Why is the administration process necessary?
After the passing of an individual (generally referred to as the “decedent”), there is an administration process that must be followed and completed. When someone passes, their name and social security number need to be retired. Not doing this is the #1 way that identity theft occurs. Seeing a professional that understands the ins and outs of the tools needed to transfer title successfully to a decedent’s beneficiaries ensures a some transition that minimizes potential taxes and costs. Some of these tools are Small Estate Affidavits, Beneficiary Claims, Heggstad Petitions, Rights of Survivorship, and Probate.
The main reason why estates need to be administered is to facilitate an orderly transfer of assets upon death. This holds true whether it is a multi-million-dollar estate or only worth a few thousand dollars. The administration of any estate also applies whether there is a will, a trust, or no estate planning documents.
During the administration period, someone must be officially and legally appointed to handle the details of the administration. That person is known as a personal representative and essentially “stands in the shoes” of the deceased. A personal representative is necessary because someone must be authorized to sign the decedent’s name and to transfer assets. If the decedent dies with a will, or “testate,” an executor is appointed as the personal representative. If the decedent dies without a will, or “intestate,” an administrator is appointed as the personal representative.
Once the personal representative of the decedent is appointed, they are responsible for locating and gathering assets, performing an inventory of all assets, and obtaining an appraisal of those assets.