The death of a loved one comes with grief that is compounded by the stress of end-stage medical decisions and planning a funeral. What follows – the administration of the estate – requires patient attention to details regarding money, real estate, insurance and taxes.
Navigating those details properly will ensure that you avoid penalties from the government and disputes with your family. This is the tale of two estate executors.
After Peter’s mother died, he searched the internet for instructions on what to do next. He found references to probate and non-probate property, testate and intestate estates, inheritance taxes and final accountings. What was missing was a glossary to explain the meaning of these terms.
Deciding to take action, Peter went to his mother’s bank because bills were arriving in the mail and he would need to sell her house. Even though Peter was the agent under his mother’s Power of Attorney, the bank explained that it was no longer valid, because a Power of Attorney ends at the death of the person who created it.
The bank told Peter he would get the authority he needed to access his mother’s money by going to the Register of Wills and starting the probate process.
Peter’s luck did not improve when he arrived at the office of the Register of Wills. He brought copies of his mother’s will, but the register’s office told Peter he would need the original will, an original death certificate, an estimate of the value of the estate, and the names and contact information for his mother’s heirs.
After searching high and low for these documents, calling the funeral director for the death certificate and trying to make an inventory of his mother’s property, Peter returned to the Register of Wills.
Peter provided the original documents and an estimate of his mother’s estate that included her IRA, 401(k) account and life insurance policy. Peter would only learn later than such accounts with beneficiary designations are not part of the probate estate. By including them in the inventory, he drove up the probate fees assessed by the Register of Wills, and no refunds will be provided when the inventory is corrected.
After Peter explained his mistake to his sisters, one of them consulted an attorney, who explained that Peter owes a fiduciary duty to his mother’s beneficiaries. Breaching that duty can lead to Peter being personally responsible for losses he caused to the estate.
Wendy wasn’t only calling the funeral home after her mother’s death. She also contacted the post office to forward her mother’s mail to Wendy’s address. She removed unused medications from her mother’s house and secured valuable personal items. She hired a landscaper to keep the lawn and flowers in good shape in the time leading up to the sale of her mother’s house.
Having settled her father’s estate a few years earlier, Wendy knew she was starting a marathon of administrative tasks. Her most important call was to an elder law attorney.
Wendy gathered her mother’s original will and original death certificate, and contact information for all beneficiaries and other family members. Wendy’s attorney reviewed the original documents. Wendy’s mother had spent time in a nursing home, but the attorney ensured that the death certificate correctly listed her mother’s county of residence. Knowing that the Pennsylvania Orphan’s Court rules require notice to be provided to beneficiaries and family when an estate is opened, Wendy’s attorney started completing the notices that would go out after the estate was opened for probate.
Like most people, Wendy’s mother had no longer been receiving paper bills or statements in the mail from her utility companies, investment firms or insurance companies. Wendy knew that her mother used an email account and paid some bills online. Because the Pennsylvania legislature has not yet passed legislation to streamline access to these “digital assets,” Wendy searched her mother’s house for paper records and her attorney made plans to request access to email and electronic bank records as the executor of the estate. Without that access, Wendy and her attorney might not know about every account held by her mother and every bill that needed to be paid.
Because Wendy did not know every account held by her mother, her attorney prepared a conservative estimate of the value of the estate. The attorney knew that the inventory of the estate would be updated later, and any additional probate fees could be paid then. For now, it made no sense to pay higher probate fees because of assets that may not exist.
Unlike Peter, Wendy’s attorney knew not to include in the value of the estate any retirement accounts or insurance policies that would pay out to a beneficiary according to an agreement. Those contractual matters are resolved outside of the probate process.
As Peter was frustrated and searching the internet for the process to resign as executor, Wendy’s attorney finished opening the estate with the Register of Wills. The attorney then arranged for a notice of the estate to be published in the local newspaper and a legal publication.
Wendy’s attorney knew this publication started the clock running for creditors to come out of the woodwork and claim that Wendy’s mother owed them money. Wendy’s attorney started preparing the required inheritance tax returns and federal tax returns, which must be filed within nine months after the date of death.
Although Wendy is detail-oriented, she is employed full-time and has a family of her own. Having an attorney to deal with banks, creditors and a realtor gave Wendy the time she needed to manage her own responsibilities and grieve the loss of her mother. In time, her attorney would know how to properly close the estate with either an informal or formal accounting.
Estate administration takes a lot of time. Experience with the process helps. It can be further complicated if the deceased person was going through a divorce or if there is an estate recovery for Medicaid reimbursement.
Learn more about the article’s author, and other community education opportunities, at www.keystoneelderlaw.com. Check out the book, “Long Term Care Guide: Essential Tools for Solving the Elder Care Puzzle,” at the Whistlestop Bookshop or Amazon, and see Keystone’s free directory of services for older adults at www.mypeaceguide.com. Keystone Elder Law has offices in Mechanicsburg and Carlisle. Call 717-697-3223 for a free telephone consultation.
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