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Probate is the formal procedure by which an executor or administrator is appointed to oversee the administration of an estate. When a person dies and leaves assets, those assets will go into probate. This requires legal paperwork and filings and may necessitate court proceedings and litigation. These proceedings basically ensure that everything is done right – that all debts are paid and that the remaining assets go to the correct people.
An executor is the person named and appointed to be in charge of the estate administration. However, you also have the option to defer the responsibility to someone else. In an estate in which there is not a will, the individual appointed is called an administrator. The executor or administrator will organize a decedent’s financial and personal documents, locate assets, identify creditors and manage the estate until distribution is made to the heirs. An estate attorney will assist the executor and administrator in these duties. An executor/administrator may also take a fee for his/her duties.
Inheritance Tax is a state tax charged by Pennsylvania on the transfer of assets from an estate to beneficiaries. The tax rate is a percentage based on the relationship of the beneficiary to the decedent. The inheritance tax applies not only to estate assets that pass by will or probate, but also to transfer of assets that are not controlled by the will. The tax payment is due 9 months after the date of death, but is eligible for a discount if paid within 3 months of the date of death.
If you are a beneficiary under a will, a beneficiary of a decedent who died without a will, a beneficiary of a trust, or if you are receiving money or property upon the death of the decedent as a surviving joint owner, you should contact Evashavik Law, LLC to see if you are required to file an inheritance tax return or pay any inheritance tax.
Debts owed solely by a decedent such as medical bills, credit card balances and funeral expenses, are to be paid from probate estate assets. An executor/administrator does not have to pay any bills out of his/her own pocket. An executor/administrator is not personally responsible for any bills or debts of a decedent. If the executor/administrator or a family member pays these debts, they may be entitled to reimbursement.
When there is no will specifying the beneficiaries, the law of Pennsylvania will determine the heirs. The list of heirs starts with family members (ie.: spouse and children, parents, siblings, uncles, aunts, and other relatives more distantly related.) Infrequently, if there are no qualifying heirs, the estate goes to the Commonwealth of Pennsylvania.
A will gives a person the opportunity to decide what happens to his or her assets after his or her death. It is important to decide who will receive your assets after death and to decide who will be in charge of handling your estate. A will can also designate who will be the guardian of your minor children.
Your will does not get filed or recorded until after your death. Keep your original signed will in a safe place and make sure your executors know where to find it. Our office maintains a fireproof safe if you would like to store your will with us.
It is a good idea to review your will periodically with a lawyer to ensure that it still accurately reflects your wishes. It is especially important to review your will when circumstances change, for example, if a spouse or child dies or you get a divorce.
Certain types of assets should have specific beneficiaries designated (life insurance policies, annuities, IRA accounts, 401(k) accounts, etc.). A beneficiary designation means naming the person or persons who will receive that specific asset upon the death of the owner. It is important to properly name the beneficiaries so that the right person or persons receive the asset after the owner's death.
If you want the bank accounts to pass to your child or children after your death, and you do not want the accounts controlled by your will, you may want to have the accounts titled as "in trust for" or “transfer on death”. This may avoid probate, but it may not completely avoid the payment of inheritance taxes. You should call Evashavik Law, LLC to discuss the advantages of jointly titling assets.
A power of attorney is a legal document in which you give authority to someone else to handle financial matters for you (such as making deposits, writing checks, selling assets) and/or to make medical decisions for you. If the power of attorney is durable, it will remain valid even if you become incapacitated. Having a power of attorney does not take away your authority. It only enables someone else to act for you, if needed, which is why it is important to choose someone you trust as your agent.
The laws on powers of attorney have changed, so if you currently have a power of attorney call us for a free consultation to determine if you need to update it.
A living will indicates to doctors, hospital personnel, and to your family what medical treatment you want or do not want in the event that you have an end-stage medical condition and/or are permanently unconscious. Having a living will can make it easier for your family to handle end-of-life decisions.
Living trusts are usually revocable which means it can be cancelled. However, a trust can also be irrevocable (noncancellable). It is important to know which type of trust is best suited for you, if a trust is needed. A revocable living trust will not usually eliminate inheritance taxes.
No, you do not have to return to the same lawyer who drafted the will to handle estate administration matters. The attorneys at Evashavik Law, LLC can provide you with the advice and services you need for all issues regarding an estate in an efficient and cost-effective manner.