Estate planning and probate seem to be highly interrelated. To understand the connection between the two, one has to understand these terms in detail. Now, probate is a legal process meant for handling the business affairs of a deceased person. This is a procedure of the court that identifies a proper will. The probate process also identifies an executor who can administer the estate and can also preside over the distribution of the decedent’s assets among different beneficiaries.
Estate planning, on the other hand, is the process of planning and naming the right person who will be inheriting your assets after your demise. Estate planning is basically your master plan to distribute our assets among your beneficiaries in an effective manner. Thus, both estate planning and probate seem to be the two sides of the same coin.
How are Estate Planning and Probate Connected to Each Other?
Yes, both estate planning and probate are the processes that determine the manner in which your ‘estate’ or assets would be distributed. Whereas estate planning is the plan you make or the instructions that you give about how you want your assets to be handled after your demise. On the other hand, probate is a process that actually carries out your wishes and instructions after your demise.
Estate Planning is First Step and Probate is the Next
Now, estate planning and probate are interconnected. It implies that both these processes are interrelated. At least probate is entirely dependent upon estate planning. If estate planning is done beforehand in an effectual manner, one can save the probate process from getting lengthy and complex. There are diverse tools that can help in this regard. These are living trusts, life insurance, as well as joint ownership agreements. A knowledgeable probate attorney can assist you in this regard.
However, if there is no estate planning done, the matter goes into the hands of a probate court. If there is a will, the executor will have to appeal for its recognition in the court. If there is no will, then the intestate succession laws come into the picture. The court can also choose an executor on the basis of the probate laws and the inheritors available. However, it is always better to go for estate planning beforehand so that the need for the probate process may be shortened.
What is the Purpose of Estate Planning?
Estate planning basically helps people who possess large to modest estates as well as assets. Now, estate planning makes sure that all the properties of the decedent are distributed evenly among the beneficiaries. Planning also ensures that this distribution is made as per the wishes of the decedent. Also, people who are benefiting from the said estate will get the maximum share of the assets in the minimum possible time.
What are the Other Benefits of Estate Planning?
Estate planning also gives permission to the owner of the assets to decide the beneficiaries who would benefit from the estate and also to what extent. Planning also makes sure that taxes imposed on the transferring process of assets will not destroy the estate. Not only does it offer financial security but it also teaches people to make imperative decisions while they are still alive. This includes appointing a guardian for the minor kids and making proper healthcare arrangements.
What Happens When There is No Estate Planning?
When there is no will or estate planning done, the following situations may occur:
If the owner of the assets is unfortunately disabled, he or she may not be able to conduct the business effectively. Thus, the probate court would assign an appointee for the owner. The appointee would be signing on the owner’s behalf. Also, the owner’s assets would be handled by the probate court and not family members. Also, the court will decide upon how your assets would be used for the owner’s guardianship or health care. This process can become highly expensive, as well as time-consuming. Moreover, it is open to the public and can continue even after the owner has recovered.
If the owner dies without an estate plan, the assets get distributed as per the probate laws of the state. As per many state laws, if the owner is married, his or her spouse and kids will receive a particular share from the estate. This implies that the spouse and kids may not receive enough share as they deserve. If there is a minor kid involved, the court will control his or her inheritance. Unfortunately, if both the owner and the spouse dies, the court will select the guardian as per the probate laws and not as per the owner’s wish. Thus, it is always advisable to go for proper estate planning to avoid a lengthy probate process for your beneficiaries.