Settling an Estate

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Many things must be addressed following a death. Among them is the process of paying debts and distributing the assets of the deceased, or "settling the estate." The state Probate Code is very specific in outlining how an estate must be settled.


Due to laws changing constantly and the variety of circumstances generally surrounding wills and estates, we strongly recommend you seek legal advice from an attorney.

If a decedent leaves a will, it will often name an executor to handle the administration of the estate. If there is no will (or if no one is named) and the value of the assets exceeds the limit set forth in the Probate Code, a probate court judge will appoint someone.

The administrator will generally take six steps in settling the estate:


1. Gather Information and Documentation

It is important to identify all creditors and assets. Search files for tax returns, bills, bank account and other asset statements, life insurance policies, and property tax statements. Safe deposit boxes, mail and professional advisors (attorneys, accountants, financial planners) can also be helpful.

2. Contact Relevant Parties

Once identified, the following are typically contacted: creditors, those holding assets, and known beneficiaries and notify them of the death. In some instances, written notification is required within a certain time periods.

3. List and Evaluate all Assets and Debts

First, it is helpful to create a spreadsheet where you can list asset, its value (typically fair market value), legal owner (trust, joint, etc.), whether or not it is community property, and the percentage of ownership if joint. It is wise to use a professional for determining values. For asset accounts (banks and securities), the balances and values on the date of death are typically used. It is also beneficial to identify whether or not a probate avoider was used, such as a trust, pay-on-death account, joint tenancy, or named beneficiary. Life insurance proceeds are only counted when they are payable to the estate.

Secondly, a list is usually made of all creditors, the amount of total debt, and the due date and amount of payments due.

4. Settle Debts and Taxes

In addition to paying any debts, the administrator should consider any and all tax liability , income, estate, and capital gains taxes. It is advisable to consult an accountant or tax attorney.

5. Identify the Appropriate (Legal) Method of Transferring Assets

There are four primary methods of transferring a decedent's assets: Probate, spousal property, small estate, and probate avoiders. The appropriate method depends on how the asset was owned, the type of asset, whether or not beneficiaries were named, and the total value of the probate estate.

6. Transfer Assets to Rightful Recipient

It is important to use the appropriate method of transfer for each asset. The Probate Code is the legal standard, and professional advice is the best policy.

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