5 Biggest Mistakes to Avoid When You’re the Executor of an Estate
You have your documents drafted, signed and put away… most people don’t discuss the estate administration process before a loved one dies because let’s face it, who really wants to? But if the person you named as your Executor doesn’t know what to do, they could fall victim to one of the five most common mistakes I see when settling someone’s estate.
I have seen a lot… grieving, anger, confusion, kids not getting along. I hate to say it but that’s pretty typical for when a loved one dies. What makes it worse is the mistakes that the Executor makes after the funeral is over and the family has gone back home. It’s the paperwork to follow.
The first mistake that I see made by an executor is:
1. Using the Wrong Documents to Probate the Estate
One of the first responsibilities of an Executor is to make sure they have found the original will and have completed the right documents to take to the courthouse to start the probate process. Do we have the most recent signed and dated will? Do we even have a will? What about if the person passed with a trust? Did the Executor complete the correct Petition for the Court?
The second biggest mistake I’ve seen is:
2. Failing to Adhere to Probate Requirements
Unlike other states, the probate requirements in Pennsylvania are not very strict. That being said, there are a few requirements that must be done. In order to ensure that everyone who has a claim or interest in the decedent’s estate is aware that there is an estate, the law requires notice to be given to interested parties. The Executor must give notice to everyone named in the will, as well as to anyone that has been disinherited under the will, or anyone that has a right to challenge the will. Upon providing this notice, the Executor must inform the court by filing another form The estate also has to be advertised once a week for three weeks in a paper of general circulation and in the legal newspapers. This is to provide notice to creditors that might not otherwise receive notice of the estate. Advertising the estate cuts off claims of creditors after one year.
3. Making Distributions Too Early
The Executor is personally liable for the estate and the distributions. If the Executor makes distributions from the estate before everything else is done, like paying creditors, the Executor is personally responsible. Such distributions are known as “at risk distributions.” They should be avoided. While there’s nothing to say that the Executor can’t make these distributions, a miscalculation or unexpected claim puts the Executor at risk, and I certainly wouldn’t advise it.
4. Tax Mistakes
The tax forms for the Commonwealth and the Federal estate returns often look simple enough, but believe it or not there are strategies and techniques that you may not be aware of. But the bigger mistake usually made by Executors is not timely filing these documents. Missing deadlines can get you into trouble and can cost the estate money. Pennsylvania requires its inheritance tax return to be filed within 9 months or else they become subject to penalties and interests. Additionally, Pennsylvania offers a discount for paying part or all of the inheritance tax within 3 months and is a deadline that should be met if possible or practical.
5. Executors Don’t Always Conclude the Estate
An Executor should not just distribute the assets of the estate once they reach the end of the estate administration; It is important that the estate is properly closed in order to protect the Executor’s liability. Generally, there are two ways to do this: by court approval or a family settlement. This option provides everyone with a record of the administration so they are aware of all the costs and allows them to agree to give money back in case a later debt appears.
Don’t allow yourself to be burdened and strapped with trying to learn how to be an estate attorney after mom dies. Give me a call and I’d be happy to assist.