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

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The strong emotions that come with a love one’s passing are often followed by bewilderment when survivors realize all of the financial and legal steps they must take to settle their affairs. The spouse who passed away may have handled all of the couple’s finances, leaving the other uninformed and overwhelmed. Or perhaps a caregiver must begin probating an estate which he or she knows little about. In some cases, the estate itself may be in disarray or scattered among many accounts.

Probate can be intimidating, but understanding how the process works and having some expert legal tips at your disposal will help you execute your duties confidently and correctly.

What is Probate?

Probate, or estate administration, is the process by which a deceased person’s property, known as their “estate,” is passed to the heirs and beneficiaries named in their will. A probate court supervises the entire process, which usually takes about a year, depending on the size and complexity of the estate.

The responsibility of overseeing this process ultimately falls to whomever was appointed executor or personal representative in the decedent’s will. Matters can be a bit more complicated when someone passes away without a will, because it may not be clear who should handle probate.

Read: How to Find out if a Loved One Had a Will

Tips for Starting Probate

  • Secure Tangible Property. This means anything you can touch, such as silverware, dishes, furniture and artwork. Once probate formally begins, you will need to determine accurate values of each piece of property, which may require appraisals, so they can be distributed properly. If property is passed around to or taken by family members before you have the opportunity to take an inventory, this will become a difficult, if not impossible, task. To avoid problems, hold off on all distributions and secure property as soon as you can, even if you do not begin probate or the inventory process immediately. Of course, this does not apply to gifts your loved one may have made while they were alive, which are not considered part of their estate.
  • Take Time. You do not need to take any other steps immediately. It’s important that you and your family have time to grieve. Most financial matters can wait, with one exception: Social Security should be notified within a month of death. If SS checks are issued following death, you will need to return them. (For more on Social Security’s death procedures, visit https://www.ssa.gov/pubs/EN-05-10008.pdf.)
    Filing the will for probate soon after death will help prevent drawing out the entire process. Some states require that a will be filed with the probate court within 30 days of death. Take the time to grieve, but don’t risk additional stress and costs with a lengthy delay.
  • Meet with an Attorney. When you’re ready, meet with an attorney to review the steps necessary to administer the 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. Many families strive to avoid the probate process, but trying to navigate things on your own can become tricky very quickly and have serious implications down the road. A short consultation can determine whether probate is necessary, assess if there may be any problems or contentions, and offer priceless peace of mind.

Read: How to Select an Elder Law Attorney

A Quick Guide to Probate

The following steps offer a general guideline of what transpires during estate administration, but the exact rules differ from state to state. It is important to consult an attorney in the state where the decedent lived.

  1. File as an Executor. To be appointed executor or personal representative, file a petition at the probate court in the county where your loved one was living before they died. In the absence of a will, heirs must petition the court to be appointed “administrator” of the estate. The state will determine who is eligible to fill the role of administrator. Typically a surviving spouse is first in line, then adult children, parents, and so on. The person approved to handle the estate will receive legal documents, typically called “letters,” which certify their authority. You will also need to file the original will and death certificate with the court.
  2. Notify Creditors, Beneficiaries and Heirs of Probate. Each state has its own laws governing notification of parties who hold an interest in a person’s estate and the amount of time they have to file a claim against it. This notification may include a published obituary in the local newspaper and/or directly notifying interested parties by mail.
  3. Marshal, or Collect, the Assets. This means that you have to find out everything the deceased owned, create an inventory and file it with the court. This is where securing property early on comes in handy. It’s generally best to consolidate all the estate funds as much as possible. For simplicity and transparency, bills and bequests should be paid from a single, separate checking account. You can establish one for this purpose or request that your attorney set one up.
  4. Pay Bills. Unfortunately, just because a loved one passes away doesn’t mean their bills stop coming. Tackle these by making a list of all liabilities they have. Some, like utility bills, storage fees to secure belongings and mortgage payments are considered administrative expenses. These accounts must be kept current throughout the probate process. If you use any of your own money to pay these expenses, be sure to keep meticulous records. You may be able to use estate assets for reimbursement in some cases. Other liabilities, like medical bills and taxes, are considered final bills. These can only be paid once probate has concluded, and there is a particular order in which creditors are entitled to repayment.
  5. File Tax Returns. You must also file a final income tax return for the deceased person. If the estate earns income (through interest or dividends, for example) during the administration process, it will have to obtain its own tax identification number in order to keep track of the earnings and possible tax consequences.
    Most estates do not need to file federal estate tax returns, but if one is needed, it must be filed and paid 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. If you are unsure what federal or state tax consequences the estate will incur, it is wise to consult an accountant or attorney who is familiar with tax laws.
  6. Distribute Property to Creditors, 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. However, once you understand the estate and have processed and paid any debts and taxes, you can distribute most of the assets, retaining a reserve for unanticipated claims and the costs of closing out the estate.
  7. File a Final Account. The executor must file a detailed account with the probate court, listing all tax filings and payments, payments to creditors, and distributions of property and assets. Once the court approves this final account, you can distribute remaining funds in the closing reserve and finish your work.

Some of these steps can be eliminated through careful estate planning, but whoever is left in charge still has to pay all debts, file tax returns, and distribute property to the rightful heirs. Meticulous record-keeping and sound legal advice can make this process much easier and shorter for remaining family and can even reduce legal bills over the long term. It’s not an easy conversation to have, but addressing these matters in advance is beneficial to everyone in the family.

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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41 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.