Estate & TrustAdministration
Central PA Law Offices
Were you named executor of a will or trustee of a trust? Did a family member or loved one pass away without a will? Where do you begin? Dealing with the loss of a loved one is difficult enough, but being faced with the duties and responsibilities of administering a loved one’s estate can be overwhelming and confusing to most people who are faced with it for the first time. We help our clients by working closely with the family and being involved with the administration tasks to alleviate the burden on the family.
What is Probate?
Probate is the process by which the person named as executor of a decedent’s Will submits the original Will (along with a death certificate and petition) to the Register of Wills for his appointment as executor of the decedent’s estate. If the will has been duly proved (witnessed and notarized) and there is no contest with respect to the validity of the will (see “Will Contest” below), the Register of Wills will issue Letters Testamentary to the named executor.
What is Intestacy?
Intestacy is death without a will. Intestacy can also occur when a decedent has not fully disposed of his or her assets by a Will or other beneficiary designation. In these instances, the decedent’s property will not pass under a will and instead will pass under Pennsylvania’s Intestate Succession Act. The person appointed by the Register of Wills to handle the estate of an intestate decedent will receive Letters of Administration and is referred to as the administrator. The Orphans’ Court has jurisdiction over all matters of intestate succession.
How Long Will the Administration Take?
This is one of the most commonly asked questions. The length of the administration depends upon the involvement and cooperation of the client. If information is exchanged in a timely and accurate manner, the administration process is much more efficient. The length of the administration process also depends upon the complexity of the estate. Given these factors, the average estate or trust administration will take nine months to one year to complete. It may be longer.
Duties of Executor/Trustee
What responsibilities have you incurred as a result of your appointment as executor/administrator or trustee? The following is a general listing of your duties as executor/administrator or trustee: notify all interested parties; prepare and file annual status reports; maintain accurate records of assets, income, debts and expenses; locate and value the assets; pay expenses, taxes (including property, income, inheritance and/or estate taxes) and debts; prepare and file an inventory of the estate’s assets; prepare and file the Pennsylvania inheritance tax return and/or federal estate tax return; and, liquidate assets for distribution or preservation.
Pennsylvania Inheritance Tax
The Pennsylvania inheritance tax return and payment of tax are due nine (9) months from the date of death. A discount of 5 percent may be taken if a prepayment is made within three (3) months of the date of death. Pennsylvania inheritance tax is payable on all assets except for life insurance. Currently the inheritance tax rates are as follows: 0% to surviving spouse; 4.5% to lineal heirs (children, grandchildren and parents); 12% to siblings; 15% to non-relatives; 0% to qualified charities.
Income Taxes
The executor/administrator or trustee is responsible for filing the decedent’s current year income tax return for the year preceding death and decedent’s final income tax returns for the period of January 1 of the year decedent died to the date of death. The executor/administrator or trustee is also responsible for filing the fiduciary income tax returns for the estate and/or trust for each year the estate and/or trust is active.
Will Contests
Who can contest a decedent’s will? Any aggrieved party, the surviving spouse who would have received a larger share under another will, a trustee whose trust estate is prejudiced; the decedent’s intestate heirs; beneficiaries under a prior will; persons who would take in the default of the exercise of a power of appointment; the Commonwealth as a statutory heir if it is questionable whether decedent had close relatives. What are grounds for a will contest? Lack of testamentary capacity, undue influence, fraud, forgery, mistake in the identity of document executed by decedent; testamentary intent; and, improper execution.
Post-Mortem Planning
Possibilities for tax planning exist not only during the client’s lifetime, but also after death. Post-mortem options available include altering the decedent’s testamentary scheme through renunciations or disclaimers; considering whether tax deductions should be claimed for purposes of the federal estate tax or federal income tax; timing of tax years; timing of activation of testamentary trusts; timing of estate distributions; waiving of executor’s commission; using alternate valuation; and, extension of estate tax payments.