To start, an experienced estate attorney will help you understand the process by breaking down the Estate Administration process into segments governed by certain deadlines. Some of these come fairly quickly after the decedent passes away, so prompt attention is key. For example, if you want to take advantage of the 5% pre-payment discount on the Estate’s Pennsylvania Inheritance Tax, you will need to file an initial return and make an estimated pre-payment within 3 months of the decedent’s date of death.
Several other tasks must also be completed within this 3-month period. When the Executor petitions the Register of Wills for the Grant of Letters Testamentary (or Letters of Administration if there is no Will), the Grant of Letters must be advertised in one periodical of general circulation (e.g. a local newspaper) and the county legal journal, if one exists. This must be done once per week for three consecutive weeks.
The Executor must also send Notices of Estate Administration to each beneficiary of the Will, as well as the decedent’s surviving spouse and children, whether or not they are named in, or have an interest under, the Will. If the decedent passed away without a Will – called intestacy – the intestate heirs, as identified by Pennsylvania Statute (20 Pa.C.S.A. § 2101, et seq), must be given Notice. Either way, proof of this Notice must then be filed with the Register of Wills within 3 months.
It will also be during this initial 3-month period where the Executor will be tasked with locating and identifying all of the assets of the Estate. Sometimes this is straightforward, and the decedent’s property is easily located. If they owned only one house, you’ll be able to find that fairly quickly. If they did all of their banking at only one institution, that too will smooth things along in finding financial assets. However, if the decedent had multiple accounts across multiple locations, had cash stashed away in dresser drawers, inside books (I’ve seen it happen), or if they had an extensive investment portfolio, some sleuthing may be required. Diligence is required to identify all of the Estate property, especially if you want to receive the 5% discount on the ultimate Pennsylvania Inheritance Tax. After all, if you don’t have a clear idea of all the Estate assets, it will be difficult to calculate an accurate estimated tax pre-payment.
Losing a loved one is a difficult and emotional time. In addition to dealing with the grief, there are also legal matters that need attention, especially when it comes to handling the deceased person's estate. This is where an estate administration attorney can be of great assistance.
From there, the next deadline you want to keep in mind is the 6-month mark. Here is when the Executor should ideally file the initial Inventory (though the “drop-dead” date is really 9 months from the date of death under 20 Pa.C.S.A. § 3301(c)). The inventory is exactly what it sounds like: A statement to the Register of Wills of all the property of the Estate. The process that you went through earlier in gathering up all of the decedent’s property will be put into writing here.
Finally, the Pennsylvania Inheritance Tax return must be filed, and the final tax paid, within 9 months of the date of death. Again, if you made a good-faith pre-payment, the Estate’s tax burden will be reduced by 5%. When you draw up your final Inheritance Tax return and factor in the pre-payment and the discount, you may owe very little or may even be entitled to a refund if it ends up that you overpaid early on. Important to note: Similar to your income taxes, there are deductions that are available to Estates on Inheritance Tax. Don’t miss these!
Throughout all of this will be numerous other tasks, both small (obtaining an EIN and setting up an Estate bank account) and large (liquidating real property) that the Executor will need to accomplish, all with the ultimate goal of making distribution of the Estate assets to the beneficiaries as the decedent wished. Having an experienced attorney with you at each step can be invaluable in accomplishing this goal.
Once we have determined eligibility for Chapter 7 and have ensured that all assets are exempt, our next step is to draft the Petition. Drafting the Petition considers all financial history and is an incredibly involved process where attention to detail is a must. The Petition must include all creditors to whom you owe money or risk that particular debt not being cleared. You must disclose every source of income and every asset you have – right down to your kitchenware – and provide a good-faith value for each item. Failure to be completely transparent can jeopardize your entire case.
Yes, drafting the Petition is an arduous process. Fortunately, a bankruptcy attorney can assume some of these responsibilities to ease the burden. If you are considering Bankruptcy, having the advice of an experienced attorney can bring you peace of mind.
Here's some good news: The law requires collection activity to stop immediately after filing for Chapter 7 Bankruptcy, including lawsuits, creditor calls, and creditor letters. This stoppage is called the Automatic Stay, which prevents creditors from making further attempts at separating you from your money.
From here, the next step is a hearing with the Bankruptcy Trustee called the Rule 341 Meeting of Creditors (named after the corresponding section of the Bankruptcy Code). At this hearing, the Bankruptcy Trustee will place you under oath and ask you questions about the contents of your Petition, such as your present financial situation. If proper care and attention has been given to drafting the Petition initially, this meeting will not be anything to overly worry about. Candidly, I have attended Rule 341 meetings that have lasted no more than 5 minutes. Still, you must prepare for this meeting thoroughly, and I will make certain this happens. An important note: The petitioner is required to attend this hearing. Failure to do so will risk your case being dismissed.
After the Rule 341 meeting has concluded, we are in the "home stretch," and it's usually only a matter of time before the Order of Discharge is entered. The debtors must complete a "Debtor Education Course," with proof of attendance filed with the Court afterward, but this is a relatively simple item. The only way to goof this up is to not complete the course.
Once the Court enters the discharge order, your dischargeable debt will be erased, and the case will be closed. The important note here is that not all debt is dischargeable. For example, payment for back taxes and student loans will need to continue. The same is true for a mortgage or a car loan that you’ve agreed to keep paying in exchange for keeping your house or your car. An experienced attorney will review your debts with you and tell you which obligations will survive the Bankruptcy process and which are dischargeable.