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The Wordly Goods — How to Settle an Estate

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When someone dies, the task of settling the person’s estate descends upon the personal representative. Being appointed a personal representative, or “executor,” is an honor that includes a broad range of responsibilities. This person must be part administrator, part accountant, and part diplomat!

Depending on the complexity of the estate, the process can drag on for years, or the estate can be opened and closed the same day. In either case, the personal representative may want to begin with a phone call to an estates and trusts attorney for guidance.

The attorney can simply point the personal representative in the right direction during a single consultation. Or the attorney can assume some or all of the duties of the personal representative, making the process less burdensome.

The challenge for most people who settle an estate is that they do this only once in their lives and therefore have to “learn on the job.” What follows is an overview of the steps involved.

1. Secure the home. If a house is sitting vacant as a result of the death, it is important to protect the property and its contents. Any valuables should be removed and kept in a safe place. Windows and doors should be locked and the alarm set, if there is one. If other people have keys to the house, consider having the locks changed. Mail should be forwarded to the personal representative, and a trusted neighbor should be asked to keep an eye out for any packages or fliers left at the door.

2. Locate the will. To open the estate, you will need the original will—not a photocopy. The will may be with the person’s important papers, at the lawyer’s office, or in “safekeeping” with the Register of Wills. Once located, the will should to be filed with the Register for the county where the person lived at the time of death, even if he or she had no assets. (If there is no will, the person has died “intestate” and the assets will be distributed according to the rules of intestacy under Maryland law.) Upon opening the estate, the personal representative will receive “Letters of Administration,” putting him or her in charge of the estate and its assets. A federal tax ID number can then be obtained and an estate checking account opened.

3. Notify agencies of the death. Banks and brokerage houses should be notified of the death, as well as insurance, credit card, and utility companies. If the person received Social Security or other government benefits, notify the agencies that provided them.

4. Marshal the assets. Prepare an inventory of the estate assets, including cars and household items, as well as real estate (whether in Maryland or elsewhere), bank accounts, CDs, investment portfolios, and life insurance policies. The inventory must include the date-of-death value of each item and be filed with the Register of Wills.

Determine whether any of the assets name a beneficiary or have a co-owner. Those that do may be “non-probate” assets, which will transfer to the beneficiary or co-owner directly and are not part of the probate estate.

5. Run the numbers. Creditors of the deceased have six months to make claims against the estate, and these will be paid from the estate account. Estimate the amount of cash needed to pay the claims and any taxes, and as necessary, arrange for any assets to be sold for distribution.

6. Deal with taxes. A personal tax return for the portion of the year the decedent was living is due by April 15 of the year following the year in which the death occurred. For bequests to anyone who is not a close family member, Maryland’s 10 percent inheritance tax will apply. This tax is payable by the recipient of the bequest, unless the will provides for the estate to pay it. Maryland or federal estate taxes may be due on larger estates. And finally, during the administration of the estate, federal and state income tax returns must be filed for the estate’s own income and expenses.

7. Make distributions. The estate assets are usually disbursed after any death taxes have been paid, but some distributions may be made earlier in the process. In any event, once an accounting showing all estate activity has been filed with the Register of Wills and approved, it is time to distribute the remaining assets to the beneficiaries. The personal representative’s job is then complete.

Lee Carpenter is an Estates & Trusts attorney at Saul Ewing Arnstein & Lehr LLP and an Adjunct Professor at the University of Maryland Carey School of Law. This article is intended to provide general information about legal topics and should not be construed as legal advice. For qualified legal counsel contact Lee Carpenter at Lee.Carpenter@saul.com or 410.332.8626.