The legal process of settling the estate of a recently deceased loved one can take family members off guard, no matter how much they have prepared for this to happen. For the children of the loved one, dealing with lawyers, taxes and probate is a dizzying and complex set of events that may go on for some time.
If you or a member of your family is the designated executor or personal representative for the estate, your fiduciary role in administering the estate is a big responsibility that will affect not only the assets of the estate but the beneficiaries and heirs as well.
The first step: probate
The first step in probate administration is determining whether the estate is testate, or has a Will, or that it is intestate, or has no Will. If there is a Will, usually the decedent left instructions with the executor of the estate, including the location of important documents.
Probate administration in Pennsylvania then goes through the Court of Common Pleas. Estates of less than $50,000 will go through an expedited probate process; all others go through formal probate.
The Executor named in the Will is appointed as the personal representative, and the court gives him Letters Testamentary granting him authority to administer the estate. If the estate is intestate, the court will give Letters of Administration to a personal representative appointed by the court. When the Letters are published, all creditors of the estate are notified as well as beneficiaries and heirs.
Death and taxes
The personal representative will then have a number of tasks, including opening up an account for the estate with a Taxpayer Identification Number, notifying the Post Office to forward the decedent’s mail, updating insurance policies, taking inventory of the estate and dealing with taxes.
In Pennsylvania, there are four taxes that will fall due: the Pennsylvania Inheritance Tax, Federal Estate Tax, state and federal income tax for the estate and the decedent’s final state and federal income tax returns.
Closing the estate
Once an accounting is completed of the estate, including inventory, payment of debts and taxes, and distribution of legacies and bequests to beneficiaries, in a formal proceeding it is filed with the court.
Administration of an estate can be quite complex, especially if it has many different income and asset sources. Advanced planning can minimize the responsibility that loved ones must take on, but it can also help to have the assistance of seasoned legal counsel to guide them through the process.