What does it take to settle an estate? The requirements may surprise you

Settling an estate can be a complicated and time-consuming process. What does the process entail? In this Q&A, Director of Estate Administration Brian Conboy answers the most frequently asked questions about estate settlement, how the process works, and what it takes to ensure a smooth transition of wealth.

Q: What is the difference between an executor, personal representative and trustee?

BRIAN:  An executor, referred to as a personal representative in some states, is the fiduciary named within your Last Will and Testament (“will”) to administer the assets passing under your will upon your death. In many cases, clients have a pour over plan, where the will is a shorter document directing that any assets not transferred to their revocable trust during life be transferred to the revocable trust at death. In a pour over plan, the revocable trust is the primary dispositive document, providing for the disposition of assets at death. You will typically be trustee of your revocable trust during your life, and you will designate a successor trustee to serve upon your incapacity or death. Usually, the executor of the will and successor trustee of the revocable trust will be the same person or institution since the roles and responsibilities are closely intertwined.

Q: What can my family expect from the trustee or executor who will settle my estate?

BRIAN: As your executor or trustee, Fiduciary Trust International handles all aspects of estate settlement and administration, including locating, safeguarding and valuing estate assets, overseeing investment accounts, managing and selling properties, transitioning household employees, identifying opportunities to minimize taxes, tax compliance and audit support, and distributing assets to your beneficiaries.

Q: Is it simpler just to name a family member instead of a professional as executor or trustee?

BRIAN: You can name a family member as executor or trustee, but we find that, oftentimes, a family member isn’t prepared for all the requirements of the role and the time it takes to fulfill the responsibilities. Administering an estate is a full-time job. In addition to what is mentioned above, the executor or trustee must account for all the assets the deceased owned, resolve any debts, file tax returns, close or transfer financial accounts and distribute assets to heirs, among other tasks. It can be overwhelming for an individual who is not experienced with the estate administration process. A professional executor or trustee, on the other hand, is skilled at the process and understands the timeline, important deadlines and milestones, and the technical aspects of the role.

Plus, if communication hasn’t been open or recent, the named executor or trustee may not even be aware that he or she has been named to the role and may be unprepared or unable to devote the time necessary to the process. If the individual decides not to take on the role, a replacement must be named. The resulting confusion may create stress and friction among family members, especially during an emotionally difficult time.

Q: Can a family member share these responsibilities with a professional trustee or executor?

BRIAN: Yes. We can share these roles with a co-executor and/or co-trustee of your choice. All settlement decisions are made jointly, but we handle most of the administrative tasks. We find that many individuals prefer to have a family member or trusted friend serve as a co-executor or co-trustee, but understand that there is a great benefit to having a professional trustee or executor in place as well.

In other relationships, we provide support services and guidance as an agent to the executor or trustee who is usually a family member, friend, attorney, accountant or financial advisor. As discussed above, the responsibilities of an executor or trustee can be overwhelming for some individuals. So, our team offers professional resources, expert advice, and administrative services to assist these individuals in the performance of their duties.

Q: How long does it take to settle an estate?

BRIAN: Many people are surprised to learn that it can sometimes take up to four to five years to settle an estate (see the estate-settlement timeline below). Our team is with your family every step of the way. Our primary responsibility is to preserve your legacy and ensure the safe transition of your wealth. We serve as a bridge between generations—settling estates for clients who often have been working with Fiduciary Trust for decades. We also help educate the next generation to become responsible stewards of wealth and build your family’s legacy.

Q: If Fiduciary Trust International settles my estate, what types of professionals would be involved?

BRIAN: Our full-service estate settlement team includes officers, associates and administrative professionals. We are lawyers, aspiring lawyers, paralegals, and support professionals. Each team member has dedicated his or her professional career to trust and estate work.

In most cases, one officer and one associate settle an estate. But we may support the largest and most complex estates with three or four team members. Typically, the team is involved in settling between 40 and 50 estates at any given time. We have the flexibility and resources to manage estates regardless of their size or complexity.

Unlike other trust companies, our team members do not double as trust officers, investment professionals or tax preparers. We focus exclusively on helping families navigate the complexities of settling an estate.

Q: Would my other advisors also be involved in the process?

BRIAN: This is an important element of our approach to settling estates. We work together with outside advisors to carry out your wishes. We also take a hands-on approach to everything we do, whether we are engaged in complex tax planning or personally sorting through a storage unit to take inventory of property. The team also has close relationships with prominent real estate brokerage firms, auction houses, appraisers, and other estate-planning professionals in the US and overseas. So, team members know who to call if they need specialized services or guidance to manage unique assets.

Q: Is my estate large and complex enough to require a professional trustee or executor?

BRIAN: The estates we settle are typically valued between $5 million and hundreds of millions of dollars. But the size of the estate doesn’t necessarily determine its complexity. Some of the most complex estates we settle are on the small end of the scale. The team has settled estates across the country, from Maine to California, and some of these estates had holdings outside the US.

Our estate settlement team is also well-qualified to manage unique assets that require special skills. For example, we have extensive experience managing world class art collections, “trophy” commercial and residential properties, sports and Hollywood memorabilia, and income from royalties and residuals.

Q: How can I make this process as easy as possible for my family?

BRIAN: Every estate is unique and each brings new challenges. Whether you have assets that are difficult to value or sell, complicated family dynamics, or multi-jurisdictional international issues, our team does not avoid difficult situations. Team members have the experience and skills needed to navigate issues that may arise.

But no matter the characteristics of your estate, the process of settling an estate can be stressful, placing strain on your beneficiaries and family relationships. Our goal is to minimize that stress by providing your beneficiaries with a clear process and encouraging open communication and transparency. We are an impartial voice in the room providing direction, addressing concerns and, when necessary, addressing conflicts that may arise. 

And our advice is not limited to estate matters. We solicit feedback from beneficiaries so we can understand their concerns. For example, when a beneficiary needs investment management advice, financial or tax planning guidance, or an estate plan of their own, the team brings in colleagues from other areas of our firm to offer Fiduciary Trust’s best thinking.

Want to know more?

If you’d like to learn more about our estate-settlement team and how we can simplify the transfer of assets from your estate, please contact your Fiduciary Trust representative or call us at (877) 384-1111. 

Estate-settlement timeline

Settling an estate requires a broad range of skills and carries a long list of responsibilities and legal liabilities. It also requires a significant commitment of time and energy. This timeline offers a general idea of what the process entails. However, note that some estate administration matters may take less time, and some may take more time, depending on the facts specific to the estate. For example, each state has its own probate requirements and some states require a hearing before the executor or personal representative is appointed, which can slow down the process.

Months 1-3

• Review the will and trust agreement, if applicable, pay the decedent’s final expenses, and gather financial documents
• File the will and petition the probate court to appoint the executor or personal representative
• Notify beneficiaries and creditors of the probate court hearing, if necessary
• Locate and secure all personal property and documents
• Appraise and insure valuable estate assets
• Cancel personal accounts such as memberships and subscriptions

 

• If cash is needed to pay estate taxes, cash bequests or expenses, decide which assets to sell and execute on the plan

Months 3-6

• Transfer retirement, brokerage and savings accounts, as well as financial interests in partnerships or other businesses, into the estate and/or trust account

• Send the probate court a detailed inventory of all property, accounts and debts
• Locate all assets and secure their "date of death” values

Months 6-9

• Distribute personal property as directed by the will or trust document
• Satisfy cash bequests to beneficiaries
• If real estate is to be sold, identify brokers to list and sell property
• Resolve any outstanding claims from creditors
• Prepare and file a federal estate tax return and pay state and federal estate taxes, if applicable
  • Secure an extension of time to file the state and federal estate tax returns if information to file return is not complete.
• Provide the IRS and beneficiaries with basis information for the property they inherited

Months 9-18

• If extension of time to file state and federal estate tax returns was obtained, ensure that said returns are timely filed, 15 months after date of death
• After filing estate tax returns and assuming there is sufficient liquidity to do so, make partial distributions of estate assets to beneficiaries
• Maintain reserves to pay the estate’s expenses until it is settled
• File fiduciary income tax returns for the estate
• Prepare and file the decedent’s final personal income tax returns

Months 18-48+

• Request closing letters from the IRS and, if necessary, respond to audit inquiries from IRS and state taxing authorities
• Pay the estate’s remaining expenses
• Prepare and file the estate’s final accounting

• Distribute any reserves that were held by the estate pending resolution of contingencies and make final distributions to heirs