Estate Planning FAQ

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Estate Administration FAQ

Q. What is Estate Administration?

A. Estate Administration is the process of settling and distributing the estate of a deceased person.

Q. What is Testate and what is Intestate?

A. Testate means dying with a valid Will and Intestate means dying without one.

Q. What is Probate?

A. Probate is the process by which the Register of Wills in the County where the decedent resided appoints a personal representative to be responsible for the estate administration. The personal representative could be an executor (someone appointed or named in decedent’s Will) or an administrator (someone else appointed to administer the decedent’s estate.)

Q. Who can be appointed as an administrator?

A. As per Title 20 § 3155 of Decedent’s Estates and Fiduciary Code:

  • A. Those entitled to the residue under the Will (the beneficiaries);
  • B. Surviving spouse;
  • B. Those entitled to the estate under Intestate Law; and
  • C. The principal creditors of the decedent at the time of death.

Q. Who will get the decedent’s property if he or she dies Intestate or without a Will?

A. If a person dies without a valid Will then the probate estate is distributed according to state laws which specify who should receive the decedent’s property. In Pennsylvania, the order of priority is:

  1. Surviving spouse;
  2. Issue, if no surviving spouse;
  3. Parents, if no Issue;
  4. Brothers, Sisters, if no Parent survives decedent;
  5. Grandparents;
  6. Uncles, Aunts and their children and Grandchildren; or
  7. Commonwealth in default of all parties listed above.

Q. What is included in the Probate Estate?

A. Any property (real estate or personal property) owned solely by the decedent or as tenants in common with another individual.

Q. What are non-probate assets?

A. Non-probate assets are those that pass automatically at the person’s death, independent of the person’s Will. For example, assets which include a beneficiary designation, have a surviving joint owner, are payable on death (POD), or have a transfer on death assigned to them (TOD). A bank account held by the decedent and his daughter as joint owners will pass automatically at his death to his daughter.

Q. What are some of the responsibilities of the personal representative?

A. Some of the responsibilities include:

  • Identify the assets of the decedent;
  • Collect and protect the assets;
  • Communicate with the beneficiaries;
  • Advertise the estate;
  • File various documents with the Register of Wills;
  • Value the assets for Inheritance Tax purposes;
  • Pay taxes and debts of decedent, including contacting the Department of Human Services for certain decedents;
  • File the final income tax returns of the decedent;
  • File the Inheritance Tax Return;
  • File the Fiduciary Income Tax Returns, if necessary;
  • Distribute the rest of the estate to beneficiaries.

Q. Why is the estate advertised?

A. Advertising the estate in a local and legal publication is done in order to place a time limit on creditors’ claims against the estate. After one year from the complete advertisement, creditors are not permitted to submit a claim against the estate.

Q. Why is the Department of Human Services notified of the decedent’s death?

A. The Department of Human Services is notified in order to determine if the decedent received Medical Assistance within the last five years of life. If the decedent received assistance, the DHS may present a claim against the estate and that claim must be satisfied before beneficiaries can receive their inheritance.

Q. Who has to file an Inheritance Tax Return? When does the return get filed?

A. The personal representative of any Pennsylvania decedent is responsible to file a Pennsylvania Inheritance Tax Return, even if no tax will be due. The Inheritance Tax Return must be filed within nine months of death. An extension of time may be requested for an additional period of six months. A discount of 5% is available if tax is paid within three months of death.

Q. How is the Inheritance Tax calculated?

A. The assets are included based on their value on the date of death, with some deductions allowed for certain debts and costs of administration. The tax is calculated based on the class of the beneficiary, using the following percentages:

  • Spouse 0%
  • Children 4.5%
  • Siblings 12%
  • Other 15%

Q. What is a Fiduciary Income Tax Return and when does it need to be filed?

A. An estate is a separate entity, like a person or a business and thus is required to file its own income tax returns. A Fiduciary Income Tax Return is an income tax return to report the income received by the estate. It is required to be filed if the income of the estate exceeds $33.00 for Pennsylvania Income Tax purposes and $600.00 for Federal Income Tax purposes.

Q. What are the final steps of estate administration?

A. Once the Inheritance Tax Return is approved, the Executor or Administrator typically prepares a First and Final Account. The Account outlines all income and expenses that passed through the estate. The personal representative will want his or her administration and Account to be approved and will want to know that his or her responsibilities have come to an end. That can be usually be accomplished out of Court, via a Receipt, Release, Refunding, and Indemnity Agreement signed by all beneficiaries. The Release Agreement asks each beneficiary to approve the administration and to exonerate the personal administrator for liability in case of any error in the administration of the estate. The Release Agreement also states that each beneficiary will return the distribution he or she received if an additional debt surfaces or an error in distribution is discovered.

Alternatively, the Account can be filed with the Court for approval by the Court, rather than the beneficiaries. When possible, most Executors or Administrators choose to settle the estate out of Court because it is cheaper and less time-consuming.

Q. How long does estate administration take to complete?

A. Estate administration normally takes at least one year. The Inheritance Tax Return is due nine months after death, and once filed, it takes four to six months to receive approval of the return from the Department of Revenue. The residuary estate cannot be distributed until approval of the return is received, although depending on the circumstances and the parties involved, the personal representative may choose to distribute a portion of the estate before the administration is complete.

Q. Is it necessary to have an attorney assist with the administration of an estate?

A. While it not required, as noted above, estate administration is a long and difficult process, which can be made easier with the knowledge and assistance of an experienced attorney.

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