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Tasks and Considerations When Settling an Estate Thumbnail

Tasks and Considerations When Settling an Estate

When a family member or spouse dies, the most immediate decisions involve how to arrange for services, the memorial, addressing visiting family, and dealing with grief. Then comes the much longer phase of settling the estate with all its financial ramifications. In a marriage, this falls to the surviving spouse (often named the executor). Outside of marriage, it falls to the executor or whomever was the next of kin. From there, the long process of unraveling the financial details begins. Here are 8 suggestions to expedite the process, limit frustration and avoid mistakes.

1. Make Non-Emotional Decisions

Any time you make an emotional decision, it will typically result in a less than ideal outcome. Instead, delay the decision until you can approach it objectively, weighing all the alternatives. If you do not think you can make an objective decision, consider talking to a neutral third party.

2. Get Help

The estate settlement process is technical and there are several legal requirements. Consider working with an estate planning attorney who handles probate matters, a financial advisor to complete transfer paperwork for account beneficiaries and trusts, and a CPA to complete the final tax returns.

3. Secure Death Certificate and Power of Attorney

You will need copies of the death certificate to close bank accounts, submit insurance claims, and transfer retirement accounts to beneficiaries. You should request multiple copies as many institutions will require an original. You will also need to secure a power of attorney or letter of authority to demonstrate that you are authorized to represent the estate (presuming you are the executor or executrix).

4. Notify the Employer

If the individual was working, the employer needs to know he or she has passed. This begins the process of claiming various benefits including life insurance. Keep in mind, there is likely a work-based retirement plan, as well.

5. Obtain the Will, Estate Plan or Trust Documents

A will or living trust is essential for determining the distribution of property. In most states, a spouse has automatic ownership of some of the property, but not all. The will or trust will designate the rest. Work with the estate planning attorney on probate and financial advisor to process account updates for the trust(s).

6. Track Costs in Detail

This is particularly relevant for non-spouse executors. Settling an estate as an executor can be a long, costly process. Your costs, as well as the estate’s costs should be paid be paid by the estate. However, you can only defend them if documented clearly and carefully. Keep meticulous records and receipts of expenditures. This ensures you can defend your actions in the event a family member or beneficiary alleges that the estate was mismanaged or if the probate court requires an accounting before making a final estate decision.

7. Taxes

The executor prepares and files the final tax return for the deceased. In addition, the package will also include an estate tax return. It is generally advisable to work with a CPA or Enrolled Agent to prepare and file these returns.

8. Keep a Log

Because the estate settlement process can take a great deal of time and is complex, write down all critical issues and decision with a date on a log. This will help you remember what you did months later and the rationale for your decisions. 

This is not a recommendation and is not intended to be taken as a recommendation. This material was prepared for general distribution and is not directed to a specific individual.

LPWM LLC does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisers.