Man at desk working on paperwork

Estate administration is the process of managing and distributing a person’s property (the “estate”) after death.  If the person had a will, the will goes through probate, which is the process by which the deceased person’s property is passed to his or her heirs and legatees (people named in the will). The entire process, supervised by the probate court, usually takes about a year. However, distributions from the estate may, in some circumstances, 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 child 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.

Here we set out the steps the surviving family members should take. These responsibilities ultimately fall on whoever is appointed 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 carrying out these steps until someone is appointed by the court.

First, 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.

Second, take your time. You do not need to take any other steps immediately. While bills do need to be paid, they can wait a month or two without adverse repercussions. It’s more 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, click here.) 

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.

In general, estate administration consists of the following steps:

  1. Filing the will. You must file the will, if one exists, and apply with the probate court to be appointed personal representative. 
  2. Marshaling, or collecting, the assets. This means that you have to find out everything the deceased owned. You need to file a list, known as an “inventory and appraisement,” 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 so that you can keep track of all expenditures.
  3. Paying bills and taxes. If an state or federal estate tax return is needed, 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. Filing tax returns. You must also file a final income tax return for the decedent and, if the estate holds any assets and earns interest or dividends, an income tax return for the estate. 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. Distributing property to the heirs and legatees. Generally, personal representatives 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. 
  6. Filing a final accounting. The executor must file an accounting 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 accounting, the personal representative 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. You can make it easier for your heirs by keeping good records of your assets and liabilities. This will shorten the process and reduce the legal bill.

Health and Elder Law Programs (H.E.L.P.), a non-profit organization started by a California elder law attorney, offers a checklist to help survivors sort out and keep track of the things that need to be handled after a person has died. 

For more information on the duties of an executor, click here.

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