Estate Administration: Know What To Do When a Loved One Dies

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Probate is the process in which a deceased person's property, known as the "estate," is passed to his or her heirs and people named in the will. The entire process, supervised by the probate court, usually takes about a year. However, distributions from the estate can be made in the interim.

The emotional trauma brought on by the death of a close family member often is accompanied by bewilderment about the financial and legal steps the survivors must take. The spouse who passed away may have handled all of the couple's finances. Or perhaps a caregiver must begin taking care of probating an estate about which he or she knows little. And this task may come on top of commitments to family and work that can't be set aside. Finally, the estate itself may be in disarray or scattered among many accounts, which is not unusual with a generation that saw banks collapse during the Depression.

This article sets out the steps the surviving family members 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 handling the probate process.

Tips when Starting the Probate Process

  • Secure the Tangible Property
    This means anything you can touch, such as silverware, dishes, furniture, or artwork. You will need to determine accurate values of each piece of property, which may require appraisals, and then distribute the property as the deceased directed. If property is passed around to family members before you have the opportunity to take an inventory, this will become a difficult, if not impossible, task. Of course, this does not apply to gifts the deceased may have made during life, which will not be part of his or her estate.
  • Take Your Time
    You do not need to take any other steps immediately. It's important that you and your family have time to grieve. Financial matters can wait. (One exception: Social Security should be notified within a month of death. If checks are issued following death, you could be in for a battle. For more on Social Security's death procedures, visit https://www.ssa.gov/pubs/EN-05-10008.pdf)
  • Meet with an Attorney
    When you're ready, meet with an attorney to review the steps necessary to administer the deceased's estate. Bring as much information as possible about finances, taxes and debts. Don't worry about putting the papers in order first; the lawyer will have experience in organizing and understanding confusing financial statements.

Probate Steps

The exact rules of estate administration differ from state to state.

  1. File as an Executor
    File the will and petition at the probate court in order to be appointed executor or personal representative. In the absence of a will, heirs must petition the court to be appointed "administrator" of the estate.
  2. Marshal, or Collect, the Assets
    This means that you have to find out everything the deceased owned. You need to file a list, known as an "inventory," with the probate court. It's generally best to consolidate all the estate funds to the extent possible. Bills and bequests should be paid from a single checking account, either one you establish or one set up by your attorney, so that you can keep track of all expenditures.
  3. Pay Bills and Taxes
    If an estate tax return is needed---generally if the estate exceeds $1 million in value---it must be filed within nine months of the date of death. If you miss this deadline and the estate is taxable, severe penalties and interest may apply. If you do not have all the information available in time, you can file for an extension and pay your best estimate of the tax due.
  4. File Tax Returns
    You must also file a final income tax return for the deceased person and if the estate holds any assets and earns interest or dividends, an income tax return for the estate as well. If the estate does earn income during the administration process, it will have to obtain its own tax identification number in order to keep track of such earnings.
  5. Distribute Property to the Heirs and Legatees
    Generally, executors do not pay out all of the estate assets until the period runs out for creditors to make claims, which can be as long as a year after the date of death. But once the executor understands the estate and the likely claims, he or she can distribute most of the assets, retaining a reserve for unanticipated claims and the costs of closing out the estate.
  6. File a Final Account
    The executor must file an account with the probate court listing any income to the estate since the date of death and all expenses and estate distributions. Once the court approves this final account, the executor can distribute whatever is left in the closing reserve, and finish his or her work.

Some of these steps can be eliminated by avoiding probate through joint ownership or trusts. But whoever is left in charge still has to pay all debts, file tax returns, and distribute the property to the rightful heirs. Your parents can make it easier for the remaining family and heirs by keeping good records of assets and liabilities. This will shorten the process and reduce the legal bill. Its not an easy conversation to have, but addressing it as early as possible, before probate is needed, makes the process go far more smoothly and lessens stress for caregivers and family members.

K. Gabriel Heiser is an attorney with over 25 years of experience in elder law and estate planning. He is the author of "How to Protect Your Family's Assets from Devastating Nursing Home Costs: Medicaid Secrets," an annually updated practical guide for the layperson.

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37 Comments

What does the Executor get paid for doing all of this? Is there a prescribed fee, and, does the Executor have to report to all the Decedents how many hours were spent, in other words, how much accounting does the Executor have to do for any amount they are paid?
windy - so all banking are POD's. Who is the POD for them? just you or you AND your brother? or you OR your brother? just how does the POD read? This is going to make the difference in what approach to use. I'd suggest you go to the bank in the morning and take your ID, passport and old DPOA paperwork (not valid anymore but shows mom's intent); dress nice & conservative and ask to speak with a bank officer (not a teller). If the bank is the kind that still has an actual trust department, you can call an schedule an appointment with a trust officer (they deal w/ death stuff all the time & cut to the chase on all this & know the state regulations)

My mom is close to the end, (she has been on hospice since June 2013….) so I have been doing what I can do make all this as simple as possible as I live in another state. Just went to the bank at the beginning of this month to review what happens with her account. Now it's a POD with me as the sole POD and I am also a signature on the account (so I can write & sign checks in my name). Because it's POD set up this way, I could once I have her death certificate go down and close it and get all the funds left (a pittance too). But what they said would be better is to leave it open for at least 6 months as I am still able to write checks or do deposits to the account. So if I get any "paid to the estate of Jane Smith" type of checks, I have someplace to easily deposit it. Like she will get a death benefit from SS, so that would go into the account. Now after 6 months, I will need to deposit something in it (keep it small - like $ 10) every 4 months or so to keep the account active too. Otherwise - at least for TX banking - it will go to the dead account file for the state banking system.

For my situation, I am hoping not to do full traditional probate. (I've been executrix twice before and totally can do probate if need be but I hope won't need to go that whole entailed route). Mom still has a home and hopefully I am able to get a MERP release of claim on the property as there are exemptions and hardship exclusions that will be filed on the property. Assuming release happens, I plan on doing a "muniment of title" to transfer the property ownership to the heir as per her will.
A muniment is kinda like probate lite or low-cal version which can be used IF there is no debt on the estate and just a house or other real property that is indicated in the will to go to a specific heir. Muniment costs maybe $ 500 - 800; 3 to 4 filings in probate (usually just a paperwork filing so no docket appearance); and has to be done within short order (like 6 months as opposed to full probate which can go 4 years in TX). Muniment ideal for situations where they just have a home and no debt and have someone who is comfortable in going to the courthouse.

Now if there is no debt or anything out there that could be a problem (medical bills, funeral home bills, MERP, any real property ownership), and all the $ left is $ just in the POD account, then there probably is no need to do probate ever. There is nothing to be paid. If you & bro get along, then you (as the POD) just close it out and then do a cashier's or certified check to him for his share and DHL or FedEx International it to him. (DHL will be easier, trust me on this) If bro happens to bank with a group that has a US presence, you could deposit the check into his account in the US for him that will clear in about 2 weeks for him. If it's over 10K there will be Homeland Security paperwork to be done (kinda a butt rash to do), so it may be easier just to DHL to him and he deals with it in his county. Good luck.
I'd like to also add, that if my muniment of title plan doesn't work, I will be going the traditional probate route. My moms estate attorney has retired, and for more fun the guy he passed his files too, has also retired. So the current legal, I don't know at all (sigh, this is what happens when your parents live to the backside of 90). But if no muniment, then it's full probate with the attorney (#3) as there will need to be some haggling with MERP (I anticipate this but with merp who knows) and I will want to roll probate out a couple of years to allow for heir to achieve majority. All of which are best served but having experienced legal to do correctly.