When a loved one passes away, his or her estate often goes through a court managed process called probate or estate administration. The estate’s executor (named in the Will) or administrator (if there is no Will) has the job of marshalling the decedent’s assets, paying any outstanding debts and eventually distributing the assets to the heirs/beneficiaries.
Every probate estate is unique, but most involve the following steps:
- Filing of a petition with the proper probate court.
- Swearing in of Executor, in the case of a Will, or Administrator, if there is no Will.
- Notice to heirs under the Will or to statutory heirs (if no Will exists).
- Advertisement of the estate to put creditors on notice of decedent’s death.
- Inventory and appraisal of estate assets by Executor/Administrator.
- Filing of a Pennsylvania Inheritance Tax Return.
- Payment of estate debt to rightful creditors.
- Sale of estate assets.
- Payment of estate taxes, if applicable.
- Final distribution of assets to heirs.
An experienced Pennsylvania Probate attorney can assist the Executor or Administrator in this process by preparing the necessary filings, helping to determine the value of assets, communicating with creditors and promptly distributing the decedent’s assets.
NON-PROBATE ASSETS
Certain types of assets are called “non-probate assets” and do not go through probate. These include:
- Property which the decedent owned as “joint tenants with right of survivorship”. Such property passes to the co-owners by operation of law and do not go through probate.
- Retirement accounts such as IRA and 401 (k) accounts where there are designated beneficiaries.
- Life insurance policies.
- Bank accounts with *’pay on death” (POD) designations or “in trust for” designations.
- Property owned by a living trust.
EXECUTOR/ADMINISTRATOR DUTIES AND COMPENSATION
The Personal Representative of the estate is called the Executor if there is a Will or an Administrator if there is no will. The Executor or Administrator has to fulfill his/her fiduciary duties on behalf of the estate with the highest degree of integrity and can be held liable for mismanagement of estate assets in his/her care. It is advised that the Executor retain an attorney and an accountant to advise and assist him/her with his/her duties.
Executors and Administrators are reimbursed for all legitimate out-of-pocket expenses incurred in the process of management and distribution of the decedent’s estate. In addition, an Executor/Administrator may be entitled to be paid a fee based on Pennsylvania’s Statutes governing estate administration. The fee will depend on the size of the estate.
COST AND DURATION OF PROBATE
The cost and duration of probate can vary substantially depending on a number of factors such as the value and complexity of the estate, the existence of a Will and the location of real property owned by the estate. Will contests or disputes with alleged creditors over the debts of the estate can also add significant cost and delay. Common expenses of an estate include executors fees, attorneys fees, accounting fees, court fees, appraisal costs, and surety bonds. These typically add up to 2% to 7% of the total estate value. Most estates are settled though probate in about 9 to 18 months, assuming there is no litigation involved.