Estate settlement is the process of settling an individual’s affairs and closing the estate when the individual passes away.
While many different terms are often used in the process to handle an individual’s estate after their death, estate settlement is a broad term that includes all informal and formal steps taken to close the estate.
The executor, probate court, beneficiaries, and next of kin all play a vital role in the estate settlement process.
What you need to know
An individual's estate includes any assets owned upon their death, whether held individually, jointly, &/or as a part of their probate estate.
While estate settlement often includes navigating the formal probate process, it also includes overseeing the transfer of non-probate assets.
The individual responsible for overseeing probate & estate settlement is commonly referred to as the executor, executrix, or personal representative.
The probate process is included within estate settlement.
It can be helpful to executors when an individual leaves a last will & testament, otherwise heirs will receive assets as stated by the intestate laws of the jurisdiction in which they lived.
Terms like estate settlement and probate are often used interchangeably, but there are slight distinctions between the two.
Probate is the formal legal process of validating a deceased individual’s wishes, assessing any applicable death taxes and then ensuring rightful heirs and beneficiaries are transferred ownership of entitled assets and property.
Estate settlement, on the other hand, is a broader term used to capture all of the informal and formal steps that are taken to settle an individual’s affairs and close the individual’s estate.
This distinction shows that estate settlement is broader than probate and encompasses the legal probate process. Yes, probate is the core component of the estate settlement process — but estate settlement is so much more than just probate.
Estate settlement includes all of the following steps:
- Gathering the decedent’s personal information.
- If applicable, consulting with a probate attorney.
- If the deceased died testate (with a will), filing the will with the probate court.
- Filing all other necessary documents with the local probate court.
- Publishing a notice to creditors.
- Completing an inventory of assets.
- Paying creditors.
- Paying estate taxes.
- Distributing assets to beneficiaries
- Formally close the estate.
Because of the number of steps involved in estate settlement, the entire process of settling an individual’s affairs and closing the estate can take anywhere from several months to a few years.
Some terms you might encounter during estate settlement:
What to do when a loved one dies
When people die, they leave behind a life that must be closed out. Don't tackle it all alone. From planning the funeral to tackling the legal & financial estate, here's an ultimate checklist of all the things an executor needs to do following the loss of a loved one.
Learn moreRobert, a wealthy widower who lives in Tucson, Arizona, passes away at the age of 101. Robert did write a will before he died and named Fred, his business partner, as the executor of Robert’s estate.
As the executor of the estate, it is Fred’s duty to complete the entire estate settlement process.
To begin the difficult journey of estate settlement, Fred needs to find Robert’s will and petition the probate court in the county where Robert lived to begin the probate process.
The probate court will validate the will and formally appoint Fred as the estate’s executor. Then, during the probate process, Fred will need to complete tasks like filing a notice to creditors and taking an inventory of Robert’s assets. The estate will eventually pay any creditors, pay any tax liens or estate taxes, and then distribute the remaining funds to beneficiaries or heirs.
Once all of those steps have been completed, Fred will need to officially ask the probate court to dissolve the estate. Once this has been done, the estate is closed.
All of those steps are key components in the estate settlement process. As the executor, it is Fred’s responsibility to ensure that all estate settlement deadlines are met. Once the estate is formally settled, Fred will be relieved of his duties as the executor of the estate.
In collaboration with
Ben Hopf
Ben is the Founder and CEO of Atticus and frequent trust and estates contributor with specialized background in generational family wealth planning and transfers. Ben serves on the Executive Board of Directors for the Trust Education Foundation, which oversees internal & external support for the nation's only undergraduate & graduate level Trust & Wealth Management programs, offered exclusively at Campbell University.
Ben is a frequent industry speaker and author across trust, wealth management and fiduciary FinTech conversations.
In collaboration with
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