The Role of the Executor


The Role of the Executor

An Executor’s task is helping to administer an estate. There is a distinction between someone who passes away without a Will, and somebody who passes away with a Will. 

What Happens If You Die Without A Will

Somebody who passes away without a Will dies intestate, needs a personal representative to handle their estate. The personal representative is appointed by the court after petitioning the court to become appointed. There is analysis done to help the court decide who would be the right person to administer the estate. It could be the spouse of the deceased, or the children. If it is one of the children, they need to agree on which sibling is suited to be a personal representative. Once this is finalized, the estate administration process can go ahead.

If somebody dies and has a Will, the executor would be named in the Will. The executor needs to take the Will to the courthouse and petition to be legally appointed as the executor. The court will issue the executor with the paperwork required. Only then, the executor can progress with duties assigned to them under the Will. Bear in mind that if you are named in a Will, it does not mean you have permission to act on behalf of the estate. The Will must be accepted by the court and the proper paperwork is granted by the courthouse, and given to the person who is the executor to take action, which can be overwhelming.

If you have lost a loved one, there is no rush to get to the courthouse for at least a week thereafter. As a family, you need to allow yourselves time to grieve and take care of urgent matters. However, when you are ready, contact us to schedule a free consultation. In this way, we can ascertain how to help you. Click HERE to schedule a consultation or call us at 724 546 4227.

The First Step

Sometimes, the loss of a loved one does not require legal assistance, but more often than not there are things we can do to help you from a legal standpoint. While some executors choose to administer the estate themselves, most executors hire a law firm to help with the court process. It is complicated when determining how the inheritance gets to the right people and paying the inheritance tax correctly. Getting the inheritance to the right people and paying the inheritance tax correctly and in a timely fashion can be daunting.

When we have our consultation with the client, we determine if an estate needs to be opened. After being hired by the client, we schedule a time to go to the courthouse to get the executor sworn in. The executor gets the paperwork after being sworn in, so they can carry out their duties. In the first few weeks there is a lot to be done. Advertising in the newspaper and notifying beneficiaries should be done first.

In Pennsylvania, creditors have one year to file a claim against an estate. The estate is a temporary entity to manage the finances and assets, and to get the assets to the right place. While the Will states that everything goes to the kids, there may be people who have a priority over the kids. If the deceased has creditor issues or final medical expenses, or if they owe money on the mortgage, those creditors may take priority claim on the estate. The executor needs to make sure the creditor claims are accounted for and properly distributed.

What is Inheritance Tax?

The next task is for the executor to gather the assets, in terms of establishing what the decedent owned. The estates assets do not belong to the executor, but the executor is in control of these assets. Once the executor has established the value of the estate, one can gauge what the inheritance tax value. The tax rate depends on the relationship the person had to the decedent. The rate of 4.5% applies to lineal descendants and 12% for siblings. For anybody else receiving an inheritance, the rate is 15%.

We suggest that the executor makes an advance payment on the estimated amount of tax due if they are able to. This is a 5% discount offered on the total amount due, if the inheritance tax is paid within the first three months. The inheritance tax is not actually due to be paid until 9 months after the death. Often the amount paid at 3 months, is only an estimation. If there is a balance, it can be paid later. When the Pennsylvania Inheritance Tax Return is filed, the paperwork is sent to Harrisburg. It could be six months before it is processed, but once it’s processed, it will be confirmed whether the amount paid is correct, or if there is an amount owing, it is confirmed and must be paid. 

What is an Estate Recovery Claim?

If a person is in a nursing home before passing away, the state may have a valid estate recovery claim against their house.  It is possible to be on medicaid while being broke, and still own a home.  When the person dies, their home ends up in an estate. The executor could be forced to sell the house, since the state needs financial reimbursement. This is because the care provided in the nursing home was funded by Medicaid, and paid by the state.

Since creditors have 12 months to file a claim, the executor cannot make any distributions to the heirs until all creditor claims are paid. If any distributions are made before the 12 months, the executor is personally liable to pay the creditor if there is no money left.

Rather Be Safe than Sorry

After approximately 15 months have passed, the tax should be pain in full. At this stage distributions are made to the heirs. The preferred method of distribution is by means of a Family Settlement Agreement. Everyone due to receive an inheritance, signs this agreement wherein they acknowledge the estate value. The heirs also acknowledge the amount that creditors were paid, as well as the amount they will inherit. When distributions are done, the estate is closed. The executor’s job is essentially complete.

Asking a person to be the executor, means that they must set aside a lot of time to administer the estate. Choose your executor wisely. 

For more information on this, please visit our website where you will find many free resources. Click HERE to download our Estate Administration guide to help you understand the process. Take a few minutes to watch this video too or listen to the podcast HERE.