When a loved one passes away, families have an administrative duty to open and close their estate. This can be an emotionally complex time, so having as much information as possible regarding the probate process can help ensure as much smooth sailing as possible. Here’s a simple guide that discusses what should happen to a loved one’s estate when they pass away to properly open and close it. We’ll also explore what happens if an estate is not settled so that you can understand the possible consequences.
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What is supposed to happen with the estate of a loved one when they pass?
Following the passing of a loved one, state laws provide a period of time to allow families to grieve. However, before too long, the party who possesses the decedent’s Will should submit it to the county probate court, along with a petition to open probate.
Once the court accepts the petition and opens probate, they will appoint the Executor. This is typically the individual nominated in the Will to handle the estate, and is thus the person who also usually files the petition.
If the deceased individual did not have a Will, any interested party can file a petition to open probate. This includes family members, beneficiaries and creditors. Probate typically gets opened since there is a strong incentive in place for the estate to be distributed to heirs, for taxes to be paid, and for debts to be settled. In the case of intestacy (when there is no Will), the court will appoint an Administrator rather than an Executor.
During the probate process, the Executor or Administrator is responsible for creating an inventory of the decedent’s personal belongings and assets. Once they have paid any outstanding taxes and debts, as well as collected any debts owed to the estate, they can proceed with distributing the remainder of the estate to its beneficiaries (heirs of the decedent) per wishes stated in the Will or state intestate succession laws.
Once these proceedings are wrapped up and verified by the court, the estate can formally close.
How long do you have to close an estate?
Probate laws vary from state to state, so to find out how long you have to close your estate, it’s recommended that you check the laws for the state in which you reside.
Note that there are two timelines related to the probate process to note: how long you have to file for probate, and how long you have to close an estate.
According to the California probate code, for example, you were nominated Executor in a Will, then you have 30 days following the decedent’s death to file for probate. California is also a state that offers a small estate affidavit option. Families opting for this route must wait 40 days following the passing of their loved one before they can file the affidavit. (Learn more here.)
Next, you must determine how long you have to close the estate once probate has been opened. In California, the personal representative (the Executor or Administrator) must complete the probate process within one year from the date they were formally appointed by the court to their position. However, they can have up to 18 months if they were to file a federal estate tax. However, missing these deadlines isn't necessarily the end of the road. If probate takes longer than the applicable timeline, then the personal representative must submit a status report to explain why there is a delay, what steps must be completed, and when they expect to complete them.
How long does it typically take to close an estate?
If you’re balking at how long personal representatives have to close an estate, don’t worry. Just because state law provides you with a certain amount of time does not mean that the process necessarily has to take that long.
In most cases, probate does not take an entire year to wrap up. On average, you can close an estate in roughly 4 to 6 months. The process can take longer with complications such as court delays or lawsuits related to the case.
What happens if an estate is not closed?
Earlier, we mentioned how there can be some consequences when an estate isn’t closed properly. Here are a few examples of what happens if an estate is not settled:
Assets may suffer devaluation & loss
Assets could be claimed by the state
Financial & criminal liability may become an issue
We discuss each of these possible outcomes in the following sections. However, note that this is not an exhaustive list of consequences that could occur when an estate isn’t closed. This will vary based on state law and the estate’s unique circumstances.
Assets may suffer devaluation & loss
One of the stronger incentives to close an estate as soon as possible is to protect the value of its assets and property. During the probate process, assets are in a somewhat “frozen” state. Actions against these assets cannot be taken unless they are used to pay debts, taxes, and then eventually distributed to heirs.
The longer an estate is left unattended, assets and property are put at risk. Not only could they lose value, catastrophic things could happen. For instance, neglected investment assets could fall subject to market losses due to inaction and lose their value. Physical property could fall into disrepair and also lose monetary value when sold. If mortgages are left unpaid, the bank could foreclose and reclaim homes. Vehicles left abandoned could be vandalized, stolen, or taken away and thus lose their potential value altogether.
Ultimately, leaving an estate alone for too long can decrease its overall value. This impacts the estate’s efficacy in settling debts and passing on assets to beneficiaries.
Assets could be claimed by the state
There are instances in which assets are absorbed by the state. This can happen when heirs to the estate cannot be found, or when they don’t respond to court notices and summons. Eventually, they lose their chances of claiming their rightful inheritance.
Financial & criminal liability may become an issue
Last but not least, there could be some financial and criminal liabilities when no action is taken. For instance, it is illegal for a party in possession of a Will to hold onto it without filing for probate.
If a beneficiary finds out that their inheritance was impacted by an Executor’s failure to open probate can pursue legal recourse. Here, the Executor could be found liable and can be forced to pay damages. Ultimately, they could be subject to criminal charges if the court determines that they deliberately hid a Will or did not file it for their personal gain.
What to do if the estate is not properly closed
If you have reason to believe that a personal representative of an estate hasn’t properly opened or closed an estate, there are a few actions you can take:
Serve a legal notice: It’s often easiest to attempt to resolve issues outside of court whenever possible. Your first option is to work with an attorney to serve the Executor with a legal warning that requests them to properly close the estate and to expedite their actions if they have been causing delays. Be sure to file your proof of notice with the court if it is needed for evidence later.
File a formal complaint: If the legal notice doesn’t result in affirmative action by the Executor, it’s time to get the court involved. Here, you can file a petition with the probate court. This is a formal complaint and request for a judge to assess the situation. If they find that the Executor has failed their duties, then the court will issue orders to resolve the situation.
Review of accounting: If the court entertains your petition, the judge will likely demand an accounting from the Executor. This will be a review of what the Executor has accomplished thus far, if anything. They will also review the progress for honest reporting and accuracy. Know that it is within your rights to demand an accounting, even if the judge does not do so.
Fire the Executor: If the court gathers enough evidence to support your claim, they will dismiss the current Executor and put a new one in place. They might appoint a family member who may be better suited for the role, or they may instead appoint a third-party administrator.
One key takeaway from this discussion is that an Executor plays a large role in probate proceedings. They in large part control the manner and timing in which an estate is settled. Today, you also learned what happens if an estate is not settled, including possible negative consequences.
These two concepts highlight the importance of nominating the right Executor in your Will. Not only should they be a trustworthy individual, they should also be qualified for the job. If you feel inspired to create your Will and nominate your Executor, or perhaps even update your Will with a new Executor nomination, there’s no reason to wait! Take our free quiz to see where you should get started, or compare our different estate planning and settlement options today!
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