Many people think that by making a will, they are taking the burden off of their family members when it comes to estate administration after their death. However, property does not magically distribute itself and there are actually several components to closing an estate. While these steps will vary depending on the nature and complexity of the estate, the following are some of the common steps in estate administration.
Opening an Estate Account
All transactions should go through a special account for the estate and not through the deceased person’s personal accounts. Once you have stopped all direct deposits in the personal accounts, that account should be closed and all liquid assets should be transferred to the estate account. All bills, taxes, and debts should be paid from this account in order to keep clear records of the expenditures. If there are substantial assets, you may need to open a money market or similar account, as well.
Inventory and Appraisal
Next comes the step of taking inventory of all estate assets and property and determining the value of the property in question. There are many types of assets that may exist, including securities accounts, employee benefits, real property, personal property, and more.
Handling Debts and Taxes
Just because someone dies does not mean they do not have to fulfill their financial obligations. Creditors and the IRS both will want the money that the deceased person owed to them. There are specific procedures for handling creditor claims against the estate, which include publishing a notice to the creditors of the death and probate case, clearing all titles from creditor liens before distribution, and making payment to creditors. In some cases, you may need to dispute a false or unlawful creditor claim, which can delay the process and require more court involvement. In addition, you must file the income tax returns for the year of the death, as well as ensure there are no past returns that need to be filed. You must also file a tax return for the estate, as well as any businesses that the deceased owned.
Any assets and property that is left over after debts and taxes are settled will need to be distributed to beneficiaries or heirs. If there is a will, it should dictate who should receive what. If there is not a will, the court will determine distribution in line with intestacy laws in Washington State.1