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I Am a Beneficiary of an Estate. How Long Will it Take For Me to Get My Money?

This is a question that we receive at least once a month if not more in our office.  Individuals who were named in a Last Will and Testament as a beneficiary, once they realize that they are a beneficiary, want to know how long it will take for them to receive their inheritance. 

The probate process in the Commonwealth of Pennsylvania is actually a very straight-forward process.  Many states in the country have a very complicated process that individuals have to go through, but Pennsylvania is not one of them.  However, that does not mean that an individual who is named as a beneficiary will receive their money overnight because there are a lot of things that have to occur before a beneficiary can get the money that they are entitled to under the Will.  

In the Commonwealth of Pennsylvania, there are requirements of an executor that he or she must comply with in order to ensure that he or she will not be personally responsible or liable for the taxes or to the beneficiaries.  For example, an executor must provide notices to heirs as well as advertise the estate in the local newspaper and local legal journal to provide notice to creditors to start the statute of limitations for creditors to come forward with a claim.  The executor must also get date of death valuation letters from every institution who holds an account or had an asset of the decedent at the time of their death.  

Once the executor and the attorney for the estate receive all the date of death letters, they are then in a position to begin to prepare the Pennsylvania inheritance tax return.  Once the Pennsylvania inheritance tax return is prepared and filed it can take the Department of Revenue up to one year to review and approve the return.  It typically takes 6 to 9 months for the approval process but can take up to 1 year.  Typically the attorney will prepare receipt and releases for each and every beneficiary if the estate is going to make a partial distribution to the beneficiaries prior to receiving the approval from the Department of Revenue.  

It is always my recommendation to the executor not to distribute all monies to the beneficiaries at this point because the Department of Revenue still has to sign off on the appraisement and the tax return agreeing that they are not looking for any additional tax in the estate.

It is also worth noting that there is a significant time delay currently with the Department of Revenue and receiving notice back of the inheritance tax and that the appraisements are okay. As of September 2020, we had filed appraisements October of 2019 that we still had not gotten final approval back on. This is significant, because although the normal lag time is five to six months, we are currently seeing about a 10 to 12 month delay in receiving the appraisements back from the Department with final approval currently.

I always recommend to my executors that they not make final distributions and have the beneficiary sign off on the receipts and releases/family settlement agreement until we have the final paperwork back.

It is obvious that in the current times, In light of COVID and the state having to close for a period of time and not getting to any tax returns, the time frame from a beneficiary to receive their money under current times is fairly significant. However, this is not normal, and under normal circumstances the final appraisement certainly would be quicker.

 It also is a case by case basis as to how much we can distribute before receiving the final word from the government. In some situations, when there’s a close family, they will distribute more with the partial distribution than in other situations. In a case where it is contentious and there are beneficiaries who are not family or who have caused nothing but issues, we will often recommend that we not distribute anything until we get the final word from the Department. In these cases, under the current situation, it could take a year or more before we are in a position to be able to do that. 

It is important to know that in a situation where somebody does a living trust or a Grantor trust in the Commonwealth of Pennsylvania and retains control, an inheritance tax return is still required to be filed. That means that even under a trust administration, if we are waiting on the Department to approve the inheritance tax return, the time frames would remain the same. I say this because many people think that probate is the problem, or that it is the fault of the local Register of Wills or Orphans’ Court, but in reality, that is not it at all, we are at the mercy of the Department of Revenue for final approval of the inheritance tax return. 

For any questions or assistance through this process, please contact us at (717) 845-5390. We would love to help you.

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Making Inheritance The Incentive / York, PA

MP900401036Putting conditions on inheritances can offer incentives to heirs

With great wealth comes great responsibility. On the other hand, great wealth can also mean great fun. When those minds are young ones it can be easy to miss the responsibility part until it is too late, if ever. If you are leaving behind an inheritance for the good of your young loved ones, then ensure that the inheritance will be a blessing and not a curse. So, how can you ensure that they’ll learn to work and do the right things? With careful planning you can make the inheritance itself provide the incentive to engage in good behaviors.

Incentivized inheritances offer you the chance to give the gift of possibilities and a secure future. Properly planned, such an inheritance can make your heirs pause to respect the inheritance and take responsibility for it. The Chicago Tribune looked into the topic in a recent article titled “Making sure your kids are trustworthy.

Basically, to incentivize an inheritance is to build certain conditions into it. Ideally these conditions offer an heir a chance to grow and take responsibility. Want the inheritance? First, finish college, or go volunteer, wait until you’re a certain age, or just uphold shared values in your life. These are the kinds of conditions you could set for an inheritance and ask your heirs to work for them. This can be done with a will, however, for greater effect consider a trust. Specifically, many find an “incentive trust” or the more hands-on “principle trust” to be a powerful tool.

If you’re going to ask your heirs to think, then you’re going to have to expect the same of yourself. Incentive plans take a careful hand and a special awareness of your heirs, their motives and their possibilities. You don’t want to accidentally disinherit or dis-incentivize, for example. Finally, when it comes to actually putting the words to paper it takes some careful drafting to get it right and think of all the options. If you want your heirs to learn and grow, then it is worth the time and treasure to work with competent counsel and with your loved ones directly to build the best plan.

For more information about making the inheritance the incentive, please visit my estate planning website.

Reference: The Chicago Tribune (May 8, 2014) “Making sure your kids are trustworthy

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