Do you think probate is something only rich people need to worry about? Well, think again!
If you own property, then you should definitely consider making sure that your estate is properly protected. This includes protecting your family’s financial interests and ensuring that your loved ones receive their inheritance.
This article will explain how trust and probate work and how they affect your estate planning.
Trust vs Probate
In the United States, trusts are used to hold property for the benefit of others. Trusts are created by writing a document called a “trust agreement” that specifies how the assets should be managed.
Probate is the process by which an individual’s estate is distributed according to state law. It involves filing a petition with the court, listing all the deceased person’s assets, debts, liabilities, and any other information required by law.
Trust and Estate Planning
When someone dies, there are two main types of an estate:
The first type is called a “testamentary” estate. This is when the decedent leaves instructions in his or her will regarding who gets what after death. If no such instructions exist, the laws of intestacy apply.
The second type is called a ‘”general’’ estate. In this case, the decedent does not leave instructions in his or her last will and testament. Instead, the laws of intestate succession determine who inherits the decedent’s estate.
In either case, if the decedent has left instructions in his or her Will, those instructions must be followed. Otherwise, the laws of intestate would take effect, and the decedent‘s heirs could end up with nothing.
What happens when someone passes away without leaving instructions in his or her Last Will and Testament?
The answer depends on whether the decedent had previously created a trust. If so, then the assets placed into the trust become part of the trust’s corpus. These assets cannot be touched until the trust ends.
If the decedent did not create a trust, then the assets go through probate. As mentioned above, probate is the procedure by which an individual‘s estate is distributed according to state laws.
Probate and Estate Planning
You may have heard the term “probate” thrown around quite often. But do you know exactly what it means?
Well, let us start at the beginning. When someone dies, there are basically two ways to distribute the deceased person’S money and belongings.
First, under the laws of intestacy, the executor distributes the estate as he or she sees fit. Second, under the laws of probate, the personal representative files a petition with the court to administer the estate.
The executor administers the estate by distributing the assets among the beneficiaries according to the terms of the will or according to the laws of intestacy.
After the distribution, the executor makes sure that the decedent‟s debts are paid off and taxes are collected. He or she also pays off any outstanding loans made to the decedent during life.
After the debts are paid, the remaining funds are divided between the decedent‚s children and grandchildren according to the provisions of the will.
The personal representative administers the estate by collecting the assets and paying out the debts owed by the decedent. After the debts are paid, any remaining funds are distributed to the beneficiaries according to the provisions of a valid will.
It is important for anyone involved in the administration of the estate to understand that the executor and personal representative are fiduciaries. This means that they owe a duty of care and loyalty to the beneficiaries.
A beneficiary can sue the executor or personal representative for breach of fiduciary duties. However, the law provides certain protections for these individuals. For example, the executor or personal representatives are immune from liability unless they knowingly commit fraud or intentionally violate their legal obligations.
The Bottomline
Trusts and probate are very different processes. While trusts are generally used to protect assets from creditors and to ensure that the assets are passed down to future generations, probate is necessary when the owner of the estate does not leave instructions regarding its distribution.
When someone passes away without leaving a Will, the executor has to file a petition with the court. The court appoints a personal representative who will manage all aspects of the estate.
In most states, the personal representative must pay all of the decedent’s debts before distributing any of the estate’s assets. In addition, the personal representative must collect all of the estate’s assets and divide them up among the beneficiaries.
When it comes to estate planning, you want to make sure you’re doing everything possible to protect your loved ones from financial hardship. At Harcourts Desert Homes, we understand that estate planning is a complex process, which is why we’ve put together a comprehensive guide to help you through the process. Our team of experts can help you plan ahead for your future by helping you create a strategy that works for you. We offer a full range of Real Estate services including Residential, Commercial, Income Property, Vacation Homes, and Trust and Probate Services. Call us today!
