How to Settle an Estate After Death: Step-by-Step Guide

Settling an estate can be a long and complex process. It involves safeguarding your loved one’s property during the administration process, paying debts and taxes, and distributing the assets of the estate to those who are entitled to receive them. Most of these duties will be handled by the estate executor. However, the next of kin will typically be involved as well. 

Every estate is different, and the complexity of the settlement process varies considerably depending on factors such as the size of the estate and the number of heirs. With that being said, there are several basic tasks and responsibilities that generally need to be completed by either the executor or the next of kin. To help you get started, we have outlined these in this comprehensive step-by-step planning guide.

The following legal and logistical information is most applicable to residents of California. However, where California’s laws or procedures differ greatly from those of the majority of other states, we have made an effort to make our out-of-state readers aware of this. The information provided on this website is for general informational purposes only and does not constitute legal advice. 

Jump Ahead to:

A. Collect the Mail
B. Secure the Residence, Automobiles and Tangible Property
C. Locate Important Documents
D. Make Necessary Notifications
E. Manage Bills and Other Debts
F. Administer and Distribute Assets
G. Arrange Care of Minors and Dependent Adults
H. Manage Taxes Obligations
I. Manage Insurance Policies

A. Collect the Mail

As soon as possible after your loved one has died, check their mailbox and collect the mail. This not only protects their privacy but also helps you know what assets the person had because statements and other documents relating to their property often arrive by mail. Bills may arrive by mail too, which will help you identify your loved one’s creditors.

If you shared an address with the person who died, you may continue to collect the mail as usual and forward important documents to the executor as necessary. If you are the executor and did not share an address with the person who died, contact the US Postal Service to arrange a change of address. You will need to provide proof that you are the legally named executor or agent of the deceased at that time. Until you confirm that the mail is being forwarded, someone would check the mail regularly to ensure it is safe and secure. 

Remember, too, that many people today receive bills and account statements online, so it’s important to obtain access to the computer(s), email accounts and online banking information of the person who died as quickly as you can. These are typically password-protected, so it will be necessary to find out where the passwords are stored. Hopefully, your loved one shared this information with a family member or close friend.

B. Secure the Residence, Automobiles and Tangible Property

Unfortunately, unscrupulous people will often attempt to burglarize a residence after learning that someone has died (for example, through an obituary). So lock your loved one’s residence and car, and allow no one to take tangible personal property that belonged to them. Tangible personal property includes furniture, antiques and artwork, as well as personal effects such as clothing, jewelry, and personal documents. If people you do not know, (for example, a housekeeper or handyman) have keys to the house, you may want to consider changing the locks

If you cannot secure the residence for some reason, you may want to move your loved one’s personal property to a self-storage unit until the estate is settled. Similarly, if you are unsure if anyone has keys to your loved one’s car, you will want to ensure that it is stored in a locked garage. 

C. Locate Important Documents 

As mentioned in our Comprehensive Step-by-Step Planning Guide: Immediately Upon Death, you will need to collect the following documents as soon as possible after your loved one dies. 

• The Last Will and Testament — This will indicate the name of the person designated as the executor of the estate. If there is no will, an executor will be named by the court. 
• Trust deed 
• Final Instructions, Disposition Authorization, and/or Designated Agent forms (if applicable) This document names the person responsible for making arrangements and paying for final disposition. If there is no named agent, the responsibility falls to the next of kin. 
• Prepaid Disposition Plan (if applicable)
• Organ/Tissue Organ Donation registration (i applicable — may be on the person’s driver’s license)

In addition to these essential documents, you will need to locate the following records shortly after death occurs. If you have trouble finding them, check with your loved one’s attorney, financial planner, bookkeeper, and close friends and family members, who may know where they were kept. Keep in mind, too, that your loved one may have stored some records on their computer’s hard drive or in the cloud, so you will need access to their computer as well.

• ​Insurance Policies
  • ​Life insurance 
  • Accidental life insurance
  • Veterans’ insurance
  • Employers or pension insurance
  • Funeral insurance (or other death-related benefit plans)
  • Mortgage and/or credit insurance
  • Credit card insurance (to pay off credit card balances)
  • Health insurance (including Medicare, Medicaid, “Medigap” policies, private health insurance, dental, and Long Term Care insurance) 
  • Property insurance (homeowners/renters insurance, car insurance, etc)
     
• Financial Accounts – Including most recent statements
  • Bank accounts – checking, savings, CDs, etc.
  • Investment/brokerage accounts, IRAs, 401ks, etc.
  • Stocks and bonds
  • Annuities
  • Credit and debit card accounts
  • Usernames and passwords for any online accounts, (These may be stored in a cloud-based password manager. Check with your loved one’s relatives and friends to learn if there is such an account and where the master password is kept.

• Deeds, Titles and Promissory Notes
  • Real Estate Property deeds (including any recent appraisals)
  • Mortgage documents
  • Other promissory or loan notes (including loans owed to the deceased) 
  • Vehicle titles and registrations 

• Other Financial Records
  • Employer retirement/profit sharing plans
  • Survivor annuities
  • Veterans benefits
  • Disability benefits
  • Income statements for the current year
    (including wages, Social Security, pension, IRAs, annuities and any other income)
  • Federal and state income tax returns
  • Property tax records and payments
  • Business records, including financial statements, contracts etc.

• Legal Documents
  • Driver’s license
  • Social Security card or number 
  • Passport
  • Naturalization, citizenship or alien registration forms 
  • Marriage license or domestic partnership agreement
  • Military service records
  • Divorce, adoption or surrogacy records including property settlements or prenuptial agreements
  • Birth certificates for all family members

D. Make Necessary Notifications

Besides friends and family members, several other important notifications should be made as soon as possible after someone dies. These include:

1. Employer(s)
If your loved one was employed at the time of their death, notify their employer. You may wish to contact their immediate supervisor directly to deliver the news, but make sure to notify the company’s human resources department as well. They can arrange for delivery of the person’s final paycheck as well as verify any employer-sponsored benefits, such as life or health insurance insurance, profit-sharing or retirement plans, to which your loved one was entitled.   

2. Social Security Administration
If the person who died was receiving social security benefits, notify the Social Security Administration immediately. Typically, the funeral home or service provider will report the death if you provide them with your loved one’s Social Security number. If you are not using a funeral service provider or simply prefer to make the notification yourself, call the Social Security Administration at 1 (800) 772-1213 to notify them of the death. (Have your loved one’s Social Security number on hand.). You can also verify your eligibility and apply for survivor benefits at that time. (Note: You cannot report the death or apply for benefits online.)

3. Credit Card Companies
Locate your loved one’s credit and debit cards and call the number listed on the cards to notify the respective companies of the death. The card issuers will flag the accounts to prevent any further charges from going through, but you or the executor will need to follow up with a certified letter and a certified copy of the death certificate before the card issuers will close the accounts. 

Also, check credit card statements for any recurring charges such as utility bills or membership dues. You will need to cancel these charges or transfer payment to another account if they will be charged to the estate.  

4. Credit Reporting Agencies (Credit Bureaus)
To protect against unauthorized use of your loved one’s identity, notify the three major credit reporting agencies of their death as soon as possible. You may make the initial report by calling the numbers listed below:

• Experian: 1 (888) 397-3742
• Equifax: 1 (888) 548-7878
• Transunion: 1 (800)  916-8800

Tell the representative that the person has died and that no credit should be issued in their name. 

After you make the telephone notifications, follow up as soon as possible with a certified letter to each agency. Make sure to include your loved one’s:

• Full legal name
• Address at the time of death
• Social Security number
• Date of birth
• Date of death

Also, include a certified copy of the death certificate and your contact information as well as proof of your relationship to the person who died. This can be a copy of your marriage certificate, birth certificate or a letter of testamentary from the Court certifying that you are the executor of the estate. 

You may also request a copy of your loved one’s credit report in the letter you send. This will help you identify all existing creditors, as well as any possible judgments or liens that could impact the estate. (Notification of Death.) 

5. Department of Veterans Affairs
If your loved one was a veteran of the U.S. Armed Services or an Armed Services retiree, you may be eligible for survivors benefits, the nature of which will depend upon your loved one’s military service and the circumstances of their death. To learn about what benefits you might receive and to notify the VA of the death, call the VA Office of Survivor Assistance at 1-800-827-1000. 

To file a claim for benefits, you will need  proof of your loved one’s military service (documents known as the DD-214 and DD-1300). If you don’t have these available, they can be obtained by filing a request with the National Archives. You can begin the process online but may need to complete it by mail.

E. Manage Bills and Other Debts

After a death, bills will continue to arrive for expenses incurred during the person’s lifetime. These may include medical bills, credit card statements, utility and cell phone bills, invoices for mortgage payments, tax bills, insurance premiums, and so on. Here are some important things to know about handling these debts: 

• As a general rule, survivors are not responsible for paying the obligations of someone who has died. Any debts owed by your loved one should be paid by the estate. If there is insufficient money in the estate to satisfy all of the person’s financial obligations, the Court will determine who is paid first. 
• In community property states (Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) the surviving spouse may be held responsible for debts incurred by the person who died if the debts were incurred for the benefit of the family. However, debts that benefited only the person who died must be paid by the estate. If you live in one of the above-mentioned states, consult with an attorney before paying or agreeing to pay any debts. 
• If you or another person cosigned on a debt incurred by the person who died, you may be liable for paying that debt. Again, contact an attorney before paying any debt from your personal account. 
• All bills should be paid from accounts that belonged to the person who died, either by the executor or trustee. If you are a surviving spouse or family member, forward all bills to this person as they arrive. If no executor has yet been named, hold on to the bills until someone is appointed to serve in that capacity. Do not pay them using your personal accounts, since this may be construed as assuming responsibility for the debt.
• It is the job of the trustee or executor to identify what bills are legitimate, fulfill creditor notification requirements and accept or reject creditor claims. The trustee or executor should consult with legal counsel about completing these tasks  because failure to fulfill the legal requirements could expose them to liability.
• If creditors press for payment before a trustee or executor has been appointed, let them know that all bills are on hold pending the appointment of an authorized legal representative. If the creditor threatens legal action or files a legal claim, contact a lawyer immediately.
  

F. Administer and Distribute Assets

How the assets of the person who died are administered depends on whether they left a will or a trust. The law is very specific about how the process should proceed, so we strongly recommend that you consult with an attorney who is experienced in trust and estate administration to advise you about what to do. The attorney should be licensed to practice law in the state where the person was residing at the time of death. To find attorneys in your area, consult our Local Venues and Services page

With that said, there are several terms that you should be familiar with, even if you have a professional guiding you as you settle the estate. We outline these below. 

1. Probate
Probate is the legal process for settling the estate of someone who has died. It serves two basic purposes:

• Making sure the assets of the person who died go to the rightful heirs and
• Ensuring that the wishes of the person who died are fulfilled. 

The process can be very lengthy or relatively quick, depending on the size of the estate, the number of heirs, and whether or not there is a will. Probate can become more complicated if the validity of the will is contested or, as is sometimes the case, more than one will exist. 

Probate begins when the next of kin submits the will and the death certificate to the Probate Court and requests that an executor be appointed to administer the estate. (This person is usually named in the will.)  The court will then hold a hearing to determine if the executor is qualified to fulfill the role as determined by state law. If so, the court issues a letter of testamentary authorizing the executor to act on behalf of the estate. This process alone can take several weeks to several months to complete. 

If the person who died did not leave a will, they are said to have died “intestate.” In that case, the Court will appoint an administrator, who is usually the spouse or next of kin. (Laws vary from state to state.) The Court issues a letter of administration to that person, authorizing them to act on behalf of the estate. The assets of the estate will then be distributed under the supervision of the Court as determined by state law. Typically, the spouse and descendants (children and grandchildren) are the first in line to inherit, followed by other survivors as determined by the state’s intestate succession laws.

Once the letter of testamentary or administration is issued, the Executor or Administrator files an inventory of the estate’s assets, notifies creditors and pays taxes and outstanding debts. Once these obligations are met, the Executor must distribute the remaining assets per the terms of the will, which is done under the supervision of the Court. Anyone with a valid claim can contest the Will or file a petition with the Court during this time. 

The entire Probate process can take one to two years or even longer to complete, during which time, the assets are unavailable to heirs. Probate fees can also be very high, ranging from 3% to 7% of the value of the estate. For these reasons, many people set up their estate plans in a way that probate can be avoided or the amount of time and money spent greatly reduced. This can be accomplished in a number of ways. 

2. Revocable Living Trust
One of the most effective ways to avoid probate is to place the assets of the estate in a revocable living trust (also known as a living trust or an inter-vivos trust). This is an agreement between the person who owns the assets (the grantor) and a trustee, the person or entity who holds and administers the trust. The trustee can be any competent adult, though most people appoint themselves as the initial trustee so they retain control of the assets while they are still alive. The terms of the trust name a successor trustee, which may be an individual, a trust company or a bank, and set forth how the assets are to be distributed when the grantor of the trust dies. 

Once the trust is established, the grantor transfers their assets — including bank accounts, retirement accounts, and real estate —  to the trust, at which point they become the property of the trust. However, because the trust is revocable, the grantor can modify the trust at any time, and income earned by the trust goes to them while they are still alive. After the grantor dies, the trust becomes irrevocable, and the named successor steps in to administer the trust. The successor trustee must hold or distribute the trust property for the named beneficiaries in accordance with the instructions outlined in the trust agreement. 

If the grantor dies before some or all assets are transferred into the trust, these assets may be subject to probate. Consult with an attorney to learn if the property can still be confirmed to be the property of the trust.

3. Small Estate Administration and Spousal Petitions
In some states, there are exceptions to the probate requirement. If your loved one’s estate is a “small estate” as defined under state law, a simpler process may be available to transfer assets to the beneficiaries. In California, for example, if the value of any real property in the estate is $55,425 or less and the estate has a total value of less than $166,250, the beneficiaries can file a Small Estate affidavit to have the assets transferred to them without going through probate court. Also in California, if the person is survived by a spouse, the surviving spouse can use a spousal petition to take title of the property he or she is inheriting, instead of having to conduct a formal probate proceeding.

4. Joint Property
Joint property, such as property titled in joint tenancy with right of survivorship or joint bank accounts typically is not subject to probate under state law. The assets transfer automatically to the survivor upon the death of either joint owner. However, the surviving owner must complete paperwork to remove the owner who has died from the title. For example, for real property, an affidavit of death of a joint tenant must be recorded with the county where the property is located. The affidavit removes the name of the person who died from the property and places it entirely in the name of the surviving owner.

5. Pay-on-Death Account or a Totten Trust
Pay-on-death (“P.O.D.”) accounts or a Totten trust automatically transfer to the payee upon the death of the owner. Like joint property, these types of accounts bypass probate. You should notify the banks where the person held accounts of his or her death, and provide them a copy of the death certificate. The banks will then contact any beneficiaries directly. If you are the beneficiary, the bank will likely ask you to complete forms to transfer the account to your name.

6. Life Insurance Policies and Retirement Plans
Life insurance proceeds and retirement plans are paid directly to the named beneficiaries and are not subject to probate. If the person failed to name beneficiaries, however, the  proceeds will be paid to the person’s estate, which may trigger probate. Contact the institutions holding the life insurance policies and retirement plans, and inform them of the person’s death. The institutions will contact the named beneficiaries directly

Special Considerations for Certain Assets
Certain assets raise unique issues that the executor or trustee may need to address. The list below covers the most common issues that can arise. 

1. Personal Residence
If the personal residence of the person who died was a rental, the executor or trustee may spare the assets of the estate by terminating the lease, vacating the premises, and putting all of the tangible property in storage until it is distributed. If the person owned their home, the will or trust may bequeath the residence to a specific beneficiary. If that’s not the case, the executor or trustee will need to determine if any of the residual beneficiaries want to take ownership of the home, provided that other assets of equal value are available to distribute to the remaining heirs.

Alternatively, the executor or trustee may sell the property and distribute the net proceeds to the heirs (after settling the debts of the estate). Before doing so, however, they will need to complete a title search to determine if there are any mortgages or liens on the property. If there are, these will need to be satisfied before the proceeds can be distributed.  

In the event the amount owed to lienholders and mortgagees is more than the value of the home, the executor or trustee may execute a deed in lieu of foreclosure, which turns over the title of the property to the mortgagee. This is generally preferable to allowing the bank to foreclosure on the property and sell it in a sheriff’s sale. The trustee or executor may also explore the possibility of a short sale if the mortgagee agrees. 

In some states, the surviving spouse, minor children, or other family members who were residing with the property owner at the time of death may have the right to continue living in the residence  during the estate administration process. Laws vary from state to state as to which occupants can remain in the home and for how long, so consult with an attorney to learn more about occupants’ rights. 

2. Other Real Estate
If the person who died owned additional real estate, check whether tenants are occupying the property. If so, look for a copy of the lease agreement among the personal effects of the person who died. Contact the tenants, and arrange for them to send the rent checks to the executor or trustee. You should also determine if a property management company is managing the property and ask them to provide a copy of the property management agreement. If the property will be sold, consult with an attorney about how to deal with the current tenants. In most U.S. jurisdictions, renters have a right to continue their tenancy until the lease expires. 

3. Bank Accounts
If there is no trust, the accounts of the person who died should be retitled to the name of the estate. To do so, the bank will likely request copies of the death certificate and the letters of administration or letter of testamentary, as well as the estate’s tax ID number. You can consolidate cash accounts into a single estate account for ease of administration.

4. Business Interests
If the person who died was the owner of a small business, check the will or trust for instructions as to the disposition of the business. (There may also be a business continuity plan with their personal effects.) The death of the owner can result in a sudden and steep decline in the business value. To mitigate against potential loss, immediately contact any co-owners or senior staff members to arrange for the continuing operation of the business, and to set up a system for collecting income and paying expenses during the administration of the estate or trust. The executor or trustee should decide as quickly as possible, based on the instructions in the will or trust, whether the business will be closed, sold, or liquidated. If the business is put up for sale, an appraiser may be needed to determine the value of the business. If the person was a licensed professional, such as an attorney, architect, dentist, or psychologist, the state may impose special rules regarding the winding up or sale of the business. Consult with an attorney to discuss the legal requirements.

Tangible Property
Tangible property includes all of the personal property of the person who died. Items specifically bequeathed to an individual in the will or trust should be secured until they are ready to be distributed to the appropriate heirs. Valuable items, such as vehicles, artwork, jewels, or antiques, may need to be appraised before a decision about who will receive them can be made. 

All remaining items of tangible property are typically distributed equally to the residual beneficiaries— in shares of roughly equal value, as the beneficiaries agree among themselves. This can be an amicable or adversarial process, depending on the people involved. In some instances, you may need to involve a mediator to assist in resolving any disputes. 

Another option you have is to sell the remaining tangible property in an estate sale. Many companies manage such sales in return for a fee or percentage of total sales, or you can conduct one yourself. The net proceeds would then be distributed to the beneficiaries. Look up Estate Liquidation & Moving services on our Local Resources page. 

You can also make donations of the remaining items to one or more charitable organizations. Listed below are resources for donating different types of items:

1. CDs and DVDs
You may be able to sell CDs and DVDs at a local used record store or online, although the popularity of streaming services has significantly affected the market for items such as these. Alternatively, you may be able to donate the items to your local public library or school. 

2. Computers and Electronics
Depending on the age and value of the electronics, you may want to sell them or upgrade them through a trade-in program such as those offered by Amazon, Apple and Best Buy. Alternatively, you can sell the item(s) on eBay, ItsWorthMore, BuyBackWorld.or a similar site. If you prefer, you can also donate the items to Goodwill, a local charity or a school. 

3. Children’s Toys
New or gently used children’s toys, stuffed animals, or books can be donated to Stuffed Animals for Emergencies (SAFE), an organization that collects items to benefit children during emergencies such as fire, illness, accidents, neglect, abuse, homelessness, or floods.

4. Arts and Crafts Supplies
If no one in the family has a use for them, arts and crafts supplies may be donated to a school, senior center, nursing home or even a hospital. If you can’t find a pl in your area that would like the items, check out theCreative Reusewebsite, which lists organizations in various locations throughout the U.S. that accept donations of art supplies, craft items, fabric, signage and more. 

5. Wedding Dress
If the person who died owned a wedding dress that was not bequeathed to anyone  in their will, you can either sell it through a local consignment shop or donate it to one of the organizations listed below.

• Adorned in Grace: A faith-based organization that resells gowns and other accessories (including veils, mother-of-the-bride dresses etc.) and uses the proceeds to help victims of sex trafficking.
• Angel Gown Program: Offered by NICU Helping Hands, a nationwide organization that provides support for families whose babies died in the neonatal ICU, this program turns donated wedding dresses into free infant gowns for final photos, memorial services etc. 
• Brides Across America: A nonprofit that provides free wedding gowns to the U.S. military and first responders who are experiencing financial hardship.
• Brides Against Breast Cancer: An organization that supports breast cancer awareness, BABC resells donated wedding dresses at an affordable price and uses the proceeds to fund activities that support its mission.
• Brides for a Cause: A registered nonprofit that sells donated dresses and donates the proceeds to women-focused charities

6. Automobiles
In many cases, the person who died will have bequeathed their automobiles to a specific beneficiary. To transfer title to this person, contact the Department of Motor Vehicles and complete the required paperwork. Be prepared to provide the DMV with a certified copy of the death certificate as well as copies of valid registration and insurance coverage. If there is no named beneficiary for the car, and no residual beneficiary wants the car, the executor or trustee may try to sell it or donate it. 

7. Leftover Medications
Leftover medicines are considered hazardous waste and must be disposed of properly. Never pour them down the drain, flush them down the toilet or simply throw them in the trash. Doing so contributes to the pharmaceutical pollution of water and soil and has been shown to contaminate our food supply. To dispose of medications safely, contact a local pharmacy, which will direct you to a take-back program in your area. 

As of March 2020, you may also donate unused, unexpired medicines through a program known as #FlipYourScrip. Administered by the Memphis-based nonprofit Remedichain, the program matches donated medications to people in need.  If it can’t find an appropriate recipient, it directs the potential donor to a disposal center in their area. 

8. Hidden Assets
If you believe the person who died had hidden assets, such as real estate or bank accounts, you may use the National Association of Unclaimed Property Administrators website to find the administrator for unclaimed assets in your state. Alternatively, you can initiate a search on Missing Money, com.These companies sometimes find assets that even the person who died was unaware of, such as unclaimed paychecks and tax refunds that were deposited in bank accounts that are no longer active or closed. 

9. Digital Assets
A digital asset is any “electronic record in which an individual has a right or interest.”  This includes social media accounts, email, text messages, websites,  web domains, and virtual currency, such as bitcoin. Management of these assets typically falls to the executor, trustee or the next of kin. See our section on Digital Assets to learn more about your rights and obligations in this regard.

G. Arrange Care of Minors and Dependent Adults

If the person who died left minor children and the other parent cannot assume custody or is no longer alive, a “guardian of the person” will be appointed by the Court. This person is granted physical and legal custody of the children and is responsible for their care and upbringing until they reach age 18.

In many cases, the person who died will have nominated a guardian for the children in their will. But while the Court typically places great weight on the parent’s wishes, it may appoint a different guardian if it believes doing so would be in the children’s best interests.

1. Assets of Minors
If both parents have died, their minor children will likely inherit their property. Minors, however, cannot legally manage their own assets. If the parents left the property to the children in a trust, the trustee will be in charge of managing the assets for the minor children under the terms of the trust. If there is no trust, the Court will likely establish a “guardian of the estate.” The guardian of the estate is responsible for managing the minor’s assets until the minor reaches 18.

2. Dependent Adults
If the person who died was caring for an elderly parent or another dependent adult, check whether the dependent adult has a general durable power of attorney or a living trust. If so, the adult’s affairs should be handled by their agent or trustee. Contact that agent or trustee and the dependent’s attorney, and inform them of the person’s death. 

If there is no power of attorney and no trust, the Court may have to establish a conservatorship for the dependent adult. Similar to guardianship, conservatorship gives the conservator authority over the incapacitated adult’s physical care and financial matters.

To learn how to establish guardianship for a minor or a conservatorship for a dependent adult, consult with an attorney who is familiar with the laws in your state. 

H. Manage Taxes Obligations

Both the federal and state governments may levy an estate tax on some portion of the estate of  the person who died. The following information is a general guide as to what tax obligations the estate may be responsible for. Be advised, however, that laws can change, so you should always consult an attorney or tax accountant for advice. The following information is current as of September 1, 2020. 

1. Federal Estate Tax 
The Estate Tax is a tax on property transferred after a death. It applies to most assets, including cash and securities, real estate, insurance, trusts, annuities and business interests, and is based on the fair market value of these items, not what a person  paid for them or what their values were when they were acquired.

Each year, the IRS exempts a portion of every estate from the estate tax. Following the passage of the  Tax Cuts and Jobs Act of 2017, the amount of the exemption was adjusted to $11.18 million for singles and $22.36 million for married couples through 2025. However, that amount is indexed for inflation, and increased to $11.58 million for individuals and double that amount for married couples in 2020. Anyone whose estate at the time of death has a value above this amount is required to file an estate tax return. You may need to have property appraisals done to determine accurate date-of-death values. As of this writing, the maximum estate tax rate is 40 percent. 

2. State Estate Taxes
As of this writing, 15 states and the District of Columbia levy an estate tax, but each state has different tax rates and laws. Speak with an attorney or tax accountant to determine whether the state where the person who died was living has a state-level estate tax. 

Note: An estate tax is different from an inheritance tax, which imposes a tax on the money received by beneficiaries or heirs rather than on the estate from which the inheritance arose. At this time, there is no federal inheritance tax, but six states ( Nebraska, Iowa, Kentucky, New Jersey, Pennsylvania, and Maryland) impose an inheritance tax. The amount of the tax varies, so contact an attorney or accountant to learn about the laws in your state. 

3. Income Taxes
The IRS requires that a personal income tax return be filed on all income earned by the person who died up to the date of their death. This return should be filed in the same manner as a tax return for a living person and should include income from all sources as well as all credits and deductions the person would be entitled to under current tax law. The surviving spouse may file as married jointly on behalf of both spouses if they choose. Any tax returns not already filed for previous tax years should be filed as well. 

If the person who died owed any taxes, they should be paid at the time the returns are filed. If they were due a refund, it can be claimed using IRS form 1310 Statement of Person Claiming Refund Due a Deceased Taxpayer.

For the remaining portion of the tax year following the person’s death, the executor will need to file IRS form 1041 — U.S. Income Tax Return for Estates and Trusts (formerly known as a fiduciary tax return). This form reports all income earned by the estate or trust: for example, dividends on stocks or income earned from a rental property on which tax may be due. Before filing, you will need to obtain a Tax ID number from the IRS. The easiest way to do this is to fill out a request online. 

4. Capital Gains Tax 
Capital gains taxes are based on an appreciation in value. For example, if someone purchased stock in 2010 for $300,000 and then sold it in 2019 for $400,000, there would be a capital gain of $100,000. That “capital gain” of $100,000 would  be subject to a federal capital gains tax, as well as state capital gains tax. The tax rate will vary based on income and filing status, and ranges from zero to 20 percent as of 2020, but may change as tax law is revised. The purchase price of $300,000 in this example is called the “basis” and the sale price of $400,000 is called the “amount realized.”

For property that is inherited, however, the basis is “stepped up” to the full fair market value at the date of death. In the example above, if instead of selling the stock, the owner dies when the stock has a value of $400,000, and the heirs of the person then immediately sell the stock for $400,000, the basis would be stepped up from $300,000 to the $400,000 value on the date of death, and there would be no capital gain. Capital gains tax could be due, however, if the value appreciates between the date of death and the date of sale. If you have inherited property and are considering selling it, consult with a tax professional about whether a capital gains tax could be due.

I. Manage Insurance Policies

In most cases, it’s prudent to maintain certain insurance coverage after a loved one dies, at least for a time. This typically includes: 

1. Homeowners and Renters Insurance
Homeowners and/or renters insurance should stay in effect for as long as the property remains in the estate or trust. This protects the estate’s assets in the event there is property damage, theft, or a lawsuit against the estate or trust. To ensure continuous coverage, the executor should notify the insurance provider in writing that the property owner has died and request that the estate be added to the policy as a “named insured.” 

2. Automobile Insurance
The decision to cancel or maintain auto insurance depends on what will happen to your loved one’s vehicle(s) while the estate is being settled. If you plan to continue using the car, you may be covered under your loved one’s current policy under the “permissive use” clause of the contract. However, many insurers add a caveat to that clause that applies when the policyholder dies. This caveat states that coverage will apply only if the driver of the car is the person’s spouse or legal representative and that person is  exercising their legal responsibility to maintain the car. In other words, any other driver will not be covered, nor will the spouse or agent be covered if they are driving the car for their own personal use. 

Alternatively, if the car will lay idle during the administration period, or if it will be sold, you can amend the registration for “planned non-operation” with the state DMV and cancel the insurance. Keep in mind, however, that changing the registration to PNO status means the car cannot be driven, towed or parked on a public roadway. If the car will be garaged and the registration is current,  you may wish to cancel the insurance, and simply not use the car. 

Since the decision to maintain or cancel coverage can be complex, speak with your insurance agent about whether to maintain your loved one’s coverage, purchase new coverage or cancel the coverage entirely until after you have settled the estate. 

3. Health Insurance
If the person who died was receiving employer-sponsored health coverage and the policy covered their surviving spouse and dependents, coverage can be continued under the 

Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) for 36 months. Be aware, however, that COBRA premiums can be quite high, equalling the portion paid by both the employer and the employee. Depending on your circumstances, you may wish to explore coverage available on your state’s healthcare marketplace before you commit to a COBRA plan. You have 60 days from the date your loved one died to make that choice. This is a non-negotiable deadline, so it’s very important to request coverage before it expires.