Being appointed executor of a will is an important and somewhat daunting responsibility. That’s because it’s up to you to settle someone’s estate, and there’s often a lot of complexity involved in the settlement process.
That’s why we’ve created this guide. Read on to find out how to kickstart the probate process, which agencies you’ll need to notify, and how to distribute assets to the estate’s beneficiaries.
Key Takeaways
To begin settling an estate, you’ll need to begin the probate process by providing the decedent’s will and death certificate.
As an executor, communication is key. You’ll need to notify relevant agencies of the individual’s death and keep beneficiaries in the loop about the distribution process.
To settle the estate, it’s worth setting up a specific bank account to manage the payment of any debts or taxes owed before distributing what’s left to the estate’s beneficiaries.
11 Steps to Settle an Estate
If you’ve been chosen as executor, it’s up to you to carry out the wishes of the person who’s passed, according to what’s specified in their last will and testament. A large part of settling an estate is making sure all assets are accounted for, and then distributing them to the designated beneficiaries.
The complexities of settling an estate vary depending on its size and the types of assets involved.
For example, a simple estate with just a house and a few bank accounts might take six to eight months to settle. Meanwhile, a more complex estate with multiple types of assets could take several years to finalize.
For that reason, it’s wise to start the wheels of the settlement process turning immediately. Here’s what you’ll need to do:
1. Gather the Information You'll Need
The first step you’ll need to take in gathering information will be to find the decedent’s will.
Start by contacting the deceased person’s lawyer, if they hired one. Their attorney can get you a copy of the will.
No attorney? You’ll need to do some detective work. If you have access, check the deceased person’s computer and email, as well as the rest of their home, office, and security deposit box.
You can also check the U.S. Will Registry, where wills can be registered for free.
The next step is to get copies of the death certificate.
Ask for multiple copies from the funeral home. You’ll need to show this document at various points during the settlement process, for instance, to gain access to bank accounts, pay taxes, and notify the Social Security Administration.
This is where Trustworthy can offer some much-needed support. Trustworthy's Family Operating System® that enables you to upload, store, and maintain important documents.
Plus, Trustworthy’s Autopilot tool makes navigating those family documents fast and simple. You’ll benefit from automated document summaries, recommended document titles, and categories, so that it’s always easy to find and share the important estate documents you need.
2. Decide Whether You Need Legal Help
It’s a misconception that you have to hire a lawyer when you’re settling an estate. An attorney isn’t a requirement, but in many cases, legal know-how and experience can be helpful.
Some reasons that you might consider hiring an attorney:
You need to go to probate court (which oversees the property and debt of a person who’s passed on).
The estate includes a complex asset, such as a business.
The will is being contested, or family members don’t see eye to eye.
The estate may not have enough money to pay off debts.
You’re not sure that you understand your state's laws and procedures. (It’s not just you — many can be quite complicated.)
You anticipate the estate will need to pay federal or state taxes.
In any of the cases above, professional help could save you both time and money.
3. File the Will With Probate Court
A petition for probate kicks off the settlement process.
Travis Christiansen, an attorney at Boyack Christiansen Legal Solutions in St. George, Utah, explains:
“Usually, it is pretty straightforward to file a will with a probate court. Some states allow you to file the will at the time it is made, and some you must wait until after the person dies.
“Depending on state law, the will is filed along with some legal documents that start the probate process. There may also be notification requirements (like an ad put in a newspaper for a certain number of weeks to notify any beneficiaries) depending on the state law.”
Even if you were already designated as executor in the will, you’ll need to fill out this form. Once it’s approved by the court, you’ll have the legal authority (aka, “Letter of Administration”) to manage the affairs of the estate.
4. Notify Agencies and Businesses
When someone dies, businesses and agencies aren’t automatically notified. That will be up to you.
Plan to contact:
Banks
Credit card companies
U.S. Postal Service
Utility companies
Social Security Administration
Department of Veterans Affairs
Medicare or any other health insurer
Any other businesses with whom the person had financial dealings
You’ll need one safe place to store documentation of your communication with each of these entities, especially in case any issues later arise. This is where a tool like Trustworthy can really come to the rescue.
With Trustworthy, you’ll gain privacy thanks to a range of security features like robust password recipes, two-factor authentication (including hardware keys), and AES 256-bit encryption.
Depending on the state you’re in and if you’re going through probate, you may also be required to publish a notice of death, typically in a local newspaper. This allows creditors whom you aren’t aware of to contact you and make a claim.
5. Communicate With Beneficiaries
Reach out to each beneficiary to let them know that you take your role seriously and the steps you’ll take to eventually distribute the assets (especially theirs) and settle the estate.
Remember to contact any businesses or charitable organizations named as beneficiaries, too. You may also want to include a copy of the will.
Again, this is where Trustworthy can step in to boost communication.
Trustworthy’s collaborative nature enables you to grant secure access to specific documents on a case-by-case basis. That means you can easily share important estate documents with relevant parties like any beneficiaries, your family members, attorney, accountant, or anyone else that you think would benefit from accessing these documents.
Sounding good so far? Explore Trustworthy’s range of features to learn more.
Not sure how to phrase all this? You can find a helpful sample letter to beneficiaries at Executor.org.
6. Get Assets Appraised
Carefully taking inventory of all the deceased’s assets allows you to determine if any estate taxes need to be paid. It also allows you to determine if the estate is solvent, (ie, you have more assets than debt).
A formal inventory will need to be filed with probate court, but even if you don’t go through probate, you’ll find it helpful to keep a detailed spreadsheet. Trustworthy can help you put together the inventory and store it safely once it is finished.
When you make note of assets, remember:
Be (very) detailed. For instance, include policy numbers of life insurance policies, the number of shares of each stock, VIN numbers of cars, and the serial number on U.S. savings bonds.
Include intangible assets. For example, a copyright on a book, a patent, or a signed contract are all considered assets, so include them in your inventory.
Get professional appraisals. Unless you’re an expert on all things, it will be hard to accurately guess how much a painting, antique cookie jar, or 1967 Corvette that’s been a home to raccoons for 20 years is worth. A professional appraiser can give you a concrete answer.
If you’ve hired a lawyer, they may be able to recommend an appraiser. You can also contact a professional organization, like the American Society of Appraisers.
7. Set Up a Bank Account
A key part of settling an estate is opening a new bank account to hold the deceased's financial assets.
Attorney Travis Christiansen explains:
“If you are going to pay people — like an appraiser or executor — to settle the will, it may be a good idea to do that so that it is clear how much money from the estate is used to pay them if there are disputes.”
You’ll use this account to pay bills (like a mortgage), take care of fees associated with the burial, pay off debts, and collect any money owed.
A basic checking account is often appropriate, although some banks offer special estate accounts. If the estate is large and/or complex, you may even need to open more than one account.
A quick note: Before proceeding to the bank, you must apply for a tax ID number or employer identification number (EIN).
You can apply online at the IRS to get one immediately. Bring this documentation with you to the bank, along with:
A copy of the death certificate
Your personal identification
A letter of administration
8. Collect Money and Pay Debts
Once you collect insurance benefits, final wages, and the like, you’ll deposit them into the estate bank account.
You’re also responsible for paying off any unpaid bills or debts of the person who passed. (And debt collectors are allowed to contact you about them.) It’s important to stay on top of these as best you can, so you don’t damage or lose assets. Car payments, electric bills, and mortgage payments should all be paid in a timely manner.
If you find that the estate doesn’t have enough cash to pay off its debts, you may need to sell some assets. Here’s where a lawyer’s help can be invaluable. As executor, you have a responsibility to be fair to all beneficiaries. If it’s not clear what you can fairly liquidate or you feel the beneficiaries may not agree, call in an impartial attorney.
In the case of an insolvent estate, one that has more debt than assets, state law will decide and prioritize which creditors are paid first.
9. Pay Taxes
The IRS separates the tax returns from a deceased person and their estate, so you’ll have to figure out the different filing requirements for each.
Income tax for the deceased: You’ll need to file a tax return (Form 1040 or 1040-SR) for the year of death, as well as any previous years in which a tax return was not filed.
Income tax for the estate: You’re required to file an income tax return (Form 1041) if the assets of the estate exceed $600 annually. If the estate includes a business, that will require its own EIN.
Estate tax returns: In some cases, you’ll need to file a tax return (Form 706) when assets are transferred to beneficiaries. You can find out more about estate taxes at the IRS website.
10. Distribute Assets
Once all debts and taxes have been paid, you’re ready to distribute assets.
Dana Ronald, founder and CEO of Tax Crisis Institute, explains: “Distributing assets to beneficiaries generally requires taking an inventory of the estate, paying any debts and taxes, and then following the stipulations outlined in the will. Clear communication and documentation are vital to avoid disputes.”
This timing is important. If you dole out the inheritance first, you may find yourself liable for any leftover estate expenses.
To avoid issues later on, always ask the beneficiary to sign and date a receipt for each item of their inheritance. You could also include a line about returning payments if they find out there’s been an error.
Some types of assets also come with unique distribution guidelines. For instance:
In some states, a property title will automatically pass to beneficiaries without any formal steps on your part. In other parts of the U.S., you may need to petition the court for distribution.
Stocks and bonds may need to be re-registered in a beneficiary’s name.
A specific dollar amount mentioned in a will (“I leave my great-granddaughter Janie $19.99!”) will need to be written as a check from the estate account you opened.
11. Close the Estate
Lastly, you’ll file a final accounting with the probate court (and make sure each beneficiary has a copy, as well.) This should include:
Income/assets received
Losses to the estate
Amounts paid out to creditors
A detailed accounting of how the inheritance was distributed to the beneficiaries
Some states require a petition to be filed in court before the estate is officially closed.
Regardless, the American Bar Association recommends that you still ask each beneficiary to sign an attorney-prepared document that acknowledges their acceptance of the assets (if you haven’t already) and approval of the role you’ve played as executor. It’s a small formality that can protect you from later disagreements.
Trustworthy gives you a simplified way to keep track of these important papers.
Frequently Asked Questions
How do I settle an estate without a will?
Technically, if there’s no will, there’s no executor. That means you’ll need to nominate yourself to be executor to commence the settlement process. You can do this by heading to the relevant county court and filing a petition to begin probate.
How long does the settlement process take?
The settlement process depends on the complexity of each respective estate. While a simple estate can be settled in a matter of months, it could take years to settle a more complex estate.
How should an executor distribute money?
Distributing assets to the beneficiaries of an estate requires you to take an inventory of the estate, pay any debts and taxes, and then follow the stipulations outlined in the will to distribute any assets or money.
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