When Someone Dies, How Is the Estate Settled?

By Cindy DeRuyter, J.D.

When Someone Dies, How Is the Estate Settled?

By Cindy DeRuyter, J.D.

If you recently lost a loved one, you probably have questions about the estate administration process. The steps involved in settling the estate and the time needed to do so depend on whether your loved one did any estate planning during their lifetime. State laws also play a role in estate settlement matters, dictating when someone must probate the estate.

Man and woman look over documents across table from man in suit

Nonprobate Assets

There is a common misconception that all assets pass through the will or estate of the deceased person. In reality, certain assets pass outside of the will. If the deceased person did not have a will, these nonprobate assets still pass outside of the estate.

Nonprobate assets include anything owned with one or more other owners as joint tenants with rights of survivorship, life insurance policies with named beneficiaries, retirement accounts passing to named beneficiaries, bank accounts with pay on death designations, real estate for which the owner had a life estate, real estate with named transfer on death beneficiaries, and stocks, bonds, or other investments with transfer on death designations.

It is relatively simple to transfer title for nonprobate assets by giving the account provider, insurance company, or county government, as applicable, certified copies of the deceased person's death certificate along with required forms and signed statements or affidavits.

Assets held in revocable or irrevocable trusts also pass outside the estate. The trustee named in the trust agreement is responsible for managing and administering trust assets as provided in the agreement.

Probate Proceedings

State laws determine whether someone needs to open a probate court matter to settle the deceased person's estate. In some states, every estate goes through probate court. In others, state laws only require probate when an estate includes real estate or is otherwise over a certain dollar value.

If an estate is probated, the court appoints someone as the personal representative, or executor. The personal representative is legally required to administer the deceased person's estate by following the will or state law if the deceased person did not leave a will.

Probate processes and requirements differ from one jurisdiction to another but typically include notifying creditors and other interested parties; safeguarding and inventorying assets; paying final expenses, valid debts, taxes, and estate administration costs; accounting to the court as required; and distributing assets. Personal representatives often retain probate attorneys to assist with probate administration and estate settlement, particularly when estates are probated.

Potential Issues

Certain issues can complicate the estate settlement process. These include situations where an estate's expenses and obligations are greater than the value of estate assets, called an insolvent estate, and situations when an interested party contests the will or challenges the way the personal representative administers the estate.

State laws generally provide guidelines for settling insolvent estates, including identifying exempt property and assets and specifying the priority for payment. In the case of a will contest or other estate litigation, the personal representative may need to hire an estate litigation attorney.

You can make the estate administration and settlement process easier for your loved ones when you die by completing your own estate planning.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.