The Process of Administrating an Estate

In general, Estate Administration includes the following steps:

1. Filing the Will and petition at the Register of Wills in order to be appointed executor.  In the absence of a Will, heirs must petition to be appointed "administrator" of the estate.
2. Marshaling, or collecting, the assets.  This means that you have to find out everything the deceased owned.  You need to file a list, known as an "inventory," with the Register of Wills.  It's generally best to consolidate all the estate funds to the extent possible.  Bills and bequests should be paid from a single checking account, either one you establish or one set up by your attorney, so that you can keep track of all expenditures.
3. Paying bills and taxes.  If a federal estate tax return is needed, it must be filed within nine months of the date of death.  If you miss this deadline and the estate is taxable, severe penalties and interest may apply.  If you do not have all the information available in time, you can file for an extension and pay your best estimate of the tax due.  Pennsylvania Inheritance Tax must be paid within nine months of the date of death.  A 5% discount on Pennsylvania Inheritance Tax applies if a tax payment is made within 3 months of the date of death.
4. Filing tax returns.  You must also file a final income tax return for the decedent and, if the estate holds any assets and earns interest or dividends, an income tax return for the estate.  If the estate does earn income during the administration process, it will have to obtain its own tax identification number in order to keep track of such earnings.
5. Distributing property to the heirs and legatees.  Generally, executors do not pay out all of the estate assets until the period runs out for creditors to make claims, which can be as long as a year after the date of death.  But once the executor understands the estate and the likely claims, he or she can distribute most of the assets, retaining a reserve for unanticipated claims and the costs of closing out the estate.
6. A final accounting.  Some of these steps can be eliminated by avoiding probate through joint ownership or trusts.  But whoever is left in charge still has to pay all debts, file tax returns, and distribute the property to the rightful heirs.  You can make it easier for your heirs by keeping good records of your assets and liabilities. This will shorten the process.

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The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Copyright © 2009 by Levandowski & Darpino, LLC. All rights reserved. You may reproduce materials available at this time for your own personal use and for non-commercial distribution. All copies must include this copyright statement.