When someone passes away, their estate is the property they owned at the time of their death. In such a case, an executor or administrator is appointed to handle the estate. The duration of the probate process can vary depending on the size of the estate and the amount of debt involved. Generally, if the estate is small and there is a reasonable amount of debt, it can take anywhere from six to eight months for everything to settle.
However, if the estate is larger, such as a farm, it may take more than a year for all matters to be resolved. The executor remains in charge of the estate even after all assets have been distributed. For example, if twenty years after the death of the deceased, a previously unknown bank account is discovered, the executor still has the right to claim it. This is because the estate never officially closed; they simply ran out of things to do.
However, the executor's liability also remains. After being appointed, the executor or administrator must take possession of all assets subject to probate and inventory them. They must also file a special form with the court known as probate letters or letters of administration. Additionally, they must provide creditors with enough time to make any claims against the estate.
The executor or administrator must also ensure that all taxes and debts are paid and all required tax returns are filed. If any assets are sold, they must be included in either a Gains on Sales program (if sold for more than appraised value) or a Losses on Sales program (if sold for less than appraised value). Once all assets have been collected and taxes and debts have been paid, the executor or administrator must distribute any remaining assets according to either the decedent's will or intestate succession rules (if no will was left). The Distribution Program must include a list of all cash or assets that have been distributed through a preliminary distribution.
If an executor named in a will does not plan to file it or start the probate process, beneficiaries may argue that they are violating their fiduciary duty with respect to the estate. Income such as dividends and interest received after death will not be reported on a return but will be reflected in either a wealth income tax return or by a surviving joint lessee if the asset was under joint lease. Executors may waive their fees but if they are also an heir, it may be beneficial to exempt them in order to save on income taxes. Once accounting is prepared or waived, a petition summarizing inheritance and actions taken must be drafted. Finally, after all matters have been settled, the executor's liability expires.
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