How to use estate settlement resources

  • An estate plan allows the deceased to settle debts after their passing.
  • Depending on state laws, the estate may need to go through the probate process.
  • Compile a list of all the individual’s assets and determine their value. Recruit the help of a lawyer if in doubt.
  • Once all outstanding debts have been paid, distribute the remaining assets to beneficiaries.

You’ve been put in charge of settling a loved one’s estate, and now you’re wondering what that entails. The first thing you should recognize is that, while it is a lot of responsibility, it means that your loved one had faith in your ability and trusted you to get the job done. Still, it doesn’t hurt to do your research and become familiar with the task at hand. In short, estate settlement resources are financial resources intended to settle debts and pay taxes following an individual’s passing so that those debts do not pass on to their loved ones. Read on to learn more about what estate settlement resources are and what you can use them for. 

Preparing to settle an estate

The process of estate settlement happens after an individual with an estate plan dies. Anyone with a home, savings or dependents likely has an estate plan, as it allows them a way to settle any debts or care for any dependents or spouses after their death. 

You, as the executor of the will, are in charge of settling the estate; namely, paying any outstanding bills or debts and ensuring that the remaining estate is distributed to the heirs as intended. Estate resources can only be used for certain purposes, depending on what is specified in the will, so it’s important to take a few key steps before you begin distributing those resources. 

First, you’ll need to gather all of the relevant information, which includes the will, several certified copies of the death certificate, tax returns and a birth certificate. You will also need to be aware of any financial institutions relevant to the estate, and reach out to the bank and the Social Security Administration to let them know you will be using the deceased person’s social security number and will need an account to complete your duties as executor. 

Similarly, you’ll need a list of all of the person’s assets (both financial and property) and a list of their business associates, as well as anyone named in the will. You will want to open a checking account in the estate’s name from which you can pay outstanding bills, potential lawyers fees and the like. Some estates may need to go through the probate process, depending on state laws and the size of the estate. Lastly, determine if you need a lawyer to help you through the settlement process. While this can simplify the process considerably and give you peace of mind, be aware of the potential costs. 

Beginning the settlement process

Once you’re fully organized, it’s time to start the estate settlement process. First, file the will in probate court and notify the beneficiaries, as well as any trustees if a trust is involved. From there, you will need to contact any organizations the deceased had an account with, which will include everything from creditors and banks to the post office and utilities companies. Also, make sure to notify any companies the deceased was receiving benefits from, such as pension plans, to make sure the estate does not receive any funds it is not entitled to.

Next, assuming you’ve compiled a list of all of the individual’s assets, you may need to get some appraised to determine their value. Also, be aware that as the executor it is your responsibility to care for the assets, such as homes, property or belongings, until the estate has been settled. This could be as simple as ensuring the individual’s house is locked up or maintaining pieces of art and the like. 

What should estate settlement resources be used for?

As mentioned before, you can set up an account in the estate’s name using a document known as Letters of Administration given by courts to the executor of a will. This account will be used to collect any debts owed to the deceased person or to pay funeral or lawyers fees, as well as other expenses. With estate settlement resources you can pay the following:

  • Taxes
    • Federal Estate Tax (Form 706)
    • State-Level Estate Taxes
    • Gift and Generation-Skipping Transfer Tax (Form 709)
    • Estate and Income Tax (Form 1041)
    • Final Individual Income Taxes (Form 1040)
  • Debts
    • Most people leave debts after they die, and it is the responsibility of the estate and not the executor to pay those debts. All you have to do is determine to what organizations the deceased person owes money. 

Once all outstanding debts and taxes have been paid, the next step is to distribute the remaining assets to the beneficiaries of the will in accordance with the deceased person’s wishes. Once that process is complete, your duties as executor of the estate have been fulfilled and you can petition to the court to be discharged of the role of executor and have the estate formally closed. 

While executing a will may seem like a complex process, if you know clearly what to expect it is much simpler than you might imagine. Get yourself organized, contact all the right people, and if you feel like you are in over your head, don’t be afraid to call in an expert.