In Florida, when creating an estate plan, it is essential to understand certain terminology and the mechanics of how an estate works to distribute your assets to your heirs. By enhancing your understanding of the estate planning process, you can make informed choices about the steps needed to ensure an executor handles your assets according to your wishes. The following points provide an overview of a traditional estate.
In financial and estate law, “estate” refers to all the property and assets belonging to a deceased individual. While it sounds simple, joint ownership, assets without clear ownership documentation and other issues can pose challenges if the individual does not address their ownership and distribution to heirs through estate planning.
Managing the traditional estate
In a traditional estate, once an individual passes, everything they own goes through a process called probate. The court appoints an executor, whom the deceased has typically chosen and named in their will. The court appointment grants the executor legal power to manage and distribute the estate’s assets. If an individual passes without a will, the probate court appoints an administrator to manage and distribute the decedent’s assets to their heirs.
Different types of estates
A traditional estate may need to go through the probate process if the individual did not leave a will. Even if a will exists, the assets usually go through probate unless the deceased has a trust estate. In this scenario, the individual set up one or multiple trusts as part of their estate plan and transferred ownership of their assets to the trust(s) while still living.
In some types of trusts, the assets remain owned by the individual while they are alive; in others, the individual no longer owns the assets once the transfer completes. This feature can create a beneficial tax situation and offer asset protection from challenges such as divorce proceedings or creditors.
By understanding the basics of a traditional estate, probate and the option of setting up trusts, individuals can make informed decisions about structuring their estate. A well-planned and executed estate can provide peace of mind and give assurance that your assets are distributed according to your wishes.