Estate settlement is the process of closing out someone else’s personal and financial affairs. The decedent’s estate plan (or a probate court if decedent failed to plan) will name one or more people who are responsible for completing the process.
This person will be called a successor trustee, personal representative or administrator depending on the type of estate, but all have the same essential responsibilities. This person will be responsible for all of the decedent’s property,
expenses and debts and bringing closure to their affairs in accordance with their directions (or state law) within a reasonable time.
The process begins with the designated person locating necessary documents and collecting information. The personal representative’s / successor trustee’s task will be substantially easier, faster and less expensive if the decedent left behind
his / her guidelines and organized their information. (For more information on Executer Guidelines.)
In an estate settlement, one of the first documents to locate is the decedent’s estate plan. A review of that plan will determine if the type of estate is probate or non-probate. If plan was based on a Last Will and Testament, the designated personal
representative should contact an experienced probate attorney to assist them with opening a probate estate. If the plan was based around a revocable living trust, a probate estate will not need to be opened, if the trust was fully funded.
In many instances, successor trustees do not require an attorney’s assistance.
Personal representative/successor trustee also needs to collect information about decedent’s debts, expenses and financial affairs. For example, mortgage, car and utility payments, credit card accounts and homeowners and car insurance. Additionally,
life insurance, annuity and retirement account information needs to be located, so that the necessary claim forms can be filed. Personal representative / successor trustee may need the assistance of a financial advisor, especially regarding
decedent’s retirement accounts.
A personal representative/successor trustee also needs to forward the decedent’s mail. By forwarding the mail, the decedent’s home will look less vacant and personal representative/successor trustee will receive any statements, bills and other
notices that are mailed to the decedent. Decedent’s mail can be a valuable resource to identify assets and expenses of the estate. He/she also needs to physically secure decedent’s property. For example, if a number of people had keys to decedent’s
home, it may be appropriate to change the locks and security system codes. Part of securing the property will be to take steps to see that routine maintenance is conducted (lawn mowing), expenses are paid (property taxes and insurance) and
utilities remain on.
In addition to physical records, most people have an extensive online presence. Hopefully, the decedent left behind the user names, passwords and security questions for their online accounts and digital assets. If decedent failed to make that
information readily available, personal representative / successor trustee will have considerable difficulty accessing decedent’s accounts. It is especially critical to access decedent’s email account given that most people have gone “paperless”
for their bills and account statements. A word of caution, however, many online providers have specific rules and regulations regarding someone accessing decedent’s account which need to be checked prior to accessing the account. Additionally,
a small number of states have statutes authorizing personal representatives / successor trustees to access decedent’s online accounts.
A probate estate exists when decedent owned property in their own name at their passing which did not have a designated beneficiary. A probate estate requires use of a probate court process to distribute the decedent’s assets. The most common type of probate estate is one which involves an estate plan based upon a Last Will and Testament. An intestate estate (one with no estate plan) is also a probate estate.
A non-probate estate is one that is distributed via a revocable trust and / or beneficiary designations only. The decedent did not own any property or account in their own name that did not have a designated beneficiary. This would include estates with funded revocable living trusts and estates consisting solely of financial accounts including life insurance, annuities, retirement accounts, Payable on Death (PoD) accounts and Transfer on Death (ToD) accounts.