When a deceased individual leaves a will behind, his or her estate goes through the probate process. A surrogate's court or probate court reviews and approves the will, then disposes of the estate following the directions contained in the will. When a will is not present, an administrator must be selected to oversee and manage the final financial obligations of the deceased, making sure all assets and liabilities are properly disposed of or paid.
Administrator and Estate
An estate is a legal entity set up to hold the assets, rights or obligations of a deceased individual. Each estate has one or more people appointed to act on its behalf. An administrator is an individual appointed to dispose of the assets of the estate, manage any creditors, and pay fees out of the estate for any required attorneys, appraisers or accountants.
Statutes exist that dictate who qualifies to act as an administrator. An administrator for an estate is appointed based on a list of family members, in a particular order. First choice is the spouse of the decedent, then children of the decedent if no spouse exists. Next in line is the decedent's mother or father, then siblings if no surviving parents, and grandparents if no other family exists. The administrator receives a commission from the estate as compensation. The amount is derived using a sliding scale based on the estate's size, applied to a percentage of the total estate.
If more than one family member qualifies, they must decide among themselves who should be appointed. If no decision is made, the court chooses. The chosen administrator must usually pay a certain amount of money in the form of a bond as one of the conditions of accepting the appointment.
Administrators have several duties to perform. They must find and gather all of an estate's assets and debts, request an IRS identification number, and open an account for the estate. They must also oversee all of the assets of the estate, pay off any debt obligations owed by the decedent, reimburse a reasonable amount of expenses related to the funeral, pay any taxes due on the estate, and then, finally, distribute any remainder of the assets to surviving family.
An administrator will take title legally on the estate's assets, and has legal responsibility to file all tax returns and pay all related taxes. This includes state and federal estate tax and income returns, payment of estate death taxes and inheritance taxes, and the deceased's final federal and state income tax returns. Tax bills typically must be satisfied before any other outstanding debts. In certain cases, the administrator may have personal liability for any unpaid tax amounts due for the estate.