Small Estate Petitions: Why We Generally Don’t Recommend Them in Pennsylvania
The purpose of the small estates petition is to allow for small estates to bypass the probate process. This means that the petition can be approved by a judge in the Court of Common Pleas and a distribution schedule to all the beneficiaries can be confirmed by court order and all interested government parties. Small estates are defined under this law as estates of less than $50,000 in value with no real estate involved.
When a loved one passes away, you generally have to go through “probate,” which involves a year-long process. But when estates are small, this process can feel like way too much work for too little reward. That’s why we get questions about the small estate petition often.
For the reasons we discuss below, we generally don’t recommend the small estate petition. The cost is similar to running probate, and if you miss anything, you have to come back for a second petition. Regardless, this article will discuss the details of filing one if you’re interested.
What should a small estate petition include?
20 Pa.C.S. Section 3102 provides the rules for a small estate petition. The petition should always include the name of the decedent, their date of death, the will as an attachment, and an identification of all beneficiaries and their specific percentage interests. The petition is filed by the executor of the estate (or the administrator if no executor qualifies). The petition should include the debts of the decedents that are known, how the estate proposes to pay those debts, the tax calculations due to the Department of Revenue, and confirmation about the possibility of any unknown creditors.
Department of Revenue must approve the petition in advance
Before the petition is filed, it must be sent to the Department of Revenue in Harrisburg to be reviewed and approved. This is to ensure that the inheritance tax is paid on any assets of the estate. In most cases, because these estates are small, this approval is not hard to come by. However, the approval process can take anywhere from 60 days to 6 months, and this acts as a significant barrier to finalizing the estate through small estates petitions. Once the approvals or “Consents” from the Department of Revenue are received and attached to the petition, it can be filed with the Court of Common Pleas for the county in which the individual was “domiciled” when they passed away. In the off chance that the Department of Revenue objects to what is laid out in the petition, they have a right to attend the hearing and object to the finalization of the small estate petition. In most cases, a brief negotiation over the Department’s objections is sufficient.
Beneficiaries must be identified so that they can object
Beneficiaries must be identified and given notice of the filing, so they also have the opportunity to object. If a beneficiary believes they are not getting their full share or that unauthorized expenses are being paid, the hearing on the small estates petition is their opportunity to make their voice heard. To speed this process along, we generally recommend attaching an express consent from each beneficiary who says they have read the petition and agree this is the best way to carry it out. Once again, if a beneficiary objects, the process becomes more complicated and the savings of time and cost to avoid probate are generally lost.
Pros and Cons of Filing a Small Estates Petition
The small estates petition is a good idea in theory, but in practice, it ends up being as much or more work as simply opening probate. In most cases, opening probate is a brief and simple affair and does not require waiting on anyone before distributing funds. The Department of Revenue can receive the tax return and approve it in its own time, and as long as you’ve done your math correctly, the approval will be forthcoming. For this and many other reasons, we generally recommend avoiding the small estates petition. Another major concern about small estate petitions is that even through the exercise of diligence, you may miss an asset you didn’t know about. If there’s any chance there’s an asset or debt that you are not aware of, you will have to come back and amend the petition even after it was approved and potentially have another hearing and another approval process with the above-named parties. In an estate, it is a simple process to update any changes in assets or debts that are discovered after the fact.
Conclusion – Call an estate attorney.
If you want to talk about how to avoid probate or filing a small estate petition, call the probate attorneys at Cornerstone Law Firm. We have experience in administering estates, handling probate, filing petitions of all kinds, and walking you and your loved ones through these processes so that we can be sure to maximize the value of the estate to the beneficiaries.