The beneficiaries of an estate are determined by will. If there isn't a last will and testament, the heirs are determined by each state's intestacy (which means dying without a will) laws.
Learning the Basics For Yourself or Loved Ones
FindLaw's section on estate administration basics provides information on how to administer an estate, what being an executor means, and what happens to a person's debts after death.
Without a basic understanding of the estate administration process, the whole experience can be overwhelming. This section offers many resources on estate administration and executors.
Estate Administration Overview
All of the things a person once owned make up their estate once they are deceased. Many estates must undergo complex processes and probate proceedings. The process requires someone to be responsible for:
- Managing the overall estate
- Ensuring that nothing is taken
- Ensuring property doesn't lose value due to neglect
This person is usually called the "personal representative." In some states, they may also be called the "executor" if the decedent died with a will.
Who Can I Pick For My Personal Representative or Executor?
The personal representative or executor of an estate may be a person or a company such as a bank. Personal representatives may be nominated by the person who passes away in their will. Although anyone can be a personal representative or executor, that person must perform with diligence and good faith.
Usually, the executor is designated in a will. If the deceased didn't leave a will, an administrator could be appointed by the probate court. Once an executor or administrator has been appointed, they are referred to as the "personal representative."
If the probate process is complicated, the personal representative is entitled to hire an attorney – at the expense of the estate – to help them with the process.
The courts can appoint the person they choose to be the fittest to serve as the personal representative if:
- The will doesn't nominate an executor
- Multiple individuals apply to serve as the administrator
This is usually the surviving spouse or another close family member. In some cases, more than one personal representative will be named. There can also be cases where someone sues the chosen executor.
Personal Representative Duties
The personal representative is responsible for:
- Locating and collecting all of the deceased's property
- Making sure any debts and taxes are paid off
- Distributing the remaining property and money to the entitled parties
The personal representative is not entitled to any proceeds from the sale of property of the estate. Generally, however, they are entitled to a fee as compensation for administering the estate.
To gain access to someone's estate, you will need a court order and testamentary letters or letters of administration. These are acquired by petitioning the courts.
Basic Tasks When Caring For The Decedent's Estate
The personal representative of an estate ensures a person's last wishes are granted regarding their property and possessions. When drafting a will, the law doesn't require that the executor be a lawyer or accountant. But it does require that the executor fulfill their duties with the utmost honesty and diligence.
Depending on the complexity of the will, the executor of a will has many fiduciary duties.
Some typical duties include:
- Identify, locate, and maintain the assets of the estate until they can be distributed appropriately (This includes determining which assets should be sold)
- Determine whether probate is necessary
- Find and contact the beneficiaries named in the will
- Ensure the will is filed with the appropriate probate court, which is often required even when probate proceedings are not necessary
- Financially manage the estate
Managing Estate Finances Appropriately
The personal representative needs to make wise decisions and complete detailed tasks. This can include:
- Canceling credit cards
- Notifying creditors and agencies
- Paying debts
- Making necessary payments such as mortgage and insurance payments
- Paying final income taxes and handling income tax returns
- Closing or setting up new bank accounts to manage the finances
- Understand and gather life insurance policies
Inventory All Assets and Handle Debts
The personal representative inventories the decedent's assets. They must be aware of the date of death and inform the decedent's creditors that they have died.
If there are any debts, their assets may be enough to pay the creditors. They are paid from the estate. Otherwise, the personal representative will need to seek the court's approval to determine who should be paid.
If assets remain after the debts are paid, the remainder of the assets is distributed according to the will. There may be inheritance taxes, estate tax returns, administration expenses, and requirements to probate assets.
Those who do not have a will are called "intestate," and states have different rules regarding how assets are distributed under their laws relating to intestacy. Some small estates may escape probate altogether.
Who Is Responsible for a Deceased Person's Debts?
Generally speaking, once a person dies, their debts are paid off from their estate. If there isn't enough money to repay the debt, the debt dies with the person. Relatives or beneficiaries of the will are usually not responsible for paying the deceased person's debts.
However, a relative or beneficiary could be responsible for repaying the debt if they:
- Owned part of the debt
- Received substantial benefits from the debt
For example, credit card debt belongs to the account holder. The co-signor or other account holder would have to pay the debt if:
- They co-signed on a loan
- The credit card was from a joint account
It's important to note that the surviving spouse may be liable for the debt in community property states – where property acquired during a marriage is considered jointly owned.
Administering an Estate Across State Lines
In some cases, an estate may need to be administered in more than one state. Generally, the state where the person lived at the time of death is where the estate goes through probate.
However, real estate is governed by state law. Any real estate in another state might have to be probated in that state. Several states have adopted a version of the Uniform Probate Code, designed to simplify the estate administration process and provide similarity among probate laws from state to state.
When To Hire Legal Counsel
If you're in charge of administering an estate and have questions about it, you may want to consult with an estate planning attorney. They can also answer questions or concerns regarding the debt left by a person who has passed away.
The links in this article can help you learn more about estate administration. You can find topics about how to administer an estate, the treatment of debts after death, choosing the right executor, the duties of the executor, and much more.