After a loved one dies, even with a will or revocable living trust, their estate must be settled. Estate settlement is the process of settling the legal affairs of a person who has died (decedent), and may or may not involve a probate. See the probate page for more details. Even if a decedent has a trust, there is a settlement of the decedent’s legal and financial matters. The term “Estate” has several meanings but in this context generally means all the money and property owned by a particular person when they die, whether in their name or in a trust, along with their legal obligations existing at death. Here are answers to some common questions about estate settlement in Utah:
The estate settlement process can be divided into the seven steps listed below. This is a very general description, and many other issues and steps may be involved depending on a decedent’s circumstances.
Collect, manage, preserve, and safeguard estate assets during administration. If assets that are titled in the decedent’s name, a probate may be required to transfer such assets.
Identify all debts and creditors of the decedent. Creditors known to you or have received bills from are referred to as known creditors. Creditors you are not aware of are referred to as unknown creditors. This step involves closing the decedent’s accounts and contracts, such as cell phones, utility accounts, car insurance, etc.
Generally, assets are sold except for assets identified as specific gifts in a will or trust, or those to be distributed in-kind to the beneficiaries. Except as provided in a will or trust, assets must be sold (or distributed) for their fair market value unless all beneficiaries agree otherwise. Sales proceeds should be deposited in a bank account in the name of the estate or trust, as applicable, using the correct tax identification number for the estate or trust.
File all required tax returns and pay all taxes due, including the decedent’s final federal and state income tax returns, any income tax returns the decedent failed to file for prior tax years, income tax returns for the estate and trust, and in some cases a federal estate tax return.
Pay estate settlement expenses, such as legal fees, accounting fees, utilities, insurance premiums, and mortgage payments. Pay all valid debts owed to creditors of the decedent prior to any distributions to beneficiaries. If assets are insufficient to pay all debts and expenses, then they must be paid in order of priority under Utah law. You should contact experienced legal counsel for assistance.
Prepare an accounting for the financial activities during the estate settlement, including assets, liabilities, receipts, and disbursements. Prepare a plan for final distribution that indicates how the remaining assets will be distributed to the beneficiaries.
Prior to making any distributions, secure beneficiary or court approval of the final accounting and the plan for final distribution. Identify the appropriate beneficiaries under the will and trust, or applicable law. Given many different family relationships and the language in particular documents, this may be very challenging and may require beneficiary consent or court approval.
The steps listed above can take much more time than you might anticipate. Generally, the estate settlement process in Utah takes between 6 to 12 months. More complex assets and situations may take longer, and less complex assets and situations make tax less time. Patience and careful administration are key to protect the trustee or the personal representative.
We highly recommend that trustees and personal representatives use experienced legal counsel when settling an estate. An experienced attorney can help protect the trustee and the personal representative from personal liability by advising them on issues during the estate settlement process. Many tax and legal issues are involved in the estate settlement process. An experienced estate settlement attorney can be especially helpful to close the estate settlement process by drafting appropriate receipt and release forms or helping to obtain court approval prior to final distributions to the beneficiaries.
We highly recommend that trustees and personal representatives use experienced legal counsel when
***This content is provided for informational purposes only, and does not constitute legal, financial, or tax advice, and does not establish an attorney-client relationship. You should not rely on, or act based on its content prior to consulting with a qualified attorney regarding your specific circumstances. Click here for more details.