Your Resource in Administering an Estate
By Colin B. May, Esquire
Estate Planning Attorney
After a loved one or close friend dies, the funeral is only the beginning of the involved process to come. This process is known as “probate” or estate administration and it is the court-based system whereby a person appointed “executor” or “administrator” acts as a manager of the estate: satisfying debts and taxes, informing those involved in the process, paying taxes, and ultimately passing property from the deceased person to the beneficiaries of the estate. Whether a person passes away without a will or had a will in place, an estate must be opened and administered if the decedent had property in their name.
What happens if there is no Will?
Sadly, more than half of people who pass away in the United States do not have a will in place. While this situation is not ideal, there is a systematic court process to administer their estate. First, we must turn to the provisions of the Pennsylvania rules of intestate succession to determine who is entitled to their property and, importantly, who may serve as administrator. “Intestacy” translates to “without a will” and an “administrator” is that person who manages the estate, much like an Executor. While the rules of intestate succession are fairly involved, once the beneficiaries of the estate are identified under the statute, much of the administrative process is similar to that which would follow when a Will is involved.
Beginning the Process: Consult a Professional
While probate is often a step-wise process, with each step identified under the probate code, there are no two estates that are identical and how exactly to proceed involves subtle nuances that may be difficult to identify and easy to mistake. While a petition for probate is a fairly simple, one-page filing, there are still a number of open questions in doing so; for instance: Should the form include an estimate of estate value? Should it include real estate? How many short certificates should be requested? Should exceptions be included? What is a renunciation or affidavit? The response I’ll offer to each of these questions is one that is frustratingly lawyerly: “it depends.”
You see, even a simple step in the process can be fraught with hidden complexity and it is important to consult with an estate attorney who can guide you through the process. But does this mean that the attorney should just do everything? Again, this depends. The question comes down to your preference as Executor or Administrator. We believe that whether you want your attorney to complete administration from beginning to end or would rather have us coach you through the process should be entirely up to you.
A Personal Action Plan
The most important resource an estate professional brings to the table is experience. At the Estate Planning Centers at Coulter & May, P.C. we always begin our discussion with a complimentary consultation to identify the issues involved and determine the best path forward. What makes our approach different is that at this initial consultation, we allow our discussion and strategy to be driven by the goals and needs of the decedent’s family. While certain steps in the process are mandated by law, the preferred methods of undertaking those steps is largely dependent on the goals and needs of beneficiaries, client preference, and financial prudence.
By the conclusion of our consultation, we like to provide our executor or administrator with a step-by-step set of instructions that we call our “Estate Administration Action Plan.” In plain English, this action plan provides a set of instructions on those tasks that you as executor or administrator will undertake and, importantly, what you can expect to receive from us in the meantime.
Keeping the Process on Track
A critical part of the process is making sure that the steps are followed in the appropriate timeframe. To ensure that the process continues to move forward, we recommend scheduling monthly status meanings to ensure that administration is staying on track and providing a forum for you to ask questions and receive guidance on things you may have received in the interim.
Most importantly, we want to make sure that you, as executor or administrator, and we, as your counsel, remain on the same page in a unified front.
In Probate, as in Life…
The mantra to remember is: Learn to expect the unexpected.
As Executor or Administrator, from time to time you will receive items in the mail, phone calls, or emails that may leave you scratching your head. This is natural and expected. Nonetheless, this can be especially disconcerting when that correspondence involves a dollar figure due on a fast-approaching deadline. It is critical in moments like this that you have the right person to reach out to for reassurance. Most of the time, these things tend to be fairly straightforward issues with straightforward solutions. Even when this is not the case, it is important to have the confidence that the issue is placed into the able hands of a professional.
With experience comes perspective, and with the right perspective, what may have seemed like a mountain turns out to be a mere molehill. It is our philosophy that no one ever wishes they had worried more in life. We embody this philosophy by ensuring that when you call, your questions are answered calmly and in a timely fashion. Even if a particular item needs timely attention, there is much value in proceeding calmly and with the guidance of a professional. While patience and composure are key qualities in an executor or administrator, it is important to remember that even a slight misstep can be costly in the long run.
The Probate Process in a Nutshell
As mentioned before, probate is the process whereby we transfer legal title of property from the decedent to the decedent’s beneficiaries. In the interim, we must also take steps to identify any legal debts that the decedent had as these now become the debts of the estate.
Joint assets or those that include beneficiary designations will pass to beneficiaries upon submission of a death certificate to the institution. While these assets do not have to go through probate, they are still subject to Pennsylvania inheritance tax and will have to be accounted for. Assets that end up in the decedent’s name are considered probate assets. In order to gain access to these probate assets, we must open a probate estate.
The opening of a probate estate begins with submitting a petition for letters. If the decedent had a Will, the Will is submitted along with the petition and the person named Executor is given the authority to serve by the court. If no Will is involved, the person entitled to serve as Administrator is given this authority.
Once an estate is opened, the court provides what are known as “Letters Testamentary” (in the case of a Will) or “Letters of Administration” (in the case of no Will). These Letters are legal documents that empower you, as Executor or Administrator, to complete the probate process.
The first two steps of probate are: (1) identifying assets; and (2) identifying debts and expenses. Usually, we are made aware early on where the decedent maintained bank accounts or other important assets, but it is not uncommon to uncover other institutions, accounts, or policies that the decedent maintained and part of the process may include locating these assets. The most common debts and expenses to deal with at the beginning of the probate process are things like: final medical bills, funeral and burial expenses, utility bills, and open lines of credit. These remain debts of the estate and must be satisfied, but it is important to get a clear understanding of the estate assets before proceeding to satisfy debts.
In addition to known expenses, we must also advertise the opening of the estate in one newspaper of general circulation and one legal journal for three consecutive weeks to allow unknown creditors to come forward and assess the legitimacy of any claims brought forth. Similarly, we should inform beneficiaries of the opening of the estate and their interest involved. Finally, in the event that the decedent was over the age of 60, we must verify that the state Medicaid agency has no claim against the estate.
Once assets and expenses have been accounted for and we have a realistic picture of the net assets involved, we can begin contemplating the overall inheritance tax obligation. Inheritance tax is perhaps the most complicated part of the process and timely filing and payment of it is of the utmost importance. Additionally, you as executor or administrator are legally responsible for the decedent’s final federal and state income tax filing and any tax filings required for the estate.
Though I am greatly oversimplifying the process, after these steps have been taken, we as executor or administrator can begin making distributions to beneficiaries. First, it is critically important that we assess and account for any out-of-pocket expenses paid by the executor or administrator or other people and maintain some cash reserves to cover any unanticipated expenses that arise later in the process. While beneficiaries are usually our loved ones or friends, it is of the utmost importance that we as executor or administrator protect ourselves from potential liability by using either a “Family Settlement Agreement” or “Final Accounting.” This step is perhaps the most critical in the process, and should not be taken without the appropriate caution.
As you can see, administering an estate in Pennsylvania is an involved process but should never be one that is overwhelming to you. To the extent that it is, the salve is having a competent professional available to assist. The key to completing the process is maintaining a clear action plan, taking the necessary steps, and consulting with the right professional.
If a loved one or friend has recently passed away and you have questions on how to proceed, we encourage you to reach out for a free initial consultation by calling us at: (412) 253-7526,
About Our Law Office
At the Estate Planning Centers at Coulter & May, P.C., we devote our practice to estate planning and assisting families through such transition times with estate and trust administration counseling. We offer guidance and advice to our clients in every area of estate planning, and offer comprehensive and personalized estate planning consultations. For more information or to attend an upcoming seminar or to book a consultation directly, please contact us at (412) 253-7526 or visit us online at www.estateplanningcenters.com.
Disclaimer: The information presented in this article is a conversational summary of a complex area of law and should not be construed to constitute legal advice. No person should rely upon the content of this article for making any decisions, and should instead consult with appropriate legal and tax professionals.