One day, many of us will find ourselves facing the daunting task of settling a loved one’s estate. Unless you’ve done it before and have the help of an estate attorney, managing the distribution of a loved one’s finances and possessions can quickly become overwhelming.
When a person dies with a Will-based estate plan, the Will must go through a process called Probate. Probate is the process of gathering, protecting and managing the decedent’s property, paying bills, debts and taxes owed by the decedent, and ultimately distributing the decedent’s property according to his or her Will. This process is overseen by the court system, most often the clerk of court in the county in which the deceased person lived, and is a matter of public record (meaning anyone can see who receives an inheritance and how much).
It’s important to do one thing before commencing with administration of the estate, and that’s securing the deceased person’s property – his or her home, automobiles, and even furniture, jewelry, and other household possessions. The executor is also responsible for managing investments, business interests and other property during the administration process. Sometimes assets will require appraisals to ascertain an accurate value for the property.
When preparing to probate the Will of your loved one, there are several steps you should take. These responsibilities ultimately fall on whoever was appointed executor or personal representative in the deceased family member’s Will. Matters can be a bit more complicated in the absence of a Will because it may not be clear who has the responsibility of carrying out these steps.
After securing the deceased’s property and meeting with an attorney, you must file the Will and a petition with the probate court to be appointed the executor of the estate. Your next step—and this one can take some time—is to gather the assets and account for them in an inventory, which must also be filed with the probate court. It’s also advisable to consolidate cash holdings into a single account, which you can use as a vehicle for handling the bills and bequests associated with the estate.
Before you can distribute the proceeds of the estate, you must take care of any outstanding bills and taxes. This includes dealing with any outstanding federal and state tax liabilities, filing final income tax returns for the decedent, and filing a fiduciary income tax return for the estate itself if the estate has income from revenue-generating assets such as rental properties, mutual funds, or interest-bearing bank deposits. The executor must also provide notice to known and unknown potential creditors and pay any outstanding bills or claims from creditors. Administrative fees and expenses must also be paid, including filing fees, appraisal fees, and attorney or accountant fees.
The final steps include distributing the remaining assets of the estate to the beneficiaries named in the Will. In order to close the estate, a final account must be filed with the probate court to show all assets and income of the estate, expenditures for costs, bills, claims and taxes, and finally, distributions to beneficiaries.
Consider this article as an outline, rather than an exhaustive listing of all of the tasks that must be completed in the administration of an estate. The complexity and time required to complete the probate process is determined by the nature and value of the deceased person’s property as well as the clarity of instructions in the Will. There are also important deadlines that must be met during the probate process, and also with other agencies such as the IRS and Social Security Administration. Above all else, take your time, gain a clear understanding of your responsibilities, and know your options. Seek the counsel of an estate planning attorney to help you navigate what for many people can be a long, arduous process.