It would be presumptuous to assume that funds from an inheritance would be available within a month or so. The probate administration process can take several months or longer. It would not be wise to buy that new car or big ticket item that you've had your eye on. Unfortunately, the distribution of inheritance money is the last thing that the executor or administrator of the estate will do.
So why does it take so long for beneficiaries to receive their inheritance? The general process for handling an estate can be involved. Each state has a specific set of laws that determine the steps required before the estate can be closed. Here, we outline the general inheritance process steps.
Step #1: Locating Estate Documents
The decedent's Last Will and Testament, along with any other important estate planning documents, will determine the nature of the estate.
If the decedent left a will, then it will need to be probated. Probate is the court-monitored process whereby a will is proved to the satisfaction of the Surrogate Judge. Not all assets of an estate go through the probate process, such as joint bank accounts, life insurance, and retirement accounts.
When someone dies without a will, or "intestate," New York law determines how those assets will be distributed among the surviving family members.
The original will, if it exists, and a certified copy of the death certificate need to be submitted to the Surrogate's Court, alongside the probate petition and other supporting documents. This must be done in the county where the decedent lived prior to their death. A filing fee will apply, determined by the size of the estate.
Step #2: Appointing an Executor or Administrator
Once the will has been authenticated, the probate judge will appoint an executor or administrator. Although executors and administrators have different titles, their functions are nearly identical. The only difference is that administrators are appointed for intestate estates.
Executors and administrators are responsible for settling the estate, which can include:
- Gathering and managing assets
- Paying the decedent's taxes and debts
- Obtaining an estate identification number from the IRS
- Opening a bank account for the estate
- Managing funeral arrangements
- Contacting lawyers on the family's behalf
All actions by the executor or administrator will be watched by the probate court to ensure that everything is done properly. This will also give greater protection to any heirs or beneficiaries.
Step #3: Valuing Estate Assets Upon Date of Death
The process of valuing the decedent's assets can be done through bank, brokerage, and real estate statements. The process may also involve capital gain calculations and handing over gifts such as jewelry and other personal property as stipulated in the will.
Step #4: Paying the Decedent's Bills and Administration Expenses
This step would include identifying and notifying creditors to pay any outstanding balances due.
Step #5: Filing a Final Income Tax Return
In this step, the estate representative would file a final income tax return for the decedent. They may also file an estate income tax return if the estate earned income. Finally, the representative would need to file and pay applicable estate taxes.
When all of the steps above have been completed, only then can the remaining assets be distributed to heirs and beneficiaries.
As noted above, this is not a simple process. It can be further complicated by various factors, such as:
- Types of assets
- State taxes due
- Federal estate taxes
- How many heirs or beneficiaries are involved
- If there are any disputes
- How skilled the estate representative is at the process
The estate administration process can be a lengthy one. Therefor, it is best to err on the side of caution. Remain patient, and avoid financial problems stemming from decisions made prematurely.
If you are named in someone's will as an executor or you are the appropriate person to commence an administration petition, hiring an experienced lawyer to handle the legal aspects is critical.