Being named the executor for the estate of a loved one is a great honor, but it’s also a great responsibility. Your loved one has placed their trust in you to settle their estate according to their wishes, no matter how meticulously planned their estate may (or may not) be.
Acting as executor can add to the physical and emotional stress of what is often an already difficult time. If you’re in the process of planning your estate, the most helpful thing you can do to simplify the process for your executor is to create an estate plan containing a detailed list of all your assets, debts, and disbursements.
If you’ve been named executor and aren’t sure how to proceed with settling your loved one’s estate, we can help you sort through the process and tackle this difficult task step-by-step. But before we jump in, let’s start with the basics:
What is an executor?
An executor is a person or institution appointed by a testator (a person who has made a will or given a legacy) to carry out the terms of their will. This includes:
- Finding and quantifying a deceased person’s assets and debts
- Paying taxes
- Paying off remaining debts
- Liquidating assets
- Distributing inheritances
What many people may not know is that executors are paid for their efforts, typically a small percentage of the gross aggregate value of the estate. You can also decline taking on executorship, in which case the court will appoint a successor executor.
Settling an Estate in 10 Steps
To help you through the process of settling an estate, we reached out to the estate attorneys at MacMillan Estate Planning for their expertise. If you’ve been charged with settling an estate, here is one way to approach the task:
1. Create a list of all the tasks you need to accomplish.
According to MacMillan Estate Planning, the #1 thing executors can do to simplify the estate settling process is to make a checklist of all the tasks they’ll need to complete throughout the process. Your list can help get you started, but it may still be helpful to work with an accountant or attorney to make sure nothing gets overlooked, as well as minimize any taxes and ensure that everything is completed legally.
2. Obtain the death certificate.
Most experts recommend ordering a minimum of 10 death certificates, and some suggest ordering twice as many as you think you’ll need. Banks, investment firms, government departments, and just about anyone you can think of will require one to properly settle the estate.
3. Locate the will or trust.
You’ll need a copy of the will or trust for probate court.
Probate court is a specialized court that deals with the property and debts of a deceased person. The primary role of a probate court judge is to ensure that the deceased person’s creditors are paid, and that remaining assets are distributed to the correct beneficiaries.
Whether probate is necessary often depends on the size of the estate. Probate isn’t necessary for many common assets. Contact your estate attorney to determine whether probate is required for you to settle the estate.
The will or trust typically needs to be filed within a few days to a month after death. After filing, a probate judge will decide on the distribution of assets covered by the will. The time required for the probate process varies by state, but usually ranges from about 6 months to 2 years. Trust assets can be disbursed immediately without court approval.
4. Contact the right professionals to help you along.
Enlist the help of qualified professionals, such as estate attorneys, tax accountants, appraisers, or estate sale companies to help you with the estate settling process.
5. File Letters Testamentary
Letters Testamentary, sometimes called “surrogate certificates”, are certified documents that prove you have the legal authority to act on behalf of the estate. They confirm your appointment as the executor, and you’ll need to file them in order to start paying debts and distributing assets.
6. Locate and protect any assets
If you’re planning your estate, the most valuable and appreciated thing you can do for your executor is to create a detailed list of assets and where to find them, including:
- Wills and trusts
- Financial investments
- Insurance policies
- Real property
- Tangible property
- Documents verifying the value of antiques and collectibles
Without a list, it can be very difficult for your executor to track down all your assets and debts, which can add a lot of stress to what is already a difficult time. It may also be helpful to document the familial or historical significance of any heirlooms or antique items.
If you are an executor and can’t locate a list of assets and debts for an estate, it may be indicated in the deceased's will.
7. Notify relevant agencies and institutions
Once you locate the decedent’s assets, you can decide whether to sell any real estate or securities, or terminate any leases or outstanding contracts. You should also begin notifying institutions like banks or government agencies, such as:
- Credit card companies
- Banks, savings and loan associations, and credit unions.
- Mortgage lenders.
- Financial planners and stockbrokers.
- Pension providers.
- Insurance providers, including life insurance, health insurance, and auto insurance.
- Social Security Administration
- Department of Veterans Affairs
- US Postal Service
- State Department of Motor Vehicles
You should also contact the deceased’s employer, as well as organizations such as unions, health clubs or gyms, libraries, alumni clubs, or other social organizations.
|PRO TIP: As an executor, once you have a list of assets, don’t let family members start picking out furniture or heirlooms and taking them away. Protect all assets until the probate process is complete and all creditors have been paid.|
8. Establish an estate bank account.
An estate bank account keeps estate assets separate from those of the executor. This account will be used to hold money transferred from the deceased’s accounts, and to pay debts and other expenses, such as the cost of disbursing possessions to heirs.
9. Pay bills, taxes, and debts.
If the deceased did not keep a detailed account of bills, income, and debt, you as the executor will need to figure out what is owed. You will also need to file an income tax return for the year in which the decedent passed, as well as any necessary estate taxes.
PRO TIP: According to MacMillan Estate Planning Corp, the most important thing to keep in mind when disbursing estate items is estate taxes. Estate taxes include:
When it comes to paying debts, your first step will be notify creditors about the probate proceeding. Creditors will then have a certain amount of time (typically 4-6 months) to file a claim for payment of any bills or obligations that you as the executor haven’t already paid. The executor decides whether a claim is valid. The required method of notice for notifying creditors is determined by state law.
10. Disburse assets.
Chances are, you’ll have been dodging questions from family members about when they’ll receive their inheritances since the moment you were appointed executor, but disbursing and distributing assets is the last step in the settlement process, especially for items that haven’t been specified in the deceased’s last will and testament.
Personal property can only be distributed after:
- You’ve been appointed executor.
- Property has been appraised (see step 4).
- The date for filing of claims has passed.
- You’ve ensured you have adequate funds to pay all estate debts and expenses.
If all debts have been paid and the above steps have been completed, you can begin disbursing assets. After assets have been disbursed, you can petition the court to close the estate.
The #1 Estate Planning Mistake
Being unaware of all aspects of the estate is one of the most common mistakes the experts at MacMillan Estate Planning Corp. encounter. This includes:
- Safety deposit boxes
- Life insurances
- Stock certificate
- Digital currency
- Seeking clearance from the IRA (or CRA, if any beneficiaries are located in Canada)
- Obtaining a waiver as an executor, before disbursing to beneficiaries
- Expecting that the estate has been settled
Creating a detailed estate plan that lists your assets and debts, as well as beneficiaries, is the best way to make sure it’s easy for your executor to settle your estate.
The last step in the estate settling process—disbursing tangible assets like furniture, antiques, and other heirlooms to beneficiaries who may be located in different states—can be one of the most logistically challenging tasks. Working with an experienced shipping company like TSI can lessen the burden and help you ensure that beneficiaries receive their inheritances within constrained timelines and without damage. A qualified shipping company can help you:
- Ship items to multiple locations.
- Ship multiple items to one location.
- Ship antiques, valuables, and fragile items or furniture using a White Glove service.
- Disburse items following an estate sale.
If you’re ready to tackle the task of disbursing heirlooms like antiques, furniture, paintings, sculptures, fine china, or other memorabilia, TSI’s specialists can help you map out what is going where, ensure items that require special attention are well taken care of, and establish timelines for each shipment or move. Our network of carriers can help you get your treasured family heirlooms where they need to go.
PLEASE NOTE: This post is intended to provide general information, and should not be taken as legal advice. Please consult legal counsel in your state for detailed information on settling an estate.