Estate administration has a bad reputation for being confusing, drawn-out, and difficult to navigate. Which can be true, especially with large complex estates. But if you have an aerial view of what it’s all about, estate administration doesn’t have to overwhelm you.
In this article, we’re going to explain the full estate administration process; there are ways some people can avoid parts of it depending upon their circumstances, but we are going to assume a holistic approach and explain the big picture.
Before anyone can begin the three-part process of administering an estate, they must be approved by the court as the Personal Representative (Executor) of that estate. If the deceased had a Last Will and Testament, it should name the estate’s Personal Representative (that person still has to be deemed fit by the court).
If there is no Will, a judge will appoint an appropriate Personal Representative. Once this person is appointed and has taken an oath to carry out their responsibilities, estate administration can begin.
Note: If you have been appointed as Personal Representative of an estate with a Last Will and Testament, you will accomplish estate administration through the probate process. You can learn more about probate here. If you are the Personal Representative of an estate with no Will, you will accomplish estate administration through the intestacy laws of your state. You can learn more about intestacy here.
Three Main Phases of Estate Administration
The first step a Personal Representative must take is to give notice that the estate is being administered to all its heirs. Most people think of heirs as anyone who is specifically named as receiving an inheritance, but in this case, the heirs are anyone who naturally would have inherited from the deceased if they did not have a Will. By default, this means the Personal Representative must notify family members according to closeness, starting with the spouse and children. If the deceased doesn’t have a living spouse or children, they must notify parents, then siblings, etc. until they are able to notify the deceased’s living next of kin (To see the full order of estate succession, click here).
After sending notice, the Personal Representative must then file an affidavit with the court to state they have done so. They must send notice within 30 days of being appointed and must file the affidavit within four months.
Next, the Personal Representative is required to file inventory, which means creating a list of assets the estate owns and then filing this list with their local Commissioner of Accounts. (The Commissioner of Accounts is an attorney who is hired by the courts to review estate accountings and make sure the Personal Representative is fulfilling their oath.)
The Inventory list is filed by category according to different types of assets, i.e. personal property (like vehicles and valuables), financial accounts, land, etc.
Inventory is due four months after one is appointed a Personal Representative.
The last phase, Accounting(s), can be ongoing for a while. After filing the Inventory, a Personal Representative is required to give ongoing reports showing what they have done/are doing with the deceased’s property.
Depending on the type of assets they are dealing with, a Personal Representative may be collecting assets, liquidating or consolidating them, using them to pay expenses, or distributing them according to the Will or intestacy rules. Accounting(s) is designed to track the money and show that a Personal Representative is doing things right. They need to be able to prove their actions, so keeping records, especially bank account records, is critically important here.
Note: If it is a fairly large estate, you will probably have to set up a bank account owned by the estate in order to take care of all these things. The commissioner is going to want to see those statements to know if you as a Personal Representative are using the funds as you should.
All of this distribution takes time, so there is often more than one Accounting. The first one is not due until 16 months after the Personal Representative is appointed – it covers the first year. Thereafter, they are due each year, four months after the end of the year. If you can show in the first year you have taken care of everything, you only have to do one, but you have to file as many as it takes to get to the Final Accounting (others are called Interim Accountings).
After the Personal Representative has worked with the Commissioner of Accounts and reached the final Accounting, the commissioner will review and approve what’s been completed and send it to the court. Once the court accepts the Final Accounting, the estate is deemed closed and the Personal Representative has fulfilled their duties.
Both choosing your Personal Representative and agreeing to be someone else’s are important decisions. This job can be big, and is not for the faint of heart. That doesn’t mean it’s impossible, just that you’ll need an understanding of the process and a good head on your shoulders to walk through it confidently.
If you have more questions about the process of estate administration, call me. I’d love to talk with you and walk you through it.