Estate Administration – Surviving Spouse

Estate Administration – Surviving Spouse

When a person dies, he or she will usually leave behind an estate. This estate must be administered, which basically means transferring the assets of a person who has died (the “decedent”) to the decedent’s heirs or beneficiaries. Assets must be gathered, funeral expenses, taxes and debts must be paid, and the balance of the estate must be paid out to the appropriate recipients.

In many situations, in order to administer an estate, probate is necessary. Probate is simply the process of involving the court in the administration of the estate. However, probate can usually be avoided when one spouse dies leaving behind a surviving spouse. The reason is that many married couples choose to title their assets as tenants by the entireties. Tenancy by the entirety is an estate in which property acquired after marriage is held jointly by husband and wife. For example, household goods and furnishings acquired during marriage are presumed to be held as tenants by the entirety. Each spouse owns the whole, shares possession and has the right of survivorship.

Therefore, in Pennsylvania when the decedent passes away, the surviving spouse automatically becomes the sole owner of the entire asset held in a tenancy by the entirety.

The decedent may also have owned other assets, such as IRAs and life insurance naming the surviving spouse as the beneficiary, which also do not require the involvement of the court in order to transfer the assets. These assets are referred to as nonprobate assets.

So if probate is not necessary, what must the surviving spouse do to settle the estate? First, determine what the assets and liabilities are, and what assets need to be transferred. For example, did the decedent own a car in his/her name alone? If so, the survivor may go to an auto tags office or title agency to transfer title to the car by filling out two forms, submitting one certified copy of the death certificate and paying the applicable fees.

Among other things, the surviving spouse may need to:

• complete claim forms for life insurance;
• apply for Social Security death benefits;
• obtain pension benefits;
• notify utilities; etc.

Finally we come to taxes. One of the tax returns our office often prepares is the Pennsylvania Inheritance Tax Return, Rev-1500. Pennsylvania Inheritance Tax is imposed by the Inheritance and Estate Tax Act of 1991 which applies to all estates of decedents dying on or after October 31, 1991. For dates of death on or after January 1, 1995, the applicable tax rate for transfers to the surviving spouse is 0%. However, this does not exempt a transfer to a surviving spouse from tax, and the statutory requirements for disclosure of assets and filing the Return are still applicable even if the spouse is the only beneficiary. Basically, this means the estate must still file even though no taxes are due.

In the words of Benjamin Franklin, “But in this world nothing can be said to be certain, except death and taxes.”

— Denise Ciampitti