What is an “Estate”?
The term “Estate” can be confusing and misleading. When someone dies, they have probate and non-probate assets. “Probate” assets are in the decedent’s individual name only. “Non-probate” assets are either jointly owned or have designated beneficiaries. For example, Tom and Mary jointly own a house and a checking account. Tom has a life insurance policy that names Mary as the beneficiary. Tom also owns a hunting cabin that is in his name only. When Tom dies, the house and checking account will go to Mary as the joint owner, as will the life insurance benefits since Mary is the beneficiary. Those are all “non-probate” assets. However, Tom’s hunting cabin did not have a joint owner or named beneficiary. Therefore, it is a “probate” asset.
Estate Administration FAQs
Probate assets are distributed to a decedent’s heirs through a Last Will and Testament or by the intestate laws. If someone dies with a valid Last Will and Testament, the Will dictates how probate assets are distributed and to whom. If someone dies without a valid Last Will and Testament, they are said to have died “intestate” and the state intestate laws determine the distribution of the probate assets. In Pennsylvania, a formal estate administration is needed if a person dies owning probate real estate or other probate assets totaling over $50,000. However, there are some exceptions to this general rule. You must speak to a qualified estate attorney to determine the correct process for your specific case.
An Executor is appointed to administer an estate through a Last Will and Testament. An Administrator has the same rights and obligations as an Executor, but with a different title. The Administrator is not named in the Last Will and Testament and is appointed either in an intestate situation or where the named Executor is unable or unwilling to serve. In either case, the Executor or Administrator is the personal representative of the estate and administers the estate according to the Last Will and Testament or applicable intestate laws.
Estates are overseen by the Register of Wills and the county Orphans’ Court divisions. To open an estate, the proposed Executor or Administrator must file an original Death Certificate and the original Last Will and Testament (if any) with the Register of Wills in the decedent’s county of residence. The Executor or Administrator must also file a petition requesting that the Register of Wills officially appoint the person as the Executor or Administrator, and an information sheet providing details on the decedent and his/her assets. Finally, the Executor or Administrator must take an oath in front of the Register of Wills and promise to administer the estate according to the Last Will and Testament or applicable intestate laws.
Well, this can be a loaded question. There are statutory requirements that must be met for every estate such as notices to estate beneficiaries and advertisements. The Executor or Administrator must liquidate all assets, which may include closing bank accounts or stock and selling real estate. All estate funds should be maintained in a fiduciary estate account. A Pennsylvania Inheritance Tax Return must be filed and inheritance taxes paid. Finally, all creditors of the estate must be paid before any distributions to estate beneficiaries. This is a simplified outline of the estate process. Before being sworn in as an Executor or Administrator, we strongly recommend contacting a qualified estate attorney for assistance in administering any estate. Our law office handles estate administrations and will be happy to speak with you about a specific estate case.
Pennsylvania applies an inheritance tax to most probate and non-probate assets, regardless of the asset’s value. There are a few tax exemptions, with the most common being life insurance death benefits. Pennsylvania Inheritance Taxes are due within 9 months of death. The taxpayer gets a 5% discount if the taxes are paid within 3 months of death. The tax rates are:
|Lineal Descendants||Children, Grandchildren||4.5%|
|Collateral||Nieces/nephews, cousins, friends||15%|
|Charities & Churches||0%|
Like an estate administration, we strongly recommend contacting a qualified estate attorney for assistance with Pennsylvania Inheritance Tax Returns. Our law office routinely prepares and files Inheritance Tax Returns and will be happy to assist you.
A formal estate administration typically takes 12-18 months to complete, especially if there is real estate that needs to be sold.
I researched this online and think I can handle it on my own. Why do I need an estate attorney to help me?
First, a qualified estate attorney will know the correct laws and procedure for your individual situation. We see many cases where people have opened formal estates unnecessarily because of online research or “non-legal” advice. Our knowledgeable attorneys can determine the most efficient and cost-effective legal procedure for your estate situation. Second, if a formal estate administration is necessary, there are several statutory requirements that must be met. This includes the proper payment schedule for creditors. Our attorneys are well-versed in the statutory rules to ensure that your estate is administered correctly.
This depends on whether your surviving parent has any probate assets. Typically, the assets held in a revocable trust are not considered “probate” and will pass to the trust beneficiaries according to the trust document. A formal estate administration is not needed for the trust assets. However, if your surviving parent has other probate assets such as real estate or stock, then a formal estate administration may be necessary.
We always recommend taking a few days, or even a few weeks, to grieve and adjust to life after losing a parent. The grieving process is just as important as the legal estate process. When you are ready, contact a qualified estate attorney to review your specific case. Please remember that the inheritance tax discount deadline is 3 months after the date of death. Ideally, you will want to consult with an attorney within 1-2 months of the date of death to ensure that deadline can be met.