Estate Settlement & Executor Checklist

This article is written to aid your Executor in the required tasks of completing their role. The estate settlement process will vary depending on size of estate and jurisdiction. Being named an Executor is an honored role of trust by the Nominator (Decedent) and should not be taken lightly. Further, it is a role that the Nominator needs to clearly communicate while alive and seek the person's permission before naming them in the estate documents.  The role of Executor takes considerable time and effort and is usually unpaid. The financial ramifications to other beneficiaries can be enormous if the Executor makes mistakes or fails to act with diligence and prudence. The Executor is a person who ultimately will learn all your financial details and family relationships.

This document does not replace the use of professional counsel. In fact, the Executor should be authorized to engage professional counsel as needed in the settlement of the estate.

Helping the Executor to Settle Your Estate

When you ask a person to be your Executor, it is important that you have your estate planning documents current, organized, and accessible to them. Such organization will make their job easier. It is an honor to be chosen to be an Executor of an estate because it is a sign of great trust and friendship. It is also important to make that process as easy as possible for that person. There is no need to keep financial secrets from that person because they will know so much about you after your death.

The Executor is a legal fiduciary to your estate. They are the person responsible to your estate to pay all your final bills, honor gift bequests, and transfer your remaining assets to your named beneficiaries and heirs. The Executor files your last personal tax return and your estate tax return. These are all big responsibilities! If a complicated or high value estate, it may be better to hire a professional corporate fiduciary to act as your Executor.

Estate Planning Documents and Where to Store Them:

Estate Planning documents include the Last Will & Testament, Trust documents, Durable Powers of Attorney, Digital Powers of Attorney, Medical Powers of Attorney and Living Wills with other medical care directive instructions (DNR Orders). Copies of these documents are best stored in your home with references to the designated storage location of the originals (ex. safety deposit box, municipal storage facilities); which will become accessible to the Executor through the Probate Process.  

Along with these legally important estate planning documents, it is valuable to maintain an inventory of all assets and related title-deed documents, bills, debts, digital password lists, burial preferences and instructions, and directions to access any legacy messages left behind for heirs, friends, and co-workers. These lists are stored where they are easily accessible by you to be kept current and then later accessible by your Executor after your death for the estate settlement.

The Estate Settlement Process:

The estate settlement process is a public process through the local county Probate Court. The Executor becomes a fiduciary to the estate and a trusted servant of the Probate Court. It is important to follow the required steps. The Executor can hire assistance as needed from professionals- attorneys, financial advisors, and accountants.  To reduce cost to the estate, a great way to use such professionals is as consultants, with the Executor doing the leg work with the Probate Court.  

Probate and Non-Probate Assets:

Life insurance, retirement accounts, and many assets that are titled to transfer at death are considered non-probate assets because they transfer according to contractual beneficiary instructions or by law. However, these assets may be needed to pay estate bills and estate taxes. So they should not be fully paid or transferred to beneficiary until an accounting of the estate is completed by the Executor. The Executor may have limited access to information regarding these non-probate assets, since an Executor does not necessarily have the right to information about these assets when the named beneficiary is not the estate. But, the Executor can assist the financial advisor, custodian, or designated heir to complete their claim or settlement process. It is important to inform the custodian; advisor, heir, or the insurance company that those proceeds may be needed to pay estate bills and taxes so that they do not pay out to beneficiaries too fast. Otherwise, beneficiaries may become personally liable for those debts. 

 The Executor Checklist: 

____1           Breathe and Grieve – take the time you need to mourn. Do not give any money to any beneficiary or creditor until authorized by court or after some time for grieving. Don’t rush. You do not need to add more stress in your life by making financial decisions and potential mistakes. Beneficiaries and creditors can wait the required time for probate to be completed. 

____2           Inform the decedent’s attorney and the financial advisor of the death. The attorney may help with all or part of the estate settlement process. Sometimes for a flat fee or an hourly fee. Executor does not need to handle all of this process by themselves; they can hire the attorney or their team to act as their agent. Depending upon the amount of assets and who is inheriting them, professional assistance is valuable. Hiring professionals also reduces stress during grieving and reduces the chance of mistakes.

____3           Locate and secure the original Last Will & Testament. 

____4           Inform Probate Court of Death before paying any creditors of the decedent (credit cards, car loans, mortgage, etc.). Debts of deceased spouse become the obligation of the surviving spouse or the JTWROS asset recipient. 

____5           You file the Last Will and Testament with the probate court of the decedent’s county of residence and wherever personal property is owned. The Executor will then receive “Letters of Testamentary” with the Probate Court. The Court confirms and authorizes you as the legitimate Executor for the estate to retitle accounts, contact creditors, sell assets, and pay out funds as needed. The Court will require an accounting of all assets and liabilities before payments begin, except for funeral costs.

____6           Inform banks of death where checking and savings accounts are located.  With Death Certificate and Probate Court authorization in hand, they will convert account to estate account or to the new owner account (if JTWROS). Bank will also freeze access to the safety deposit box to just the Executor. If spouse is Executor and account is JTWROS, bank just needs death certificate to initiate the transfer process.

____7           Collect all bills being received. Inform companies of death. You do not need to pay them right away.  They are creditors to the estate, (unless spouse). You only want to pay them after probate court has authorized the payments to be released and if there is enough money.   There is a required legal method to the payment of creditors or to complete payment settlement, ademption, or abatement of gifts and inheritances.  

____8           The Executor is responsible for consolidating the list of all assets, debts, and beneficiary information to complete estate settlement process. No debts are to be paid until there is an accounting of all the assets and the liabilities of the estate with the Probate Court. Creditors must be paid fairly and be given the time to be alerted to the death to file their claim against the estate, (usually at least 6 months).

____9           Protect and monitor the decedents “digital identity”. It is not unusual for the decedent to have email accounts, digital automated backup of records and mementos (family pictures), and social networking accounts.  You want those records maintained and continue to pay for the services so that records are not lost.   Contact those organizations as Executor to try protect the information and update contacts / social networks with notices of death. Hopefully, as part of estate plan, you were granted digital rights in the will and have needed passwords to download and preserve files.   

____10           The Executor of an estate is not technically responsible for funeral and burial arrangements, but the costs are to be paid by the estate. So the Executor has an indirect responsibility to see that the funeral cost can be managed by the estate and that it does not exceed acceptable costs to the Probate court.

____11           As mentioned earlier, the Executor will arrange for the decedent’s personal accounts to be retitled to “estate accounts” and used for funeral expenses and other creditor and tax payments. Proceeds of life insurance can be directed by the Executor to pay for required funeral services if there is not enough money in the estate to cover.  The Executor through the funeral home can file a lien against the beneficiary’s proceeds to cover the funeral costs and other estate costs. 

____12           Get “originals” of death certificates through the funeral home. Get multiple originals (need 1 for each institution) (get extras just in case):

a.    Bank

b.    Life Insurance Company

c.     Brokerage firm

d.    401K Provider

e.    Current employer

f.      Social Security

 g.    IRS (one for when filing last decedent return in April and one for estate tax return 9 months after death.)

____13           Be prepared to have credit cards frozen after a credit card company is notified of death. Credit card companies also put credit agencies on notice of death, causing other cards with decedent name to be frozen. Spouse often has to reapply for credit. 

____14           Inform insurance companies and Qualified Plan companies of death. They will provide distribution forms for beneficiaries to fill-out. These processes do not need to wait for Probate court since assets transfer by contract due to beneficiary instructions on file. Not governed by LWT.  Technically, they do not need to accept any instructions from Executor; they will need to speak to beneficiary. They will need copies of death certificate.

____15           Inform Social Security and any pension plan of death so that annuity payments end. Otherwise, estate becomes liable for any overpayments.

____16           Keep a file and tracking list of all documents received and the calls or steps you have taken. This way, you know that all bills have been paid. 

____17           As mentioned earlier, the Executor receives their authority from the Probate Court to settle the estate. Through the accounting reports and required Probate Court filings, the Executor is authorized to pay bills and ultimately pay-out bequests in accordance with your LW&T. 

____18           The Executor is required to file the last personal tax return for the decedent and the Federal estate tax forms. Important to request verification of acceptance or transcript by the IRS. 

____19           Once the verification is received or a transcript of the filing is received; this document and all other accountings can be filed with the Probate Court as part of the estate settlement process.

____20           Once estate settlement is completed and approved by the Probate Court, the Executor will receive the official notice from the Probate Court that the estate has been properly closed out. This close-out process will reduce the risk of continuing liability for any fiduciary error by the Executor. The Probate Process will take at least nine months. Often it can take longer if there is real estate or business interests involved in the estate.  At this time, any residual value or assets of the estate can be distributed according to instructions.

____21           Store copies of estate files in your home for at least three years after estate settlement in case of any claimed fiduciary liability due to error.   

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This checklist is provided as an educational service and is not to be considered legal or tax advice.  It is best to contact attorney, accountant, or local Probate Court for process details. This list has been consolidated by Bill Schretter, CLU, ChFC, CFP?. - A Member of the FPA of Southwestern Ohio and a 2016 CFP Board Ambassador?.

Bill Schretter is owner of Life-Legacy Services, which helps people record messages of love, appreciation, and advice for those they leave behind.