By Timothy S. Barkley, Sr. October 2017.
Uncle Herman has just died, and you have been duly selected as the Executor of his Last Will and Testament. Hopefully, you were forewarned. Congratulations.
You must marshal, preserve, and distribute the assets of the Estate in accordance with the terms of the Will and the Law; and treat creditors, beneficiaries, and the taxing authority impartially. This can be no small feat.
If you are also a “legatee” – that is, a beneficiary of the Will – you have an inherent conflict of interest, since you must (a) make sure all legitimate creditors are paid, while (b) hoping your own inheritance is not diminished. While this sounds simple enough for a reasonably moral individual, there are times when the issues are not clear or your judgment is clouded, and it becomes difficult to reconcile your interests and your obligations impartially.
To open the estate, you will file paperwork with the Register of Wills of the County in which Uncle Herman died domiciled. The Petition for Probate and supporting documentation, including bond and notice for publication in the newspaper, suffice to open the Estate and, hopefully, provide for you to be appointed as Personal Representative of the Estate and thus as Executor of Uncle Herman’s will.
These two terms are used somewhat interchangeably. A “Personal Representative” or “PR” is the person who represents an estate. An “Executor” executes a will. If there is no will, the estate of the deceased will still be represented by a “Personal Representative.”
Marshaling the assets of the Estate is simple if Uncle Herman kept a detailed, up-to-date list of his assets and liabilities, but can resemble the proverbial Gordian knot if he didn’t. All cash assets must be transferred to an Estate account. Securities (stocks, bonds, mutual funds) must be retitled in the name of the Estate. Real estate need not be retitled, but should be administered with the obligations of the Executor paramount. Beneficiaries can reside in Estate real property, but only if consonant with the terms of the Will. Tangible personal property (“stuff”) must be inventoried before the beneficiaries remove it from the premises, and valued for tax and probate accounting purposes.
Preserving the assets of the Estate requires keeping them insured, exercising reasonable care with personal property, and carefully tracking the receipt and expenditure of Estate assets for Estate purposes. Every dollar or item must be accounted for, and any discrepancies are resolved against the Executor. This writer advises his Executor clients not to make any expenditure or distribution without consultation, and to keep every slip of paper.
Within three months of the opening of the estate, you must file an Inventory showing all assets, valued as of Uncle Herman’s date of death. You must also file a statement of any assets of which Uncle Herman was joint owner and any retirement assets, if these are distributable to anyone other than a spouse, child or descendant of a child, sibling, parent or grandparent and thus subject to tax.
All creditors’ claims must be received within six months from the date of Uncle Herman’s death. Any claim not filed by that date is time barred. An important exception is for claims of the Department of Health and Mental Hygiene, which can be filed at any time up to six months from the date notice of the opening of the estate is published.
If you pay any creditor without receiving a properly and timely filed claim, you are personally liable to the Estate for that amount if contested by another creditor or beneficiary. You need to decide which claims are to be paid, and which are to be disallowed. If you disallow a claim, the claimant might take you to court to try to get paid over your objection.
Within nine months of the opening of the Estate, you must file an Accounting, showing the gains and losses in value of assets, all receipts and disbursements, and distributions to beneficiaries during the Estate process. Again, every asset and every dollar must be accounted for, sometimes a significant burden in an active Estate or an Estate with many creditors and beneficiaries. State and federal death taxes are due by this date, and probate fees are paid with the Accounting. You will also petition the Orphan’s Court for your commission and the attorney’s fee.
Uncle Herman’s income taxes must be prepared and filed at their usual due dates. If the Estate earns more than $600 in taxable income, the Estate’s tax returns must be prepared and filed.
Assuming that all creditors, beneficiaries and the taxing authorities are satisfied, and all Estate business is completed, the Estate is then closed. If there is still outstanding business, however, the estate remains open and Accounts filed every six months until the estate administration is complete.
Even if everything wraps up nicely, nearly a year of your life will have passed, and, if you are like many, you are now considering how to avoid placing this burden on your family upon your death.
Attorney Tim Barkley
The Tim Barkley Law Offices
One Park Avenue
P.O. Box 1136
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