administrators and families with probate and estate administration throughout Rhode Island from his Providence office.
Learn more about Probate & Estate Administration or contact Mark to discuss the circumstances of an estate.
Official sources
- R.I. Gen. Laws § 33-11-5 — Presentation of claims
- R.I. Gen. Laws § 33-11-19 — Payment of claims
- Rhode Island EOHHS — Medicaid Estate Recovery
This article provides general information only and is not legal advice.