The Estate Settlement Process
The estate settlement process can be confusing! This page provides a helpful outline of the process, which typically can be broken down into four phases.
Phase 1: Appoint the Personal Representative
If probate is needed, the first thing we will do is to apply for the personal representative (PR) appointment with the court. In order for the court to approve the PR, notice must be given to the Division of Medical Assistance, as well as to the will’s beneficiaries and certain family members, providing them the opportunity (which we hope they do not take) to contest the PR appointment or to contest the will.
Depending on the type of petition filed, this appointment process tyically takes anywhere between a matter of weeks or even months. Once appointed, the PR has authority to “marshal” (take control of) the estate’s assets.
During this stage we will also appoint successor trustees of any trusts.
Phase 2: Take control of estate assets and file returns
During this stage, the PR tracks down the information for the various assets and liabilities, and obtains values, ownership and beneficiary information, and transfers assets to the estate or trust. Sometimes these are easy tasks, sometimes not.
During this stage estate tax returns are filed, sometimes with tax due, sometimes filed without tax due, typically when the bulk of the estate passes to a spouse. A PR has nine months to file estate tax returns. A six-month extension is available if filed within the nine months. It is important that these deadlines are met to avoid penalties.
There is also a nine-month deadline to file what is called a “qualified disclaimer”, a planning tool that can be helpful in certain circumstances to minimize estate tax exposure.
Phase 3: Distribute estate assets to beneficiaries
Once the PR has taken control of the assets, debts need to be paid, including any estate tax liability. After this, distributions will be made to beneficiaries. Depending on the will or the trust language, distributions will either be outright distributions, or held in trust for the benefit of a beneficiary or a group of beneficiaries.
An estate’s creditors have up to one year from the date of death to bring a claim against the estate. Therefore, PR’s have to be very careful as to when distributions are made. A PR can be held personally liability if he or she distributes assets prematurely and the estate’s assets are then unable to cover the creditor’s claim.
We will work carefully with you as PR or as Trustee to determine the appropriate time to make distributions to the beneficiaries and to obtain appropriate releases from the beneficiaries before distributions are made.
Once appointed and throuout this stage, the PR is responsible to keep the beneficiaries informed as to the status of the estate administration and to provide an accounting at certain times. We will help you with these responsibilities.
Phase 4: Close the Estate
Once final distributions are made to the beneficiaries, the estate can be closed.
There are several options for closing an estate, each with pros and cons. We will walk through each of these with you and determine which option is best.
Closing an estate typically requires a final account of all the estate’s financial activities, which is provided to the beneficiaries and depending on the type of closing, required to be filed with the court.
A proper estate closing fulfills the PR’s fiduciary responsibilities and provides significant protection for the PR in the event that a beneficiary or creditor later attempts to file a lawsuit against the PR, claiming wrong-doing.
Estate Admin Questionnaire
Your completing this questionnaire before our initial meeting will make our time together most productive. Don't worry about tracking down every last detail.