How to Quickly Settle an Estate?
By Dave Miller
The loss of a loved one can be a very emotional and difficult time. What most people don’t think about when a loved one passes away at first is the burden and stress of dealing with attorneys, assets, stacks of paperwork, taxes, and personal property that has to be handled. This stress, if not handled correctly, may be harder to deal with than even coping with the loss. To start with, here are a few definitions that need to be explained before discussing the overall process of settling an estate.
Estate
An estate is defined as all the property a person owns or controls. This includes all assets a person possesses at the time of death including real property, securities, businesses, physical possessions, cash, life insurance, any kind of pension or investments, and any debts or obligations owed.
Probate
Probate is a legal court process of gathering, accounting for, and finally transferring ownership of the property to the beneficiaries that are spelled out in the will. The probate process is generally overseen by an executor.
Executor
An executor is the person who administers the probate process to carry out the terms expressed in the will. An executor may be a bank trust officer, a lawyer, or a family member or trusted friend.
Trust
The purpose of a trust is a legal third-party agreement that determines how a person’s property is to be protected, held, and managed during his or her lifetime or upon death. The main objective for a trust is to keep the estate out of probate after death, speed up the estate process, reduce the estate tax liability, and protect property in your estate.
Will
A will, similar to a trust, is a written legal document that indicates how your property will be distributed at the time of your death. In a will, you would describe all of your property and name who the property would be given to when you pass away. The main difference between a trust and a will is when a trust is properly drafted, it can help avoid the long legal process of a probate.
The Process of Quickly Settling an Estate
Although the process may vary from state to state, the basic process is fairly simple and standard. The quickest way for an estate to get settled is through a trust or living trust that already exists. If no trust exists, the estate will go into probate. Probate can be a long drawn out process that can add stress and difficulty. Let us assume there is no existing trust and walk through the steps leading into probate.
Step #1 – Inventory Documents and Assets
The first step in the estate settlement process is to locate and make copies of all of the decedent’s estate planning documents and important papers. These documents might include a will, bank or brokerage statements, stock and bond certificates, life insurance policies, corporate records, asset titles, deeds, and the last three years of income tax returns. Most of these documents will be evidence for all assets that may be included in the estate. There might not be paperwork for all assets that were owned by the decedent, so there may be some research needed in order to inventory everything.
Step #2 – Start the Probate Process
Typically a probate is only necessary if there is property in the name of the decedent that needs to be transferred. If probate is necessary, the next step in the estate process is to see who is the executor of the estate. The executor is typically named in the will and if there is no will, someone must be appointed by the court as administrator to perform the duties of an executor. Once someone is appointed, the next step is to file a petition for probate of will with the county clerk of courts office where the decedent lived. This filing process may vary from state to state and a local probate attorney may be needed to help file the proper paperwork. Once the probate is filled and opened with the county, the will is public record.
Step #3 – Pay the Expenses and Taxes
This next step is for the executor to setup a bank account to hold money that was owned by the decedent. From this account you will deposit all estate funds to pay expenses such as legal fees, accounting fees, property taxes, utilities, or mortgage payments. The executor must officially notify the creditors of the probate proceedings in order to pay them off. Once the bills, expenses, and all assets are inventoried, the next step is to pay any income and estate taxes that may be due. This includes working with an accountant to file the required federal or state income tax returns. This is only required if the estate earned any income or the estate is taxable during the course of the settlement process.
Step #4 – Distribute the Balance to the Estate Beneficiaries
The question that all heirs of an estate wonder is “when are we going to get our inheritance”? In most cases, after all rightful debts and expenses have been paid, the remainder of real and personal property is distributed by the executor as the will directs. If there is no will that states how the property will be split, the executor will have to look at the state law statutes to find out how everything gets properly distributed.
In order to completely settle the probate, everything owned by the decedent such as bank accounts, insurance policies, and investments must be split or transferred. There may also be personal and real property that will need to be liquidated to settle the probate. Personal property such as furniture, computers, tools, and other household items may be sold through estate or rummage sales and real property such as houses or land may have to be listed with a Realtor to sell. Sometimes the condition of the house may make it hard to sell or move in a timely manner. An investment company may be a better option to help get cash faster in order to close out the estate.
In Conclusion, Losing a loved one may not only be emotional, but may be a long process making sure the estate is handled correctly and efficiently. Because every state has their own rules and laws, these steps are just a short description of the process of how to quickly settle an estate. We advise seeking legal advice from a lawyer and accountant in order to properly handle the estate process in your state.
David Miller is a trusted real estate investor with many years helping sellers sell their homes for cash. For more info on settling an estate, check out how Real Estate Swap can help you get cash for your house. Also check out our One-Stop-Shop Real Estate Blog for more info on buying or selling a home.