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A To-Do List for Settling an Estate
The adjustment to the loss of a loved one is hard enough
without the inevitable workload of settling their affairs. Even
if they don't have much in the way of assets, the process takes
time — typically up to a year.
It makes sense to get advice from tax, estate, and financial
planning experts in the preparation of an estate plan. A
Certified Financial Planner™ professional in estate matters is
a good choice to start the process.
It also makes sense to have an idea of how that year will go,
so here's a list of what needs to be done at critical intervals of
the process. But this is not just a list to help survivors. This
can be a key estate-planning tool for you as well. Remember the
way that you handle your estate, financial, and funeral
arrangements can lighten the load on family members. Tailor the
following list to your own needs, and discuss it with your
chosen executor while you're in good health. And if you need to
make changes, keep them informed:
Step #1 - Start rounding up key documents. An executor
has to find, identify and organize a deceased person's financial
records, tax returns, and other key papers to figure out what
the decedent owned or controlled. If that individual was working
closely with a financial planner or investment manager, they may
have all that material summarized in one place. But otherwise,
the executor needs to look for bank accounts, brokerage accounts
or other investments, life insurance or annuity policies,
retirement plans, deeds to real estate, automobile titles and
other evidence of assets with value. She will also be looking to
see if the decedent had a will or trust that directs what they
want done with the previous items. Also, the executor needs to
track down all records of outstanding loans, mortgages or credit
card bills. Make sure at least 10-20 copies of the death
certificate are ordered. Note: This won't be done in a day, even
if the deceased was extremely well organized.
Step #2 - Start making key phone calls. The executor
needs to inform key contacts that the person has died. Make sure
they contact:
- Social Security if the deceased was
receiving benefits;
- The Veterans Administration if they
were a qualified veteran for burial benefits;
- Their
employer, health insurer, credit unions, mortgage company and
credit card companies for possible death benefits;
- Life
insurance agent for possible death benefits;
- Automobile
insurance agency if they owned a car;
- All creditors - mortgage companies, credit card companies, any organization
that's owed money by the deceased - needs to be notified that
their customer has died. They'll probably request a copy of the
death certificate, so make sure you have enough copies.
Step #3 - Get permission to check safety deposit boxes.
If there isn't a will in an easy-to-find place or an at-home
lock box, the executor may need to try and get into a bank
safety deposit box, which can take a bit of time. The procedures
vary from state to state, but the bank should be able to direct
the executor. (NOTE: This is why it's good to keep important
papers in an at-home lock box.)
Step #4 - Filing the will for probate. If you
find a will, the executor named in the will should be notified,
and a decision should be made about whether to file the will for
probate. It is usually not necessary to probate a will unless
there is property in the name of the decedent that needs to be
transferred, so if everything is in joint names with a surviving
spouse or surviving children, there may be nothing to pass under
the will. This is something for which the advice of a lawyer
might be needed. If there is a trust document, the trustees or
successor trustees should be notified.
Step #5 - Bring in a lawyer if necessary. The executor
may or may not choose to work with an experienced estate
attorney. Generally, it can be a good idea. If there is no will
and no trust, the property owned by the deceased will pass to
the "intestate" heirs determined under state law, and
one or more of those heirs (or some other qualified person) will
need to file a petition for "letters of
administration" in order to sell or transfer the decedent's
property. The procedures for probating a will, or petitioning
for letters of administration, vary from state to state, and may
require the services of a lawyer.
Step #6 - Make sure bills get paid. The executor needs
to make sure that all the deceased's bills and other outstanding
debts continue to be paid until they are disposed of. If assets
are insufficient to cover these debts, the executor will have to
find another way to pay them or make sure talks take place to
lower the amounts.
Step #7 - Make sure taxes are paid. The executor needs
to make sure there is a final tax return filed on behalf of the
deceased. A federal tax return needs to be filed if the gross
estate is more than $3.5 million in 2009.
Step #8 - Make sure assets are properly distributed.
The executor, working with estate and tax experts, can determine
after all expenses and taxes are accounted for, that all of the
assets are distributed properly. Only at that time can the
estate be truly closed.
June 2009 — This column is produced by the Financial
Planning Association, the membership organization for the
financial planning community, and is provided by Don McCarty of
Financial Decision Partners, a local member of the FPA.
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