What is Estate Settlement – and are you ready to do it?
As part of our financial planning process for clients, we will typically discuss estate planning and our interest in establishing familiarity with a client’s will, trust, or other estate plan. These planning documents play an important part in our overall financial planning process.
We find that many clients name their spouse or other family member as their personal representative, or executor. Those terms are interchangeable and that person named will be tasked with a lengthy and oftentimes complicated list of duties to settle the estate as the “power holder.”
What is Estate Settlement?
The following is a fairly comprehensive list of the duties an executor of an estate is responsible is responsible for in order to settle someone’s estate:
- Locate the latest will and review for instructions and understanding.
- File a petition with the court to probate the will and obtain letters testamentary.
- Assemble all of the decedent’s assets:
- Take possession of safe deposit box contents;
- Consult with banks and other financial institutions to locate all accounts held by the decedent, also searching out any hidden funds or valuables in the home;
- Transfer all securities to an estate account and continue to collect interest and dividends on behalf of the heirs;
- Locate, inventory, and protect household and personal effects and other personal property;
- Collect any life insurance proceeds payable to the estate;
- Locate and inventory all real estate deeds, leases, mortgages and tax information. Provide immediate management for any rental properties;
- Arrange ancillary administration for any out-of-state properties;
- Collect monies owed the deceased and check interests in estates of other deceased persons;
- Find and safeguard business interests, valuables, personal property, important papers, the residence, etc.;
- Inventory all assets and arrange appraisals when necessary;
- Determine the estate’s liquidity needs. Assemble bookkeeping records and review investment portfolios. Sell assets as appropriate;
- Pay valid claims against the estate. Reject improper claims and defend the estate when necessary.
- Pay state and federal taxes due:
- File individual income tax returns for the decedent and also the estate;
- Determine if the estate qualifies for Special Use Valuation under IRS section 2032A or the deferral of estate taxes under sections 6161 or 6166;
- If the surviving spouse is not a U.S. citizen, consider a qualified domestic trust for the deferral of estate taxes;
- File federal estate tax return and any appropriate state estate or inheritance tax return.
- Prepare statement of all receipts and disbursements. Pay expenses, including attorney’s fees and executor’s commissions. Assist the attorney in defending the estate, if necessary.
- Distribute specific bequests and residue. Obtain tax releases and receipts as directed by the court. Establish testamentary trust (or pour over into a living trust) where appropriate.
As you can see, there is a lot to the settling of an estate and most people do not have the technical expertise and ability to accomplish this without the help of a professional.
Washington Trust Bank is able to provide this service, and in fact has been doing this for over 100 years. In many cases the decedent has already been a client of the Wealth Management area of the Bank and the officers already know the client’s assets and wishes – naming Washington Trust Bank as the executor/personal representative in your will makes this process a lot more accurate, efficient and reliable.
The views or opinions in this article are those of the author and do not necessarily represent the views of Washington Trust Bank or senior management. Washington Trust Bank believes that the information used in this blog was obtained from reliable sources, but we do not guarantee its accuracy. Neither the information nor any opinions expressed constitutes a solicitation for business or a recommendation of the purchase or sale of securities or commodities.
About The Author
As Vice President and Senior Wealth Advisor, Greg provides financial analysis to high net worth individuals. He is the author of several articles for various publications and nonprofit organizations on estate and financial planning subjects.