Estate Administration Overview

by | Jul 11, 2018 | Articles, Estate Planning

Estate Administration can be complex, but it does not have to be. Here is a general overview of the estate administration process. Estate administration typically includes three broad steps:

  1. Asset collection and inventory.
  2. Paying and collecting debts and taxes.
  3. Disbursing assets to beneficiaries. This process may occur either with or without a will and may occur in probate court or outside of probate court depending on the particular situation.

It is important to have an up-to-date valid will. You should review and possibly amend your will if any of the following events occur:

  1. The adoption or birth of a child
  2. The death of your spouse or divorce
  3. Remarriage
  4. Any other significant life changes that cause you to want to change in beneficiaries. Once you have a valid will, make sure that it is readily accessible in a location that the survivors know about.
Wills and Estate Administration

In the absence of a will, state law will determine the identity of the heirs at law. If you have no qualifying living relatives, your estate will transfer to the government, also known as escheat. Although this is rare, it may occur. You can avoid intestate, by pre-planning and ensure that you have a valid will.

Estate AdministrationYour will typically will name an executor to conduct the estate administration. Selecting an executor is a very important and personal decision. You may choose your spouse, an attorney, family members, or anyone else that you have in mind. A bank trust department may also serve as executors. You may want to discuss the executor service with the potential executor prior to naming this individual in the will. An executor has the ability to refuse or be unable to serve, therefore, it is important that your will provides for an alternative executor and in some cases multiple alternatives. In the absence of a named executor, the probate court will appoint an administrator according to state law. The probate court will issue a document known as “letters of administration” that allows the selected executor to have authority over the estate assets.

Taxes, Beneficiaries, and Creditors

Even if you don’t owe taxes, the simplest estates may require filing tax forms. Typically, the federal estate tax return is due nine months after the date of death. Even a no-tax-owed filing is recommended because tax filings may start the time period for which the IRS may assert claims against the estate. Therefore, you may want to consult with a CPA or a tax professional.

It may be a requirement under state law to notify both potential creditors and beneficiaries by notices or advertising. This requirement is in addition to direct notice provided to known creditors and heirs. Once all the steps required are completed, the executor or administrator should timely apply to the probate court to close the estate. This starts the time period in which dissatisfied parties may assert personal claims against the executor. Prior to closing the estate, the assets must be fully distributed. This is a general overview of the estate administration process and if you need assistance in the estate administration process, please contact us today.

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