Frequently Asked Questions
The reality is that nearly everyone has an estate. Notably, cars, houses, bank accounts, life insurance, as well as investments – no matter how large or modest – are all part of your estate. However, estate planning extends beyond your possessions: it is the process of strategizing and preparing for disability, disease, and death. Some people believe that having a will is sufficient, but a will by itself is only part of the whole estate planning picture. At the very least, every estate plan should include a will or trust, a financial power of attorney, and a health care power of attorney that contains instructions for end-of-life treatment (commonly referred to as a “Living Will”).
None of us know what the future holds; nevertheless, you can and should make a plan to deal with the many turns life has in store for you, both expected and unexpected. Effective estate plans prevent conflicts among your family members and give you peace of mind for the unknown. Most importantly, you should prepare an estate plan because it puts you in control.
A will, also known as a Last Will and Testament, is a legal document in which an individual outlines their wishes regarding distributing their assets, paying debts, caring for any minor children, and handling other issues after they die. A will only controls probate assets, consequently having no control over jointly held assets or assets with beneficiary designations.
A common myth that many believe is that the Commonwealth will get your entire estate if you die without a will. In reality, like every other state and the District of Columbia, Pennsylvania has its own laws that determine who inherits a person’s property when that person dies with no will or trust in place. These intestate succession laws are government-formulated and directed estate plans. This may be just as frightening as the thought of the government getting everything since the law may require the distribution of assets to individuals you would not otherwise desire to have them. The answer to questions can be complicated and ultimately hinges on which family members or relatives survived the decedent.
Wills are not set in stone once you sign them. You can make changes or even revoke your will any time before your death as long as you are legally competent to make the change. That said, it is a bad idea to simply start drawing lines through the part(s) of your will that you don’t like and then write your initials next to the marked text. This will almost certainly cause conflict and the strong possibility that someone may initiate a challenge to the validity of your will. Most changes can be made by either having a codicil (formal amendment to a will) or a new will prepared revoking the old will.
The short answer is yes. You can put instructions regarding your funeral in your will. However, while you can put your plans for your funeral in your will, it is not something we typically recommend to our clients. The fact is that the funeral typically happens within a week of someone passing away. It is the very first thing a family takes care of. Your family will probably not contact a lawyer or even look at your will until after you’ve been laid to rest. It’s better to create what we call a “Letter of Instruction,” which details your desires for the funeral and can be shared with your family to ensure everyone is on the same sheet of music.
Pennsylvania does not allow you to disinherit your spouse entirely without a valid prenuptial or postnuptial agreement. Even if you specifically write your spouse out of the will, Pennsylvania law permits them to inherit and claim their “elective share,” which is no less than one-third of your estate. However, you can disinherit children in Pennsylvania. While there are many reasons to disinherit someone, be careful how you plan to do it. Simply omitting a child from your will is almost always unsuccessful because the courts could deem the omission a mistake or oversight should the disinherited child contest the will. To effectively disinherit your child(ren), you should include a clause in your will that specifically identifies the child(ren) you intend to disinherit, along with a clear statement that you are intentionally disinheriting them.
A Financial Power of Attorney is a vital part of any estate plan that allows you (the “Principal) to designate one or more individuals (your “Agent(s)”) to act on your behalf with regard to financial matters. A Financial Power of Attorney allows you to select the person(s) whom you trust to make financial decisions if you are unable to do so. It is important to note that spouses are NOT automatically each other’s agent under power of attorney. While married couples enjoy certain conveniences, such as being able to access jointly held bank accounts, their authority to act for one another will not extend to real estate matters, life insurance, retirement accounts, or annuities.
A Health Care Power of Attorney allows you (the “Principal) to designate one or more individuals (your “Agent(s)”) to make medical decisions on your behalf when you are unable to make them yourself. Please keep in mind that even if you have prepared a Health Care Power of Attorney, you will have complete control to make any medical decisions for yourself as long as you are capable of doing so. The Health Care Power of Attorneys we prepare for most clients will almost always include an advance directive, otherwise known as a “Living Will,” which states your wishes regarding withdrawing life-sustaining treatments when you are permanently unconscious or in an end-stage medical condition.
The short answer is whoever the local Pennsylvania Orphans’ Court decides to put in charge of your financial and health care decisions should it be deemed necessary, which may not be the person you would have chosen. Failing to create power of attorney can have many unintended consequences. No one likes to think about if or when there comes a point in life where they could become incapacitated, but a Financial Power of Attorney and Health Care Power of Attorney are crucial documents that should be included in every estate plan.
A trust is a legal entity created when someone (the “Settlor”) enters into an agreement with another (the “Trustee”) to hold and manage title to property or assets on behalf of their beneficiaries. There are many different kinds of trust agreements (e.g., revocable trusts, irrevocable trusts, special needs trusts, etc.) and whether or not you need a trust as part of your estate plan depends on your unique background, financial position, and goals.
A revocable living trust may be a good idea for some, but it is not for everyone and does not reduce the time and expense of estate administration in Pennsylvania. However, a revocable living trust can be a good option if you own out-of-state real estate, so you can avoid probate in multiple states, and because many other states have a more complicated probate process. Revocable living trusts can be useful in certain circumstances, but they are not for everyone.
Nope. A revocable living trust will not reduce the Pennsylvania inheritance tax or federal estate tax, nor will it reduce your legal fees. The claim that living trusts reduce taxes is one of the most common myths out there. This is important; a living trust does nothing to protect your assets from taxes, creditors, or lawsuits.
Everyone really should have these three fundamental estate planning documents: a Last Will and Testament, a Financial Power of Attorney, and Health Care Power of Attorney with an Advance Directive. Planning ahead will make sure that your wishes are followed after death, your family is spared unnecessary expense and delay, and someone you trust will be in charge if you ever become unable to manage your own affairs. Additional documents, such as trusts, could be necessary depending on your specific goals and family circumstances.
This is the point when things get a little technical and legalistic. Really, how often does someone use the terms “probate assets” or “non-probate assets?” When a person dies in Pennsylvania, all of their property is divided into two categories. Probate assets are those assets that the decedent owned in their name alone and in some circumstances jointly with someone else but without rights of survivorship (also known as Tenants in Common). Non-probate assets pass directly to another person by operation of law (e.g., jointly owned bank accounts, life insurance, IRAs, 401(k)s, real estate owned as joint tenants with rights of survivorship, and many more). When planning your estate, it is important to know and understand the difference between probate and non-probate assets. The distribution of non-probate assets is not controlled by your will or Pennsylvania’s intestacy laws.
If you have a retirement plan (e.g., IRA, 401(k), 403(b), etc.) or own a life insurance policy, you are probably familiar with the concept of a beneficiary designation. Assets that pass by beneficiary designations will pass directly to your named beneficiary, overriding any contrary provisions that may exist in your will. Failing to review beneficiary designations could wreck other parts of your overall estate plan because they typically override other estate planning documents such as a will. A complete estate plan includes making sure any accounts you have with a beneficiary designation(s) work effectively and efficiently to achieve your overall estate planning goals.
Every parent with young children should make estate planning a priority. Estate planning deals with much more than dispersing assets after someone dies. If you have minor children, there are several crucial estate planning options you should consider; for example, parents, with or without significant assets, should have an estate plan in place setting forth their wishes for their children, including nominating a guardian in the event both parents die while their children are still minors. Furthermore, for any property left to a minor, the will should include a testamentary trust that provides instructions for how the trust should be used (e.g., health, education, maintenance, and support) and should set forth the age at which the child can receive their inheritance outright. A proper estate plan can ensure your minor children are taken care of by ensuring that your children will be placed, if necessary, with a guardian you trust and that your estate is administered according to your wishes.
“In this world nothing can be said to be certain, except death and taxes,” Benjamin Franklin, 1789. The Pennsylvania Inheritance Tax is a tax imposed on the privilege of inheriting property when someone dies. The inheritance tax rate is based on the relationship between the decedent and the beneficiary. Unlike an estate tax, there is no threshold below which the tax is not imposed. By default, it is the beneficiaries, not the estate, that are ultimately liable for paying this tax; however, a will often provides that the estate should pick up this tab as well.
First, congratulations on taking the pivotal step of creating and executing estate planning documents. For most clients, signing their estate planning documents brings a sense of relief and satisfaction. Now you need to know what to do with them. Once your estate planning documents are signed, the originals should be kept in a safe place (such as a fire-resistant safe at your home). We also recommend that you show your executor the exact location of your original will during your lifetime. Your original will needs to be found in the event of your death. If the original will cannot be located, Pennsylvania law presumes that you revoked it. While there are ways for a lawyer to try to probate a photocopy of a will, doing so can be expensive with an uncertain outcome.
Everyone needs an estate plan. Many people put estate planning far too low on their list of priorities, but no one can predict the future and if we leave unanswered questions about how to settle our affairs, life for those we love could be even more difficult. Estate planning is not only for older individuals nor is it only for those with a lot of money. Estate planning is about giving you and your family peace of mind by preparing for uncertain future events such as death, disability, and incapacity.
Probate in Pennsylvania is the legal process that administers the distribution of a deceased person’s assets. When a person dies in Pennsylvania owning any assets in their name, an estate will need to be probated, whether or not there is a will. The intention of probate is to ensure the proper collection of estate assets, settlement of any debts, payment of any taxes due, and that any remaining property is distributed to the decedent’s beneficiaries or heirs. If the decedent had a will, the assets will be distributed according to the terms of the will. If the decedent did not have a will, the estate assets will be distributed according to Pennsylvania intestacy laws. The process begins with having an Executor or Administrator appointed to administer the estate by the Register of Wills in the county where the decedent resided.
The laws governing probate and estate matters are state specific. Estate proceedings in Pennsylvania are governed by the following laws and rules:
- Probate, Estates and Fiduciaries Code (PEF Code) (20 Pa.C.S. §§ 101 to 8815)
- Inheritance and Estate Tax Act (72 P.S. §§ 9101 to 9196)
- Pennsylvania Supreme Court Orphans’ Court Rules (Pa.O.C. Rules 1.1 to 16.12)
In addition to the above laws and rules, each county may adopt its own local rules regulating the practice and procedure within that county (see, for example, Lackawanna County Orphans’ Court Rules). Each probate matter presents its own unique issues and potential pitfalls; thus, the Executor or Administrator must follow these laws and rules to avoid personal liability.
In a practical sense, there is no significant difference between an Executor and an Administrator. Executors and Administrators serve the same role in the Pennsylvania probate and estate administration process. They manage a decedent’s assets and ensure the proper distribution of those assets. The difference between the two is merely how they are appointed. An Executor is a person named in someone’s will to carry out the terms of that will. If the decedent did not leave a will, the Register of Wills is tasked with selecting someone to serve as Administrator. Executors and Administrators are both commonly referred to as the “personal representative” of the estate.
First and foremost, Executors or Administrators of estates in Pennsylvania are fiduciaries. This means that Executors and Administrators have a legal obligation to make sure that the estate is administered properly. If the estate is not handled properly, the Executor or Administrator may be held personally liable for any issues that arise during their tenure. While their specific responsibilities may vary from case to case, generally, Executors and Administrators are responsible for collecting estate assets, settling any debts, paying any taxes due, and distributing all remaining proceeds or property, if any, to the decedent’s beneficiaries or heirs. That seems simple enough, right?
Each state has its own rules regarding who can be appointed the Executor of an estate. The good news is that Pennsylvania only has two basic requirements when it comes to who is eligible to serve as the Executor of an estate: 1) an Executor must be at least 18 years old and 2) an Executor must be of sound mind (i.e., not adjudicated incapacitated by a court). Yes, Pennsylvania does allow out-of-state residents to serve as Executors. Most Register of Wills offices now have virtual procedures in place to swear in Executors in lieu of requiring them to show up in person, which has made the appointment of out-of-state Executors much more practical.
It is always best to have the original will to probate. Unfortunately, sometimes all we have is a copy. Under Pennsylvania law, when attempting to probate a copy of a will, a legal presumption exists that the original will was intentionally destroyed or revoked. To overcome this presumption, one must prove that 1) an original will was actually executed, 2) the contents of the original are substantially the same as the copy, and 3) the testator had not revoked or destroyed the original prior to death. Someone trying to probate a copy of a will in Pennsylvania must provide at least two competent witnesses that will testify to both the execution and content requirements. This two-witness requirement is often a major hurdle when attempting to probate a copy of a will.
If a decedent dies without a will (i.e., intestate), the Register of Wills will select someone to serve as Administrator of the estate. Each state has laws that outline who may serve as Administrator of an intestate estate. Pennsylvania law (known as the PEF Code) allows the following individuals in the following order to be appointed Administrator of an estate: 1) the decedent’s surviving spouse; 2) the decedent’s issue (e.g., children and grandchildren); 3) the decedent’s parents; 4) the decedent’s siblings; 5) the decedent’s grandparents; and 6) other interested parties such as the decedent’s creditors. Keep in mind that when multiple people have an equal right to serve as Administrator that those who do not wish to serve can execute a renunciation in support of someone else being appointed Administrator. If necessary, the Register of Wills may conduct hearings to determine who should be appointed.
To get the most out of your first meeting with a probate attorney, you should start getting organized and gathering as many of the following documents as you can locate to bring to your consultation: original will (if one exists), death certificates, real estate deeds, copies of financial account statements, and copies of outstanding bills and invoices – including bills for funeral and medical expenses. While you will likely be gathering documents throughout the estate administration process, your early efforts to assemble as many of these documents as you can will ensure the estate can be handled as efficiently as possible.
There are several ways to obtain a Pennsylvania death certificate. The easiest way is to request a death certificate through the funeral home, assuming you are using a funeral home. You may also request a Pennsylvania death certificate online through Pennsylvania’s only authorized vendor. Additionally, you may request death certificates by visiting one of Pennsylvania’s six Vital Records offices throughout the commonwealth or by mailing an Application for a Death Certificate to the Division of Vital Records, Death Certificate Processing Unit, PO Box 1528, New Castle, PA 16103. The fee for each death certificate is $20, which is waived if the decedent or the decedent’s spouse is a military veteran.
Under Pennsylvania law, the Executor or Administrator of an estate is required to mail Notice of Estate Administration to specific individuals within three months of the grant of letters. Those required to be sent this notice include anyone named in the decedent’s will, the spouse and children of the decedent (whether or not named in the will), and all individuals entitled to receive property under the laws of intestacy when there is no will. Depending on the specific circumstances, other individuals may also need to be sent notice. Additionally, the personal representative of the estate must advertise that letters have been granted in a newspaper of general circulation near the decedent’s residence and in the legal journal designated by local rule. These advertisement notices must run once a week for three consecutive weeks. The purpose of advertising the estate is to give notice to potential estate creditors.
When someone dies, their outstanding debts do not die as well. In simple terms, the decedent’s estate now becomes responsible for any debt. If the estate has sufficient assets to pay all debts, the estate’s Executor or Administrator may pay all creditor claims as they come and ultimately distribute any remaining property to the decedent’s beneficiaries or heirs. Things get a bit more complicated when the estate is insolvent, which is when a decedent’s debts are greater than their assets. In those cases, the personal representative for the estate will use all of the money from a decedent’s assets to pay off the debts. In Pennsylvania, the payment of debts follows a very specific order of priority, which is outlined in the PEF Code. If any debt remains unpaid after all of the assets have been exhausted, the decedent’s family members will not be responsible for the remainder.
The estate administration process in Pennsylvania typically takes between one and two years. Many factors will affect the exact amount of time it takes to complete the process. Settling an uncontested estate, where there is no need for litigation, will generally take less time than estates that have fighting beneficiaries. In the most complicated cases, the probate process can take several years. Of course, the vast majority of complex estate administration cases are a consequence of lousy estate planning or no estate planning at all.
Not all of a decedent’s property in Pennsylvania will pass through probate. When a person dies in Pennsylvania, all of their property is divided into two categories. Only assets that the deceased owned in their name alone or in some circumstances jointly with someone else but without rights of survivorship (also known as Tenants in Common) will pass through probate. These assets are commonly called “probate assets.” Other assets such as those held jointly with rights of survivorship and assets with designated beneficiaries will pass directly to another person by operation of law. These assets are commonly called “non-probate assets.”
Yes. The personal representative of an estate can sell the decedent’s real property. Pennsylvania law even permits the Executor or Administrator to sell a decedent’s real estate without getting all of the beneficiaries to approve unless prohibited by the decedent’s will. However, some situations do require approval of the beneficiaries, and in some cases court approval, such as any sale of real property to an interested party (e.g., a personal representative or a beneficiary).
Pennsylvania is one of seventeen states that has a death tax, which is known as the Pennsylvania Inheritance Tax. An inheritance tax is imposed on the beneficiaries of an estate for the right to inherit property; however, a will often provides that the estate should pick up this tab as well. In Pennsylvania, the inheritance tax rate depends on the value of a decedent’s assets and the beneficiary’s relationship to the decedent. Pennsylvania Inheritance Tax is assessed on almost all assets owned by the decedent alone or with others. Payment is due nine months after a decedent’s date of death, after which the tax due accrues interest and penalties.
Other than the Pennsylvania Inheritance Tax return, the Executor or Administrator of an estate may need to file other tax returns. In most cases, the estate’s personal representative will need to file the decedent’s final state and federal income tax returns. A much smaller amount of estates need to file a return for federal estate taxes, as well as state and federal income taxes for the estate in cases where the assets of the estate generate income as the estate is being administered.
Pennsylvania does offer a special process to administer estates without the need for formal probate where the decedent’s personal property does not exceed $50,000. However, using a “Small Estate Petition” in Pennsylvania does not eliminate the requirement to pay creditors and taxes. Also, if the decedent owned real property of any value, formal probate will be necessary. In addition to the “Small Estate Petition” procedure, Pennsylvania has other probate shortcuts that assist some families with transferring property more quickly and with less hassle. For example, Pennsylvania law permits financial institutions to release up to $10,000 to certain surviving family members without opening an estate as long as the funeral expenses have already been paid.
Sometimes, a decedent dies owning property in more than one state. If a nonresident decedent dies owning property in Pennsylvania, ancillary probate may be necessary to legally transfer those assets to the decedent’s beneficiaries or heirs. The process begins with obtaining an exemplified copy of the estate record from the state where the decedent was domiciled at death and filing it with the Register of Wills in the Pennsylvania county where the property is located. If a nonresident decedent owns property in more than one county in Pennsylvania, you may file the exemplified record in any county where the decedent had property. For those that are curious, an exemplified copy of a record is an official copy of public records made under seal that can only be made and attested by the body that originally issued the document – i.e., a fancy certified copy of a court record.
In Pennsylvania, the Orphans’ Court is the Division of the Court of Common Pleas that serves as the probate court with jurisdiction over estate proceedings. However, the Register of Wills office in each Pennsylvania county acts as a quasi-judicial body whose primary function is to determine whether a document offered for probate should be admitted to the official record. The Register of Wills alone has the authority to appoint personal representatives and grant letters. Prior to opening the official record, the Register of Wills can conduct evidentiary hearings, take testimony, and render decisions on disputed estate matters. Decisions by the Register of Wills may be appealed for specific reasons to the Orphans’ Court Division.
There are essentially two ways to close an estate in Pennsylvania: informally and formally. Most Pennsylvania estates are closed informally, by release agreement, sometimes referred to as a Family Settlement Agreement. Release agreements allow the beneficiaries of a Pennsylvania estate to approve the administration of the estate and consent to the final distribution of the remaining estate assets. This agreement will usually include an informal account of the assets, liabilities, expenses, and proposed distribution, as well as important legal provisions for the protection of the Executor or Administrator. If all parties sign the release agreement, the estate may be closed without court action.
Alternatively, when a release agreement cannot be obtained, the Executor or Administrator must file a formal account for approval by the Orphans’ Court. Specific legal requirements must be followed when using this route. The Orphans’ Court will schedule hearings for all objections it receives from an interested party. After objections have been ruled on, the court will enter a final order, thus allowing the Executor or Administrator to close the estate.