During the administration of an estate, regardless of whether a loved one died with a will in place or not, the objectives of estate administration remain the same.
The tasks of an Executor can be broken down into four areas of responsibility:
- Gather the assets of the decedent;
- Pay the debts of the decedent;
- Discharge the tax liabilities of the decedent and the estate; and
- Distribute the net remaining estate to the heirs and/or beneficiaries of the decedent.
An estate administration can be formal or information.
A full and complete administration of an estate is known as a “formal” administration. The steps involved in this process are comprised of the following:
- Search for and locate the decedent’s last will and testament;
- File a Petition for Probate and obtain a Grant of Letters;
- Advertise that the estate has been probated;
- Marshall the assets by gathering and securing them in the care of the personal representative (known as an Executor or Administrator)
- Notify the PA Department of Human Services of the decedent’s passing;
- Give notice to the beneficiaries of their possible interest in the estate;
- Pay the debts of the decedent;
- File an Inheritance Tax Return, Inventory, and Appraisement;
- Payment of Taxes;
- File the final account and proposed schedule of distribution;
- Distribute the estate to the decedent’s beneficiaries upon confirmation of the final account;
- File final paperwork with the Court to finalize the estate.
A formal administration of an estate can be quite expensive, so there are also informal alternatives that you should discuss with your legal counsel. Such options include, a small estate petition, a family settlement agreement, or a combination of a formal administration and a family settlement agreement.
Personal Liability for Executors & Administrators
All executors and administrators should remain mindful of the fact that upon undertaking the responsibility of administering an estate, you take on fiduciary duties for the estate. This means, you owe a fiduciary duty to the beneficiaries and creditors of the estate. As such, in the event that you mismanage the estate, or distribute an inheritance to the beneficiaries ahead of paying off the debts of the estate, you could become personally liable to the decedent’s creditors and/or remaining beneficiaries for your failure to administer the estate appropriately.
If you have questions about Pennsylvania inheritance tax, feel free to reach out to Covalt Law at your convenience; we’d be happy to provide you with an overview of what to expect as you plan for your estate or administer a loved one’s wishes.
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