Estate Administration Services
What is Probate?
Probate or “estate administration” is the process by which a deceased person’s property, known as the “estate,” is passed to his or her heirs or beneficiaries (people named in the Will). Responsibilities ultimately fall on whomever was appointed executor in the deceased person’s Will. Matters can be a bit more complicated in the absence of a Will, because it would not be clear who has the responsibility of carrying out these steps. The entire process can take up to a year. However, substantial distribution from the estate may be able to be made in the interim.
The emotional trauma brought on by the death of a close family member often is accompanied by bewilderment about the financial and legal steps the survivors must take.
The spouse who passed away may have handled all of the couple’s finances. Or perhaps a
child must begin taking care of probating an estate about which he or she knows little. And this task may come on top of the executor’s commitments to family and work that cannot be set aside. Finally, the estate itself may be in disarray or scattered among many accounts.
The Process of Administering an Estate
In general, estate administration includes the following steps:
- Filing the Will and petition for probate with the Register of Wills in order to be appointed executor. In the absence of a Will, heirs must petition to be appointed "administrator" of the estate.
- Marshaling, or collecting, the assets of the estate. This means that you have to find out everything the deceased owned. You need to file a list, known as an "inventory," with the Register of Wills. It's generally best to consolidate all the estate's funds to the extent possible. Bills and bequests should be paid from a single estate checking account, either one you establish or one set up by your attorney, so that you can keep track of all expenditures.
- Paying bills and taxes. If a federal estate tax return is needed, it must be filed within nine months of the date of death. If you've missed this deadline and the estate is taxable, severe penalties and interest may apply. If you do not have all the information available in time, you can file for an extension and pay your best estimate of the tax due. Pennsylvania inheritance tax must also be paid within nine months of the date of death. A 5% discount on Pennsylvania inheritance tax applies if an estimated tax payment is made within three months of the date of death.
- Filing tax returns. You must also file a final income tax return for the decedent and, if the estate holds any assets that earn interest or dividends, an income tax return for the estate. If the estate does earn income during the administration process, it will have to obtain its own tax identification number in order to keep track of such earnings.
- Distributing property to the heirs or beneficiaries. Generally, executors do not pay out all of the estate assets until the period runs out for any creditors to make claims. This can be as long as a year after the date of death. But once the executor understands the estate and the likely claims, he or she can distribute most of the assets, retaining a reserve for unanticipated claims and the cost of closing out the estate.
- A final accounting. The executor must prepare an account, listing any income and assets of the estate and all estate expenses and distributions. In certain cases the executor must file this account with Orphan's Court. However, if all of the beneficiaries of the estate are in agreement, the final account can be approved without court supervision and the executor can distribute the remainder of the estate and close out the estate.
- Some of these steps can be eliminated by avoiding probate through joint ownership or trusts. But whoever is left in charge still has to pay all debts, file tax returns, and distribute the property to the rightful heirs. You can make it easier for your heirs by keeping good records of your assets and liabilities. This will shorten the process.
It's quite common for surviving relatives to have emotional attachments to the tangible personal property of the deceased. "Tangible personal property" is anything you can touch, such as, silverware, dishes, furniture, artwork, or jewelry. To minimize potential conflict over this property, it should be inventoried before the process of distributing it to family members begins. Determine accurate values of each piece of property, which may acquire appraisals, and then distribute the property as the deceased directed. If property is passed around to family members before you have the opportunity to take an inventory, this will become a difficult, if not impossible task. This inventory is especially important if the deceased has not left specific instructions on how his or her property should be dispersed. Of course, this does not apply to gifts the deceased may have made during life, which will not be part of his or her estate.
Take your time. While bills need to be paid, they can wait a month or two without adverse repercussions. It's more important that you and your family have time to grieve. Financial matters can wait. (One exception: there is a 5% discount in Pennsylvania inheritance tax if paid within three months of death.) Third, when you are ready, meet with an attorney to review the steps necessary to administer the deceased's estate. Bring as much information as possible about finances, taxes, and debts. Don’t worry about putting the papers in order at first; the attorney will have experience in organizing and understanding confusing financial statements.
How We Can Help
Levandowski and Darpino will represent the executor or administrator of the estate both in situations where there is a Will or an intestacy (which occurs when a person dies without having executed a Will). Our services include:
- Drafting and preparing all petitions, notices, reports, receipts, accountings, inheritance tax returns, and other documentation required by law to complete the administration of the estate.
- Preparing an inventory of assets of the estate that are subject to probate and filing it with the Register of Wills.
- Discharging all liabilities of the estate, including taxes.
- Advising the executor or administrator with respect to post death planning issues, such as funding of trusts and distribution of assets.
- Providing the executor or administrator with counsel and advice with respect to questions arising out of the administration of the estate such as dealing with troublesome beneficiaries.