Losing a loved one is a difficult and emotional experience. In addition to navigating grief, you may find yourself with the responsibility of managing the deceased’s estate. Settling an estate can seem overwhelming, but by following a clear process, you can handle it effectively and ensure the wishes of your loved one are honored.
Summary:
- First, locate the will or trust and any other estate planning documentation
- Order certified death certificates
- Notify appropriate people and agencies
- File for probate, if necessary
- Inventory, evaluate, and distribute assets of the estate
- File a final tax return
Locate the Will or Trust
If your loved one left a will or a trust, it will serve as the guiding document for how the estate should be handled. The will or trust typically names a personal representative (sometimes called an executor) who is the person responsible for managing the estate. If no will or trust is present the state will appoint an administrator, often a close relative, to settle the estate according to state laws.
Obtain a Death Certificate
Once a personal representative has been identified, settling an estate begins with obtaining certified copies death certificate. This document will be required when dealing with financial institutions, insurance companies, and government agencies. It’s a good idea to order multiple certified copies, as you may need to provide them to different organizations.
In Whatcom County, you can order death certificates via the Department of Health. Certified death certificates cost $25 per copy in Washington state. You must meet certain relationship requirements in order to order a certified death certificate, qualifying relationships include:
- Spouses or domestic partners,
- Children (includes stepchildren),
- Parents (includes stepparents),
- Siblings
- Grandparents
- Grandchildren
- Legal Guardians
- Legal or authorized representative
Notification and Filing with Probate
When somebody passes away, many people need to be made aware as soon as possible:
- Close family and friends
- The deceased’s primary care physician
- The deceased’s financial planner
- The deceased’s attorney (if any)
- The Superior Court in the county where the deceased lived when they passed away to file a Petition for Probate.
- The Social Security Administration
- The deceased’s financial institutions (banks)
- The deceased’s insurance carriers
- The deceased regular bill carriers
Please note that if the deceased’s estate plan involved a trust instead of a will, probate may not be necessary. We advise that you consult with the attorney who developed the estate plan for the deceased on next steps.
If the deceased left a will, or died without an estate plan, the estate will go through the legal process known as probate. Probate validates the will and grants the executor authority to manage the estate. The court will also address any potential challenges to the will and ensure that creditors are paid before assets are distributed.
Please note that probate involves posting the death in the paper, allowing creditors and others who may have claim to assets of the estate the opportunity to claim assets.
If no will exists, the court will determine the rightful heirs based on intestate succession laws.
Inventory the Estate’s Assets
The executor is responsible for identifying and inventorying the deceased’s assets. This includes financial accounts, real estate, personal belongings, investments, and business interests. It’s important to create a thorough list, as these assets will be used to settle debts and eventually distributed to heirs. You may need to inventory any of the following (and more):
- Deeds, titles, and loans related to real estate and vehicles,
- Insurance policies
- Financial accounts, included bank accounts, investment accounts, annuities, safety deposit boxes, etc.
Before any assets can be distributed to beneficiaries, outstanding debts must be settled. This includes mortgage payments, credit card balances, and other loans. Note that you may need to hire an approved appraiser to evaluate the value of any real estate property.
Note that, certain assets, such as life insurance policies and retirement accounts, may pass directly to beneficiaries without going through probate. These accounts typically have designated beneficiaries, and the executor will need to contact these institutions to facilitate the transfer of funds.
Distribute the Remaining Assets
Once all debts and taxes are settled, the executor can distribute the remaining assets according to the instructions in the will. If there is no will, the assets will be distributed based on the state’s intestate succession laws. This may include distributing funds to immediate family members or other legal heirs.
File Final Tax Return
Whoever is appointed by the will as the personal representative (or appointed by probate in the absence of a will) will need to file a final tax return for the deceased. To do so, the personal representative will need:
- The deceased’s social security number
- Records of the deceased’s income
- Documentation of any deductions
- Documentation of any assets gifted to charity
The estate may be subject to both state and federal estate taxes. If the estate is valued over 2.193 million dollars, you must also file estate taxes. The federal threshold in 2024 is $12.92 million but scheduled to be adjusted to a lower threshold in coming years.
Close the Estate
After all assets are distributed and legal requirements are met, the executor can close the estate. This involves submitting a final accounting to the court and requesting that the estate be officially closed. At this point, the executor’s responsibilities are complete, and the estate is settled.
Inheriting Funds
It may be the case that you find yourself inheriting funds or other assets when a loved one passes away. There can be tax, cashflow, and other financial implications when this occurs so do reach out to your financial advisor for guidance.
Local Resources:
- Department of Health
- Local funeral homes:
- Where to file will
- Unclaimed property
Important Disclosures:
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.
Securities offered through LPL Financial, Member of FINRA/SIPC. Investment advice offered through Northwest Wealth Advisors DBA West Invest, LLC, a registered investment advisor. Northwest Wealth Advisors and West Invest, LLC are separate entities from LPL Financial.