Settling an estate
Someone has died, you are sad and overwhelmed, and there is work to do. Settling someone's estate after they pass away can be a complex and time-consuming process, but there are experts and resources to help you. This work is led by the executor of the will, often supported by next of kin. If the deceased doesn’t have a will, the court will appoint an administrator, who will fill out the duties of an executor.
Some things like notifying officials of a death need to happen right away, others within a few months, and some like going through personal belongings can wait until you are ready.
First, you need to know what to do. An executor is responsible for:
Filing necessary documents
Locating and securing the assets of the estate
Filing the will with the probate court (more on probate below)
Paying debts and taxes
Managing the estate assets
Communicating with and distributing assets to beneficiaries
Important things to cover:
Obtain copies of the death certificate: The first step in settling someone's estate is to obtain certified copies of the death certificate. These copies are used for filing claims with insurance companies and transferring assets. It’s always helpful to have a digital scan as well.
Notify creditors and government agencies: The executor of the estate should notify all creditors and government agencies of the person's death, including banks, credit card companies, utilities, and the Social Security / Social Insurance.
Review the will: Review the deceased’s will and understand their wishes for property and assets.
Locate and value assets: The executor should locate and inventory all assets of the deceased, including bank accounts, investments, real estate, personal property, and any business interests. These assets should be valued as of the date of death to determine their fair market value.
Pay debts and taxes: The executor should pay all debts of the deceased, including funeral expenses, outstanding bills, and taxes owed. Any taxes that are owed on the estate itself should also be paid.
Distribute assets to beneficiaries: Once all debts and taxes have been paid, the remaining assets can be distributed to the beneficiaries of the estate in accordance with the person's will or, if there is no will, in accordance with local law.
File necessary documents: Finally, the executor should file all necessary documents with the probate court to close the estate, including a final tax return, an inventory of assets, and a final accounting of all transactions related to the estate.
The process of settling an estate can vary depending on the jurisdiction and the complexity of the estate (for example, Ontario vs. NY). It can be very helpful to seek the guidance of an experienced estate planning attorney to ensure that the process is carried out correctly and in accordance with all applicable laws and regulations.
There are also many administrative tasks to keep on top of such as paying bills, shutting off services, forwarding mail, organizing and/or emptying a home. Ask for help and divide some of the tasks amongst family and friends.
You may need to work with the estate to cover costs of a funeral or other death-related expenses. Financial institutions should be able to help with some of these costs from the deceased accounts if you speak to them first and then show invoices.
New businesses are emerging to help you navigate. Debbie Stanley of ETP Canada launched her company to help families navigate all the logistics after a death (they also have an online course that helps you understand the task ahead).
Her service will help you sort through the tough stuff, but Stanley recommends, “My advice would be to make sure that you are having conversations with your future executor and loved ones. The worst thing is when we keep all of our information, wishes and explanations to ourselves; our loved ones do not have a way to get answers to the many questions they will inevitably have. Leave your family with documents organized, wishes written down, and decisions clearly explained, this leaves your family with a legacy, not a mess of paperwork!”
Lantern offers a checklist of the tasks to take care of after a passing with personal consultation. And Everloved and Manulife have good checklists as well.
Probate:
Probate is the legal process of settling a deceased person's estate. It depends on the regional laws, but here are some general steps that are typically involved in settling a probate estate:
Prepare documents: Provide documents that include original, signed copy of the will, death certificate, a list of beneficiaries, and a list or affidavit of the deceased’s assets and liabilities.
File a petition for probate: The executor of the estate will file a petition for probate in the appropriate regional court.
Notify heirs and creditors: Once the court approves the petition, the executor or administrator will notify the deceased person's heirs and creditors of the probate proceedings.
Pay debts and taxes: The executor or administrator will pay the deceased person's debts and taxes from the assets of the estate.
Pay fees: pay any fees associated with probate to the court along with any application costs
Distribute the assets: Once debts and taxes are paid, the remaining assets of the estate will be distributed to the beneficiaries or heirs according to the terms of the will or state laws.
Close the estate: Once the assets have been distributed and all debts and taxes have been paid, the executor or administrator will file a final report with the court and the court will close the estate.
Probate in North America varies by province (details for Ontario and BC) and state (details for California and New York) but generally works by the executor submitting an application to the regional court, receiving a grant of probate, and paying the fees required. Unless probate is not required (for example, when the value of an estate is small in Canada), the executor cannot administer the estate until probate is granted.
Trust and Will in the U.S. can help with their three tiered services, priced accordingly: self guided, concierge, or consulting a lawyer.