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

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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.

3 Reasons You Need a Will

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Everyone needs a will. Every year, individuals die without wills, and their families deal with a great deal of unnecessary headache, stress and sorrow because of the unpreparedness of the family member who passed away. But despite the fact that everyone needs a will, many people don’t know why. So here are 3 reasons you should have a will—yes, you!

  1. Wills dictate who takes your possessions.

This is the obvious reason, of course. A will is the document that decides who takes your possessions and your property at the time of your death. Even if your family knows who you were closest to, the law will not necessarily pass your possessions to that person. A will is a necessary and easy way to dictate who will take your possessions upon your passing, and, perhaps more importantly and in some situations, who will not take your possessions when you pass.

  1. Wills determine who takes custody of your minor children upon your passing.

This is one of the more frightening and concerning potential outcomes that a will helps to prevent. When you pass away, a court will be in charge of determining who will take custody of your minor children. A will provides clear and strong evidence of who it is you intended to have your children, and this will be upheld by the courts absent extraordinary circumstances. If you do not do this, your children could potentially be put in midst of a protracted legal custody battle. This is true even if everyone in the family is clear on who should have custody of the children or who you wish to have custody of the children. A court will still have the final say because no will was left to establish who you wished to have custody of your children.

If the other parent of your children is in the picture—married to you, or otherwise sharing custody with you—then this is not as much of a concern; the court will allow custody to the other parent. However, if both of you are to pass away suddenly, this would still be a potential problem that a will can solve. Simply put, when it comes to something as important as custody of your children there is no reason to take any chances.

  1. Wills determine who will be the Executor or Executrix of your Estate.

These may sound like fancy legal terms to many readers, but selecting who will be the Executor (or Executrix if a female) of your Estate is a very important decision. First, in selecting your Executor it is important to consider who will carry out your wishes at your death. Second, in selecting your Executor, you are selecting someone that will make very important decisions if there are ambiguities in your will or situations that you could not have predicted. Your Executor may also be responsible for setting up Trusts for your children if they are still minors and dealing with other details. Third and finally, someone has to take the responsibility to deal with your Estate, and that individual will in all likelihood be paid from your Estate for their time and trouble. Making sure that the person who is going to receive some payment from your Estate is someone you trust, respect and appreciate is important.

Conclusion: Wills are For Everyone

Wills are important for every individual to have. You need a will to handle the affairs of your Estate after your death. But in some cases, a Trust, such as a Revocable Living Trust is a better option. Speaking with an estate planning attorney is important, and it shouldn’t be put off. Call Cornerstone Law Firm today and speak with one of our attorneys about getting started on your will.