The Wise and the Wary
Who can you trust? Deb hears this question over and over again in her professional practice as an elder law attorney and a fee-only, holistic financial planner. Let Deb teach you how to protect yourself and your assets from those who might not have your best interests at heart. [Editor's note: Deb no longer contributes to Silver Planet, but we have made her archived blog entries available as a service to our readers.]
A Moment to Ponder the Basics, Part 1
What is probate, anyway?
We’ll get back to the rest of the misconceptions of estate planning in a few weeks. First, we need to answer the question, "What is probate, anyway?" Here’s part 1 of the answer.
Probate is the legal process that transfers your property (your “estate”) to those entitled to it after you die. It’s a simple definition, but with many nuances. Let’s break down that definition:
- "...the legal process": There is court involvement. How much depends on your state’s laws, the complexity of your estate, your heirs’ or beneficiaries’ penchant for litigation, and many other factors.
- "...that transfers your property": First, it has to be your property—owned by you alone. If you own something jointly with your spouse or business partner, it may not have to “go through probate.” Second, it has to be property that does not get passed on through beneficiary designations or other contractual clauses (e.g., IRA beneficiaries).
- "...to those entitled to it": If you have a will, the people you name in it are called beneficiaries. If you don’t have a will (that’s called dying intestate), those people are called heirs, and what they get will depend on what your state’s laws say. Either way, your estate’s creditors will get paid first.
- "...after you die": You’d think that this should go without saying, but just to be clear—wills only “speak” at the moment of death. Until then, you can rip up your will, give everything away, or spend it all. It’s your money!
So how does the probate process begin? That’s for next week!
By Deborah Hoskins, JD, CFP
The Wise and the Wary Blog
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