After my father's death we have received a letter from an insurance company about some payments owed to us. It says the check will be made out to the estate if an estate exists.
So now I am confused about whether an estate is a legal entity that may or may not exist, as opposed to the common language definition of "whatever the deceased left behind".
He had no significant property not in a trust, not even bank accounts, only personal effects. If we get a check made out to the estate, how is it handled? Does the estate have to be set up as a legal entity, perhaps with its own bank acct, to cash such a check? Or can the executor in his will legally just sign it on the back and cash it? Many thanks for your help!
Assets of an estate are subject to the debts of the decedent. The estate is a legal entity that holds those things among others. The insurance company will want to pay the estate because that is the proper person they contracted to pay or send refunds to, presumably. Each state has a small estates affidavit type procedure to side step opening a probate.
This may or may not be what you need:
At a minimum, you should talk to a probate attorney to be sure that there is no need for a probate. Use the AVVO.com web site to find an attorney in your area. In addition to that, contact your local bar association for referral to an attorney who specializes in this or talk to friends and neighbors to ask about an attorney they have used and liked. Often, but not always, the attorney will do an initial consultation free of charge. You will then be in a better position to determine what to do next. Best of luck to you!
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The prior attorney offers sound advice. However, if your there were no debts and no other probate assets, then the insurance company may have a direct payment to beneficiaries procedure for small amounts. Perhaps this is why they are qaulifying with "if an estate exists." Call them to explore your options. If not follow the instructions suggested by the prior attorney.
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Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is [email protected] , his website is www.sjfpc.com. and his blog is
LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is [email protected] , his website is www.sjfpc.com. and his blog is <http://frommtaxes.wordpress.com/> Mr. Fromm is ethically required to state that the response herein is not legal advice and does not create an attorney/ client relationship. Also, there are no recognized legal specialties under Pennsylvania law. Any references to a trust, estate or tax lawyer refer only to the fact that Mr. Fromm limits his practice to these areas of the law. These responses are only in the form of legal education and are intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received. By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction, who is familiar with your specific facts and all of the circumstances and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question. Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.
A decedent's estate is a "pot" into which all property of a deceased goes into if that person owned them at time of death and they did not somehow pass to living persons through trusts and other arrangements including some special bank accounts that do not require probate, and are subject to his creditors. Probate is really the name given to a one-sided "lawsuit" or case that is filed in court to administer handling of a deceased person's assets AND debts so that once any debts are cleared up, any remaining assets can pass along to the intended beneficiaries "free and clear".
Sounds like your dad was the beneficiary of the insurance, had some bank accounts and some other property, AND he had a will.
First, however, since he had a will, the will must be filed by law, with the circuit court clerk.
There are different kinds of probate estates, depending mostly on the aggregate value of the assets he had at the time of death - sounds like the insurance proceeds were the primary assets of value. It can be fully court-supervised or pretty much "independent". Either way a main reason for opening the estate is that you notify creditors and if they don't pop up and claim valid debts, then the assets can be distributed "free and clear". Otherwise, both the insurance company and the will beneficiaries run the risk of having creditors follow the assets. It could very well be he set it up this way to cover final medical bills and funeral costs, etc.
So the insurance company's procedures may not allow it to issue a check without knowing that the person named the executor has been court-appointed under a probate case. And without court appointment, trying to cash a check made to an executor may be a big problem -- no bank will want to take the deposit without proof of the executor's authority to transact the check.
So, anything in your dad's name at his death, including bank accounts, that do not by the way they are set up automatically pass to a living person, also would go into the estate "pot".
Depending on the nature of the payment, you may be able to discuss using a small estate affidavit or some other way to get the payment made. Usually, the "estate" is set up by the probate court and gets it's own tax ID number if it is significant or there are some other issues.
Any advice contained in this message was not written and is not intended to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties with respect to taxes that may be imposed upon the taxpayer. (See IRS Circular 230). Before taking any action, you should seek the advice of an attorney.
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