Closing an estate is a complex, emotionally charged situation and having to navigate the probate process to reach the final distribution of estate assets only compounds the stress. In addition to the legal maze of the court process that you must navigate, administering and closing an estate is rife with financial complexity – from taxes to filling out forms to accounting for myriad assets and transactions.
Failing to file things correctly can have significant consequences, so working with an experienced CPA is imperative. Here’s what you need to know about the final distribution of assets:
What is a Probate for an Estate?
Probate is a legal process of reviewing, administering, and distributing an estate’s assets and transferring ownership to beneficiaries. The duration of this process ranges from a few months to several years depending on the circumstances.
These proceedings are essential when dealing with high-value estates, even if there is no will. Courts make the final decision about the final distribution of estate assets.
What is the Final Distribution of Estate Assets?
The final distribution of estate assets is the final step in the probate process. This is when courts transfer the ownership of assets to beneficiaries or heirs.
The final distribution only occurs when the estate is settled, meaning all creditors and taxes have been paid, all disputes have been resolved, and the judge gives final approval.
What Needs to Happen Before Final Distribution?
The final distribution of estate assets usually requires navigating the probate process, which varies depending on whether or not there’s a will.
If there is a will, this document details how to distribute estate assets and appoints an executor to act on their behalf and oversee the administration of an estate. The executor must first file the will with the probate court, which initiates the probate process.
Before the final distribution, the executor must also use the estate to pay off any outstanding taxes or debts and file a final, personal tax return on the deceased’s behalf. If debts and taxes outstrip available funds, there is no final distribution.
A person who dies without a will is said to die intestate. If a court determines a will is invalid, it is also referred to it as intestate. Under these circumstances, courts distribute assets per California state laws and appoint an administrator to manage the estate.
The administrator locates heirs, and the court reviews and determines what assets to distribute and how to distribute them. If there are no beneficiaries, the government can take ownership of assets. The executor or administrator must:
- File the will with the Clerk of Court
- File a petition to approve the final distribution
- Notify creditors
- Report and petition for final distribution
- Obtain an inventory and appraisal of all assets using official probate forms
- Give notice of the hearing to all interested parties
- Receive a court order for final distribution
- File an accounting with the district court
- File a report of administration
- File a Petition for Final Distribution
- Submit a Judgment of Final Distribution a minimum of 10 days before the hearing for the judge to approve or reject
Related Article: Is Probate Needed if There is a Will?
Do You Need a Court Accounting?
The executor or administrator is required to file an accounting of financial transactions that occurred during the administration of the estate.
Filing an account with the court includes submitting financial statements that adhere to specific guidelines under Probate Code sections 1060-1064 and 1090. Accountings must detail:
- The period these transactions occurred over
- Property on hand at the beginning of a filing period
- The value of assets received during a filing period
- Income receipts
- Net income and losses from a trade or business
- Gains and losses from sales
- Distributions to beneficiaries
- Property on hand at the end of the filing period
More importantly, these schedules are extensive, complicated, and filled with specialized language, and completing them is difficult without the expertise of a CPA.
Related Article: California Trust Accounting: What Documents Are Needed?
Get Help with Final Distribution of Estate Assets in California
If you are in the process of obtaining the final distribution of estate assets in California, you have enough on your plate between maneuvering through legal obstacles, disputes, and all kinds of turmoil that can protract proceedings. To minimize costs, ensure you do everything by the book, and mitigate the stress and emotional tumult of this trying time, hiring a financial consultant is imperative. Marcia Campbell CPA offers unparalleled financial consultation services to streamline and facilitate the estate probate process.