Tag Archive for: estates

An inventory must be filed with the court in administering an estate. The inventory should identify all probate assets of the decedent at the time of death. This may require some investigation by the executor. A good starting point is to monitor the decedent’s mail for evidence of statements for accounts. In an increasingly electronic society, however, access to digital accounts may be more productive as more and more parties elect for email correspondence over hard copies in the mail.

The inventory should include the value of the assets listed as of the decedent’s death. The inventory is to be filed with the court within nine (9) months from the date of death unless an extension is granted.

If additional assets are discovered after filing the initial inventory a supplemental inventory should be filed with the court. The amount of tax due depends on the value of the estate. Accordingly, the inventory and inheritance tax return are usually filed together. There is a form available for use in Pennsylvania on the Unified Judicial System website. Alternatively, items on Schedule A – E of the inheritance tax return can serve as the list of assets for the inventory.

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Not every asset owned by a party at the time of death will be subject to the probate process or pass under the direction of the will. Probate assets are those for which there is no pre-existing designation as to who should get the asset. Examples of typical assets that will be subject to probate include individually owned bank accounts, cars, personal property, business interest, real property held as tenants in common, cash, and life insurance with no beneficiary. These types of assets should be distinguished from any account with a beneficiary designation as those accounts will pass to the beneficiary. Also, joint accounts will usually go to the other party whose name is on the account.

Assets that are put into joint names within a year of date of death can still be subject to inheritance tax on the full amount of the account though ultimately a non-probate asset. If assets have been put into joint names over a year from date of death then only 50% of the account would be taxed. Ideally, you should plan for how those taxes will be apportioned. Business interests may also end up being non-probate if there is a partnership agreement spelling out what happens in the event of death. If there is a buy-out of the decedent’s interest, that is taxable and should be listed on the inheritance tax return. Where the decedent’s interest is just assumed by the remaining partners in the business then there is no tax and no need to do probate.

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The executor of your will is the person designated to be responsible for the administration of your estate. They are required to act in a fiduciary capacity and carry out the wishes as stated in the will. It is a good idea to talk to your executor about your desires regarding your assets and debts as stated in the will. Your executor or other trustworthy party should know where the original will is kept as well. The executor will need to take the will to the Register of Wills to open the estate and be formally recognized as the party authorized to handle the estate. From there, the executor will need to identify all the assets and debts the decedent had at the time of death. An inventory will need to be filed with the court.

The executor should also notify social security, employer(s), banks, insurance companies, retirement plans, etc. regarding the death of the decedent. The executor is responsible for safekeeping and/or maintenance of the estate until the time of distribution. The executor should review the will to identify all possible beneficiaries as they will need to be notified. The executor will usually open an estate bank account to consolidate assets and be able to pay necessary bills and taxes. The last income tax return for the decedent needs to be filed as well as an inheritance tax return. The executor must keep detailed records of all transactions that occur as an accounting is usually part of the final process of distributing and closing the estate. Executors may receive financial compensation for their services. An executor may also elect to retain an attorney to ensure the proper administration of the state in lieu of undertaking the responsibility on their own.

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One of the first steps to take after a loved one dies is to find out if they had a will. If there was a will, the second step is to make sure the will is valid. There are a few requirements for a valid will in Pennsylvania. First, the will must be signed by the deceased party or decedent. Ideally, there will also be signatures of two witnesses. A self-proved will includes an additional affidavit signed by the decedent and the witnesses that the signatures on the preceding will were valid and that the decedent signed the will knowingly and voluntarily. This affidavit can be signed simultaneously with the will or at a subsequent date so long as the testator and witnesses are available to sign. Sample language for an acknowledgment and affidavit is below.

We, the Testator and the witnesses respectively, whose names are signed to the attached or foregoing instrument, being first duly sworn, do hereby declare to the undersigned authority that the Testator signed and executed said instrument as their last will and testament in the presence and hearing of the witnesses, and that they had signed willingly, and that they executed it as their free and voluntary act and deed for the purposes therein expressed, and that each of the witnesses at the request of the Testator, in the presence and hearing of the Testator and each other, signed the will as witness, and that to the best of his or her knowledge the Testator was at the time at least eighteen years of age, of sound mind and under no constraint, duress, fraud or undue influence. Click here to read more about wills.

Formal administration involves handling the entire process through the courts. After the short certificate, the executor or administrator needs to notify all possible beneficiaries. They will also need to notify all possible debtors by publishing notice in the local law reporter as well as a local newspaper of general circulation. The executor or administrator should also notify social security, employer(s), banks, insurance companies, retirement plans, etc. regarding the death of the decedent.

Within three months of the date of death, the executor or administrator should pay estimated taxes on the estate to get a discount. Taxes for the estate will depend on the size of the estate. It is best to underestimate and potentially have to supplement later on than to overpay and risk not being able to get that money back from the government. A federal estate identification number should be obtained. The executor or administrator needs to make sure the final individual tax return for the decedent is prepared and filed in addition to the inheritance tax return. An inventory of the estate should be filed with the court along with a detailed accounting of all expenses of the estate and a proposed distribution of the remainder of the estate to close it out. Distributions should generally not be made until approx. a year after notice to allow creditors to make any valid claims against the estate prior to disbursement.

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If a loved one has passed away without a will, the laws of intestacy will govern how their estate is handled. The closest kin can apply to the Register of Wills to be designated as the administrator of the estate. They will also be granted a short certificate has proof of their authority to handle the estate.

The administrator would then have the responsibility for identifying all the assets and debts as well as beneficiaries and their contact information and maintaining the estate until final distribution. If the decedent was married and does not have any children or surviving parents, the entire estate goes to their surviving spouse. If there were parents, the first $30,000 goes to the surviving spouse as well as half of the remainder of the estate.

If there are children of the marriage, the first $30,000 goes to the surviving spouse as well as half of the remainder of the estate also. If there are children of the decedent only, the surviving spouse gets half of the estate. The remaining half of the estate, or in the event the decedent is not married, the entire estate, shall pass in the following order: (1) to the decedent’s children; (2) to the decedent’s parents; (3) to the decedent’s siblings or their children; (4) to the decedent’s grandparents; (5) to the decedent’s aunts and uncles and their children and grandchildren. If there are multiple persons in a category, they will each receive equal shares such that a decedent with three children would have the estate separated into thirds.

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After a loved one has passed, one of the first steps to be taken is to determine if they have a will. If so, you will want to locate the original will and make sure it has been properly signed. Ideally, the will has a self-proving affidavit so that the witnesses to the will do not need to be present when the will goes to probate. If there is not a self-proving affidavit, someone with knowledge of the deceased’s signature would need to verify the signature. In some counties this must be done in person. The named executor will need to go to the Register of Wills with the original will, photo identification, and some method of payment to open the estate.

The Register of Wills will give the executor a short certificate of letters testamentary. This document authorizes the executor to handle the decedent’s estate. The executor will likely need to appear in person at the appropriate county office throughout the probate process. For this reason, it makes sense to name an executor that lives in the area. You should also be careful if selecting co-executors as they need to agree on how to proceed. The executor should identify all the assets and debts as well as beneficiaries and their contact information. Real property should be secured and maintained, including keeping up with any mortgage, homeowners insurance and taxes in the interim.

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Minors may not be able to receive assets left to them due to their age. In that scenario, a guardian for the estate of the minor must be appointed. A parent cannot be the sole guardian of a minor’s estate. A co-guardian must be named or a corporate fiduciary alongside the parent. If the appointment of a guardian is not contested, this can be accomplished without a hearing in Bucks County. An inventory of the minor’s estate must be provided to the court however yearly reports are not necessary. Additionally, the guardian or co-guardians must post bond based on the value of the estate coming into their control unless the court feels it is unnecessary. Corporate fiduciaries are exempt from the bond requirement. Disbursements may be made for the minor’s support and education as deemed reasonable by the guardian without further court order.

In some circumstances, it is not necessary to have a guardian of the estate appointed. Specifically, if the minor stands to gain less than $25,000 the court rules permit distribution to a restricted access account. The parent of the child can oversee this type of distribution. The court would order the funds to be deposited into a savings or investment account in the child’s name. Withdrawals are not permitted except by court order. The child then takes control over the account once they are 18 or older.

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Oftentimes people are very concerned about making sure that they have a will but do not think about a power of attorney. While it is an important part of an estate planning process, and is critical if you have specific goals and desires on how you would life your life’s savings distributed upon your death, without one your closest relatives will still receive your assets under the intestate laws. If you are married, this means your spouse. The state does not take your assets unless and until there are no living relatives.
A power of attorney, however, has no fall back provision. If you do not have a power of attorney when you need one, your loved ones will have to petition the court and ask to be appointed as your guardian. This can be an expensive and time consuming process. A power of attorney, unlike a will, is a document that takes effect while you are living. It gives power to whomever you choose to handle your financial affairs, including paying your bills, signing checks, even selling your property. You can use a power of attorney while you are still capable of handling your affairs but are unavailable or you can use it solely in the event that you become you incapacitated and are no longer able to handle your affairs. Some people will use one if they are out of state and need to sell their house. They can designate a power of attorney to handle the transaction for them at settlement. A power of attorney can specify what rights and power you give the other person and it can be limited to specific things.
It is a very powerful, but often overlooked document. You should trust fully the person you designate as it can be abused. You can revoke it in writing at any time. It can be used for many different reasons. If say, for example, you have a child in college and you want information on their account with school or grades, you can talk to your child into signing a Power of Attorney to allow you access to this information. So many parents are frustrated when they pay college bills and yet the school will not even tell them the balance due. It is a very useful tool in the event of an unfortunate and tragic accident that does not result in death. If the breadwinner is suddenly not available, rather than have to file a petition and wait for court, a Power of Attorney will enable the spouse to handle all the affairs, negotiate checks, obtainformation on the mortgage and other bills that may only be in the other person’s name.
The cost of a Power of attorney is very inexpensive (approx. $ 100) compared to the cost that will be incurred if someone does not have one when it is needed (thousands). It is something to think about to protect yourself while you are living or assist your loved ones.

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It is possible for a spouse intentionally left out of the other spouse’s will to still receive a share of the estate in the event of death. Pennsylvania law provides for an “elective share” pursuant to 20 Pa. C.S. 2203(a). This law provides that if a person is still married at the time of their death with no divorce pending, the surviving spouse can elect to receive 1/3 of that person’s estate. There are items that are excluded from the estate instances where an elective share will be applied. 2203(b) states the following exceptions: (1) any conveyance made with the express consent or joinder of the surviving spouse; (2) the proceeds of insurance, including accidental death benefits, on the life of the decedent; (3) interests under any broad-based nondiscriminatory pension, profit sharing, stock bonus, deferred compensation, disability, death benefit or other such plan established by an employer for benefit of its employees and their beneficiaries; (4) property passing by the decedent’s exercise or nonexercise of any power of appointment given by someone other than the decedent.

To simplify, a surviving spouse cannot receive any portion of something that they already agreed to give away by way of previously consenting to it. As it relates to subsections (2), (3) and (4), accounts that have a beneficiary designation will pass to the named beneficiary. Additionally, the surviving spouse waives the right to seek other items they may have been entitled to if they choose to exercise the elective share. The surviving spouse must reduce to writing their intent to exercise the elective share and timely file with the court. Either spouse may waive their right to exercise the elective share before or during the marriage or even after death of their spouse. It is wise to consult with an attorney to see if choosing the elective share is the best outcome if you are left out of a spouse’s will.

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