In our last post, we began speaking about some of the steps one will need to take in winding up an estate. As we noted, the process can be overwhelming for those who’ve never encountered it, but a bit of planning ahead and knowing who to turn to for help can be a great help.
In addition to obtaining the death certificate and the estate planning documents themselves-the will or trust-the executor will need to file the letters testamentary. These need to be filed with the probate court in order to establish one as the executor of the estate. These documents prove one has the authority to act on behalf of the estate and can begin the process of winding up the estate.
Handling the estate will involve a number of tasks, including paying bills, filing tax returns, managing and distributing assets, and interacting with beneficiaries, as well opening and closing bank accounts. The first step, though, is to locate all the deceased person’s assets. Ideally, the deceased will have left a list of all the assets and where to find them. In some cases, the deceased leaves behind documents verifying the value of various items, which can be helpful. The attorney who handled the deceased’s will should also have a listing of the assets. In addition, the attorney will notify creditors of the deceased person’s death, which will give them time to request payment.
Distribution of assets takes place by trust, will or contract. Executors must be careful not to distribute any assets until the probate process is complete and creditors are paid.
The executor will be responsible for paying the deceased person’s debts from the funds of the estate. To do this, one will set up a bank account in the name of the estate or trust. If the estate’s assets cannot cover the debts, creditors will be paid according to a predetermined priority. An accounting of the deceased person’s cash flow will need to be done if they didn’t keep records of it themselves.
Filing an estate tax return is also part of the process.
There are certainly challenges to this whole process, and it is greatly helpful to work with an attorney while going through it. With a bit of planning and advice from those with experience, though, the process can be completed correctly and efficiently.
Source: Fox Business, “Seven Tips if You Are the Executor of an Estate,” Judy Martel, June 13, 2012