[The following article was written by Elizabeth White, a Certified Elder Law Attorney* with Marshall, Parker andWeber. It is reprinted here with her permission.]
Your loved one lets you know that you are named as the Executor in their Will. Now what? Until the person that named you passes away, rest assured there is nothing that needs to be done with the Will. However, it is understandable, especially if you are a planner like me, that you would want some background on what the position entails.
Let’s review ten common questions that those who are named as Executor often ask about the position.
1. If I am named Executor in the Will, do I have to serve? Serving as Executor of an estate is not an easy task. While you may be honored that someone has named you, there are various reasons that you may not wish to or simply cannot serve. You are not required to accept the position of Executor. If there is a successor Executor named, you may step down (renounce) and allow that person to serve. If no successor is named, there is a law in Pennsylvania that provides who has the right to serve in the position. If you already know during your loved one’s lifetime that you do not want the position, you should tell them. Your loved one could then choose someone else to name in their Will as Executor.
2. I am named as a Co-Executor with my siblings. Can I start the estate process without them? Co-Executors in Pennsylvania must serve jointly. Do not be surprised if you call an attorney when a loved one passes to try to start an estate, only be told that the other Co-Executors must be present.
3. Can I administer the estate without going to the courthouse and opening an estate? There are certain assets that require probate, or the opening of an estate in Pennsylvania. This is completed at the Register of Wills. Upon filing a petition and after being administered an oath, you will receive official paperwork (letters testamentary) proving you are the Executor of the Estate and can manage the estate assets. There can be instances where the type of assets or the titling of assets do not require a probate estate. An attorney can review assets to advise if there is no probate estate is necessary.
4. What paperwork do I need? At minimum, you will need the original Will and an original death certificate. Any paperwork related to your loved one’s assets and beneficiaries addresses helps the process along. If your loved one worked with an attorney, the Will and other information may already be in the attorney’s file.
5. Are there taxes the estate will have to pay? There are taxes associated with most estates. These may include a Pennsylvania inheritance tax to the Department of Revenue, federal and state income taxes, and in situations of high net-worth individuals, Federal Estate Tax. An attorney and accountant can advise you as to what taxes apply to the estate and assist in completing and filing the appropriate forms and payments.
6. Can I take a fee for serving as an Executor? Serving as an Executor is work. You are able to be compensated for your service and the fee is income taxable to you. In order to be compensated, you should keep track of the work and time you have put into administering the estate. This fee is generally allowable even if you have hired an attorney to assist with the administration.
7. Am I personally responsible for outstanding debts? If there are any valid outstanding bills owed, these debts are brought by the creditors to the estate. in Pennsylvania there is a specific priority for which debts get paid from an estate. If the Executor properly manages the assets and pays the debts in the correct order, there should not be liability to the Executor personally for the debts. However, if certain requirements are not met, such as advertising the estate or paying debts in the right priority, there can be liability to the Executor.
8. Can the estate be completed in a couple of months? Generally, no. Estates usually are open between one to two years, sometimes longer. That does not mean work needs to be done on the estate every day, but the process takes time. There are certain documents, such as an inheritance tax return, that the Department of Revenue must review and accept before an estate can be closed. This review can take up to 6 months from the date of filing the return.
9. I think my brother got more from my mom than me during her lifetime. I want to subtract that from his inheritance, but the Will says everything goes equally. Do I have to pay the estate assets to the persons listed in the Will in that proportion? Yes. You must notify interested parties, including the beneficiaries in the Will of the estate. As Executor you must follow the terms of the Will. You cannot change the distributions based on your preferences or ideas of what your loved one would have wanted.
10. Am I required to hire an attorney to administer the estate? No, but it is a really good idea. If you do not administer the estate according to the laws, you put yourself in a position of personal liability. Additionally, administering an estate, even with advisors, is time consuming. It is better to leave it to the professionals to ensure that everything is completed properly and in a timely matter.
*Certified as an Elder Law Attorney by the National Elder Law Foundation as authorized by the Pennsylvania Supreme Court.