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Duties of a Personal Representative of an Estate in Pennsylvania

By: Elizabeth Z. Milne, Esquire

Has a member of your family or a close friend recently passed away? Were you named as an executor under their Will? Or did they pass away without a Will and need someone to finalize their estate? Being named as an Executor under a decedent’s Will or appointed as an Administrator of a decedent’s estate under the intestacy laws of Pennsylvania can be a complex, lengthy, and challenging role that many people are unaware of when they agree to represent a decedent’s estate in this capacity.

The first step in any estate administration is determining who has the authority to act on behalf on estate. When an individual passes away, the next of kin of that individual (the surviving spouse, children, or close relatives) should locate the decedent’s Will. This may require a search of a safe deposit box of the decedent and the filing of appropriate forms to do the same. The decedent’s Will states how the decedent’s assets are to be distributed, who the beneficiaries are, and who shall act as fiduciaries, including who is named as Executor to handle the administration of the decedent’s estate. For the Executor to act on behalf of the decedent’s estate, the individual named in the decedent’s Will must submit the original Will to the Register of Wills office in the county where the decedent resided at the time of his or her death. If the decedent passed away without a Will, the next of kin should petition the Register of Wills office to be appointed as an Administrator of the decedent’s estate. Once the Register of Wills appoints an Executor or Administrator (collectively known as Personal Representative) of a decedent’s estate, that individual will be granted Letters of Testamentary for an Executor or Letters of Administrator for an Administrator, which give the Personal Representative the legal authority to act for the estate.

Next, the Personal Representative is required to notify the beneficiaries of the estate of their beneficial interests in the estate and is required to certify such notice to the Register of Wills. If the decedent left any assets to a charitable organization, the Personal Representative must notify the Pennsylvania Attorney General. Also, the Personal Representative is required to advertise the grant of Letters of Testamentary or Administration in a local news publications to notify the public of the administration of the decedent’s estate. The advertisement of the grant of letters starts the one-year statute of limitations that a creditor of the decedent’s estate has to file a Notice of Claim against the estate. Finally, the Personal Representative needs to notify the IRS of his or her fiduciary relationship as Executor or Administrator of the estate.

At this stage in the estate administration, the Personal Representative has to determine what the assets are and where they are located. He or she will need to collect and secure the assets and transfer them into the name of the estate. Prior to the transfer, the Personal Representative will need to file for a Federal Employer Identification Number to open any accounts in the name of the estate. In addition, the Personal Representative will need to verify the value of all the decedent’s assets as of the date of death of the decedent or as of the alternative valuation date, which is six months from the decedent’s date of death, for tax purposes. Valuing the decedent’s assets may require complicated situations, such as a sale of real estate, an appraisal of valuable tangible personal property, or the valuation of a closely-held business. An inventory of the decedent’s assets is required to be filed in the Register of Wills office within nine (9) months from the decedent’s date of death.

Throughout the estate administration, the Personal Representative will need to pay the reasonable funeral and final medical expenses of the decedent, any valid and legal debts of the decedent, and any administrative expenses of the estate, such as probate and filing fees. These estate expenses may be deductible for estate or income tax purposes and should be discussed with an estate attorney for accuracy.

Depending on the gross value of the decedent’s estate and the nature of the disposition of the assets, the estate may be subject to Pennsylvania Inheritance Taxes, Federal Estate Taxes and Generation-Skipping Transfer Taxes. For 2016, an estate under $5.45 million is not subject to Federal Estate Taxes because of the Federal Estate Tax Exemption. Unfortunately, Pennsylvania does not have an exemption amount and Pennsylvania Inheritance Taxes are paid on the full value of the decedent’s estate less allowable deductions, based on the beneficiary’s relationship to the decedent. Both the Federal Estate Tax and the Pennsylvania Inheritance Tax returns are due within nine (9) months from the decedent’s date of death. If the Personal Representative pays the Pennsylvania Inheritance taxes within three (3) months from the decedent’s date of death, the estate will receive a five percent (5%) discount on the taxes owed.

Also, the decedent’s final lifetime Federal and state income tax returns (Form 1040, etc.) will need to be filed and paid by the Personal Representative. The decedent’s estate will have to file a fiduciary income tax return for any income earned by the estate for each year the estate is administered. The Personal Representative is responsible for the filing of these returns and the payment of all of the necessary taxes.

For decedents who died with assets in multiple states, additional state administrations may need to be opened and additional state taxes may be owe. For example, if a Pennsylvania resident died owning property in New Jersey, an ancillary New Jersey estate may need to be administered for the decedent and New Jersey estate, inheritance and income taxes may be owed by the estate and for the decedent.

Finally, once all of the decedent’s assets are collected, valued, and transferred into the estate’s name, all administrative expenses, debts, and taxes are paid, and all required documents are filed and the returns are accepted and cleared by the appropriate authorities, the Personal Representative can distribute the estate assets to the beneficiaries according to the decedent’s Will or, if no Will, then by the Pennsylvania intestate statute. Before distributing the assets to the beneficiaries, the Personal Representative may be required to obtain receipts and releases or an agreement to a family settlement from the beneficiaries, or may be required to file a formal accounting with the Register of Wills office, depending on the complexity of the estate administration.

If you, or someone you know, has been named as an Executor or Administrator of a decedent’s estate and need assistance with the estate administration in either Pennsylvania or New Jersey, please contact one of the Trust & Estate Attorneys at Connor, Weber & Oberlies, P.C.