Estate Planning & Administration
Estate Planning
Wills & Interstate Statutes
A person who dies with a valid, legal, Last Will and Testament is referred to as having died testate. A person who dies without a valid Last Will and Testament is referred to as having died intestate.
A will is a written document that designates how the person desires his or her property to be distributed upon their death. A will does not become effective until the person's death.
When a person dies intestate or without a will, the respective state statutes provide how the decedent's property will be distributed. Most important to keep in mind is most married couples intend their property to go to their surviving spouse; however, most state statutes will include the decedent's children for a portion of the decedent's property.
Trust
The topic of trusts is much too broad to cover in a summary fashion. However, when discussing trusts, most people think about a revocable trust. A revocable trust basically works as a will, in that it designates how the person's property is to be distributed upon their death.
What makes a trust different than a will? One of the purposes of a trust is to avoid probate (probate is discussed below). To avoid probate, the trust will need to be funded -- a technical term for changing title to titled assets (ex. real estate, vehicles, accounts) to reflect that the asset is not titled in the name of the individual but rather in the name of the trust. If done correctly, this process avoids the need for probate.
Insurance Contract & Pay-on-death Clauses
The final type of estate plan involves assets such as life insurance, retirement plans, and pay-on-death clauses. The pay-on-death clauses of these documents constitute their own separate estate plans.
It is important to realize that often times the pay-on-death clause may provide one thing, which is contrary to a person's will or trust. In such an event, usually the pay-on-death clause prevails.
Estate Administration
Probate
Probate is the process of administering the estate of a decedent who died having a will or no other estate planning documents. Probate involves filing the appropriate documentation with the probate court, requesting the will be admitted to probate, and appointing a personal representative to administer the decedent's estate.
Trust & Administration
As discussed above, if a decedent has a fully funded trust, meaning title to all titled assets are titled in the trust, probate can generally be avoided. The main distinction between probate and trust administration is that trust administration is private and does not involve the judicial system.
Pay-on-death Clauses
Usually, pay-on-death clauses only address certain assets of a decedent, such as insurance policies, retirement planning, and investment accounts. With that said, it is a simple process that normally involves providing the institution with a copy of the decedent's death certificate. Please note, however, that a person has assets other than those that can be administered through a pay-on-death clause. Therefore, usually there will also need to be a will or trust.