A friend or family member passes and you are named as the Executor in the Last Will and Testament. What do you do?
Understanding Key Terms
Codicil. A written amendment to the Will
Decedent. A person who passed away
Estate Administration. The process to settle an estate
Executor or Executrix. Also known as a Personal Representative. The person named in the Will to settle an estate.
Last Will and Testament. A written document directing the distribution of property at death
Letters Testamentary. A declaration from the Register of Wills authorizing the Personal Representative to administer an estate
Personal Representative. Also known as the Executor or Executrix. The person named in the Will to settle an estate
Probate. The official proving of a Will by the Register of Wills
Register of Wills. An elected official in each Pennsylvania county who has jurisdiction of the probate of Wills and granting of Letters Testamentary
Testate. Leaving a Last Will and Testament upon death
Testator. A person who creates a Last Will and Testament
How To Find The Decedent’s Will
The Personal Representative who is named in the Will or the decedent’s surviving family members must find the original Last Will and Testament. To find a decedent’s Will, family members should first search the decedent’s home. Estate planning attorneys advise testators to keep the Will in a safe and secure location. If the decedent had a home office, the Will may be in a desk drawer or filing cabinet. The testator might also store the Will in a safe or a fire-proof box. Contacting the decedent’s bank is another possibility. Sometimes the testator will keep the Will in a safe deposit box. Contacting the decedent’s attorney is an option. Most attorneys will keep an original Will or a copy of the Will at their office.
The Decedent’s Funeral And Burial
When possible, the Personal Representative named in the Will should arrange for the decedent’s funeral and burial instructions that are set forth in the Will. In most instances, however, the Will does not specify the testator’s wishes for funeral or burial, or the Will is retrieved well after the funeral and burial services. In either event, the Estate often pays the funeral and burial expenses. If a family member paid for the services, the Estate often reimburses the family member.
Posting The Decedent’s Passing On Social Media
The Personal Representative may memorialize the decedent’s passing through social media such as Twitter and Facebook. Algorithms within the social networks can cause a person’s profile to pop up in feeds even after the person has passed away. Social media networks offer a profile removal feature, but they typically won’t allow the Personal Representative to access the individual’s account information. Facebook will allow the Personal Representative to create a memorial page that can replace the decedent’s former profile page. Creating a memorial page is an easy way to let friends and family members know about the passing.
Probating A Will In PA – Register Of Wills
The Personal Representative named in the Will usually starts the estate administration process after the decedent’s funeral and burial services. The first step is to probate the Will. To do this, the Personal Representative takes the original Will, death certificate and a petition for Letters Testamentary to the Register of Wills office in the county in which the decedent last resided. At the Register of Wills office, the documents are reviewed, information is entered into the Register’s filing system, and Letters Testamentary are issued.
The Register will issue Letters Testamentary if the Will is valid, a fee is paid, and other requirements are satisfied. Generally, the Will must have been created and signed by the decedent if the decedent was at least 18 years of age and of sound mind when he or she created the Will. Two witnesses must validate the decedent’s signature. This can be done at the time the Will was created by having two witnesses sign with the testator in front of a notary (self-proved Will) or witnesses can attest after the decedent’s death.
Links To Pennsylvania Register Of Wills By County
Types Of Wills
Standard Will (most common). A typed document with essential terms, signed and dated by the Testator.
Holographic Wills. A handwritten document with essential terms, signed and dated by the Testator.
Foreign language Wills. A valid Will in a foreign language offered with a translation.
Will Copy. If the original Will cannot be produced because it is lost or accidentally mutilated or destroyed, a copy might be acceptable. The Personal Representative will have to prove that a diligent search has been made for the original Will and that circumstances exist which explain the non-production of the original Will. The Personal Representative will have to appear for a hearing and offer testimony showing that the original Will was not mutilated or destroyed by the testator with the intention of revoking it.
Non-Resident’s Will. If the original Will was already admitted for probate in another state, the Pennsylvania Register will accept a certified copy of Letters and the Will from the other state.
Pennsylvania Probate Fee Schedule
The Register of Wills has a fee schedule to cover the expense of the Will probate and issuance of Letters Testamentary. The fee varies from county to county and is determined based on a sliding scale of the value of the Estate. The Register of Wills will publish the fee schedule on their website and the fees are usually updated every few years. An estimate of the Register’s fees is anywhere from $150.00 for an Estate valued less than $100,000 and $500.00 for Estate valued at $1 Million. Again, these fees vary.
General Duties Of The Personal Representative
After the Register of Wills issues Letters Testamentary to the Personal Representative, the Personal Representative is now responsible for the estate administration. An overview of the Personal Representative’s duties includes the following:
- Sending proper Notice to Beneficiaries
- Publishing an Estate Notice in local newspapers
- Sending Notice to known creditors
- Gathering and valuing the estate assets
- Completing and filing a Pennsylvania Estate Inventory
- Obtaining an EIN for the Estate
- Opening a checking account in the name of the Estate
- Paying debts and expenses of the decedent and the Estate
- Taking steps to preserve and protect Estate assets
- Maintaining certain insurance
- Preparing and filing the REV-1500 (Pennsylvania Inheritance Tax Return)
- Preparing and filing a Federal Estate Tax Return, if required
- Preparing and filing the decedent’s final Income Tax Return
- Prepare an informal or formal Estate Account
- Distributing the Estate assets
- Closing the Estate
These are just some of the many duties and responsibilities of a Personal Representative. Many estates have unique issues and the Personal Representative is responsible for handling or resolving all tasks and situations that may arise.
Hiring A Pennsylvania Estate Lawyer
Since the Personal Representative must strictly comply with the terms and provisions of the Will and must comply with Pennsylvania law, there may be serious legal consequences for Personal Representatives. Some of the applicable laws can be found in the Pennsylvania Probate, Estates and Fiduciaries Code. Personal Representatives are considered fiduciaries in Pennsylvania. A fiduciary is held to the highest standard of loyalty and care that the law provides, so he or she must act solely for the benefit of the Estate and the Estate’s beneficiaries. Breach of fiduciary is a cause of action that can result in the Personal Representative’s personal liability. For these reasons, it is strongly advised for the Personal Representative to hire an estate attorney for guidance and help throughout the probate and estate administration process.
Pennsylvania Probate Fee Schedule – Attorney Fees For Estate Settlement In PA
Estate attorneys are entitled to “reasonable compensation” for their services. Estate attorneys typically charge an hourly rate, or they will charge a percentage fee based on the value of the Estate and the types of assets in the Estate. For hourly services, attorneys will often request an advance retainer payment to cover some or all the anticipated fees. The attorney will usually send the Personal Representative a monthly invoice, detailing the work performed, the time spent, and the fee for that month.
Percentage fees can vary, but the overall fee must be reasonable. One example of an attorney percentage fee schedule was described in the case of In re Johnson Estate, 4 Fid.Rep.2d 6, 8 (O.C. Del. Co. 1983). The judge considered the following fee schedule to be reasonable compensation for attorney’s services:
|Value of Estate||% of Estate||Fee||Total|
|$0.01 to $25,000.00||7%||$1,750.00||$1,750.00|
|$25,000.01 to $50,000.00||6%||$1,500.00||$3,250.00|
|$50,000.01 to $100,000.00||5%||$2,500.00||$5,750.00|
|$100,000.01 to $200,000.00||4%||$4,000.00||$9,750.00|
|$200,000.01 to $1,000,000.00||3%||$24,000.00||$33,750.00|
|$1,000,000.01 to $2,000,000.00||2%||$20,000.00||$53,750.00|
|$2,000,000.01 to $3,000,000.00||1.5%||$15,000.00||$68,750.00|
|$3,000,000.01 to $4,000,000.00||1%||$10,000.00||$78,750.00|
|$4,000,000.01 to $5,000,000.00||0.5%||$5,000.00||$83,750.00|
In addition, there are set percentages for certain other actions
|Regular commission P.O.D. bonds and trust funds||0.5%|
|Non-probate assets up to $1,000,000.00||1%|
|Transfer joint accounts||3.5%|
|Assets which are taxable at one-half value||3.5%|
|Joint accounts fully taxable||Full commission|
The Personal Representative and the estate attorney are free to negotiate a reasonable hourly rate or a percentage fee. The Personal Representative should make sure the fees are memorialized in a letter of engagement with the attorney. Attorney’s fees are expenses of the Estate and should be listed as a deduction on the inheritance tax return to reduce the overall inheritance taxes.
Documents Needed For Proper Estate Administration in PA
The Personal Representative and the estate attorney will need to locate and produce documentation that will be needed for the estate inventory, inheritance tax return, and the estate Account. These documents include, but are not limited to the following:
Original Last Will & Testament of the decedent
Death Certificate (multiple originals)
Copies of any stock or bond certificates that the decedent may have held outside of a brokerage account
Partnership Agreement, Shareholder Agreement or Operating Agreement
Deed to Real Estate
Title to Motor Vehicles
IRA, Pension, or other retirement plans statements
Life insurance policies
Most recent state and federal Income Tax Returns (Form 1040)
Gift Tax Returns (Forms 709)
List of all personal property the decedent owned with its estimated value
Safe deposit box numbers, location and inventory
Any other evidence of assets the decedent owned not otherwise noted above
Searching For Applicable Assets When Settling An Estate in PA
To find the Estate assets and liabilities, the Personal Representative should contact the U.S. Postal Service and arrange for the Postal Service to deliver the decedent’s mail to the Personal Representative. The mail may include the decedent’s monthly bank statements, brokerage statements, life insurance statements, mortgage statements, insurance bills, etc. This process is still useful, but less reliable since most people utilize online services with no paper trail.
The Personal Representative should also consider accessing the decedent’s email accounts. Instead of paper statements arriving through the Postal Service, most people receive electronic statements. Since email is so regularly accessed, there’s a chance the Personal Representative will find that the decedent’s email account is already logged in. If not, then the Personal Representative may have to contact the decedent’s employer for email access or a company such as Google or Apple for email access.
Other ways a Personal Representative can find assets of the Estate include a physical search of the decedent’s home or place of business, review of the decedent’s income tax returns for prior years, and a search of the decedent’s safe deposit box.
Filing The Rev-1500 (Pennsylvania Inheritance Tax Return)
In Pennsylvania, decedents’ estates are required to file a Pennsylvania Inheritance Tax Return (Form REV-1500). A Pennsylvania Inheritance Tax Return should be filed on behalf of any decedent who resided in Pennsylvania at the time of his or her death or owned an interest in reportable property that is subject to inheritance tax, such as real estate in Pennsylvania.
The Pennsylvania Inheritance Tax applies to a decedent’s estate regardless of its size and the rate varies, depending on the decedent’s relationship to the beneficiary. In 2020, the rates are as follows:
- Spousal Rate = 0%
- Lineal Rate (children, grandchildren, etc.) = 4.5%.
- Sibling Rate = 12%,
- Nieces, nephews, and other beneficiaries = 15%.
Some property is exempt from the PA Inheritance Tax altogether such as life insurance proceeds and certain retirement plans.
The REV-1500 must be filed within nine (9) months of the date of death unless an extension is applied for and granted by the PA Department of Revenue. Late returns are subject to penalties and interest. If an estimated tax payment is made within three months of death, a five percent (5%) discount on the tax due will apply.
In order to determine the amount due under the PA Inheritance Tax, a Personal Representative must ascertain the value of the decedent’s assets as of the date of death. Estate expenses, funeral and burial costs, probate fees, attorney’s fees and the family exemption are just some of the potential deductions. Once the estate is valued and deductions are taken, the Personal Representative calculates the tax due using the proper rate.
How To Close An Estate In Pennsylvania
Pennsylvania Family Settlement Agreement
There are two ways to settle and close an estate. The quick and inexpensive option is for the Personal Representative to prepare a Family Settlement Agreement for the heirs of the estate to approve and sign. A Family Settlement Agreement is a legally binding contract that should include an informal account of the assets, liabilities, expenses of the estate and a proposal for distribution of the remaining assets. A Family Settlement Agreement should be comprehensive and include important legal provisions for the protection of the Personal Representative. For example, the Personal Representative will want the family members to agree to indemnify and hold harmless the Personal Representative for any honest mistakes or inadvertent errors during the estate administration process. Other common provisions include an agreement for attorney’s fees, Personal Representative fees, and the division and distribution of the estate assets.
Another option is for the Personal Representative to prepare and file a Formal Account and Statement of Proposed Distribution with the Orphan’s Court. There are specific legal requirements when proceeding with this option, such as providing notice to all interested parties of the date when the Account will be presented to the Orphan’s Court along with an opportunity for any party to object to the Account. A Formal Account is a detailed, written document of all assets, expenses and transactions of the Estate. When the Orphan’s Court receives an objection from a party, the Judge will schedule a hearing date at which time the party will explain the reasons for the objection. The Orphan’s Court will then determine if the Estate can be distributed pursuant to the Statement of Proposed Distribution or if there is an issue with the Formal Account that must be resolved. If there are no objections to the Account, the Personal Representative can settle and close the Estate. The Estate cannot be closed until all objections are resolved to the satisfaction of the Orphan’s Court.
Five Common Mistakes By The Personal Representative
- Not hiring a Pennsylvania Estate Attorney. While the Personal Representative is empowered by the court to handle the estate administration, the inexperienced Personal Representative may not be fully aware of his or her duties and can make inadvertent mistakes which can cause unnecessary problems. These mistakes can be avoided with the help of a Pennsylvania estate attorney.
- Preparation and Timely Filing of the REV-1500 (Pennsylvania Inheritance Tax Return). An estate attorney can assure compliance with the calculation and reporting of the Inheritance Taxes. Preparation of and filing of the Inheritance Tax Return is complex, so an estate attorney’s assistance is invaluable.
- Failure to Discover all Estate Assets and Liabilities of the Decedent. By failing to identify all assets of the decedent, the Personal Representative has failed to comply with a basic fiduciary duty. Failing to identify and value every asset the estate has can have negative results when filing estate taxes, as tax returns may be inaccurate, which may then require amendment and the paying of penalties and interest. Additionally, if assets are missing or misidentified, there could be problems distributing the proper assets among beneficiaries of the Will. In addition to the obvious assets of the estate (house, car, personal belongings, etc.), assets may be “hidden” in safe deposit boxes or “under the mattress.” Stock accounts, life insurance and retirement plan information may be difficult to locate.
- Failure to Properly Divide and Distribute Estate Assets. The Personal Representative cannot substitute his or her own wishes for those made by the testator. For example, if three children are beneficiaries and one is getting more than the other two under the terms of the Will, the Personal Representative cannot ignore the testator’s intentions and do what the Personal Representative thinks is fair. Personal Representative’s face personal liability if the Personal Representative fails to comply with the terms of the Will.
- Failure to Comply with Pennsylvania Law. Pennsylvania has a requirement that heirs must be notified of the estate administration within three months. The purpose of the notice to estate requirement is to inform those who may have a beneficial interest in the estate, but the notice does not guarantee that the beneficiary will receive any money or property. After the notices are given, a certification must also be filed with the Register of Wills. If this certification is not properly and timely filed by the Personal Representative, the court will be notified of such delinquency. Additionally, Personal Representatives are responsible for sending notice to estate creditors and other interested parties under Pennsylvania law. The notice to creditor requirement provides certain parties with an opportunity to state a claim to estate assets in satisfaction of a debt that is owed. For example, if a debt is owed to the PA Department of Public Welfare, the estate recovery program may enable recovery from the estate for the time nursing facility services or home and community-based services were received by the decedent. It is important to understand that failure to provide proper notice to estate creditors can subject the estate and the executor to liability. There are many other legal requirements that Personal Representatives must adhere to when settling an estate.
Get Help With Settling An Estate in PA – The Martin Law Firm, P.C.
The Martin Law Firm estate attorneys routinely represent Personal Representatives in estate matters. We handle matters in the Register of Wills and Orphans Court in Montgomery County, Philadelphia County, Bucks County, Delaware County and Chester County. If you have been named in someone’s Last Will and Testament to serve as the Personal Representative of an Estate, please contact us today at 215-646-3980.