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Twelve Months of Financial Milestones Working with Financial and Legal Advisors What Are the Steps in the Probate Process? What Is the Probate Process if There Is No Will? How Do I Pay the Bills Until the Estate Is Settled?
What Should I Do if I
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SETTLING THE ESTATE
If your loved one’s estate is being settled by a professional executor or administrator, you will not be burdened by the considerable responsibilities these positions require, which are described in this section. But you should keep in close touch with the executor so you know what is happening. You might want to ask a financially savvy friend to help you through this as well. If your loved one left a will and named you as executor, you should seek the advice of experts to guide you through the very complicated probate process. At the very least, work with a lawyer who is well versed in handling estates. He or she can help ensure you fulfill all your legal responsibilities as an executor. Depending on the size and complexity of an estate, assistance from some or all of the following professionals also may be needed: a financial planner, certified public accountant, trust officer, or life insurance agent. Ask trusted family members, friends, and advisors for the names of professionals who can help you settle the estate. The estate settlement process begins with the court issuing letters that allow the executor or administrator to continue the legal process of settling the estate and meet his or her responsibility to protect its value. The court may take several weeks to issue the letters, and they are valid only for a limited time. Executors may take some or all of the following steps to settle the estate: • Begin the probate process. • Obtain death certificates. • Obtain a federal tax number for the estate, called an EIN. • File the will and other legal papers with the probate court if formal probate is required. Unless a small estate (as determined by the laws of your state) is involved, formal probate generally will be required. • Advertise who the executor is. People who are owed money by the person who died or others who have an interest in the estate need to know who to contact about their claims. Claims must be filed within a specified and limited time, which varies from state to state. • Open estate checking and savings accounts. • Keep track of all the dates by which various tasks have to be done. • Identify members of the deceased’s immediate family. • Locate all documents that affect the value of the estate. These are the documents listed earlier in this booklet, such as birth certificates, buy/sell information for a business, cancelled checks for the previous three years, deeds, federal and state personal and business income tax returns, gift tax returns, employee benefit information, marriage certificate, military discharge papers, prenuptial agreements, vehicle titles, and more. • List all of the estate’s assets. This list is called an “inventory.” The assets include what your loved one owned alone or with others. The list will include bank accounts, brokerage accounts, business interests, mutual funds, personal property, real estate, and the contents of any safe deposit box. If your loved one controlled property as a “trustee with power of appointment,” that property may be included in the inventory as well. Some types of property that the decedent gave away within three years before death also are included. • Determine who inherits the property. • Manage the property of the estate. This includes negotiating leases, making investments, and paying debts and final bills. • Obtain a copy of all trusts where your loved one was the grantor, testator, lifetime beneficiary, or held powers of appointment over the distribution of assets to others. • Keep a written record of all income, expenses, and payments made. • Determine the value of all banking, savings, mutual fund, and brokerage accounts as of the date of death. • Locate qualified appraisers to document the current fair market value (what it will sell for) of business interests, real estate, and personal property such as jewelry, clothing, cars, and furniture. • Make sure that buildings (houses, rental property, office buildings) owned by the decedent are insured and not at risk of vandalism or robbery. The executor may need to manage these buildings or collect rents. • File for survivor benefits, such as life insurance, pension benefits, and government benefits, such as veteran’s benefits. • Sell assets if money is needed to pay bills. Commonly, the probate court must approve any sale of real estate. • Invest estate assets conservatively. • File tax returns for the person who died. Final federal, state, and local income taxes must be paid in addition to federal and state estate taxes as necessary. Final personal income tax returns are filed on the normal due date. Estate tax returns are due nine months after the death, but that date can be extended. • Distribute assets according to the will or state laws. • Prepare a final accounting of the estate for the clerk of the probate court. • After an estate is settled, petition
the probate court to remove them as the executor or administrator.
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What Does the Executor or Administrator Do?
