How to settle an estate: the process from death to final distribution

How do you settle an estate?

You settle an estate in seven phases: secure the property and get the documents, work out whether probate is needed, get appointed by the court, notify creditors and inventory the assets, pay the debts and bills from an estate account, file the final and estate tax returns, then distribute what is left and close the estate. Each phase gates the next.

The phases apply whether or not there is a will. With a will, the court appoints the named executor and the will decides who inherits. Without one, the court appoints an administrator and state law decides. The tasks are the same in the same order. If you have not yet confirmed you are the person responsible, start with what an executor actually does.

Phase 1: Immediately after death

What happens. The home and valuables are secured, the funeral is arranged, and the will is located. The funeral home usually orders the first batch of certified death certificates from the state vital records office; 10 to 15 copies is common, because banks, insurers, and agencies each want their own. See how many death certificates you need.

Who does it.Whoever is on hand, usually the named executor. You do not need court authority to lock a door or forward mail. You do need it to move money, so pay nothing from the deceased’s accounts yet.

Also in this phase. Report the death to the Social Security Administration by giving the funeral director the Social Security number or by calling 1-800-772-1213. SSA takes reports only by phone or in person, and any benefit paid for the month of death goes back (usa.gov). The steps are in notifying Social Security of a death.

What unlocks the next phase. The original will in hand and certified death certificates on order. Without both, nothing downstream moves.

Phase 2: Determine whether probate is needed

What happens.You sort every asset into two piles: what passes through probate and what passes outside it. Probate is the court process for transferring assets titled in the deceased’s name alone with no beneficiary named. Everything else moves by contract or title, without the court.

Who does it. The executor, working from statements, deeds, and policy documents. Non-probate assets still need claim forms and retitling, but you can start those now, because the institution deals with the beneficiary, not the court.

The small-estate shortcut. If the probate pile is small enough, most states let heirs collect it with a sworn affidavit instead of a full probate case. The dollar limit and waiting period vary by state. Read how a small estate affidavit works before you file anything, because it can remove phases 3 and 7 entirely.

What unlocks the next phase. A list of probate assets and their rough value, which tells you whether you file a full petition, a small-estate procedure, or nothing at all.

Phase 3: Open probate and get appointed

What happens.You file the original will (if there is one) and a petition with the probate court in the county where the deceased lived. Some states require the will to be filed within a set number of days even if no probate follows; check the county court’s site. The court validates the will, notifies interested parties, and issues Letters Testamentary (with a will) or Letters of Administration (without). Every bank, broker, and agency will ask for them. Details are in what Letters Testamentary are.

Who does it. The person named as executor petitions. If no one is named or the named person declines, state law sets who can apply. Some courts require a bond unless the will waives it.

What unlocks the next phase.The letters. Until you hold them, you cannot access accounts, sell anything, or sign for the estate. The delay here is the court’s calendar and the notice period to heirs, both of which vary by state.

Phase 4: Notify and inventory

What happens. Two things in parallel. Notices go out: to known creditors directly, to unknown creditors by published notice where the state requires it, to beneficiaries, and to agencies such as the Department of Veterans Affairs if the deceased was a veteran. And you build the inventory: every probate asset with its date-of-death value, and every liability. Many courts require the inventory to be filed within a set period after appointment.

Who does it.The executor. Requesting the deceased’s credit reports surfaces debts nobody mentioned. Real estate and business interests usually need a written appraisal, which also fixes the tax basis beneficiaries use later.

What unlocks the next phase. The creditor notice starts a clock. Creditors have a state-set window to file claims, and you should not distribute until it closes: an executor who pays heirs before valid creditors can be held personally responsible for the shortfall. The inventory tells you whether the estate is solvent, which changes everything about phase 5.

Phase 5: Manage and pay

What happens. You get an EIN for the estate (free and immediate at IRS.gov/EIN, or by Form SS-4), open an estate bank account under it, and move the probate cash in. From there you pay the bills that protect assets (mortgage, insurance, utilities, property tax), the funeral and final medical bills, and then valid creditor claims. Proceeds from selling a house, a car, or securities land there too.

Who does it. The executor. Every dollar in and out runs through the estate account, with a receipt; that ledger becomes the accounting in phase 7. Once the EIN exists, file Form 56 to put the fiduciary relationship on record (IRS: deceased person).

If the estate is insolvent. When debts exceed assets, state law sets the order in which claims get paid. Do not pay creditors in the order they call; this is a point where an attorney earns their fee.

What unlocks the next phase. The claim period closed, disputed claims resolved, and the estate account holding a known balance. Neither the tax picture nor the final distribution can be computed until the outflows are fixed.

Phase 6: Taxes

What happens. Up to three federal returns, plus whatever the state wants:

• Final Form 1040.The deceased’s last personal income tax return, covering January 1 to the date of death. It is due when the return would have been due had death not occurred, generally April 15 of the following year. Write “DECEASED,” the name, and the date of death across the top. A court-appointed representative who attaches the certificate of appointment does not need Form 1310 to claim a refund. Source: IRS Publication 559.
• Form 1041, the estate income tax return. Required when the estate has gross income of $600 or more for the tax year, which happens as soon as the estate account earns interest, a rental collects rent, or assets are sold at a gain. Calendar-year estates file by April 15. Source: Form 1041 instructions.
• Form 706, the federal estate tax return. Only for estates above the filing threshold: $13,990,000 for deaths in 2025 and $15,000,000 for deaths in 2026. Most estates never file one. Source: IRS estate tax.
• State returns. Only some states have an estate or inheritance tax, and the thresholds are separate from the federal one. Check the revenue department for the state where the deceased lived and any state where they owned real estate.

Who does it. The executor signs. A CPA who handles estates is worth it the moment there is a Form 1041, because the fiscal-year choice and whether income passes through to beneficiaries changes who pays and how much.

What unlocks the next phase. Returns filed and any tax paid. The IRS can hold the executor personally liable for distributing assets before federal taxes are paid, so the tax filings are the floor under the closing date, not a formality.

Phase 7: Distribute and close

What happens. You prepare the accounting: what came in, what went out, what is left, and how it splits under the will or state law. The beneficiaries approve it, or the court does in states with formal accountings. Each beneficiary signs a receipt and release on receiving their share; specific gifts go first, then the residue. You give each beneficiary the tax basis of what they received, close the estate account once the last check clears, and file the closing documents.

Who does it. The executor prepares; beneficiaries sign; the court accepts. Some states let beneficiaries waive a formal accounting, which shortens this phase. Keep a reserve for late bills until you are sure nothing else is coming.

What ends the process.The court’s order closing the estate or, in states without a closing order, the filing of the closing statement and the end of any objection period. After that the executor’s authority ends and so does their exposure. For the full task list in order, use the executor checklist.

How long does settling an estate take?

A simple estate with cooperative beneficiaries, no real estate to sell, and no disputes can close in under a year. Many estates take more than a year: the probate court’s calendar, the creditor claim period, and the tax filings set the floor. Estates with property in more than one state, a business, a contested will, or a Form 706 take longer, often much longer.

Two things set the floor, and effort does not shorten them. The creditor claim period is a fixed window that starts when notice is published and varies by state. The tax filings follow the calendar: the final Form 1040 is not due until April of the year after death, and the Form 1041 cannot be finalized until the estate stops earning income. Executors who move fast on everything else still wait on those two.

What stretches an estate past the range is usually a house to clear and sell, a beneficiary who cannot be located or will not sign, a disputed claim, or an executor who opened the estate account late and has to reconstruct a year of transactions. Only the last one is fully in your control.

Do you need a lawyer to settle an estate?

Not always. Many executors close a straightforward estate without one: a clear will, assets in one state, beneficiaries who get along, and more assets than debts. Most probate courts publish their own forms, and a small estate affidavit is designed to be done without counsel.

It is worth paying for an attorney when any of these is true:

• Real estate in another state. That property usually needs its own ancillary probate in the state where it sits.
• A dispute. A will contest, a claim the will is invalid, or beneficiaries who disagree about the accounting.
• Insolvency. Paying creditors in the wrong order is a personal liability for the executor.
• A business interest. Valuation, buy-sell agreements, and keeping the business running during probate are specialist work.
• A taxable estate. Anything near the Form 706 threshold, or a state estate tax, needs a professional return.

Fees are paid from the estate, not by you personally, and how they are set varies by state. A CPA for the tax returns is a separate, often better-value hire than a lawyer for the whole estate.

How do you know the estate is settled?

An estate is settled when every one of these is true. If any is still open, the estate is not done, even if the money has been handed out.

• The creditor claim period has closed and every valid claim is paid or resolved.
• The final Form 1040 and any required Form 1041 or Form 706 have been filed and the tax paid, along with any state return.
• The final accounting has been approved by the beneficiaries or the court, or formally waived.
• Every distribution has been made, specific gifts and residue alike.
• A signed receipt and release is on file from each beneficiary.
• The estate bank account is at zero and closed.
• The closing documents are filed and, where the state requires it, the court has discharged the executor.

Keep the records. Beneficiaries need the basis figures when they sell, and tax authorities can ask questions after the estate closes. The hub’s PDF export exists for this: every task, note, and date in one document, kept after the account is gone.