So, Uncle Oscar has always said you were his favorite nephew. He never married, had no children, and at 92 he passed away after a long life well lived. Now you’ve learned he named you as Executor in his Will, and that you and your siblings are the residuary beneficiaries of his Will. You may now be wondering: what exactly did you just inherit in terms of responsibility, and do you need a lawyer to help?Uncle Oscar’s Assets: What’s What?The first step in the estate administration process is to identify the assets and determine what are probate assets, which are governed by the provisions of the Will, and what are non-probate assets that will pass separately from the Will.Let’s say Uncle Oscar owned: A house with a mortgage in his name A bank account titled only in his name that does not have any beneficiaries named on it A bank account titled “Pay on Death” (POD) to you A joint bank account with his brother, George An IRA naming your sister, Susan, as beneficiary A life insurance policy naming your brother, Stanley, as beneficiary A collection of old coins A car titled in his nameProbate AssetsProbate assets are controlled by the Will and, after debts and expenses are paid, are shared by you and your siblings as the residuary beneficiaries. The following assets from the list above are titled in Uncle Oscar’s name alone, which means they are probate assets and are governed by the provisions of the Will: The residence The bank account titled in his name alone without any beneficiaries The old coins The vehicle Non‑Probate AssetsThe non-probate assets go to the beneficiaries named in beneficiary designations made by Uncle Oscar during his lifetime and maintained by the investment companies, life insurance companies and custodians of the funds. This happens completely separate from the provisions of the Will. So, the following assets from the list above are non-probate assets: The joint account goes directly to Uncle Oscar’s brother, George. The “Pay on Death” (POD) account goes to you. The IRA goes to your sister, Susan. The life insurance policy goes to your brother, Stanley.How About the Pennsylvania Inheritance Tax? The probate estate is responsible for paying Pennsylvania’s inheritance tax for assets that are distributed under the Will. Pennsylvania’s inheritance tax rate is based on who receives the property, as follows: 0% for spouses and qualifying charities 4.5% for adult children 12% for siblings (like Uncle Oscar’s brother, George) 15% for everybody else (like you, Susan, and Stanley)Sometimes, depending on the provisions of the Will, the inheritance tax on the non-probate assets must also be paid by the probate estate. Other times, the Will directs that each beneficiary of non-probate assets is responsible for paying his or her own share of the inheritance tax. The inheritance tax on non-probate assets can get complicated. For joint accounts, only the decedent’s portion of the joint account is subject to the inheritance tax. So, only 50% of the joint account that Uncle Oscar owned with his brother, George, is subject to the 12% inheritance tax rate that applies to a decedent’s sibling. If the account had been owned jointly by Uncle Oscar and three other people, then only 25% of the account would be subjected to the inheritance tax as a result of Uncle Oscar’s death. In contrast, the entire value of a transfer on death (TOD) account is subject to inheritance tax. Life insurance proceeds are not subject to inheritance tax. IRAs are subject not only to inheritance tax, but also to income tax, and are governed by special “inherited IRA” rules about how quickly the beneficiary must withdraw the money out of the IRA.It Can Get Complicated. An Executor must also determine if there are even enough probate assets to pay all the decedent’s debts. Here, if Uncle Oscar’s mortgage exceeds the value of all the probate assets, the Estate may be insolvent. Then, Pennsylvania law sets a priority for which creditors get paid first in an insolvent Estate. Mistakes can be costly for an executor, so a lawyer would be helpful. During this often-emotional journey, an Executor must act in the best interest of the Estate and its beneficiaries. Most Estates are administered without serious undesirable outcomes. Disputes among beneficiaries can be resolved by the Orphans’ Court if needed. If you find yourself named Executor (much like Oscar’s favorite nephew) and you’re not sure where to start, our Estates team can walk you through each step so you can honor your loved one’s wishes with confidence and peace of mind.