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The property left in
your name will be distributed according to the estate plan you have
chosen. Even if you have not affirmatively chosen a plan, the State
has written one for you (though you may not like it). You may have
property not in your name but held by a third party, such as a life
insurance policy, an Individual Retirement Account (IRA) or 401K,
and so for forth. These accounts will have a beneficiary designation
and you will have specified in advance who the third party is to
pay upon your death. These latter types of assets can be called
“contractual” assets.
Depending on the type
of property you own at your death and how that property is titled
or owned and depending on what type of estate planning documents
you have, your estate will be administered before it can be distributed.
Beneficiaries and heirs will usually be more interested in the distribution
than in the administration. You may be concerned with how it will
be administered, to save time, money and anxiety for those beneficiaries
and heirs.
Several types of estate
administration exist. Three are briefly described below:
Informal
Administration
In California, many
informal procedures exist, usually for persons who die with modest-sized
estates. For example, several types of property, including real
property, can be transferred without a formal probate process
and sometimes without any Court procedures, for persons who die
with $100,000.00 or less in their name at death. Unless your “contractual”
assets mentioned above list your estate as your beneficiary, these
contractual assets will pass informally and without any Court
involvement. Community property passes between spouses informally,
as well.
Formal
Administration
Usually, if a person
in California dies with more than $100,000.00 in their name at
death, some form of formal process will usually be required. This
process will typically be called a “probate” administration. Although
a probate process technically involves a Will to be administered
(and probate indicates “proving” the Will), even a person who
dies without a Will but more than $100,000.00 in their name at
death, will still have the estate subject to the Court process.
If a person has a Will, the estate is probated and an Executor
will be appointed by the Court to administer the estate. If the
person has no Will, the estate is administered and an Administrator
will be appointed for the process. Without a Will, your estate
passes according to Intestate Succession, a series of statutes
which provide a rigid structure to transfer your property to your
blood relatives. With a Will, you choose the beneficiaries and
how much they will receive.
Trust
Administration
Increasingly popular
these days are revocable trusts or living trusts. While trusts
confer benefits in terms of incapacity planning which would not
be possible with a Will, the primary benefit of having a living
trust is to avoid the probate process mentioned above. A trust
involves transfer of legal title from the owner of property to
another person, a trustee, who then holds the property for the
benefit of the owner. This form of title allows for transfer of
ownership from the successor trustee (following the death of the
person who created the trust) to the beneficiaries chosen by the
owner of the property. It does not require Court involvement and,
as such, typically results in administration of the estate sooner
and less costly than would be the case in a probate administration.
Not only is a trust administration typically quicker and less
expensive than a probate administration, but a trust administration
is also intended to be a private matter. However, due to fairly
recent statutory changes, our trust administrations in California
are not as private as they once were and you can now expect many
aspects of the administration to come under possible scrutiny
from a variety of people.
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Hopefully, you
will act to create a comprehensive estate plan. In that plan you
will choose the manner in which your estate will be administered
upon your death (and, before death, if you become incapacitated).
Regardless of
how you have planned, we would be pleased to discuss how we might
assist you in answering your questions and helping administer an
estate, regardless of the methods which will be required.
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