Clients may often feel overwhelmed by the amount of information available to them regarding estate planning. While they try to piece together the entire plan, they also often leave out some basic questions. Here are answers to some of the most common estate planning and probate questions.
What Is Included in My Estate?
Your estate consists of all the assets you possess at the time of your death. Those assets can include real estate, personal property, securities, cash, interest in businesses, retirement, IRA accounts, and life insurances policies.
Who Needs an Estate Plan?
The short answer is everyone. If you own any amount of assets, have children, or are just going away for college, there is some form of an estate plan that you should have to protect your interests. The goal of an estate plan is to safeguard your rights and assets in your near and far future, and it essentially allows you to control your future (as much as you can). It is much safer to have an estate plan than to let the state handle your matters impersonally by default.
What Assets Must Go Through Probate?
Examples of assets that go through probate include bank accounts that do not list a co-owner or beneficiary, real estate owned individually by the deceased person, stocks and bonds in the decedent’s name, certain tangible possessions (e.g., clothing, jewelry, furniture, cars registered only in the deceased individual’s name).
What Assets Can Avoid Probate?
Assets that can skip the probate process are property listed in a trust, real estate owned via joint tenancy (that includes a right of survivorship or tenancy by the entirety), life insurance policies, retirement accounts with designated beneficiaries, and bank accounts with Payable on Death or Transfer on Death clauses.
Is Probate Only for Those with a Large Estate?
No. Most states, including Ohio, have adopted laws that allow for 2 different types of estate procedures, one of them being small estate plans. Estates with a smaller amount of assets will have a simplified procedure, lower costs, and reduced time delays. (Certain assets will still need to go through the probate process in order for ownership to be formally transferred to the new owner).
What Is a Trust?
A trust is an estate planning tool that allows for your assets to be managed and distributed to your beneficiaries without the need for probate. It is a legal document that names an individual or an entity who will control your assets after your death and will distribute or manage assets for those entitled to them (your beneficiaries) according to the terms of the trust. Learn more about trusts here.
If I Have a Trust, Do I Still Need a Last Will and Testament?
Yes. Having both will allow you to capture all your assets, even those that were not transferred into the trust. A will created in conjunction with a trust is called a pour-over will. It states that any other assets that belong to you on your date of death should be transferred to your trust and be distributed accordingly, if possible. Discuss with an attorney to ensure that all your assets are accounted for as some assets that are not in your trust, that do not have beneficiary designations, or are not jointly titled with another individual may still be subject to probate.
Who Can Serve as Executor?
The executor of your will must be at least 18 years old and of sound mind (not considered “incapacitated”). Note that Ohio only allows for nonresident executors if they are related to you by blood, marriage, or adoption, or if they reside in a state that permits nonresidents to serve as executor.