After you pass away, your property will be distributed and transferred to other people. An executor or administrator will take charge of this process, which is known as estate administration. The way your estate administration proceeds depends on several factors, including any planning you have done beforehand.
What Happens During an Estate Administration
In Pennsylvania, the Register of Wills determines who will serve as executor or administrator of an estate. When the decedent (the person who died) left a Will, the person named in the Will serves as executor unless they are disqualified or decline to serve.
The process is a little more complicated when the decedent died intestate, which means he or she did not leave a Will. Usually, one of the decedent’s relatives is named the administrator of the estate based on the list provided in Pennsylvania law.
Executors and administrators have the same job to perform. However, the executor is directed by the decedent’s Will when distributing probate assets to heirs. The administrator must follow the intestacy laws of the state in which you lived when you died.
It’s important to understand how assets pass from the decedent to his or her beneficiaries during estate administration.
Probate Property vs. Non-Probate Property
Assets owned only by the decedent usually become part of the probate estate for the executor or administrator to manage. But some property transfers to beneficiaries by other, non-probate, means.
· Property owned by a trust is managed by a trust, whose job is similar to the executor or administrator.
· Jointly-owned property passes directly to the co-owner. However, joint ownership with someone other than a spouse has its dangers and should be carefully considered.
· Accounts with named beneficiaries transfer directly to the beneficiary after the account owner dies.
Probate is not always a lengthy process, and non-probate assets transfer slightly faster than probate assets. By using non-probate transfers, however, the estate loses some of the protections offered by Wills and trusts.
Wills, Trusts, and Non-Probate Transfers
Wills and trusts direct the distribution of a decedent’s property. They can also protect your beneficiaries in situations like the following:
· Beneficiaries under age 18 require the appointment of a legal guardian of their estate.
· Some beneficiaries may lack the maturity to handle a large inheritance.
· Irresponsible beneficiaries of any age may need help managing their funds.
· Disabled beneficiaries may lose public benefits like Medicaid and SSI if they receive their inheritance directly.
A properly drafted Will or trust can include provisions to avoid these problems. In fact, having an estate plan in place before you pass away could make estate administration easier for your executor and your family.
Estate Administration Duties
Executors and administrators typically have to do the following when handling an estate:
· Find and notify beneficiaries.
· Locate and gather the decedent’s property.
· Evaluate the property to see if it belongs in the probate estate.
· Manage estate assets, which may include paying for maintenance and insurance.
· Pay the decedent’s debts.
· Distribute probate assets to beneficiaries.
Before finalizing an estate administration, the executor or administrator also has to address any tax problems.
For example, Pennsylvania imposes an inheritance tax on property transferred through an estate, except for life insurance proceeds. Rates vary based on the relationship between the decedent and beneficiary:
0% — spouses and charities
4.5% — lineal descendants (parents, children, grandchildren )
12% — siblings
15% — anyone else
Federal inheritance taxes may also apply. Since the 2021 federal estate exemption is $11.58 million, your estate will not be affected unless it exceeds the exemption amount.
We Can Help with Estate Administration Issues
Someone will take charge of your estate after you are gone. Dying without a Will or trust means your estate will pass according to Pennsylvania state intestacy laws, without regard to your individual preferences. Leaving a Will or trust allows you to state how you want your assets to be distributed and provisions are included to protect your heirs.
At Slutsky Elder Law, we often help clients safeguard their futures through powers of attorney, estate planning, and guardianship proceedings.