Settling an estate: how probate works, what avoids it, and how long it takes

A short note before you start

This guide explains how estate settlement usually works in the United States. It is general information, not legal or tax advice. Probate is state law, and the forms, dollar limits, deadlines and fees differ by state and sometimes by county. Use your state court's self-help pages for specifics and a probate attorney when your situation does not fit.

What is an estate?

A person's estate is everything they owned at death minus everything they owed: house, accounts, retirement plans, life insurance, vehicles, business interests, belongings and digital accounts on one side; mortgage, cards, medical bills and taxes on the other. Settling it means collecting the assets, paying valid debts and taxes, and distributing the rest under the will or, without one, under state intestacy law. The person who does this is the executor named in the will or a court-appointed administrator; many states call both a personal representative, and the process of doing it is called estate administration. Not all of the estate goes through court, so the first task is sorting assets into two piles.

What assets skip probate, and which ones require it?

Assets with a named beneficiary, joint ownership with right of survivorship, or a payable-on-death or transfer-on-death registration pass directly to the new owner with a certified copy of the death certificate and a claim form, no court involved. Anything titled in a living trust passes the same way, under the trust document. Everything else, mainly property held in the person's name alone with no beneficiary listed, has to go through probate.

Outside probate

These transfer with a certified copy of the death certificate and a claim form, and the executor has no authority over them:

• Retirement accounts and life insurance with a named beneficiary; the plan or insurer pays directly.
• Property owned jointly with right of survivorship, including tenancy by the entirety for married couples where it exists. Nolo: "When one owner dies, the property simply goes to the other joint owner"⁹.
• Payable-on-death bank accounts and transfer-on-death registrations for brokerage accounts and bonds. Nolo notes that "the majority of the states also now allow transfer-on-death deeds for real estate"⁹.
• Anything titled in a living trust. The successor trustee distributes it under the trust document.

Through probate

Everything else: property in the person's name alone with no beneficiary, such as a house in one name, a solely owned account without a POD designation, a car, and personal belongings. Also anything payable "to my estate" and any beneficiary designation that failed because the named person died first. How title was held decides how much probate there is.

How does probate work, step by step?

Probate follows the same basic sequence in every state, even though the vocabulary changes: the court appoints an executor or administrator, that person notifies heirs and creditors and inventories the assets, valid debts and taxes get paid, and what remains is distributed and the estate is closed. The steps below lay out each stage in order.

1. File the will and a petition with the probate court in the county where the person lived. The court confirms the will and appoints the executor or administrator, issuing "letters" (letters testamentary for an executor, letters of administration for an administrator) as proof of authority.
2. Give formal notice to heirs, beneficiaries and known creditors, and publish a notice for unknown ones.
3. Inventory and value the assets as of the date of death. California, for example, uses a court-appointed probate referee for non-cash assets¹.
4. Manage the estate while open: keep insurance and mortgages current, collect income, sell property if needed.
5. Pay valid claims in the order the state sets, then file the tax returns.
6. Prepare a final accounting, obtain court approval where required, distribute, and close.

Informal and formal probate

Sixteen states have adopted the Uniform Probate Code, and Nolo reports that "Most probates in UPC states are informal," a paperwork process with no court hearings that is used when heirs get along and no creditor trouble is expected¹⁰. Formal probate, with hearings and closer supervision, is used when there is a dispute, an unclear will, or a reason to have the court approve each step.

What are small-estate procedures?

Nolo: "Almost every state now offers shortcuts through probate" for small estates, in two forms: "affidavit procedures that allow you to claim property simply by presenting a sworn statement" and "simplified probate processes"⁹. There is no national threshold. Each state sets its own limit, decides what counts toward it, and sets a waiting period, so check your state court's self-help site.

Two examples, to show the range:

• California (example): personal property can be collected by affidavit when the qualifying estate is $208,850 or less for deaths on or after April 1, 2025 and "40 days have passed since the death." A separate petition covers a primary residence worth up to $750,000².
• Texas (example): a small estate affidavit is available when there is no will, "30 days have elapsed since the date of the decedent's death," no personal representative has been appointed, and the estate's assets "excluding homestead and exempt property, does not exceed $75,000"⁶,⁷.

The only limit that matters is your state's, on the date of death.

How long does it take to settle an estate, and what slows it down?

California's courts say formal probate "typically takes 9 to 18 months and can sometimes take even longer"¹; Nolo says most Michigan cases "can be wrapped up within seven months to a year after the personal representative is appointed"⁹. An estate that avoids probate can be settled in weeks; a contested will, real estate in two states or an estate tax return can push past two years.

What adds months: the creditor claim window, which must close before safe distribution ("about three to six months, in most states," Nolo, checked 2026-09-17; Michigan gives creditors four months after notice); selling a house or business; an estate tax return, due nine months after death; a will contest, a missing will or missing heirs; and an executor working without an inventory.

Timeline table

What does it cost to settle an estate?

Costs come out of the estate, not the executor's pocket. They typically cover court filing fees, attorney fees, executor compensation, and appraisals for real estate, businesses or collectibles. How much each category runs depends on the state and the size and complexity of the estate.

Court fees

Set by each state, sometimes scaled to estate size. California charges $435 for the first petition for letters and $435 again for most later petitions, including final distribution⁴.

Attorney fees

Nolo: "Lawyers usually use one of three methods to charge for probate work: an hourly fee, a flat fee, or a fee based on the percentage of the value of the estate." Statutory percentage fees are allowed in Arkansas, Iowa, California, Missouri, Florida and Wyoming, and Nolo warns they are "calculated based on the gross value of the probate assets, not the net value." Even there the fee is negotiable¹².

Executor compensation

Executors are entitled to pay, either reasonable compensation under state law or a statutory schedule. California pays "Four percent on the first one hundred thousand dollars," then 3% on the next $100,000, 2% on the next $800,000 and 1% on the next $9,000,000¹. New York starts at 5% on the first $100,000 and 4% on the next $200,000⁸. The fee is taxable income, and family executors often waive it.

Appraisals and the rest

Date-of-death appraisals for real estate, businesses and collectibles; a bond where the court requires one; a CPA for the returns. Small items on a simple estate, each a delay when paperwork is scattered.

What happens with creditor claims?

The executor must notify creditors and give them a window to file. The window is state law: "about three to six months, in most states"⁹, and states differ on when the clock starts. Valid, timely claims are paid in a legal order, with funeral and administration costs and taxes usually ahead of unsecured debts. If the estate cannot pay everything, distribute nothing until you know the priority rules; an executor who pays the wrong debts first can be held responsible.

For family members, the CFPB's rule is that "If there is no money or property left in the estate, or the estate can't pay, the debt will generally not be paid." You owe personally only as a co-signer, a joint account holder, under a state rule requiring a surviving spouse to pay certain debts, or in a community property state¹⁸.

What taxes does an estate have to pay?

Most estates only need to file the deceased person's final personal income tax return. Some estates also owe an income tax return of their own if they earn money after the death, such as interest or rent, and a small number of very large estates owe a federal estate tax return as well. Which of the three apply depends on how much income the estate earns and how large it is.

1. The final Form 1040. "The same tax deadlines apply for final returns," so it is due the following April 15 unless extended; a representative who is not court-appointed attaches Form 1310 to claim a refund¹⁵.
2. Form 1041, the estate's income tax return, for interest, dividends or rent earned after death. Required at "Gross income for the tax year of $600 or more" or with a nonresident alien beneficiary; calendar-year estates file by April 15, with an automatic five-and-a-half-month extension¹⁶.
3. Form 706, the federal estate tax return, required "if the gross estate of the decedent, increased by the decedent's adjusted taxable gifts and specific gift tax exemption, is valued at more than the filing threshold for the year of the decedent's death": $13,990,000 for 2025 deaths and $15,000,000 for 2026 deaths¹⁷. Ask a CPA about filing anyway to preserve a surviving spouse's unused exemption.

State taxes are separate. The Tax Foundation counts twelve states plus the District of Columbia with an estate tax and five with an inheritance tax, Maryland in both groups, and notes Oregon's exemption is only $1 million¹⁹. Inheritance tax is paid by the recipient.

How do you distribute assets and close the estate?

Distribute only after the claim window has closed, debts and taxes are paid or reserved, and the court has approved where required. Get a signed receipt from every beneficiary and close the estate account last. File the final accounting and the closing statement or petition for discharge, then keep the records for several years.

Speed depends almost entirely on the inventory. An executor who starts with a list of every account, policy, deed, debt and online service, with contacts and document locations, can finish the inventory in days and open the creditor window in the first month. That inventory is what a family guide such as Omliva's is built to hold; without one, discovery through mail and statements is the main reason a simple estate drags into a second year.

When to get professional help

Handle it yourself when the estate is small, the will is clear, the heirs agree and the assets are ordinary. Bring in a probate attorney when the will is contested or missing, there is real estate in more than one state, the estate may be insolvent, a business or rental is involved, a beneficiary is a minor or disabled, or the family is in conflict. Bring in a CPA when the estate earns income, the person had a business, the gross estate is near a federal or state threshold, or a surviving spouse may benefit from a portability election. Both are paid by the estate.