When you are creating an estate plan, it is important to understand some of the terms and concepts that are commonly used. Your estate plan can be tailored specifically to meet your needs and plans for the future. The following are some basic questions often asked in estate planning.
Probate is the process of proving the validity of a will, accounting for a deceased person's assets, and distributing the assets to heirs named in the will. Probate courts also handle guardianships of minors and incapacitated adults as well as the estates of decedents who pass away without a will.
The probate court's role in these cases is to oversee them and ensure that all applicable state laws are followed and that assets are distributed properly.
In the case of a will, this means that the court's role is to ensure that the estate is distributed according to the decedent's wishes.
In a guardianship, the court approves a suitable guardian and oversees the case to ensure that the guardian is performing his or her duties in accordance with the best interests of the ward.
A joint tenancy is a form of ownership of property in which the co-owners hold the property in equal shares and with equal rights to it. The right of survivorship means that the surviving joint tenant(s) will automatically inherit the deceased's share of the property when he or she dies. This happens automatically and does not require court intervention.
appoints an administrator to ensure that the provisions in the will are carried out upon the will creator's death.
Statutory requirements must be met for a will to be valid—the signing must be witnessed, and the will creator must be of sound mind and free of duress, coercion, or undue influence to make decisions regarding their estate.
A living will is a document that expresses a person's wishes in advance in case they become unable to communicate their wishes in the future due to permanent unconsciousness or terminal illness. A common misconception is that a spouse or other family members will have the right to decide what happens in this situation regarding their loved one's medical care. This is not the case—without a living will, family members have no choice about what happens, and a court may be asked to decide.
you wish to receive artificial hydration and nutrition if you are unable to eat or drink on your own.
Anyone can benefit from having a living will. A living will allows you to declare your wishes in advance so that medical providers will be legally required to stop or continue administering treatment as you have specified in your living will.
Intestacy means the condition of having passed away without a will. If you die without a will, your property will be distributed according to what is known as "intestate succession." State law lists your next-of-kin in order of their right to receive property.
This process is overseen by a probate court, just like distribution of property with a will.
Beneficiary designations are the directions you give to the custodians of certain types of assets, such as life insurance policies, annuities, bank accounts, and retirement plans as to who will automatically receive the assets in these accounts upon your death.
There will usually be a requirement that the beneficiaries present a death certificate to the institution that owns the account prior to funds being distributed. Distribution of benefits from these types of accounts ordinarily do not need to be overseen by a probate court.
Many policies or accounts allow designation of primary beneficiaries and secondary beneficiaries. The primary beneficiaries have the right to inherit the assets in the account first. If the primary beneficiaries have passed away at the time of the account holder's death, the assets in the account are distributed to secondary beneficiaries.
What is a durable power of attorney and when do you need one?
A durable power of attorney is a document that allows another person (the "agent" or "attorney in fact") to make decisions on behalf of another person (the "principal"). A durable power of attorney may authorize the agent to manage your financial transactions, make healthcare decisions for you, or both.
providing notice to the agent of revocation in accordance with state law.
It is a good idea to have a durable power of attorney in case you become incapacitated by an illness or accident and are unable to make decisions on your own.
Any other condition that could render you temporarily or permanently unable to manage your affairs or make healthcare decisions on your own behalf warrant a need for a durable power of attorney.
A revocable living trust is an estate planning instrument governed by a trust document that allows the trust grantor to place property in the trust and specify who will receive the property upon his or her death.
The trust must also name a trustee to manage the property in the trust for the benefit of any beneficiaries named in the trust instrument—usually the trust grantor during their lifetime. Upon the trust grantor's death, the trust may be converted into an irrevocable trust for the benefit of heirs.
A living revocable trust is revocable because property can be added or removed from it, and it can be amended as needed during the trust grantor's lifetime. This is what distinguishes a revocable trust from an irrevocable one—once property is placed in an irrevocable trust, it cannot be removed. A revocable living trust is called a "living" trust because it is created during the trust grantor's lifetime.
Using a revocable living trust to distribute the assets in an estate can be useful for almost anyone.
One of the reasons that revocable living trusts are a very common estate planning tool is that using a trust can help your heirs avoid probate. The process of probating a will can be lengthy and expensive. If there are any challenges to the will's validity, the process can take even longer. A revocable living trust allows beneficiaries to receive their inheritances more quickly.
Another reason many people choose a revocable living trust to distribute the assets in their estate is that it can be amended at any time. Property can be added or removed at the trust grantor's discretion. A revocable living trust is easier to amend than a will.
If you have questions about estate planning and are seeking legal advice, contact Nina Whitehurst at Cumberland Legacy Law by calling (931) 250-8585 or by filling out our online form.