Estate Planning for Beginners – Part 1: The Probate Process

Estate Planning Part One: The Probate Process
Where do we begin with estate planning? At the beginning, of course, which is the probate process.

What is probate? Probate takes one of two forms: 

  1. Where your will is presented to the probate court.
  2. Where there is no will and the court is asked to appoint an administrator to Probate the assets of the estate.

In situation number one, the will is presented to the Probate or Surrogate’s Court for proof. Proof of what, you may ask? The will needs to be validated and confirmed as valid by the probate judge. Once this is completed, the judge looks to the will to see who the deceased named as executor and possibly as trustee. Under normal circumstances, formally appointed these individuals or entities to act as executor and/or trustee as provided in the will.

At a minimum, what should be included in the will? Consider the following:

  • Distribution of tangible assets (your car, boat, jewelry, clothing, and other personal effects).
  • Direction to pay all debts and taxes that may be due as of the date of death.
  • Distribution of real estate.
  • Specific bequest of money to named individuals or charities, if applicable.
  • The distribution of all the “Rest, Residue, and Remainder” of the assets.
  • The appointment of an executor or executors.
  • The appointment of guardians for minor children, if applicable.
  • Appointment of trustees, if applicable.

The role of the named executor is to execute the terms of the will for the benefit of the named beneficiaries and report back to the probate judge for approval of the plan distributions, as outlined in the will.

To get to this point, the executors are required to notify the public that the deceased individual has died, and the creditors have a limited amount of time to make claims against the estate. Once all claims have been satisfied, including federal and state income taxes and estate taxes, if applicable, the executor presents a plan to the court for the ultimate distribution of the assets.

It is at this point that the executor would, and most certainly should, get a release from each of the beneficiaries acknowledging their acceptance of the distributions expected to be made in the near future.

If a minor child is involved, the will typically names an individual or individuals who will be the guardian of the child/children. Hopefully, the will has specific provisions for any minor child for both their living arrangements and financial considerations for both the child and the named guardian.

Assuming the judge approves all that has taken place and has approved a formal accounting (which will be required), the beneficiaries are asked to approve the plan of distribution and sign off on this plan. It is at this point in the settlement of the estate that the assets are finally distributed to the beneficiaries and the estate is eventually closed.

But what if there is no will? In this situation, the laws of the state takeover under what are called “Intestate Distributions.” Intestate means to die without a will.

In this situation, the intestate rules (under state statutes) provide a formal plan of distribution that the deceased neglected to do themselves and it is quite possible that this plan may leave family beneficiaries very unhappy. Each state may be different and these rules should be reviewed but NEVER depended upon.

Dying without a will is a nightmare to settle and may rip families apart. If you do nothing else after reading this article, search out the intestate laws in your state and become familiar with these rules.

In closing, assets, such as life insurance policies and retirement plans (assets titled as “joint tenants with right of survivorship”), are assets that are not controlled by the will or by the probate court. Named beneficiaries will get them directly, or if titled as “right of survivorship,” will go directly to the survivor.

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