Most of us accept the fact that we will die sooner or later, hopefully later. However, how many of us are prepared for our death, or the deaths of our parents and loved ones, in the matter of disposing of our (or their) earthly possessions? Many TV lawyers frighten particularly older adults, suggesting that unless they take certain steps (like sign up for a living trust which they will happily sell you for a couple thousand dollars or so), the state or the government will “dispose of their assets for them” or even take them. This is TOTAL BALONEY.
What happens when you don’t have a will?
In Pennsylvania, the assets of every person who dies without having a will and owning assets at the time of their death are distributed to their heirs under an orderly system set forth in PA law, which determines who are the natural heirs of the deceased and how the estate is to be divided between them. To do this, a relative (or family friend who is willing to do the job if family members do not want it) is appointed the “administrator” of an estate by the Register of Wills of the County the decedent (legal term for the person who died) lived in, and the law provides the steps the administrator must take to properly administer the estate and distribute the remaining assets to the heirs. This is not to say that the process always runs smoothly; often there are disputes between the heirs, sometimes even over who is to be administrator, as well as over the appropriate distribution of the assets. Writing a will while still alive and having the ability to do so, naming an executor, naming the heirs, and listing how the assets of the “testator” (This is the legal term for the person who wrote the will. The female version is “testatrix”) are to be divided saves time, attorney fees and expenses, and hard feelings between heirs.
It’s All in a Name
What is the difference between an “executor” and an “administrator?” An “Executor” (the term for a female executor is “Executrix”) is the person listed by the deceased person in their will to carry out the estate administration. Quite often a secondary or successor executor will be named, in case the first named executor is unwilling or unable to carry out the duties of administering the estate.
Executors have a Fiduciary Duty
The executor is called in legal terms a “fiduciary.” That means that the executor is bound by law to faithfully carry out the instructions of the testator in administering the estate, as well as by the law of Pennsylvania, and when they are sworn in at the Register of Wills, they take an oath to do so. This means that they should act promptly to collect and safeguard the assets of the estate, without playing favorites among the heirs. If there are cash assets or other accounts of the decedent, bank or investment accounts, they need to be converted into estate accounts, which means that a social security (estate identification) number must be obtained for the estate. The executor must make sure that all assets of the testator are located, insured and kept safely from theft. The executor must prepare and file and estate inventory listing the assets of the estate and their values. Then they must prepare and file a PA inheritance tax form and pay any inheritance taxes due on estate assets from the assets of the estate. They must also make sure that all legitimate debts of the decedent are paid from the estate assets and reimburse those who paid funeral or other death-related expenses for the decedent. They may need to sell some of the assets of the estate to accomplish this, and they must attempt to get the best price possible (the “fair market value”) for these sales. Any proceeds from these sales must go into the estate account. In certain cases, the judge of the county Orphans Court must specifically approve of the sale of real estate. If some of the heirs are minors, a trust may be needed to be set up for them, if not specifically set forth in the will. PA law provides that the executor, as well as the attorney for the estate, who usually prepares the paperwork and guides the executor in administering the estate, are entitled to be compensated for their work, but these fees may not be “excessive,” considering the amount of work done, and they are always subject to review by the court which must approve the final accounting necessary to close the estate.
Closing the Estate
If all the debts of the deceased have been paid, and all the heirs are adults and agree as to the values of the assets, the expenses of the estate, and the distribution of the remaining assets of the estate, a Family Settlement Agreement may be prepared by the lawyer and signed by all the heirs. Then and only then can the estate be closed and all of the remaining assets distributed. If the heirs are not in agreement or some of the debts of the deceased have not been paid, the lawyer must prepare an accounting and take the case to audit in front of the Orphans Court judge, where those who disagree, including creditors of the estate, may raise objections to the actions of the executor, the values of the assets, the attorney fees and costs and executor fees, and such during the audit proceeding. If an executor is found to have wasted assets of an estate or converted them to his or her own use, they may be fined, and in severe cases, prosecuted and jailed.
Choose your Executor Wisely
In sum, the executor of the estate is responsible for acting promptly, fairly and following the instructions of the testator and the law. He or she can be removed as executor by the judge upon petition by heirs or creditors if he or she does not carry out their fiduciary duties responsibly. When clients come to me to write a will for them, and we come to the part where they name an executor to administer their estate, I instruct them firmly: This is not an honorary position. It is work, and it requires patience and duty and fairness. Do not pick your oldest, or your son, or some other family member just because you are concerned that they might feel left out or slighted. Pick the person (maybe not even a relative) best suited to be the business manager of your estate. If you have been chosen as executor of an estate, be sure to execute your duties faithfully and fairly.