Protecting The Past; Planning The Future
Probate & Estate Administration Lawyers in Pennsylvania
Our experienced lawyers are familiar with the administration process in Pennsylvania and New Jersey and will bring the estate to close as efficiently and quickly as possible.
We will prepare and file required tax returns and counsel as to opportunities to avoid current or future taxation through the treatment of assets of the estate. Often, complex issues arise as a result of tax or legal hurdles, and our firm is adept at negotiating a resolution that will benefit all interested parties.
What is Probate?
Probate is the process by which a deceased person’s estate is administered. Technically, probate refers to the administration of the estate of a person who dies testate, or with a will. The estate of a person who dies intestate, without a will, will have their estate undergo the “administration” process.
The process of probate and administration is substantially the same, with the primary issue being that a will identifies the beneficiaries of a person’s estate. A person without a will has their beneficiaries decided by state law, which can lead to unintended and undesirable consequences. In either case, the estate must be opened by the court, usually acting through the Register of Wills. The Register of Wills will appoint a personal representative (the executor of the will, or the administrator of an intestate estate). The process will typically take nine months to one year, and can take longer, depending on the complexity of the estate.
Role of Personal Representative
The Register of Wills will appoint a personal representative (the executor of the will, or the administrator of an intestate estate). Typically, the powers and duties of the personal representative are spelled out in the Will and in state law.
After appointment, the personal representative must make appropriate notification of all beneficiaries and advertise for potential creditors. The personal representative is charged with gathering the decedent’s assets, identifying and settling the decedent’s debts, paying taxes, and making distributions to the appropriate beneficiaries.
The personal representative has the sole authority to act for the estate, and has a fiduciary obligation to the estate’s beneficiaries to efficiently and properly manage the estate’s assets. To the extent a Court finds that the personal representative failed to properly manage the estate, he or she may be personally liable for damages even if there was no intentional misconduct.
The representative has the power to transfer estate assets and sell them to pay liabilities and taxes. The personal representative may hire advisors to assist with the many complicated legal and tax issues that arise during the administration.
Closing The Estate
Once all assets are marshaled and debts and taxes are paid, the estate must be closed. There are two ways of “closing” an estate.
First, if all beneficiaries are in agreement as to the administration, the estate can be closed informally. In Pennsylvania, a family settlement agreement will usually be prepared, which will set out the remaining estate assets and schedule of distributions. The beneficiaries will release the personal representative and promise to return their distribution in the event of any future claims.
The other alternative is to file a petition for approval of the personal representative’s accounting in the Orphan’s Court. The personal representative will prepare and file an accounting, which is a summary of all transactions made for the estate. The beneficiaries will have the opportunity to object to anything in the accounting they feel is improper. The Court will resolve any disputes and close the estate (this is called the adjudication). While this process is more formal and expensive than a family settlement agreement, it is necessary for complex estates or estates where there is disagreement among the parties.
Orphan’s Court
Estate matters involve emotional issues, including, most importantly the division of assets. Our firm works diligently to avoid litigation, but in some cases litigation avoidance is not possible. In those cases, our firm is able to provide our clients high caliber, aggressive and experienced Orphan’s Court litigators. Whether a Will contest, a contested guardianship or challenging the conduct of the trust or estate’s fiduciaries, our firm will guide you through the unique challenges of Orphan’s Court litigation.
Although initially attempting to avoid litigation, our clients know that once litigation is commenced, our litigation efforts will be tireless and aggressive and we will take all actions necessary for them to achieve their desired litigation result.
Attorney’s Fees and Support for Estate Executors
Estate matters involve emotional issues, including, most importantly the division of assets. Our firm works diligently to avoid litigation, but in some cases litigation avoidance is not possible. In those cases, our firm is able to provide our clients high caliber, aggressive and experienced Orphan’s Court litigators. Whether a Will contest, a contested guardianship or challenging the conduct of the trust or estate’s fiduciaries, our firm will guide you through the unique challenges of Orphan’s Court litigation.
Although initially attempting to avoid litigation, our clients know that once litigation is commenced, our litigation efforts will be tireless and aggressive and we will take all actions necessary for them to achieve their desired litigation result.
Intestacy, or Dying without a Will
Intestacy occurs when a person dies without leaving behind a will. Russell Law handles matters of intestacy for clients. Click here for more Estate Planning information.
Taxes Associated with an Estate
There are a variety of tax matters and responsibilities that impact estates. The primary ones include:
The personal representative of an estate will have to file a final income tax return for the part of the year in which the decedent was alive. This applies to both federal and state income tax.
For income tax purposes, the state and federal government look at an estate as a separate person who has to pay tax on income received. To the extent that the estate receives income in the form of dividends and capital gains, it will have to file a fiduciary income tax return for each year in which it is open. The same rules apply to a trust. The trustees are required to file fiduciary income tax returns on income received by the trust.
In Pennsylvania, an inheritance tax is imposed on all estates from the first dollar. All of your beneficiaries, excluding your spouse, charities, and minor children, will have a tax imposed on
their inheritance, which will range from 4.5%-15% depending on their relationship to the decedent.
In New Jersey, an inheritance will be taxed based on the “Class” scheme below:
Class A beneficiaries are exempt from the inheritance tax; they pay no NJ inheritance tax. This group includes the deceased person’s spouse, domestic partner, or civil union partner, parent or grandparent, child (biological, adopted, or mutually acknowledged), stepchild (but not step-
grandchild or great-step-grandchild), grandchild or other lineal descendant of a child.
(Class B was deleted by the legislature in 2018)
Class C: includes the decedent’s sibling(s), half-sibling(s), son-in-law(s), daughter-in-law(s), and
widows of deceased children.
Class C beneficiaries are taxed as follows: 11% tax on any amount over $25,000 up to $1,100,000 (no tax below $25,000) 13% on any amount over $1,100,000 up to $1,400,000 14% on any amount over $1,400,000 up to $1,700,000 16% on any amount over $1,700,000
Class D: includes anyone who is not a Class A, C or E beneficiary. So, a nephew, niece, cousin, fiancé, friend, or non-civil union partner is considered a Class D beneficiary.
Class D beneficiaries are taxed as follows: 15% on any amount up to $700,000 (unless the bequest is less than $500)
16% on any amount in excess of $700,000
Class E: charitable beneficiaries owe no inheritance tax.
Trust, Estate and Fiduciary Litigation
In Pennsylvania, the Orphan’s Court has jurisdiction over litigation arising in the area of probate, estates and fiduciaries. Orphan’s Court litigation can involve non-adversarial proceedings, such as a petition for approval of an accounting by an executor, administrator or trustee, or an unopposed petition to modify or terminate a trust. Orphan’s Court litigation also involves disputes, such as will contests or objections to the accounting or conduct of an executor, administrator or trustee. If the Court determines that a fiduciary acted improperly in administering an estate or a trust, the Court can remove the fiduciary and can surcharge him or her, meaning that the fiduciary becomes personally liable for damages to the estate.
Another type of litigation commonly seen in Orphan’s Court involves disputes over joint bank accounts and other “non-probate” assets that do not pass under the will but which can have tremendous value.
Will Contests
Poet Robert Burns is credited with the saying “the best laid plans of mice and men, often go awry.” The phrase has taken on the meaning that, even with the most thorough, deliberate, and well-intentioned plans, sometimes things do not work out the way we plan them. The same can be said when it comes to estate planning. When we create our estate plan, it is expected that our wishes will be executed in the manner we have prescribed in our Wills.
However, sometimes circumstances arise which would cause an interested party to challenge the terms of a Will. Sometimes it is a disgruntled family member, or perhaps a child who has fallen out of favor. Occasionally, it may be a child who has isolated the parent and helped (or coerced) that parent to direct their assets to them, usually to the detriment of the other children. Perhaps a friend or loved one has been taken advantage of by a stranger (changing the Will to give everything to the caretaker while on your deathbed, is the classic example). The most typical challenge to a Will is done based on:1) lack of testamentary capacity, 2) and/or undue influence.
As discussed in our blogs on testamentary capacity, the standard for creating a Will is remarkably low. The law will not disturb the terms of a Will so long as you know who your natural heirs are, what assets you have, and how you want them to be distributed. However, if an individual is mentally or physically ill at the time they create the Will, or has some other condition which weakens their intellect, they may be susceptible to what the law calls “the crafts of designing persons.” While it is a difficult argument to make against such a low standard, presenting an “unnatural” Will distribution scheme at the time of death can be a strong indicator. So if the Will gives everything to one child and excludes the others, or if (as mentioned above) the estate goes completely to a stranger, that may be the right time to assert a challenge to the Will.
For the myriad of reasons that a Will Contest may occur, the counsel of a seasoned estate planning attorney can be invaluable.
We at Russell Law have decades of experience when it comes to estate planning and Will Contests.
In Pennsylvania, according to 20 Ps. C.S.A. § 2501, any adult over the age of 18 who is of sound
mind may create a Last Will and Testament. You may wonder what “of sound mind” means
when it comes to making a Will? This definition directly implicates “testamentary capacity.”
Testamentary capacity is defined by three factors:
1) Does the testator (person making the Will) know the natural objects of their bounty?
Simply stated, the “natural objects of one’s bounty” are your beneficiaries- children,
grandchildren, siblings, and so on;
2) Does the testator have a general working knowledge of their estate? Asked a different
way, does the testator understand their assets and what property they own? And;
3) Does the testator understand how they want to distribute their bounty upon death?
Testamentary capacity is a very low standard compared to, say, ability to make a contract. The
law is generous to the wishes of the testator so long as they can reasonably answer ‘yes’ to all of
these questions. So, in most cases, adults who create Wills have the capacity to do so.
So what does lack of capacity look like? Perhaps a client who cannot tell you any of their assets.
Perhaps a client who cannot tell you who their children are (even though that child may be
present at the time). Or perhaps a client who cannot communicate to you about why they are
visiting you in the first place. All of these factors are strong indicators that an individual lacks
testamentary capacity.
When we talk about undue influence, the underlying idea is that an individual has created a Will
that may not be the product of their free Will. However, “undue influence” is very much a term
of art in Pennsylvania. Once a Will has been submitted for probate, that Will is presumed valid.
In order to challenge that Will as a product of undue influence, the challenger must show, by
clear and convincing evidence:
1) the testator was of a weakened intellect at the time the will was executed;
2) the proponent of the will stood in a confidential relationship with the testator; and
3) the proponent received substantial benefit under the will.
However, “weakened intellect” does not simply mean that you were physically or mentally ill at
the time you made a Will. Rather, it means that, because of your physical and/or mental
condition, it left you singularly susceptible to the “art and craft of designing persons.” To prove
undue influence, the level of influence exerted over the testator must evidence an “imprisonment
of the body or mind, or fraud, or threats, or misrepresentations, or circumvention, or inordinate
flattery, or physical or moral coercion, to such a degree as to prejudice the mind of the testator,
to destroy his free agency and to operate as a present restraint upon him in the making of a Will.”
Again you see that the standard for proving undue influence is markedly high, and requires
strong, convincing, and compelling evidence that a Will is not the product of free will.
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Our Mission is to provide residents of Pennsylvania with legal services that will protect their families and their life's work.