Estate administration is the legal process that occurs when a person dies and a personal representative is appointed to settle the decedent’s affairs by paying any outstanding debts, filing an inheritance tax return, and distributing the decedent’s assets to their heirs. A personal representative is appointed by opening an estate at the Register of Wills in the county where the decedent lived at the time of his or her death. Opening an estate is only necessary when the decedent owned probate assets at the time of death. Probate assets are assets that the decedent owned in his or her name alone without a beneficiary designation. Examples of probate assets are a home that is in the decedent’s name only or a bank account in the decedent’s name alone without an “in trust for” or “payable on death” designation associated with the account. Conversely, examples of non-probate assets include a joint bank account, an investment account with a beneficiary designation, or a home owned by husband and wife or by two or more individuals as “joint tenants with rights of survivorship.”
Testate vs. Intestate
When a person passes away with a will they have died testate. The appointed personal representative is known as an Executor if the person is a male or an Executrix if the person is a female. Alternatively, if a person passes away without a will they have died intestate. In that instance, the personal representative is known as an administrator if the person is a male or an administratrix if the person is a female. The person named as a personal representative in the decedent’s will should take possession of the decedent’s original Last Will & Testament and schedule a consultation with an experienced estate administration attorney at Zacharia Brown in order to review the contents of the will. The initial consultation will also include a discussion of whether an estate must be opened and the ensuing steps in the estate administration process. If an estate is opened at the Register of Wills, the personal representative will be sworn in and the original will is probated. To probate a will means to prove the validity of a will. Once the will is probated and the personal representative is sworn in, the Register of Wills will then grant Letters Testamentary and issue short certificates. A short certificate is a court document which is imprinted with an official seal that allows the personal representative to handle the decedent’s affairs and to act on their behalf.
A common question that arises about the estate administration process occurs when a person passes away without a will and their family members or loved ones are under the impression that all of the decedent’s assets will go to the state. This is not true, as long as the decedent has surviving familial heirs within the parameters of the Pennsylvania intestacy laws. However, passing away intestate or without a will often complicates the estate administration process because it places the appointment of a personal representative and the distribution of the decedent’s assets into the hands of the Commonwealth of Pennsylvania. This frequently leads to unnecessary and frustrating quarrels among family members and loved ones that may have been avoided by creating a will.
Whether a person passes away with or without a will, the personal representative is required to file an inheritance tax return as a critical step in the estate administration process. Inheritance taxes are owed on nearly all of a decedent’s probate and non-probate assets, while a few items that don’t trigger inheritance taxes include life insurance proceeds, qualified retirement accounts such as an IRA or 401(k) if the decedent was under 59 ½ years old, and certain real estate located outside of Pennsylvania. With that said, the inheritance tax rate for a surviving spouse and for children under 21 years old is 0% which means these individuals won’t pay any inheritance taxes on the assets they inherit. The inheritance tax rate for lineal descendants (children, grandchildren, parents, etc.) is 4.5%. While the inheritance tax rate for siblings is 12% and for all others the rate is 15%.
How We Can Help
The estate and probate administration process can be a complex and overwhelming endeavor. That is why it is so important to contact Zacharia Brown to guide you or a loved one throughout the entirety of this process. The experience of our attorneys will give you peace of mind during this difficult and stressful time.