Here are the answers to some questions that clients frequently ask about Estate Administration & Probate. These FAQs are provided for general information only and are not intended to be relied upon as legal advice. For a consultation, please contact us.
Probate is the process whereby a deceased persons affairs are concluded and the estate property is transferred to their beneficiaries. Probate is also known as "estate administration," and it is managed by the individual or institution appointed as executor or administrator of the estate.
Generally, the tasks to be completed during the probate process include:
- obtaining “letters of administration” or “letters testamentary,”
- providing notice to creditors and beneficiaries,
- gathering, safeguarding, and keeping inventory of the assets of the deceased,
- ensuring all necessary taxes are paid, including death taxes and income taxes, and
- distributing assets to the beneficiaries in a manner consistent with the wishes of the deceased.
A revocable living trust is an estate plan that is marketed nationwide by many businesses and attorneys. The main benefit of the revocable living trust is that, if executed 100% correctly, it can avoid probate proceedings. In Pennsylvania, unlike many states, probate is a relatively inexpensive, simple and painless process, and there is no reason to avoid it. Thus, a Pennsylvania resident is generally not served well by having a revocable living trust, which can be expensive and cumbersome to set up.
Revocable living trusts do not save any taxes. Many salespeople sell these trusts with the false promise of tax savings, and it simply is not true in Pennsylvania.
There are instances when a person should consider implementing a revocable living trust, but it is a very situation-specific decision, which should be made with the input of a qualified estate planning attorney. Revocable living trusts are not a one-size-fits-all estate plan.
If the assets of an estate are insufficient to pay its debts (including taxes and administrative expenses) the estate is considered “insolvent.”
One of the responsibilities of an executor (or administrator) is to ensure that the debts of the deceased are paid. Pennsylvania law provides a strict order of priority for paying debts when an estate is insolvent, and creditors must be paid in that order.
For insolvent estates: it is important to understand the following:
- The costs of administering the estate, including legal fees and executor commissions are paid before other debts.
- Administering an insolvent estate can be more complicated than administering an estate with lots of assets.
- As long as the estate is administered properly according to law, the executor is not personally responsible for paying the debts of the deceased person.
- If the executor administers the estate improperly, or pays the wrong debts, they can be held personally responsible for the unpaid debts.
As with any estate, it is very important to contact an attorney for assistance.