For Executors and Maybe Trustees
Losing a loved one is hard. But if you’re an executor or trustee hopefully this step-by-step guide to Estate Administration will ease the burden of knowing the business of what to do when a close family member or friend dies.
Whether or not your loved one has a will or trust their estate may be still have to go through the probate process in Pennsylvania.
Each estate administration varies in complexity and you may have more to do than these basic steps but this is a great starting point to get you familiar with what needs to happen after the death of a loved one.
1. The Will- Find the Will, any living trusts, any amendments to the will or trust, and any previous wills. It may be necessary to ask a sick or dying loved one where the Will is so that you do not have to find it when they are gone. If there is no will the state “intestate law,” will govern who acts as the administrator, and who inherits.
2. Contact an Attorney- Call an estate planning and estate administration attorney to help you navigate through the process. Even if there is No probate required there are many rules about what gets paid and what still gets taxed. You may have many meetings with the attorney so make sure you are comfortable with the attorney and their location. www.avvo.com is a great website where you can search for local, competent, and highly knowledgeable lawyers.
3. Gather Documents And Information- When you meet with the lawyer bring the Will and any amendments to it or previous wills. Also bring income tax returns (from the past few years if possible), bank account statements, retirement accounts, and any bills due. Also make a list of your loved ones valuables like real estate, CD’s, bank and investment accounts and insurance and annuities.
4. The Probate Process- Your attorney will determine what assets must be probated. Things like jointly held assets, assets in a trust, IRA’s, annuities or life insurance and the beneficiaries named do not go through probate and are automatically distributed.
*Make sure the attorney tells you an estimate of the Pennsylvania inheritance tax and federal estate tax that may be due even on non-probate assets.
5. Executor Duties- The executor is named in the Will. The executor will need to go with the attorney to the Register of Wills office, one is located in every county, and the original will and death certificate must be presented and any county fees must be paid depending on the size of the estate and other considerations. The executor has many duties and some have deadlines so make sure you get legal guidance to make sure the job is getting done.
6. Advertising the Estate- The estate must be advertised for several weeks in two local newspapers. The reason this must be done is so that any creditor is notified and can make a claim on the estate. Also notices are sent out to all possible beneficiaries of the estate.
7. Inheritance Tax Discount- The estate should consider paying the Pennsylvania inheritance tax or at least an estimate within three months to get a 5% discount. The full amount of the Pennsylvania Inheritance tax and the federal estate tax (if you owe this) is due within 9 months of your loved ones death. It is not always desirable to pay this so make sure to review this issue with your adviser to avoid paying tax on funds you may never receive.
8. Estate Distribution- The executor with the attorney’s help will divide the assets and pay bills due on the estate. This must be done before you can distribute and close the estate. At the end of the estate you should protect yourself from liability by getting a court order OR a family settlement agreement.
* Family Settlement Agreements (FSA’s) cannot be drafted by anyone but a lawyer. However, this is one of the only ways to avoid personal liability other than through the probate court.
This is simply a beginner step-by step guide to Estate Administration, the process that follows after a person passes. There are many more detailed steps.
For more information click here to read our entire report The Ten Most Common Mistakes Executors Make…and How To Avoid Them.
This may seem like a lot for someone, the executor, to do while trying to cope with the loss of family or a loved one and often times it can be very overwhelming. If you have been named an executor find out exactly what that entails to make sure you have the time and energy to follow the required steps involved.
A law firm is an excellent source of knowledge. Try to find one that offers consultations and fixed or hourly fees to make sure you understand the legal and financial and liability ramifications of being an executor and or what all is entailed in an estate administration so you can prepare yourself and or family and loved ones so there is less time to struggle with these steps and more time to grieve for the loss of your family or loved one.
We hope this Estate Administration 101 Guide has helped you understand your role as executor or trustee and or understand what happens after a loved one dies.
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