When a person dies, his property is gathered into an estate. The estate is formed for the purpose of settling his outstanding liabilities and distributing what remains to his heirs and beneficiaries. The process for distributing a decedent’s estate varies by state. As a result, review the laws of the state where the decedent lived to determine the process related to your specific set of circumstances. Generally, an estate is considered settled when a court declares the estate closed.
The legal process of settling an estate is known as probate. The process begins when a court learns of a decedent’s death, generally due to an interested party filing for a probate proceeding. The court will begin reviewing possible copies of the decedent’s will, checking to see that it was appropriately drafted. The court will validate one will as controlling over the estate. The court then appoints the executor named in the will to oversee the estate. If no valid will exists, the court will appoint an administrator.
Role of the Executor or Administrator
The person chosen to oversee the estate must determine what property is in the estate and establish the property's value. Probate property is anything that is solely titled in the decedent’s name. Jointly-owned property, life insurance policies and retirement accounts are generally excluded from probate estates. The executor must then pay the decedent’s outstanding debts using the estate's assets. The remaining property is distributed to the beneficiaries named in the will. If there is no will, the assets will be distributed to the decedent’s relatives, known as heirs.
Read More: Estate Administrator Duties
The probate court will review all related paperwork regarding the administration of the estate. Once the court is assured the estate’s assets have been distributed in accordance with state law, it will issue an order declaring the estate closed. Once the estate is closed, all of the administrator’s responsibilities are terminated and no other claimant or potential heir can try to make a claim for the decedent’s assets.
Some states permit estates with small asset valuations to be settled outside of probate. Illinois, for example, allows an estate without real estate and valued at or below $100,000 to be resolved using an affidavit. The administrator of the estate would still gather the decedent’s assets, pay off liabilities and distribute the remaining assets to the appropriate heirs. However, the administrator would do this without court supervision. Once the process is completed, the estate’s administrator completes an affidavit regarding what assets composed the estate, how those assets were distributed and confirm all of the decedent’s outstanding claims were paid. The administrator submits the completed affidavit to the probate court, which reviews it and then closes the estate once it is satisfied all steps were properly followed. Check your own state’s laws to see if it has a similar procedure.
John Cromwell specializes in financial, legal and small business issues. Cromwell holds a bachelor's and master's degree in accounting, as well as a Juris Doctor. He is currently a co-founder of two businesses.