What do I do if I’m an Executor? An overview of Estate Administration

When a loved one passes away what are the responsibilities that you have as the next of kin in regards to estate administration? In this post, I want to take the opportunity to give you an overview of the process, and to help you prepare for what you’ll expect in meeting with an Estate Administration attorney.

  1. Marshalling the Assets

The first step in Estate Administration is marshalling the assets of the Deceased. They may have investments, stocks, bonds, IRAs, life insurance policies, 401ks and other retirement accounts, as well as bank accounts, trust funds, real property, personal property and other items of value. The Executor—that is, the individual charged with administrating the estate—will have to pull together information about each of these assets in order to assist the attorneys to make intelligent decisions about how to handle these matters. As part of marshalling the assets, there need to be appraisals done on certain items. Particularly where a business fixture or piece of equipment is difficult to value, appraisers will need to be brought in to give an opinion of the fair market value of such an item. This is true even of items that will be claimed by members of the family. Perhaps a ring or other family heirloom will be passed down to a daughter as part of her share the estate. Nonetheless, there will usually need to be an appraisal done to determine what portion of her share of the estate will be diminished by her taking that item of value instead of money.

  1. Filing Tax Returns

They say there are two things you cannot avoid in life: death and taxes and this is particularly true at death when you have to pay more taxes. Despite the fact that an individual has had to pay income tax their whole life, they will usually have to pay an estate tax when they pass away. Even when the estate itself is not taxed, frequently the amount that is passed to the non-spouse will have to be taxed. This includes those items of value discussed earlier. Inheritance tax must be assessed, and an Inheritance Tax Return (REV-1500) must be filed within a tight time period with the Pennsylvania Department of Revenue. It is important to be diligent about preparing to file the tax return. Filing a tax return within three months brings a discount on the overall tax that has to be paid. In large estates, this discount can be a substantial amount of money. Accordingly, it is important to move quickly to prepare and file this tax return.

  1. Distribution of Assets

After all the assets have been marshalled, valued and the taxes have been paid, it is time to distribute the assets from the estate. Distribution of the assets happens according to the Decedent’s Last Will and Testament, or, if there is no Will, according to laws governing intestate succession. This is the part you’re probably most familiar with, and of course, it’s the part where the Executor is rewarded for his hard work in administering the estate.

Conclusion: What to Do if You’ve been Named an Executor

When a loved one passes away, it is best not to delay decisions about the estate. Probating the Will, if necessary, and marshaling and distributing the assets must occur, and the sooner it occurs the more money that will be able to be passed to the heirs. If you have questions in regards to Estate Administration or if a loved one has recently passed away and you need help administrating their estate, call Cornerstone Law Firm and let us know how we can help you.