Estates 101: Lawyers, Wills, and Money

In which we look at getting a lawyer and how the estate pays out its debts.

The lawyer.  So how much did it cost us to hire a lawyer for the whole process?  Here’s the actual numbers: $600 up front given to the lawyer for the paperwork fees (see below; some of this may be refunded if the fees aren’t that high) and $3500 (payable in 2 months) for all the legal work.

A lawyer can charge by the hour, or, given a typical estate, can simply give you a flat fee which reflects the average amount of work.  In some states, the lawyer is permitted to charge a percentage of the gross value of the estate; I don’t believe PA is one of them.  However, a “richer” and more complicated estate will probably require a lot more work on the part of the lawyer, so it will in general cost more even if not charged by percentage.

The paperwork fees.  The paperwork the lawyer will have to file, for which that money is asked up front so he can get started, includes the petition to the Registrar of Wills to accept the will; the obtaining of the IRS number for the estate; the generation of short certificates for you (the representative) so that you can do certain things like opening a bank account; and advertising the estate.

“Advertising the estate”?  Yes.  The estate must be advertised for three solid weeks in a legal newspaper (e.g. The Pittsburgh Legal Journal) and a general newspaper (e.g. The Pittsburgh Post-Gazette).  The ad includes the name of the deceased, the personal representative, and the attorney.  This requirement allows creditors to contact the estate to make claims.  The advertising alone accounts for about $200 of the fees.

Deposits into the estate account.  Okay, so you get the EIN and short certificate and go to the bank and get a checking account for the estate.  Good.  Now you take any money you get which should be part of the estate and deposit it in that account.

Examples of things we deposited in my mom’s estate account: the refund from her cable TV provider (her last bill was pro-rated from the day after she died, when we called and had service cut off); her last paycheck from her employer (she had been at work less than a week before she died); other pro-rated refunds.

We didn’t want my mom’s car (which she owned free and clear, fortunately) so I took it and a death certificate (do not forget the death certificate!) to a title transfer office and had the title and registration transferred to my name.  Then we sold the car.  The entire value of the sale?  That’s part of the estate’s assets.  Into the account it goes.

Money the estate spends. Now the heir to my mom’s estate (that being me) didn’t intend to keep my mom’s house, and she was paying a mortgage on it.  So the representative of the estate (that also being me) decided that the correct thing was to sell the house.  But until we could get the house sold, there was still a monthly mortgage payment to make; and even if she owned the house free and clear there would have been bills for utilities if we kept them turned on.

So as the estate’s representative, it was my duty to the heir (yes, I know) to maintain the estate’s assets in good order and ensure they did not lose value.  So all such bills were paid out of the estate bank account.

Bills before you get the estate account set up. It’s likely you’ll have some bills which are due in the first few weeks after the death, before you can get all the paperwork together to get the estate account.  (We already talked about the big ones, which are the funeral expenses, but my mom’s next mortgage payment was due just two weeks after she died also.)

No need to panic.  Pay such bills out of your own account and keep receipts and records.  All of these expenses you pay out of your own bank account become money the estate owes you.  (And remember once again, that’s true even if the money was in your bank account because you collected life insurance or money from joint bank accounts — that’s not the estate, that’s your money!)

Even once the account’s set up, you may find yourself in a situation where you go to pay a bill and you forgot to bring the estate’s checkbook.  Whatever.  Pay it in cash or with your own check or however you like and keep receipts.

If (like me) you had to transfer more money into the estate account so it could keep paying its bills (my mom’s mortgage payments were high) — you guessed it: record it.  The estate will owe you that money.

Strictly speaking the estate account isn’t necessary; it’s an administrative tool which makes it a lot easier to keep track of the estate’s bills and separate them from your own normal life in this period of time.  (You did remember that you have your own mortgage or rent, utilities, groceries, etc. to pay, right?)

Disclaimer: I AM NOT A LAWYER.  NONE OF WHAT I SAY HERE SHOULD BE CONSTRUED AS LEGAL ADVICE.  A LICENSED LAWYER SHOULD BE CONSULTED ON ALL LEGAL MATTERS PERTAINING TO ESTATES. The purpose of this article is to tell you some things I learned in the process of dealing with my mom’s estate, which you may want to think about in planning your own estate or dealing with a loved one’s estate.  Furthermore, details of some of these matters differ from state to state, so if you’re not in Pennsylvania, things may be different.  Consult your lawyer on all matters.