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23 Mar

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Estate Planning for Beginners – Part 1

March 23, 2017 | By |

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.  The first is where a will is presented to the Probate Court and the second is 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 surrogates 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 Trustee and under normal circumstances, formally appoints these individuals or entities to act as Executor as provided in the will.

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

1). Distribution of tangible assets (your car, boat, jewelry, clothing and other personal effects).

2)  Directions to pay all debts and taxes that may be due as of the date of death.

3). Distribution of real estate.

4). Specific bequests of money to named individuals or charities, if applicable.

5). The distribution of all of the “Rest, Residue and Remainder” of the assets

5). The appointment of the “Guardian” for any minor children.

6). The appointment of the Executor or Executors

7). The 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 planned distributions, as outlined in the will.

To get to this point, the executor is required to notify the public that the deceased individual has passed away and that 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.

If minor children are involved, the will typically names the individual or individuals who will be the guardian of the child/children.

Assuming the judge approves all that has taken place, 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 take over under what is call the “Intestate Distributions “.  “Intestate” means to die without a will.

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

In my own experience, I can outline a number of situations where dying without a will was a nightmare to settle and may rip families apart.

In our next piece, we will cover the subject of “intestate” distributions.

(For more, see: Estate Planning for Beginners, Part 2)

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