When an individual dies, his estate is distributed according to state law and provisions he made in advance. The estate is composed of all of his property and assets at the time of his death. Settling the estate involves taking care of debts and then distributing the remaining assets.
Who Handles Settlement?
The person who handles the settlement depends on what provisions the deceased person made. If he created a will or a trust, he would have also named an executor. The executor oversees the settlement of the estate. If no executor was named by the deceased, the probate court appoints an administrator for the estate.
One of the primary responsibilities of the executor or administrator is to handle the debts of the estate. In most jurisdictions, the executor or administrator must publish a notice of death in the newspaper. This notice alerts creditors that they must get a claim on the assets if they want to be paid. After waiting a certain amount of time, the executor or administrator pays the claims in the proper order, according to state law.
The executor or administrator also handles any tax-related issues. In most cases, this involves filing the annual federal and state tax return for the deceased individual. Then the executor or administrator must also pay the appropriate amount of tax to these governing bodies. Large estates may also be subject to estate taxes.
Distribution of Assets
Once the debts and taxes are paid, the executor or administrator distributes the assets to the beneficiaries of the estate. This involves transferring property such as real estate and personal property to the name of the beneficiary. It can also include selling some assets and then writing a check to the beneficiary. If cash is held in accounts, the executor divides the cash between or among the beneficiaries according to the will.