What Does Estate Settlement Costs Mean?
Estate settlement costs refer to the closing costs after the estate taxes are calculated. It is the cumulative expenses incurred during the transfer of the property and estates previously owned by a deceased individual. They are paid at the closing of the estate so that the distribution of the estate’s final assets can be finally made to the beneficiaries. The costs can vary depending on the size and composition of the estate, the number of beneficiaries, and the type of legal documents (will or trust) available.
Insuranceopedia Explains Estate Settlement Costs
Technically, estate settlement costs are divided into three categories namely (1) taxes, (2) costs of dying, and (3) administrative costs. Taxes refer to the state and federal taxes while the cost of the dying includes the cost of medical and funeral services. Administrative costs, on the other hand, include accounting and legal fees incurred when processing the estate tax. The size of the estate will determine the cost of the estate settlement. This means that larger estates usually cost more than the smaller ones. It is important that you have your house assessed for its fair market value to be able to get an estimate of the estate settlement cost. But as a general rule, you can use 3% or 6% of the estate’s market value to make an estimate.