At Jones Gregg Creehan & Gerace, we regularly guide clients throughout Pittsburgh on probate, estate administration, wills, and trusts. We leverage our in-depth knowledge of Pennsylvania’s Uniform Probate Code and the applicable trusts and estates law to protect our clients’ interests.
This guide is intended to answer many of your questions about estate planning so that you can make informed decisions about your future. Whether you need assistance drawing up a will or trust or administering a loved one’s estate, we can help. Contact our office today to get started.
Guide to Pittsburgh Estate Administration Basics
When someone passes away, their estate must go through a court-supervised process to manage and distribute the estate assets. If the deceased person or decedent had a will in place, the legal process is referred to as probate. When there is no will, the process is known as estate administration.
To initiate probate, the individual named as the executor must file a petition with the probate court in the county in which the decedent resided, along with the will and a death certificate. The court will hold a hearing to validate the will, confirm that the executor is capable of carrying out their duties, and issue “Letters Testamentary” – a legal document authorizing the executor to administer the estate. The executor is tasked with distributing the estate assets according to the instructions in the will.
Estate administration is different in that a close relative or associate of the decedent must petition the court to be named the estate administrator. The probate court will issue “Letters of Administration” and open the proceeding. Estate administrators and executors share similar duties. During the estate administration process, however, the decedent’s assets will be distributed according to the intestacy laws of Pennsylvania, which prioritize spouses, children, and parents.
Which assets are subject to probate and which are not?
Generally, any asset that was owned by the decedent and not assigned a beneficiary is subject to probate, including residences, real estate, and personal belongings (e.g. furniture, cars, clothing, art, jewelry, and other valuables).
Certain assets are exempt from probate, however, including:
- Real property in which title is held jointly, with right of survivorship
- Property held in a trust
- Life insurance policies with designated beneficiaries
- Retirement accounts with named beneficiaries
- Bank and investment accounts with pay-on-death (POD) designations
In addition, Pennsylvania law provides for a simplified probate process for small estates – those valued at less than $50,000, not including real estate. In short, the executor is allowed to administer the estate and distribute the assets without going through the entire probate process.
Although probate is intended to be a quick and efficient process, there are numerous details that must be handled before an estate is closed. Moreover, probating a high-net-worth estate poses unique challenges. Finally, the estate administration process can become complicated for surviving family members given that the decedent did not leave instructions concerning their assets. The best way to handle these complexities is to consult with an experienced Pittsburgh probate and estate administration attorney.
Guide to The Role of a Personal Representative in Estate Administration
The personal representative – the executor or administrator – is the individual authorized to act on behalf of the estate. That individual is responsible for overseeing the estate property and has a legal obligation to protect and maintain the estate assets. Some of the important duties of a personal representative include:
- Notifying the beneficiaries and heirs of the decedent’s passing
- Inventorying and appraising the estate assets
- Settling any debts with the decedent’s creditors
- Filing the decedent’s final income tax returns
- Paying federal estate taxes, if applicable
- Distributing the estate assets to the beneficiaries
- Closing the estate
A personal representative is considered a fiduciary, which means they have a duty to act in the best interests of the beneficiaries and can be held liable for mistakes and/or misconduct. Finally, personal representatives may be entitled to reasonable fees, as well as reimbursement for all legitimate out-of-pocket expenses related to administering the decedent’s estate.
If you are preparing a will, there are a number of qualities you should look for when choosing a personal representative. While it is common to name a spouse or adult child, the individual you appoint must be trustworthy, financially literate, and capable of handling all the details and communicating effectively with the beneficiaries. We can help you with the selection process and help you designate the individual most capable of carrying out your wishes.
Pittsburgh Will Basics
A Last Will and Testament commonly referred to as a “will,” is the most basic estate planning document. It declares how your assets will be managed and distributed after you pass away. While many people are aware of the importance of having a will, a recent poll found that more than 50 percent of Americans do not have one in place.
In addition to leaving instructions about how your property should be handled, a will allows you to:
- Designate an executor to carry out your final wishes and administer the estate
- Name beneficiaries to inherit the estate assets
- Establish a distribution plan for the assets
- Arrange funeral and burial plans
Importantly, if you have minor children, a will allows you to name guardians to care for them in the event of incapacity or the simultaneous death of both parents. Finally, a will is not set in stone and can be revised while you are living so that it is aligned with changes during your lifetime (e.g. marriage, buying a home, having children, acquiring assets).
Remember, wills must be validated through probate in Pittsburgh, and the process can take between 9 and 18 months. There are also costs associated with probate – personal representative’s fees, attorneys’ fees, and court filing fees – which can range from 5 to 7 percent of the total estate value.
The Risks of Not Having a Will in Place
Not having a will is one of the most common estate planning mistakes, one that carries serious consequences. Without a will, the probate court will intervene to make decisions about your estate that may not agree with your wishes. In particular, the court will appoint an estate administrator to act as the personal representative of your estate. This can put your surviving family members in a difficult spot and increase their burdens during a trying time.
Also, the court will appoint a guardian for your minor children who may not share your values, ideas about child-rearing practices, or spiritual beliefs. Finally, without leaving clear instructions about who should get what after you die, disputes may arise among surviving family members.
Any resulting legal action might deplete the value of your estate and fracture family ties. With so much at stake, it is wise to consult with an experienced Pittsburgh estate planning attorney who can assist with creating a will that protects both your assets and your loved ones.
Pittsburgh Trust Basics
While a will is the cornerstone of an estate plan, many individuals can benefit from establishing trusts. Put simply, a trust is a legal arrangement in which the person making the trust (the grantor) appoints another party (the trustee) to manage their assets for the benefit of the designated beneficiaries.
A common misconception about trusts is that they are only for the wealthy, but trusts are designed for all types of objectives, such as avoiding probate, long-term care planning, providing for a loved one with special needs, and minimizing estate taxes. A trust can be created within a will to protect minor beneficiaries (“testamentary trust”), but there are several types of standalone trusts as well, such as:
- Revocable living trusts are typically created to supplement a will. A living trust (inter vivos trust) is one that takes ownership of your property but allows you to continue managing it during your lifetime. The main benefit of this estate planning tool is that probate is not required; however, all trusts in Pittsburgh must go through a trust administration phase.
- Irrevocable trusts become effective during the grantor’s lifetime, but cannot be amended or modified. The assets remain in the trust permanently and are managed by the designated trustee. Irrevocable trusts are also exempt from probate, as well as estate taxes, and the trust assets are also protected from creditors’ claims.
- Special needs trusts are designed to protect a disabled loved one (a minor child or an adult). Because receiving an inheritance may disqualify these beneficiaries for public benefits (e.g. Medicaid, Social Security Disability), a special needs trust can be established to hold assets to cover their day-to-day needs, while maintaining their eligibility for government benefits.
- Charitable trusts are designed for estate planners who wish to leave a charitable legacy. The trusts can help to minimize estate taxes by combining gifting with charitable donations. In a charitable remainder trust, for example, a named beneficiary receives income from the trust for a certain time period after which the trust assets are transferred to a designated charity, referred to as the final or remainder beneficiary.
- Pet trusts are intended to provide for people’s cherished pets when they are no longer around to care for them. Because pets are not considered property, they cannot be left to someone in a will. However, a pet trust can be established to appoint both a trustee and a caretaker. The trustee manages the trust funds while the caretaker is responsible for caring for the pet, providing food and shelter, and arranging veterinary care.
There are several other types of trusts that may also fit into your estate plan, including:
- Irrevocable life insurance trust
- IRA trust
- Family trust
- Generation-skipping trust
- Gift trust
- Grantor retained annuity/unit trust
- Qualified personal residence trust
- Spendthrift trust
- Spousal lifetime access trust
By working with an experienced trusts and estates attorney, you can establish a trust-based estate plan that protects your assets, provides for your loved ones, and preserves your wealth for future generations.
How This Guide to Estate Administration from Jones Gregg Creehan & Gerace Can Help You
Our firm has been helping clients throughout the Greater Pittsburgh region with all their estate planning needs for nearly a century. We know that no two estates are alike and will tailor a plan to your unique needs and objectives.
Whether you only need a will-based plan or you can benefit from establishing trusts, you can depend on us to provide you with trustworthy advice and guidance. In addition to wills and trusts, we also regularly prepare other essential estate planning documents, such as:
- Durable power of attorney to appoint a trusted person to manage your personal and financial affairs in the event you are suddenly incapacitated due to illness or injury
- Advance healthcare directive or healthcare proxy to name a healthcare representative to make decisions about your medical care if you become incapacitated
- Living will to establish the type of end-of-life care you wish to receive or have withheld
- Guardianship to protect the well-being of a close relative and their estate if they suffer an incapacitating illness or injury
Our services are not limited to drafting estate planning documents. We provide each client with ongoing counsel to ensure that their estate plans are up-to-date.
In addition, we regularly represent executors and estate administrators and work to help them faithfully carry out their important duties. In the event of disputes, we believe negotiated solutions are the best way to preserve not only the value of the estate assets but family unity as well. At the same time, we are capable of litigating will contests in probate court if necessary.
Above all, we provide each client with compassionate, efficient representation through every step of the estate planning journey. When you become our client, you will have peace of mind knowing that our experienced trusts and estate attorneys are on your side.
Contact Our Pittsburgh Attorney to Guide You Through Estate Administration, Wills, and Trusts!
Whether you have questions about probate and estate administration or need assistance preparing a will or trust, turn to this guide from Jones, Gregg, Creehan & Gerace. Our attorneys will always work in your best interests and guide you every step of the way. Contact our office today to schedule an appointment.