Last Will & Testament 101

Settling legal wills

A will doesn't settle overnight. After someone dies, beneficiaries often disagree about how to divide property—sometimes over the property itself, sometimes over its value, sometimes just because the process takes time. Many people expect to divide a decedent's estate right after the funeral. That's not how it works.

If there's no will, an administrator must still be appointed to handle the estate. Executors and administrators have some differences, but we'll treat them the same for now.

Most executors are new to the job and have many legal duties. They need a lawyer to make sure they follow the law and protect the estate.

Even if the executor handles most tasks, we recommend checking in with an attorney regularly. This helps avoid problems with beneficiaries and tax authorities later on.

By law, the executor owns the decedent's property until it's distributed to beneficiaries. But the executor also owes legal duties to them. The executor must gather all the decedent's property, keep it safe, make sure it's insured, pay taxes, and clear any liens or other claims against it.

If a family member left you a car in their will, it belongs to the executor until they officially hand it over to you. The executor has to pay property taxes, loan payments, and insurance. They also need to prevent the car from losing value. If you take the car before it's legally yours, you could face theft charges.

If the car has claims against it—unpaid taxes or loan payments—the executor can't give it to you until those are settled. That's why some assets take longer to distribute than others. The estate might need to sell other property to pay off the car loan, or even sell the car itself.

Creditors must be paid before other property is distributed. Items without a clear market value—insurance policies, bank accounts, stock portfolios—need professional appraisal.

This prevents the value from being misrepresented for tax purposes or to favor the executor or any beneficiary. By law, anyone with a claim against the estate has one year from the estate notice publication date to file. This can include medical bills, funeral expenses, utility bills, or other legitimate claims.

The executor must file and pay all federal, state, and local estate taxes. Work with an estate attorney and tax professional for this. The IRS can come back years later to claim unpaid taxes.

Several strategies can reduce estate taxes: deducting certain administration expenses, choosing a fiscal year over a calendar year, and making other tax elections.

Most people don't know about these options, and new ones appear regularly. A tax professional usually saves money. Financial guarantees can also reduce worry and prevent penalties if mistakes happen.

Federal and state estate taxes are due nine months after death, unless the estate qualifies for an extension. The tax payment is usually due by nine months, but returns can be extended an additional six months—making the filing deadline 15 months after death.

Unlike income tax returns, the IRS reviews every estate tax return. The taxes aren't settled until the tax authority accepts the return and notifies the executor.

During administration, the executor must preserve the estate's value and manage it for the beneficiaries' benefit. The executor collects income from investments, business interests, and real estate, invests the assets prudently, and sells them if needed.

The executor handles these sales, keeps records of all transactions, and once creditors are paid and taxes are settled, distributes the remaining estate to beneficiaries according to the will.

An executor is entitled to a fee for the work and responsibility involved. The amount depends on how much work they actually do.

Some executors do most of the work themselves; others hire professionals to handle almost everything.

Most executors hire a lawyer and possibly an accountant. Often the lawyer who drafted the will is hired, but that's not required.

The executor can choose their own legal counsel. The lawyer explains the executor's duties and deadlines, helps prepare tax returns, resolves disputes, and makes tax elections.

Estate and trust taxation is complex. A tax professional can often save the estate significant money through careful planning after death.