When someone dies, their estate goes through a legal process to determine how the property and assets will be distributed. This process is known as deceased estate administration.
There are a few things that everyone should know about this process, whether they are personal representatives or beneficiaries of an estate. Here are the basics we’re going to discuss in this post:
- What is a deceased estate
- What happens when someone dies
- The executor of the estate
- The will
- Taxes
- Challenges with a deceased estate
- The timeline of managing a deceased estate
- How long a deceased estate can exist
- Mistakes to avoid when managing a deceased estate
What Is a Deceased Estate?Â
A deceased estate is the assets, property, and liabilities of a person who has passed away and is now owned by their legal representative, known as an executor or administrator.
The executor of the estate has the legal responsibility of managing and distributing the estate’s assets in accordance with the provisions of their will or, if no valid will exists, according to state law.
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What Happens When Someone Dies?Â
When a person passes away all of their property, money, and possessions become part of their estate. This includes tangible items such as their home, car, and jewelry, as well as financial accounts such as bank accounts and investments.
If the deceased left a valid will, then the executor of the estate is appointed in accordance with the instructions contained within. But if no such appointment has been made, the court takes the responsibility to appoint one.
The Executor of the Estate
The executor is responsible for managing and distributing the assets of the estate in accordance with the deceased’s will (for example, by renting out their Property). The executor or administrator of the estate is also responsible for paying off any debts that may be owed by the deceased.
The first step an executor must take is to find the original will of the person and arrange a funeral. Once this has been done, they can go on to discharge estate-related duties, which include:
- Contacting beneficiaries of the estate, and explaining to them how you are administering the estate
- Obtaining a death certificate and submitting it to relevant authorities, such as the country’s tax body
- Ensuring any outstanding debt and bills are paid out of the estate
If you think you won’t be able to perform your duty properly as an executor, then the law allows you to pass on your responsibility to a state trustee, who will administer the will on your behalf.
The Will
A will is a legal document that outlines how a person wishes for their estate to be distributed upon their death. It is important to understand that, in some cases, the will may not be valid due to factors such as age or undue influence.
It’s also important to understand that the will is legally binding only when it comes to the distribution of property. In other cases — such as when someone mentions how their children will be taken care of in the will — the will is not binding.
If there is no valid will, then state law determines how the assets are distributed.
Taxes
The executor of the estate is responsible for filing any taxes due from the deceased person’s income, estate, and/or trust accounts before assets can be distributed to beneficiaries.
In this regard, you’ll have to collect the details of all the income the deceased has earned before their death, as well as any income they may have earned since their passing.
If you fail to pay the due taxes on behalf of the deceased, you can land in legal trouble and may be held personally responsible for any outstanding tax.
Challenges with a Deceased Estate
There are a number of challenges associated with managing and distributing a deceased estate, including locating all of the assets, dealing with creditors, and managing disputes between beneficiaries.
It is important to understand that the executor or administrator of the estate is legally responsible for managing the estate in accordance with the provisions of the will or state law.
Unfortunately, it’s not possible for a layperson to understand all of the legalities that surround a deceased estate, especially if it has been complicated by disputes.
As such, it is important to hire a qualified attorney to ensure that all steps are taken in accordance with the law.
Time Period
The time it takes to settle a deceased estate can vary depending on the complexity of the estate, but typically it can take up to one year.
During this time, the executor must take a number of steps to settle the estate, including notifying creditors and locating beneficiaries. In some cases, it can take longer if the estate is more complex or a dispute arises between beneficiaries.
How Long Can a Deceased Estate Exist
Generally, the executor must close the estate within a certain period of time. This period is determined by state law, so it is important to consult a qualified attorney to understand the time frame in your particular state.
For example, in Australia, the tax office accepts a maximum of 3 years for an estate to be administered. But this can vary, depending on how complex the case is and if there are any disputes.
Additionally, it is important to note that some assets may pass outside of probate and are not subject to this time frame. For example, life insurance proceeds do not generally pass through probate and may take longer to collect.
Mistakes to Avoid When Administering a Deceased Estate
There are a number of mistakes that an executor can make when administering a deceased estate, including delaying the process, failing to keep a detailed record of everything you do, or failing to maintain regular communication with the beneficiaries.
Another common mistake is trying to save money by not hiring a probate lawyer. But as you might have already guessed, administering a deceased estate is full of legal complexities, and not hiring a professional to help you out can be a costly mistake.
Final Words
While the process of administering a deceased estate can be complicated, it is an important responsibility, and it’s crucial to take all of the necessary steps in order to ensure that all assets are properly managed and distributed in accordance with the will or state law.
It is also important to seek help from qualified legal professionals to ensure that all of the legal requirements are met and to avoid any costly mistakes. By doing so, the executor or administrator of the estate can be sure that all assets are properly located and distributed in a timely manner.
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