The first steps to take when settling an estate

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Even if it’s expected, losing a loved one, such as a parent, can be traumatic. The aftermath can be discombobulating, as well: The matter of settling an estate often compounds the pain.

So when the unfortunate moment comes, what are the first things you should do to settle your loved one’s estate?

First steps in settling an estate

Experts say it’s important to go through the grief process before concentrating on finances. “Figure out if there are any immediate impending transactions, like a house closing or a business deal,” says Kate Scallan, a trust and estate lawyer at Sidley Austin in Chicago. “If not, focus your attention on the mourning process, coordinating the burial and being with the family.”

Hopefully your loved one has a will. If not, state laws on estates will decide how the assets of a deceased person (called the “decedent”) are divided up. A probate court, which is charged with transferring title of the decedent’s assets to his or her successors, will appoint an administrator to oversee the disposition of your loved one’s assets.

If there is a will …

If your loved one does have a will and the value of the assets exceed a certain threshold — $100,000 or less in most states — the will goes through probate, with the process led by an executor who was appointed by the decedent. If the estate is small and the assets don’t make the threshold, the estate typically can be settled through a small-estate affidavit or simplified probate court procedures.

You need to file your loved one’s original will with the county. And remember, it is public record. So if you get stiffed by your loved one, a lot of people have the potential to know about it.

Tips for settling an estate after a loved one's death © iStock;

You’ll want to quickly figure out what assets the decedent had. “This can be difficult because sometimes they play their cards close to the vest,” Scallan says. Watch the mail for account statements. And contact your loved one’s accountant or banker to determine where the assets are and how to secure them.

It’s also important to secure your loved one’s personal property, including artwork and jewelry. “Sometimes relatives take things,” says Richard Rampell, CEO of Rampell & Rampell, a Palm Beach, Florida, accounting firm. “Household employees can be an issue, too.”

Other loose ends

You’ll need to get multiple copies of the death certificate from the county or state vital records office to verify your claims for:

  • Life insurance. “Once you provide a death certificate, life insurers will pay up almost right away,” Rampell says.
  • Pension plan. If your loved one participated in a pension plan, you should contact the plan administrator and inquire about successor benefits. “That’s part and parcel of seeing what the decedent owned and the proper way to transfer it,” Scallan says.

Keep in mind that court and administrative costs of settling an estate can be hefty, totaling 3% to 10% of the estate’s value. You also have to pay federal taxes on the estate if it’s worth $5.43 million or more (in 2015), and you may have to pay state estate taxes, too.

Meanwhile, patience is a virtue. Don’t expect everything to happen at once, as it can take up to 5 years or more to settle a large estate.

“Recognize it’s a high-tension time,” Scallan says. “People want to get it done immediately. But these things take time, especially if you have probate or owe a tax.”