When someone passes away, it is important to understand the laws that govern wills and estates. Understanding these laws is also essential to creating a comprehensive estate plan during your life.
Parman & Easterday can provide assistance with all legal matters related to wills and estates. We help those planning their legacies and taking steps to care for their heirs. We provide assistance after someone has passed away to assist in transferring the deceased person’s estate.
One thing we want you to understand is what an estate is for purposes of a last will and testament.
What is a Probate Estate?
Technically speaking an estate is everything a person owns. It is divided into different categories after a person dies. Some or all of the estate assets may have to pass through probate. These assets constitute the probate estate.
Unless the deceased person had a Trust, the probate estate generally consists of most if not all the property the deceased person owned. The house, bank accounts, furniture, cars, clothing, family heirlooms, and more can be transferred through the probate process. Unless an estate plan is in place to avoid probate, these assets will be distributed through the probate court.
When creating a will, it is important to determine who should inherit the different types of property in the estate. Many who create a will include a remainder clause that specifies who should get the assets in the probate estate that were not left to a specific beneficiary.
What is a Non-Probate Estate?
In addition to the items that pass through probate, there may be assets in a non-probate estate. The non-probate estate consists of money and property that transfers by beneficiary designation outside of probate.
Some things included in the non-probate estate include:
- Life insurance policies: The death benefit from life insurance policies is paid to the named beneficiaries outside of probate.
- Retirement benefits: Money in retirement accounts, like IRAs, transfers to named beneficiaries outside of probate.
- Accounts with payable on death clauses: you can include “pay on death” clauses on bank and other financial accounts.
- Jointly-owned property, such as cars and houses. These transfer to the co-owner at death.
- Assets held in trust. When you create a trust, the assets held in that trust transfer through trust administration instead of through the probate process.
Some assets and property that are part of the probate estate will be added to the value of the non-probate estate to determine if estate taxes are due. It is possible to take steps to transfer some assets without them being counted for tax purposes. This is important if you feel your estate will become taxable.
Knowing the laws for wills and trusts can help you to determine how your assets should be owned so you have control over what is part of your probate estate and what is in your non-probate estate. This makes it possible to avoid or reduce estate taxes and ensure assets are transferred to the new owners as quickly, efficiently and inexpensively as possible. For example, if you own shares in a family business, you may want your ownership to transfer without probate so the new owners can quickly assume control over the business.
An attorney will provide assistance in helping you understand what makes up your estate. We also help you ensure the value of your estate is protected so your heirs will inherit the maximum amount possible.
How can an Estate Planning Lawyer Help?
Parman & Easterday will explain what constitutes your estate when you create your will, trust and/or comprehensive estate plan. Knowing what is in your estate, why, and how it is titled, is important information to have as you consider your legacy.
To learn more about wills and estates, you can join us for a free seminar. You can also call us at (405) 703-9987 or contact us online to get personalized help. We provide advice on estate planning to clients in Overland Park, Tulsa and Oklahoma City, and surrounding areas.