Reasons for the Administration Process
Upon an individual’s death, it is necessary to complete an estate settlement process and follow specific guidelines to properly distribute the estate they have left. This should always start with retiring the individual’s Social Security number, as failure to do so opens the door for identity theft. Lawyers who specialize in estates and trust administration are valuable consultants, as they know the best tools for properly transferring assets. With their resources, it is easier to ensure that costs and taxes are minimized, and things go as planned. Some of the tools they use include small estate affidavits, Heggstad petitions, beneficiary claims, probate, and survivorship rights.
Transferring the decedent’s assets in an orderly way is the main reason for estate administration. This is true no matter how humble or grand the decedent’s estate is. It is a process that must be completed properly, regardless of whether there is a will, a trust, or no will at all.
For an estate to be properly administered, an individual must first be legally designated to take care of all the details. This administrator may be called a fiduciary, an executor, or a personal representative. It is necessary to name this person so that someone is legally authorized to transfer a decedent’s assets and sign their name. If a decedent has named this person in their will, they are called an executor. If there is no will after an individual dies, a personal representative is appointed to handle these responsibilities. The administrator must fulfill many duties, including conducting an inventory of a decedent’s assets, locating said assets, and having items appraised to determine their value.
The Executor’s Responsibilities
As an individual embarks on settling an estate, the first step they must take is to file in the probate court of jurisdiction where the decedent passed away. This court will determine whether the will is valid and handle any litigation necessary to resolve challenges to the will. When that is determined, the executor will administer the estate according to the terms of the will. This involves contacting creditors the decedent owes money to and beneficiaries who are named. It is vital to keep detailed records and all receipts during this process.
If creditors have claims against an estate, the executor must pay these debts with the estate’s assets. It is important to have a complete inventory of the decedent’s assets, including those not in the will. Such assets must also be distributed according to the state’s intestacy laws. When there are expenses incurred during the probate process for services such as accounting, appraisal, and legal services, they must also be paid out of the estate assets before the remainder is distributed to beneficiaries. The job that an executor takes on to ensure that these assets are distributed properly is often complicated.
The following estate settlement components are specific details that must be handled individually during estate settlement.
Estate Assets Management
- Asset access. The administrator will need to gain access to and control of all assets that belong to an estate.
- Tangible property. Some of the most valuable components of an estate often include tangible items like furniture, artwork, automobiles, jewelry, and collectibles. In cases such as this, an appraiser may be necessary to determine their value.
- Financial resources. Securities and bank accounts are the remaining items that must be valued as assets to an estate.