Settling an Estate, Step by Step

Somebody has died, and the job of sorting out what they left has landed on you.

It is a long job — a straightforward estate commonly takes the better part of a year, and often longer — and it arrives at the one time in your life you are least equipped to run a project. Nobody teaches it. The advice you find online is either a two-line checklist that skips the hard parts or a page of legal terms written for lawyers.

Very little of that is anyone being slow: an estate generally cannot close before your state’s creditor claim period has run, and often not before a final tax return can be filed for the year of death.

The difficulty is sequence — some things are irreversible if done in the wrong order, and a few of the most alarming-looking ones can safely wait two weeks. Here is that sequence.

This is a record-organizing walkthrough, not legal, tax, or financial advice. Probate is state law: the periods, forms, thresholds and fees differ from one state to the next and sometimes from one county to the next. Nothing below is a deadline for your estate. Treat it as a map of which questions to ask your probate court and your attorney.

The three mistakes, before anything else

Almost everything that goes badly wrong for an executor is one of three things, and all three are avoidable if you know them on day one.

Distributing too early. Money handed to a beneficiary before the debts, taxes, expenses and — in most states — the creditor period are all dealt with is money you may have to find again yourself. Beneficiaries spend it. Nobody gives it back cheerfully. It is the mistake probate attorneys warn about most, and the one you cannot undo.

Mixing the money. Estate money goes through the estate’s own bank account under the estate’s own taxpayer number, and never through yours — not for a day, not to be helpful, not because it is easier. Commingling turns a bookkeeping job into a credibility problem, and it is very hard to argue your way out of a bank statement.

Assuming the will decides everything. It does not, and this surprises nearly everyone. See stage 3.

Stage 1 — The first days

Before anything legal happens, and none of it requires a lawyer.

Secure the home; change the locks if keys are unaccounted for. Arrange care for pets — nobody else will raise this, and it will not wait. Photograph every room before anything is moved, because personal property is where estates turn into family arguments, and a dated set of photographs taken before anyone tidied is the cheapest protection there is.

Find the original will, plus any codicil or trust. A photocopy is not the same thing, and courts treat a missing original very differently from a misplaced copy. Check the home safe, the desk, the attorney’s office, and the safe deposit box.

Order certified copies of the death certificate as soon as the funeral home has filed it. Order ten to fifteen. Almost every institution you deal with keeps the copy you give it, and a rush re-order costs more, takes longer, and always lands in the week you needed it.

Then tell people: the family, the beneficiaries named in the will, the employer (ask HR in writing for the whole list — final pay, unused leave, group life, retirement plan), and confirm Social Security has been notified. Any benefit paid for the month of death or later has to be returned, and the longer that runs on the messier it is to unwind.

Stage 2 — Get appointed

File the will with the probate court in the county where the person lived. Many states require whoever holds the original will to deposit it with the court within a set period after the death, whether or not probate follows — the period, and what triggers it, differ by state. Ask the clerk what applies where the person lived.

Then petition the court to admit the will and appoint you. Until the court issues letters testamentary, you have no authority to do anything — not touch an account, not sign for the estate, not sell a car. Those letters are the single most important piece of paper you will hold, and every bank and registry will ask to see them. Order several certified copies, and expect to re-order: some institutions ask for letters certified within the last thirty or sixty days.

Two things worth doing before you file. Check whether your state has a simplified small-estate procedure — an affidavit or summary administration that skips most of full probate. And decide about a probate attorney. Their fee is an administration expense paid by the estate, not by you. A house, a business interest, a blended family, an out-of-state asset, or any hint of a dispute are all reasons to get one.

Stage 3 — Take control

Now the estate becomes a thing that can hold money and act.

Get the estate its own taxpayer identification number — it is a separate taxpayer from the person, and banks will generally require one before opening an estate account. Open that account, and run everything through it. Redirect the mail to yourself: the mail is how you discover the accounts, subscriptions and creditors nobody mentioned, and it stops a pile of envelopes advertising an empty house.

Then the task that everything else depends on: list every asset, and how each one is titled.

This is the part that surprises people. A great deal of what someone owns passes outside the will entirely — anything with a named beneficiary, anything held jointly with right of survivorship, anything payable-on-death or transfer-on-death, anything already in a living trust. Those go to somebody directly, usually without you, and they are generally not available to pay the estate’s debts.

Those are the general rules in most states, offered so you know which question to ask — not so you can skip asking it. Community-property states work differently, only some states allow transfer-on-death deeds, and a designation can be overridden by a divorce decree or a court order. The deed, the title, and the account agreement decide.

Value each probate asset as of the date of death, not today. Banks and brokerages will issue a date-of-death statement on request; real estate usually wants a licensed appraisal, which is worth having even when no tax is due because it fixes the beneficiaries’ cost basis.

While you are here: notify the credit bureaus of the death. Send a certified death certificate and proof that you are the executor to one of Equifax, Experian or TransUnion and ask for a deceased flag on the file — the agency you contact is required to notify the other two. A deceased person’s identity is an attractive target precisely because the accounts stay open while nobody is watching them. The FTC’s consumer guidance (opens in new tab) walks through the notification.

Stage 4 — Notify and gather

Tell the institutions and agencies that need telling, and file the claims. Banks, brokerages and retirement plans each want a certified death certificate and usually a copy of the letters — ask each one for the date-of-death balance in the same conversation, and you save an entire second round of letters. File the life insurance claims. Chase the pension nobody remembers — an old defined-benefit plan from a job three employers ago is among the easiest assets in an estate to miss entirely. Collect what the estate is owed: final paycheck, unused leave, expense reimbursements, tax refunds, a security deposit.

And give notice to creditors as your state requires. This is what starts the claim clock, and it matters more than it sounds: once the window closes, claims that were not brought are generally barred. Publication starts it in most states, but publication alone is often not enough for creditors you actually know about — send those direct notice as well and keep the proof of mailing, because that proof is what makes the bar date stick. That is not a style preference: the Supreme Court held in Tulsa Professional Collection Services, Inc. v. Pope, 485 U.S. 478 (1988), that a known creditor is entitled to actual notice.

Notify the beneficiaries in writing that the estate is open. Many states require it, most courts expect it, and all of them reward it. A short factual update every few weeks is the cheapest risk management in the whole job — beneficiaries who hear nothing assume the worst, and an estate dispute is enormously more expensive than an email.

Stage 5 — Pay, file, and account

Confirm the estate is solvent before you pay anyone. Total what it owes against what the probate estate holds — remembering that the non-probate assets, however large, generally cannot be used. If it is close or short, stop and call the attorney: an insolvent estate follows different rules, and paying the wrong creditor makes the shortfall your problem.

Then review each claim. You are not obliged to pay something because it arrived in a firm-sounding envelope. Check the debt is real and documented, that it was the deceased’s alone rather than joint, and that nothing was charged after the date of death. Record your decision and its date either way — an accepted claim and a rejected one both need a written trail, and a claim you never answered is the worst of the three.

Pay in your state’s order. The broad shape is consistent — administration expenses and funeral costs generally come near the front, taxes and certain priority claims next, and general unsecured creditors last and pro rata if there is not enough to go round, with beneficiaries after all of them. Secured debts sit outside that ladder: a secured creditor is generally paid from the property securing it. The rungs, and what sits on each, are set by your state’s statute — get the list from the attorney rather than from a page like this one. One rung is federal, not state: under 31 U.S.C. §3713 a fiduciary who pays other debts of an insolvent estate ahead of a claim of the United States can be personally liable for it.

On tax, you need to know which returns might apply, not how to prepare them: the decedent’s final personal return, the estate’s own income tax return if it earns enough after the death, a federal estate tax return if one is required, and any state estate or inheritance tax. Get an accountant in early — their fee is an estate expense too — and specifically ask, if there is a surviving spouse, whether the estate should file a federal return even with no tax due in order to elect portability of the unused exclusion. That is a real decision with a deadline attached, and it is easily missed by an estate that assumed “no tax owed” meant “no return needed”. (The IRS does allow some estates a simplified late election, but that is not something to rely on by default.) The IRS’s guidance for deceased taxpayers and estates (opens in new tab) is the place to start.

Meanwhile, keep the ledger. Every court that asks for an accounting asks the same three questions — what came in, what went out, what is left — and if you have kept it line by line as things happened, producing it is a formatting job rather than a year of archaeology.

Stage 6 — Distribute and close

The stage people rush, and the one that determines whether the estate stays closed.

Prepare the accounting. Get court approval to distribute if your state requires it. Make the specific bequests named in the will, photographing each item as it is handed over. Distribute the residue in the shares the will sets.

Then get a signed receipt and release from every beneficiary — including, especially, the ones you are related to. This is the document that says they received their share and have no further claim, and skipping it because everyone is family is exactly how family estates go wrong years later.

File the final accounting and the petition to close, because until the court discharges you, you are still the executor. Close the estate bank account only once the last checks have cleared and any late refund has arrived. And keep the whole file — the returns, the accounting, the releases, the court orders — for as long as your attorney or accountant advises.

A realistic pace

Most of this job is waiting. Waiting on a creditor period, waiting on a tax return, waiting on an institution that takes six weeks to answer a letter. You cannot compress those, and feeling that you should is one of the more exhausting parts of the role.

What you can control is whether the schedule is written down, whether the assets are classified, and whether the money was logged the day it moved.

Start free: the First Two Weeks After a Death checklist covers stage 1 and stops there on purpose — fifteen things that genuinely need doing now, and the far longer list that can wait.

Then the whole job: the Executor’s Estate Settlement Records & Task Binder dates fifty-eight of its sixty tasks from the date of death (the other two recur), routes every asset by how it is titled — probate, non-probate, or one to put to the attorney — gives each creditor claim an answer-by date, and keeps the accounting as you go. Background reading: what an executor is, what probate is, and executor binder vs estate settlement app.