Steps in Closing an Estate of a Decendent with Beneficiaries

By Stephanie Kurose, J.D.

Steps in Closing an Estate of a Decendent with Beneficiaries

By Stephanie Kurose, J.D.

Closing a person's estate after they die can often be a long, detailed process. This includes paying off debts, filing final tax returns, and, finally, distributing the estate's assets according to the wishes of the deceased.

Man using laptop at a desk with scattered papers and a calculator

If you have been named an estate executor, it is important to do these steps in the right order. An executor, also known as a personal representative in some states, must be sure to pay any debts and taxes before distributing assets. Otherwise, they risk being held personally liable if a premature distribution leaves the estate with insufficient funds to pay all debts and taxes.

1. Notify all creditors.

Once the will is submitted to the probate court, the executor must notify all creditors and potential creditors of the decedent's death. Most states require notification by mail. Other states simply require the executor to publish a notice in a local paper. And some states require both forms of notification. Creditors must then file any claims with the executor within a set period of time defined by the state. Any creditor who fails to file a claim within this time frame loses their ability to collect the debt. The executor must determine the validity of these claims and must pay all valid debts using estate assets.

2. File tax returns and pay final taxes.

The executor is also responsible for filing the decedent's final tax returns and paying any applicable federal and state estate taxes. Estates that are under a certain value may be exempt from paying certain estate taxes. The executor should check with the state and the Internal Revenue Service (IRS) to determine if the estate qualifies for an exemption. If not, the executor must pay the taxes and obtain a release from the tax agencies proving they were paid. These documents are needed to close the estate with the probate court.

3. File the final accounting with the probate court.

The executor must submit the final accounting form which lists all of the estate's assets, income, and expenses. The form can be obtained from the state probate court. A formal hearing is held unless all beneficiaries sign a waiver accepting the accounting. If someone refuses to sign, a formal hearing is held during which beneficiaries can voice their objections.

4. Distribute remaining assets to beneficiaries.

Once all obligations are paid, the executor can distribute the assets to the assigned beneficiaries according to the terms of the will. The executor should get a receipt from each beneficiary proving they received the inheritance.

5. File a closing statement with the court.

Once all assets are allocated accordingly, the executor must file a closing statement or closing affidavit with the probate court. This document serves as a formal notice that all property has been distributed and all other estate obligations have been taken care of.

An estate executor has many important responsibilities when it comes to settling a person's estate. If you want more information, reach out to an online service provider who can help answer any questions you may have.

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