Settling an estate is necessary when an individual dies. The estate is comprised of all of the property owned by the deceased individual and must have an executor to distribute the assets. While there is no official time limit placed on the executor as such, there are rules governing the distribution of certain assets.
A will and testament is a legal document that may contain instructions on when certain assets must be distributed. These instructions may spell out a timeline of events such that all assets would be distributed by a specific date. The probate court involved in this process may also have a time frame which must be followed when settling the estate. However, there also may be no time frame specified by your local government.
A retirement account generally contains provisions for distribution to beneficiaries. These provisions are spelt out by the IRS. The distribution of retirement assets must be done according to IRS rules. For example, you must distribute assets from a retirement account to a non-spousal beneficiary within the first year of the death of the deceased. The distributions must take place over a period of no longer than the lifetime of the beneficiary.
Life insurance proceeds are not normally part of the will, but the assets should be distributed to the beneficiary as soon as possible. If the insurance policy names the estate as the beneficiary, the will should specify how this money is distributed. Otherwise, the beneficiary is responsible for claiming the death benefit.
You should check with the probate court to determine any special time limitations on settling the estate. Any debts that are payable should be settled in a timely manner. However, the actual time limit may vary according to where you live.
- "Practicing Financial Planning for Professionals (Practitioners' Edition), 10th Edition"; Sid Mittra, Anandi P. Sahu, Robert A Crane; 2007
- "Ernst & Young's Personal Financial Planning Guide, 5th Edition"; Martin Nissenbaum, Barbara J. Raasch, Charles L. Ratner; 2004
- "Life & Health Insurance, License Exam Manual, 6th Edition"; Dearborn Financial; 2004