Estate Settlement FAQs

While our focus is providing a turn key estate resolution to downsize, pack, ship and move the contents of the home, this information is provided for your convenience without guaranty or warranty to accuracy. We recommend you always check with a certified financial planner or attorney. We work with families in all states and executors on the "who will do it" once the legal and financial issues are resolved.

There has been a death in my family, what do I need to do?

The first step...

When a loved one passes away, begin the claim settlement process by immediately notifying the deceased client's financial advisor or attorney and determine the executor of the estate. Your call will initiate the estate settlement process. 

We will work with you and your executor.

Probate, Personal Representative, Executor, Administrator

Every state has different requirements for probate. Generally, before a will can be accepted as genuine it is authenticated by a Probate Court. A Personal Representative (or Executor) is named by the Probate Court to administer the estate and a court order is issued identifying the person, persons or entity that has been appointed. 

For people who die intestate, without a will, an Administrator is typically appointed by the Probate Court to handle the tasks of evaluating the decedent's assets and debts, paying creditors, and turning over the balance to heirs, who are determined according to state law. To determine whether an estate needs to go through probate, and what is required to complete the administration of the estate, consult an attorney or the decedent's county or state Probate Court. . Questions about probate rules should be discussed with your attorney.

What is a probate estate?

Property that is individually owned and does not list a beneficiary is included in the probate estate. The probate estate also includes a proportional share of any assets where ownership registration is "Tenants in Common", "Community Property", or "Marital Property" The task of transferring the assets in the probate estate to beneficiaries and taking care of outstanding debts falls to the Executor, Personal Representative or Administrator. The process of transferring these assets is known as "settling the estate." How estates are settled varies from state to state, and probate procedures might vary according to the estate's overall value. 

Smaller estates can sometimes be settled through more informal means of administration such as a Small Estate or Summary Administration procedure. To determine whether an estate needs to go through probate, and what steps are required to complete the administration of the estate, consult an attorney or the deceased's county or state Probate Court.

If I do not want to go through probate, is there an alternative process? Does this vary by state?

Small Estate, Summary Administration, etc.
In situations where it is determined that property does not need to pass through probate, most states provide an alternative process. These processes and the rules that govern them vary from state to state. The rules that must be used are the rules issued by the decedent's state of residence. To determine whether an estate needs to go through probate, and what steps are required to complete the administration of the estate, consult an attorney or the deceased's county or state probate court. 

What is considered qualified vs. non-qualified tax accounts?

A "Qualified" or "Tax-Qualified" account is one in which assets were accumulated under an IRS approved program allowing some degree of tax deferral or exemption such as an IRA or 401 (k). Non-Qualified accounts are those which do not enjoy any preferential tax status such as a checking account at a bank. Additional requirements may be identified to complete the settlement of tax-qualified accounts 

In settling the probate estate, it is important for the Executor to determine if federal and/or state estate taxes and state inheritance taxes need to be paid, and to see that these obligations are satisfied. In some states you are required to obtain an estate or inheritance tax waiver from state tax authorities before assets in the deceased's account may be released. These taxes usually are based on the value of the "taxable" estate — the fair market value of all assets owned by the deceased minus deductions. Federal estate taxes typically must be paid within nine months of death. Other payment options may exist if the deceased was a qualified business owner. As for state estate and inheritance taxes, you might begin by consulting with state tax authorities in the deceased's state of residence. Where the deceased owned real estate or other property in more than one state, multiple state probate may be required. You should consult your attorney when taxes are due or when the deceased owned property in more than one state. A decedent's final income tax return is due for the period 1/1 to date of death. Income payable after date of death must be allocated between the decedent's estate and the beneficiaries of any non-probate assets. You should consult your tax preparer regarding these issues. 

Questions Regarding Federal Estate Taxes
Consult an attorney or tax professional and refer to Internal Revenue Service Publication 559 (Guide for Survivors, Executors, and Administrators), Publication 950 (Introduction to Estate and Gift Taxes) and Publication 590 (Individual Retirement Arrangements). These publications are available from the Internal Revenue Service at irs.gov. 

What types of property ownership registrations pass through probate?

Community Property, Marital Property: Method by which a married couple owns property in some states whereby each spouse owns a one-half interest. Upon the death of one spouse, the survivor's half goes to the survivor, and the deceased's half becomes part of the probate estate. 

Tenants in Common: A registration in which each owner is entitled to a predetermined share of an asset. Upon the death of one owner, that person's divisible interest passes to his or her probate estate. The surviving owner receives only his or her own share of the asset. 

Individual Ownership: A registration in which there is a sole owner with no beneficiary or surviving owner. Upon the death of the sole owner, all interest in the account passes to his or her probate estate. 

Partnership: A registration in which each partner is entitled to a predetermined share of an asset. Upon the death of one partner, that person's divisible interest passes to his or her probate estate. The surviving partner receives only his or her own share of the asset. 

Sole Proprietorship: A registration in which there is a sole proprietor of a business and are typically titled with the name of the sole proprietor doing business as (DBA) the name of the business entity, with no beneficiary or surviving owner. Upon the death of the sole proprietor, all interest in the account passes to his or her probate estate. 

What types of property ownership registrations do not pass through probate?

Joint Tenants with Rights of Survivorship, Tenants by Entirety: A registration in which there are multiple owners, each with ownership rights to all interest in the account. Upon the death of an owner the surviving owner(s) typically exercise their rights of survivorship and retain their ownership rights to all interest in the account. 

Individual Ownership with Transfer on Death (TOD), Individual Ownership with Payable on Death(POD), Trusted Beneficiary: A registration in which the sole owner has designated a beneficiary or beneficiaries to the account. Upon the death of the sole owner, interest in the account is transferred to the named beneficiary(s) according to the instructions provided by the sole account owner. However, if the named beneficiary pre-deceased the sole owner, or if the named beneficiary was the sole owner's probate estate, this type of account may still need to pass through probate. 

Joint Tenants with Rights of Survivorship TOD, Joint tenants with Rights of Survivorship POD, Tenants by Entirety TOD, Tenants by Entirety POD, Community Property WROS TOD, Marital Property WROS TOD: Each of these account registrations include rights of survivorship for the surviving owners. Upon the death of an owner the surviving owner(s) typically exercise their rights of survivorship and retain their ownership rights to all interest in the account. Although each of these account types includes a beneficiary provision, the named beneficiary(s) have no rights to any interest in the account until after the death of the last owner to die 

IRA, Roth IRA, SRA, CESA, Deceased IRA : These types of accounts all include a beneficiary provision and upon the death of the sole owner interest in the account is transferred to the named beneficiary(s)according to the instructions provided by the sole account owner. However, if the named beneficiary pre¬deceased the sole owner, or if the named beneficiary was the sole owner's probate estate, this type of account may still need to pass through probate. 

What types of investments or accounts might have been held by the deceased?

Life Insurance
Life insurance is a vehicle for protecting beneficiaries. This contract is known as a policy and is purchased to insure the life of a person. Upon the death of the insured person, the insurance company pays a death benefit to a named beneficiary. Proceeds from a life insurance policy are generally free from federal income taxes. The proceeds are paid directly to the named beneficiaries, bypassing the delays and expenses of the probate process. 

Tax-Deferred Annuity
Think of a tax-deferred annuity like a retirement savings vehicle. The annuity owner puts in money overtime ("premium payments") and at a future date (typically after age 59-1/2, in order to avoid a 10% IRS penalty tax), can take withdrawals to supplement retirement or alternatively can receive that money as regular monthly payments. Upon the death of the owner, or in some cases the death of the annuitant, and if the contract has not been annuitized, a death benefit may be paid to the beneficiaries designated under the terms of the annuity contract. An annuitized contract means the owner is receiving regular payments based on an established payout during their lifetime or over a specified period of time. A death benefit may be paid to the beneficiaries designated under the terms of the payout contract. 

Mutual Fund
A mutual fund is a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a shareholder of the fund. Upon the death of the owner of a mutual fund account, ownership interest may be transferred to surviving owner(s), named beneficiary(s) or the decedent's probate estate, depending upon the ownership registration and beneficiary status of the account. 

Investment Certificate
An Investment Certificate is a security in which the investor makes either a single, lump-sum payment or multiple periodic payments to the issuing certificate company and in return, the issuing company agrees to pay the holder of the certificate when the certificate reaches maturity. The amount of payment may be based on an amount agreed at the time of purchase often called the face amount, it may be the result of accumulated earnings based on a fixed rate of interest or alternatively, earnings could be generated based the changes to an index. Upon the death of the owner of an Investment Certificate account, ownership interest may be transferred to surviving owner(s), named beneficiary(s) or the decedent's probate estate, depending upon the ownership registration and beneficiary status of the account. 

Brokerage Account
A brokerage investment account is an account which allows the account to buy, hold and sell securities. Upon the death of the owner of a brokerage account, ownership interest in the securities and cash held in the account may be transferred to surviving owner(s), named beneficiary(s) or the decedent's probate estate, depending upon the ownership registration and beneficiary status of the account. 

Why do I need to open an account, can't you just send me a check?

A beneficiary on an investment account inherits the investment such as mutual fund shares, stocks, bonds. The shares in the account need to be re-registered or transferred into the ownership of the beneficiary before they can be liquidated. 

The deceased was the Trustee on an account owned by the Trust. Since there is no deceased account owner why do I have to complete a death settlement for the account?

When a Trustee of a Trust or other person acting in a fiduciary role, such as a Guardian, Conservator or Custodian is deceased it is necessary to make adjustments to the account registration to ensure that any remaining and/or successor trustees or other fiduciaries are able to continue to manage the assets. The death settlement process will allow those changes to be made in the most efficient manner. Once the account registration is updated the surviving and/or successor fiduciaries are usually responsible for executing any further management or distribution of assets.

How do I complete a Required Minimum Distribution (RMD) for the deceased owner of an IRA?

If the decedent was required under IRS rules to complete an annual RMD but had not completed the RMD for the year in which they died, it is important that you notify their  financial advisor as soon as possible. The methods available for fulfilling the RMD from the IRA can differ depending upon the type of IRA investment and the type of beneficiary designated for the IRA. 

You can start here for a referral.

Is this taxable to me?

Please refer to the IRS Website at www.irs.gov