You understand the importance of creating an estate plan well in advance of when any of it is needed. While there are some elements you know get wrapped up in an estate, there are others that you have not considered. In an effort to cut down on preparation time, it is a good idea to review some of the basics about estate planning and what is and is not included. Explore some of the components of what the court may regard as an estate.
What Is Considered an Estate?
When a person passes, they leave behind property, assets and debt. Their estate is a compilation of these and other things. Since property and assets are typically interchangeable in financial planning, they should break down further in an estate plan into those items that are tangible, like real estate and vehicles and those that are intangible, like investment accounts. Cash and savings accounts are considered assets and part of an estate. Debt is something many don’t think when planning their estate. Encumbrances on homes, vehicles, and other tangible property are addressed first when going through probate. Credit cards or unsecured debts are paid last. Finally, personal effects and possessions are accounted for in an estate plan.
What Is the Difference in a Gross Estate and Probate Estate?
During tax season, you hear the terms gross income and net income tossed around frequently. While both refer to the amount of money you made in a given year, they mean very different things. The same holds for your gross estate and probate estate. Your gross estate consists of all cash positive elements you leave behind. It is a total computation of the value of your property and possessions calculated at the time of your death. A probate estate is more like net income. It is only those assets that must go through the probate process. Thus, some components of the estate are excluded from the probate estate computation.
What Is Excluded From Probate?
Some estate planning lawyers suggest placing some property in trust accounts. The suggestion is made to help beneficiaries inherit quicker and more efficiently than just gifting the property to them. Trusts, insurance policies, and some retirement accounts do not go through the probate process because a beneficiary designation passes immediately upon death and does not need a court process to sift through.
As your life progresses and changes, you may feel it necessary to update an estate plan to include or eliminate items. You may do this with the help of a new estate planning lawyer, like a Probate Lawyer in Melbourne, FL. If you do choose to switch, you should bring any existing paperwork with you to the appointment to make the process of revising documents easier. For issues in Texas, contact Brandy Austin Law Firm, PLLC.