Michelle C. Berk, Esquire Explains
"How To Settle An Estate"

Jim:I am asked many times per year by clients what they need to do when they are the executor of an estate. Can you describe the responsibilities of the executor?

Michelle:The best place to start is in your attorney’s office with the Will and copies of statements of the assets. That is because probate is not always necessary, if beneficiaries are named or there are Payable on death designations, or joint accounts. However except between spouses, there is usually PA Inheritance Tax that must be paid.

Jim:Can you give us an overview of the estate settlement process in PA?

Michelle:After meeting with your attorney, if probate is needed, the Executor and attorney go to the Register of Wills Office after the attorney prepares a Petition for Probate that should be done in advance, and in some counties, must be filed electronically and reviewed and approved by the Register of Wills in advance of probate. The attorney should review the Will to make sure it can be probated and meets the requirements and can prepare petitions and do whatever is needed so that the Will or a copy can be probated, if probate is needed. The attorney does not have to be the attorney that wrote the Will and can be selected by the Executor. Pa. Ethics Rules for lawyers prohibit them from insisting that they retain the clients Will since that is done sometimes so that the client will feel that they have to use them as the attorney for the estate. Nothing if further from the truth, and the law!

Probate, if needed, is a system of rules established that will guide the process and imposes deadlines for giving Notice to beneficiaries, filing Certifications of Notice, requiring an Inventory and Inheritance Tax Return to be filed and Status Notices to be filed with the Register of Wills. The original Will is accepted for probate and then Short Certificates are issued. They authorize the Executor to proceed and carry out their duties of marshalling the assets and carrying out their responsibilities, as above and also, such as filing an Inventory paying taxes within certain time limits even to obtain a discount of 5% if an estimated pre-payment is made within 90 days of the date of death.

There are ways to settle an Estate even if the decedent did not write a Will. The process is similar but an Administrator is appointed, instead of an Executor, and there are procedures to follow to get one appointed so the estate can be settled.

Jim:What is probate and how does it work?

Michelle:Again, it is the orderly administration of the Estate as overseen by the Register of Wills office, a division of the Orphans’ Court in the county in which the decedent died, as indicated on the death certificate. The original death certificate and original Will and Petition for Probate are prepared by the attorney and then the Executor or proposed Administrator bring them all with the attorney to the Register of Wills who will admit the Will to probate and swear the Executor /Administrator into their role of office and issue Short Certificates, aka, Letters Testamentary if there is a Will, and Letters of Administration, if there isn’t a Will or under other circumstances. Then the fun begins. There is a fee payable at probate based upon the amount of assets in the estate, plus the number of short certificates ordered, usually $10 a piece, plus of course taxes due.

Jim:What role does an attorney play in helping to settle an estate?

Michelle:The role of the attorney can’t be minimized or disregarded in favor of DIY or using someone else since there are so many laws of decedent’s estates that influence whether the Will can even be accepted for probate or if additional information and documentation is needed, for example, if the original can’t be located, or if it is not self-proving, or if there is a dispute about who should be the Executor or beneficiaries, or if allegations of fraud arise, or even in benign situations, such as perhaps co-Executors are appointed and one of them is unable or unwilling to serve. An attorney can pin point all of these issues. They can even serve to advise that probate is not needed and then help settle the estate. Their expertise and knowledge is also invaluable in saving you money since they are trained and skilled in helping you minimize Inheritance tax and avoid the imposition of interest and penalties and sanctions in the event that tax is not properly calculated and paid. They make sure the many rules and regulations in the Probate, Estates and Fiduciaries Code are followed as well as the local county rules that govern Estates and probate.

Jim:How are attorneys compensated in helping to settle estates?

Michelle:Clients generally chose to use the Estate of Johnson guidelines from the Chester County court case, which apply differing percentages to different assets of the estate to calculate an attorney’s fee. That is preferred over an hourly rate usually since the estate settlement process is so time intensive that the time would really add up and that is why the Johnson’s Estate guidelines are more economical. The fees paid both to the attorney and if an Executor or Administrator fee is paid, they are both deductions from Inheritance tax too!

Jim:How long does it take to settle an estate normally? What factors contribute to how long it takes?

Michelle:We sometimes hear that a year is about average, but every estate varies in the amount and complexity of the assets. As a guide, the PA Inheritance Tax Return is required to be paid and filed within 9 months from the date of death. If an extension is requested, tax still must be paid with the request for the extension! Then the PA department of revenue takes approximately 4-6 months to review the Return and issue an Appraisement of whether it is accepted or alternatively, if more tax is due, or if a refund is due, and an Application must be filed to obtain the refund!