What Is the Meaning of Settle Estate?

By Dennis Masino

A Last Will and Testament contains instructions for the distribution of a person's assets, also referred to as the estate, when he dies. The will names a specific person, known as the executor, to act as the estate's representative. The executor, sometimes referred to as the administrator, must collect the decedent's assets, pay his debts and estate taxes, and distribute his remaining assets to the heirs named in the will. This process, called settling the estate, occurs under the supervision of the state probate court.

A Last Will and Testament contains instructions for the distribution of a person's assets, also referred to as the estate, when he dies. The will names a specific person, known as the executor, to act as the estate's representative. The executor, sometimes referred to as the administrator, must collect the decedent's assets, pay his debts and estate taxes, and distribute his remaining assets to the heirs named in the will. This process, called settling the estate, occurs under the supervision of the state probate court.

Appointing a Representative

After a person dies, the state probate court appoints an executor to act as the representative of the decedent's estate, generally the person named in the will. If no will exists, the court appoints a close relative, such as a spouse or an adult child, as the executor of the decedent's estate.

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Inventory the Assets

Once an estate's executor has been appointed by the probate court, she must collect, inventory and safeguard the decedent's assets owned at the time of death. The executor also may obtain appraisals to determine asset value for estate tax purposes, depending upon the type of assets held by the decedent. Nothing can be paid to heirs until all debts, taxes and funeral expenses have been paid.

Debts

The executor must notify the deceased person's creditors of the death so they can file claims for payment. Although the notice can be mailed, some states require the death notice to be published in a newspaper. The creditors have a period of time in which to file claims as set forth by state law. The executor must review the claims for payment to determine validity and timeliness and pay valid claims from the estate's assets.

Estate Taxes

The executor also must file tax returns for any federal and state taxes due on the estate. Federal estate taxes are based on the estate's value at the time of its owner's death, but no tax is due if the estate's value is below a certain dollar amount adjusted by Congress periodically. Federal and state estate taxes must be paid before assets are distributed to the heirs.

Distribution of Assets

The final step of the probate process, the distribution of assets, occurs after the executor files an accounting with the probate court showing the inventory, value of assets and all money paid out of the estate up to that point. Once the court approves the accounting, the executor may distribute the remaining assets of the estate according to the directions of the Last Will and Testament. If a person dies without leaving a will, the estate's administrator distributes the assets according to state laws that specify the relatives of a deceased person who are entitled to share in the distribution of the estate.

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References

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