{Read in 3 minutes} I’ve been writing this blog for a looooooong time now (since late 2016!) and I sort of had a face-palm moment when I realized that as much as I’ve talked about various topics, I don’t have an article called “What Is an Estate?” — even though I talk about Estates all of the time. So, I thought I would correct that and spend some time talking about an Estate.
An Estate is a legal term that refers to an entity that is created upon someone’s death. By definition, an Estate is transient in that it will only be open for a certain amount of time, while an Executor named in the Will, or an Administrator when someone dies without a Will, handles the deceased’s affairs. This involves collecting the various assets of the Estate, paying off any bills that are left behind, and then paying out money to those who are entitled to it, whether they be beneficiaries named under the Will, or next of kin.
Much like the deceased had their own Social Security number, the Estate must obtain a Taxpayer Identification Number, (also known as an Employer Identification Number or EIN) for purposes of conducting business. Potentially, the Estate may also have to file some tax returns, including potential payment of estate taxes and income taxes. The Estate will maintain a bank account in the name of the Executor or the Administrator who will be the sole signatory on the bank account. And it’s through that account that the Executor or Administrator will receive funds and then pay them out.
How long does it take to administer an Estate? Well, it varies. Sometimes Estates are very simple where there are just funds to collect and other times the Estate has very complicated assets, such as real property, intellectual property, tangible personal property, or even quirky assets that are challenging to collect.
In general, I tell clients that an Estate administration may take as little as 6-9 months, or as long as 18-24 months. Of course, if anyone files a challenge to a Will, demands an accounting, or otherwise commences litigation in the Surrogate’s Court, that could delay things significantly. Although the Surrogate’s Court is generally a very expeditious court, litigation by itself certainly takes time.
For more information on this topic, please contact me.