When beneficiaries named in an estate know they will receive part of the decedent’s property, they get anxious. In most common estates, beneficiaries are unaware that there are factors involved when distributing the decedent’s property. The following factors determine the length of time it will take the executor to distribute property:

• Executor responsibility – The priority for any executor is to pay the expenses and the taxes of the estate. Also, the executor must provide the probate court with an Inventory of Assets as depicted in the article Understand the Task in Front of You. The inventory must include the values of all property owned by the decedent, including assets with designated beneficiaries. The inventory will then determine if the gross value of the estate meets the threshold for filing estate taxes.

• How the beneficiaries are to receive property – The beneficiaries, named in a will, can receive property through the will. Also, beneficiaries can receive property directly from the decedent’s assets as a designated beneficiary.

• Estate Law is state specific – Estate law is different in most states. Therefore, how long it takes to administer an estate will depend on the location of the estate and the estate laws of that specific state.

So, the beneficiaries need to know that the location of the estate and how they receive property of the estate affects when the executor can distribute the decedent’s property.

Beneficiaries Named in a Will

Beneficiaries named in a will must understand that the executor controls the decedent’s property throughout the estate administration. Also, the beneficiaries aren’t guaranteed the property listed in the will. If the expenses and taxes of the estate exceed the assets of the estate, the executor needs to use abatement rules to reduce the bequest left to beneficiaries to cover the estate liabilities. So, until the executor pays the expenses and taxes of the estate, only then will the executor distribute the property, or what’s left, to the beneficiaries named in the will.

However, in a well-funded estate, the distribution rules can change. If the executor feels confident that the estate has more than enough assets to cover the liabilities of the estate, then the executor could distribute property early if the probate court allows in some states. Conversely, if the solvency of the estate is in question, or the executor doesn’t want to risk distributing early, the executor will distribute the property after paying the expenses and taxes.

Unfortunately, estate laws differ from state to state. So, for property listed in the will, estate law dictates when an executor can distribute property. In Massachusetts, an estate going through a formal probate process lasts one year. At the end of the year, the executor can distribute property to the beneficiaries. In a small estate – estate gross value is $25,000 or less – the entire estate administration may last only months.

Typically, in common estates, executors will hold off distributing the decedent’s property until the end of the estate administration. Therefore, beneficiaries named in a will may have to wait at least a year before receiving the decedent’s property.

Designated Beneficiaries of the Decedent’s Assets

Typically, designated beneficiaries listed on the decedent’s assets are the most anxious. The beneficiary knows that the assets are not the property of the estate. Therefore, these beneficiaries feel they should receive the property immediately after the death of the decedent. However, most beneficiaries overlook that estate law establishes a process an executor needs to follow before distributing property. In most states, the probate court dictates that the executor must complete an Inventory of Assets that includes all the property and associated values of the decedent. Furthermore, estate law allows the executor time to complete this inventory. For instance, in Massachusetts, estate law gives the executor three months from the date of appointment to complete the inventory. If the estate involves property located out of state or other complications, estate law will grant the executor more time.

However, as mentioned in the article Setting up the Formal Probate Process Part 1, in common estates, executors can complete the inventory before submitting the will to the probate court. As a result, soon after submitting the paperwork to the probate court, the executor can distribute the property to the beneficiaries. So, designated beneficiaries may only have to wait a month depending on the complexity of the estate.

Receiving the Decedent’s Property

Regardless of all the factors affecting the timing of distributions to the beneficiaries, one fact is certain: The beneficiary won’t receive the property immediately. Therefore, the executor should communicate this fact to all the beneficiaries of the estate. Once the executor knows the direction of the estate administration, the executor should contact all the beneficiaries of the estate. In the communication, the executor should include a general explanation of the estate and when distributions may occur. Hopefully, this will relieve the anxiety for most beneficiaries and give the executor a chance at a smooth administration.

Was this article helpful? If you are a beneficiary or will be in the future, does this article help you understand why you won’t receive property immediately? Let me know your thoughts or questions on this article in the comment area below.

References

Voluntary Administrations in Massachusetts – This link provides rules for small estates in Massachusetts.

The Executor’s Guide– In the appendix of the Executor’s Guide, there is a list of all 50 states and rules for administering an estate for each state. A great reference if you want an estimate of how long an estate takes to close in your state.