Steps That an Executor Must Take to Settle an Estate

If you are going to be the executor of an estate without any past experience, you are stepping into the great unknown.  Whoever nominated you for this important responsibility has given you a JOB!  With this in mind, we are going to share some simple steps that you will take when it is time for you to administer the estate.

First Things First

First, I will use the older term “executor” due to its long-time use.  Today, many states refer to this person as the “personal representative”.  Now, to the tasks at hand.

Though this may be overstating the obvious, the first order of business is to actually get the will in your hands. In most cases, the person that asked you to assume the role will let you know where you can find the will, so this should be a simple task.  That’s not always true.

In some cases, a person may not communicate their request with their selected executor.  They might not even get your agreement to serve.  They may fall into that “I’m never going to pass away” category.  They may intend to share the location of the will yet fail to do so until it’s too late.

If you have been asked to be an executor, don’t let this happen. Make sure that you know where to find the document, and discuss its contents with the person so you are familiar with it.

Another consideration on handling the responsibility of serving as an executor is a letter of last instructions. In addition to the will, you are going to need ownership documents, keys, passwords, and so forth.  The individual you will be representing should pass along this information in a letter of last instructions.

Admit the Will to Probate

The next step is to admit the will to the probate court. In most jurisdictions, there will be a short hearing, and you will be formally recognized as the executor of the estate.

Notify Creditors and Establish an Estate Bank Account

You have to post a notice for creditors in a newspaper to announce the passing of the decedent. Since there will be final debts, you will start an estate bank account. To do this, you need an employer identification number that you can apply for and receive online through the IRS website.

Gather the Relevant Paperwork

As we have touched upon, you will gather all the ownership documents and other paperwork that will be needed. This would include income tax returns for the last three years.  Do not underestimate how difficult it can be to identify all assets owned by the decedent.

Inventory the Assets

You have to take stock of all the assets that will comprise the estate. If you have a letter of last instructions, there may be a list of the assets.

Short of this, you have to do the necessary legwork to conduct the inventory without a clear roadmap. During this stage, appraisals of certain types of property may be necessary.

Estimate the Value of the Assets

When you have identified all the resources that will be part of the estate, and you have appraisals for tangible objects, you have to place a value on the assets. In essence, when distributing assets to the beneficiaries, you will be slicing up a pie.  First, you have to determine its size.

Pay Final Debts

After all the above steps are completed, you are getting close to the end of the process. Before the estate can be closed by the court, you have to file the final 1040 tax return, perhaps a fiduciary return, pay final taxes, and all other valid debts.

Income taxes will definitely be part of this equation, and a small percentage of people are exposed to the federal estate tax.  Today, the tax is only applicable on asset transfers that exceed $11.7 million.

Distribute the Assets to the Beneficiaries

The final step of the process is the most satisfying for the inheritors. After the court is ready to close the estate, you can distribute the bequests in accordance with the wishes of the decedent.

Schedule a Consultation Today!

We looked at the administration process for a simple will here, but in reality, a living trust can be a far better choice for most people. If you are ready to discuss your estate planning options with an Oklahoma City estate planning lawyer, we are here to help.

You can send us a message to request a consultation appointment, and we can be reached by phone at 405-843-6100.