Closing an estate means that the work of administering the estate is done. This situation is reached only after the estate is properly inventoried, taxes are paid, all debts and other obligations are satisfied, and the remaining assets have been distributed via probate or other methods.
Estate executors in Pennsylvania must take one of two actions to close an estate. Find out more about what those actions are and when an estate is ready to close below, and learn how a probate lawyer may help with the process.
When Do You Close an Estate in Pennsylvania?
The first step in moving toward closure for an estate is finding any will left by the decedent. The decedent is the person who passed away. A will should name an executor and provide some details of how the decedent wanted his or her assets distributed among heirs.
The executor should then complete tasks that include:
- Probating the will. The will, death certificate, and other documents must be brought to the appropriate Register of Wills office. The documents are then entered into the register’s digital filing system.
- Gathering assets. The executor works to discover all the assets of the estate and begins to create an accounting, or inventory, of those assets. That includes cash on hand and in accounts, real property such as homes, and other property like cars or personal effects.
- Sending and publishing notices. The executor may need to publish notices in local newspapers and send notices to beneficiaries.
- Conducting estate accounting. In some cases, the executor may need to file for tax ID numbers for the estate, open accounts in the estate’s name, and pay bills and debts from the estate.
- Filing the Pennsylvania Inheritance Tax Return. Someone will need to file the Rev-1500 form and pay the applicable Pennsylvania inheritance tax.
- Distributing remaining assets. Once all debts and other obligations of the estate are handled, the remaining assets can be distributed to heirs according to the will and probate laws of the state.
How Can You Close an Estate in Pennsylvania?
Once all the matters associated with the estate are handled and there’s nothing else for the executor to do, the estate can be closed. This is done via one of two methods.
Via a Formal Account and Audit
The executor, who is also known as the personal representative in Pennsylvania, prepares a formal accounting of the estate and how it was administered. This includes a statement detailing how the assets and liabilities of the estate were handled and administered.
A formal notice must be sent to all potentially interested parties, such as creditors and beneficiaries of the estate. That notice must indicate when the formal report will be presented to the court. This provides time for any interested parties to object to the closing of the estate. When objections are received, they are dealt with via hearings on each matter.
If there are no objections—or if all objections are resolved—the estate can be closed.
Via a Family Settlement Agreement
If the formal method of closing an estate sounds like a lot of work and a bit daunting, don’t worry. There’s an informal method that is generally preferred by many families.
This method involves the executor or personal representative creating a document called a Family Settlement Agreement. This document should also include an account of the assets and liabilities of the estate and how they were handled, but it doesn’t need to be as formal and stringent as the formal account and audit in the above method.
Ultimately, the Family Settlement Agreement is a contract. The heirs of the estate sign it, indicating that they agree with how the estate was settled and also agree that it can be closed.
In many cases, other provisions are included in the contract. The personal representative can include a clause indemnifying them, which means the heirs agree not to hold the person responsible in the future if any honest errors are uncovered about the estate. The agreement might also detail payments to be made to the executor for their work on the estate.
A Family Settlement Agreement is an easier and less expensive way to close an estate. It doesn’t involve courts and hearings and allows the estate to be closed quickly. In many cases, the only reason to move to a formal audit is because the personal representative can’t get all the heirs to sign an agreement—for whatever reason. It may be that someone has refused to do so, for example, but it could also be that the executor has been unable to locate a specific heir or get them to respond to communication efforts.
Get Help From a Probate Professional
When a loved one dies, families can deal with a lot of emotion and stress. Piling complex estate administration and probate tasks onto an already difficult situation can create more stress and additional challenges. Yet, letting an estate sit without attending to it can also lead to issues.
If you find yourself in this conundrum, consider reaching out to an experienced professional for assistance. Contact Karen Ann Ulmer, P.C., attorneys at law, today to find out how we can remove some of the burden from your shoulders.