INFORMATION ABOUT ESTATE ADMINISTRATION AND PROBATE

There may come a time, unfortunately, when you are called upon to act as the personal representative of a relative or friend who has passed away. In that capacity, you will be responsible for locating all the decedent's assets, paying legitimate bills and expenses and distributing the remainder of the estate according to the terms of the decedent's Will, or the state's intestacy laws if there is no will.

We hope that the questions and answers presented here will assist you in familiarizing yourself with the issues and terms associated with Estate Administration and Probate. While the material below attempts to answer common questions in this area, state and local laws may significantly modify the facts set forth. Because all legal problems are unique, nothing provided here is a substitute for the advice of competent counsel. We strongly urge you to consult with an attorney licensed to practice in your state about any particular legal problem you may have.

WHAT IS ESTATE ADMINISTRATION, AND WHEN IS FORMAL ESTATE ADMINISTRATION REQUIRED?

"Estate Administration" includes procedures and requirements relating to collecting assets, satisfying obligations such as debts and expenses, tax preparation and filing, and distributing property to heirs and beneficiaries. In almost every case when a person dies owning personal property or real estate, an estate must be opened and many papers must be filed.

WHAT IS PROBATE?

Probate is a court proceeding which accomplishes several things: It validates your Will or establishes that you died without one. It appoints and empowers your personal representative to act for your estate. It makes sure that expenses, taxes, family allowances and debts are paid in the order provided by statute. It identifies your beneficiaries and heirs and sees that your property is distributed in accordance with your Will or the intestacy (when you die without a Will) laws. Some disadvantages of probate are (i) publicity, since a detailed inventory of the property of the estate with value information must be filed, and (ii) possible delay in identifying and paying debts, filing and obtaining court approval of inventories and accounts, preparing, filing and obtaining IRS approval of estate tax returns, and effectuating the transfer of title of assets to the estate and then again to heirs and legatees.

HOW CAN I AVOID HAVING MY ESTATE PROBATED?

Except in the most simple estates, it may not be possible to entirely avoid some form of probate proceeding. It will usually be necessary to have a personal representative appointed to administer an estate and to deal with property transfer and tax issues. In many states, estates with personal property having a total value of less than $10,000.00 can be administered using a simplified "small estate" procedure. If only a car is involved, there is usually a provision for transferring title to the surviving spouse or heirs without administration. The use of joint and survivorship forms of ownership through which property passes directly by operation of law to designated beneficiaries will also help to avoid probate.

Another popular planning tool to avoid probate is the revocable living trust. To create a living trust, you (the "grantor") transfer assets to another person (the "trustee", who may also be you). The trustee owns legal title to the property and manages it for the benefit of the beneficiary (who may also be you). At the time of your death, since there are no assets in your estate because they were previously transferred to your trustee, there is no probate proceeding. The benefits of having a revocable living trust varies from state to state. Revocable living trust arrangements are not appropriate for everyone and should not be entered into without advice from an estate planning professional. In many states, while there may be no official probate, the use of a revocable living trust does not avoid payment of inheritance taxes.

I HAVE BEEN NAMED PERSONAL REPRESENTATIVE OF AN ESTATE. WHAT SHOULD I DO?

If you have been designated to serve as the personal representative of a decedent's estate under his or her Will, or by your rights as an heir if there is no Will, you should first retain an attorney experienced in probate matters to assist you to get qualified by the court to act as the decedent's personal representative. Once this is accomplished, your attorney will help you identify the decedent's assets and verify the decedent's debts and obligations. Your attorney will also help you prepare any necessary tax returns and documents required by the court during probate. Finally, your attorney will assist you in distributing the decedent's estate as directed by the Will or in accordance with the laws of intestacy.

WHAT IS A REASONABLE AND CUSTOMARY FEE FOR THE EXECUTOR OF THE WILL?

Customary fees for the person to administer a decedent's estate may vary from state to state. Pennsylvania and many other states have set guidelines for a reasonable amount a personal representative administrator may receive. For example, in Pennsylvania, a reasonable fee for an estate not exceeding $100,000.00 is five percent (5%) of the probated estate. The personal representative's fees are paid from the estate and generally must be approved by the court. Because standards concerning personal representative's fees may vary from state to state, you should seek local counsel.

HOW IS MY ATTORNEY PAID?

The fee of the attorney representing the personal representative is an expense of the estate and paid out of estate assets. Normally the court has to approve your attorney's fee. Depending on where you reside, your attorney's fee may be a percentage of the gross estate or your attorney may charge by the hour for the time spent working on the estate. Occasionally, the attorney will enter into an arrangement with you to handle an estate matter on a "flat fee" basis, where one flat, predetermined fee is paid for the representation.

If you or someone you know is concerned about the administration of an estate, a DESSEN, MOSES & ROSSITTO attorney will be happy to review the facts for you. Just press the button below to submit a factual history form.

If you have other questions or comments about the area of Estate Administration and Probate or any other area in which we practice, please send us an E-mail message with your questions or comments and we will be happy to try to assist you.

LINKS TO OTHER INTERESTING INFO

Federal Estate and Gift Tax Code
Metlife Online
Plan Your Estate
State Estate and Probate Laws
Tax Code Online

Information found at this Web site is for general informational purposes only and is not intended to be legal advice or the rendering of a legal opinion. DO NOT assume that anything contained in these Web pages answers your specific legal problem. Each legal situation is unique. You should seek independent legal advice and counsel regarding any specific legal problem you may have.