The field of estate planning encompasses a few separate disciplines. The definitions of some of these disciplines written below may be helpful to the reader.
Probate is a series of interactions with the court following a person's death. If the decedent's estate is small the heirs may never have to be involved with the court. For the smaller estate proper planning by using tools such as holding property in joint tenancy and "pay on death" financial accounts can avoid the necessity for court intervention.
Where there is no will, the decedent's property passes to the heirs through "intestacy" as established by the laws of the state.
Where the decedent had a will the validity of the document is established as part of the probate process. An executor is appointed to manage the decedent's wishes as set forth in the will. The decedent who has written a will is some times called the "testator".
A living trust is a relationship
between three people:
- The person who starts off owning the property (called the settlor or trustor)
- The person to whom the owner "entrusts" the trust property (called the trustee)
- The people for whom the arrangement is created (called the beneficiaries)
When the trust is first formed these three persons can be one human being. This way, even though your assets have been put into the trust, you can remain in control of your assets during your lifetime. Usually, the client retains direct control over the trust property by acting as the trustee until his or her death or incapacity. Trust assets are completely available to the client during his or her lifetime.
Legal ownership changes when the trust is created.
A successor trustee is named so that when the trustor passes, the successor trustee manages the trust assets and distributes them to the beneficiaries of the trust.
When a person makes a writing which names the beneficiaries who will receive his or her estate, a will has been made. The person who makes the will is the testator.
In the will the testator also names one or more persons to manage his or her estate and provides for the distribution of his property at death. That person is the executor.
To have legal validity a will must be properly written and witnessed.
When a testator dies his heirs and/or executor seeks to have the court begin probate proceedings so that the testator's property can be distributed. Probate is a series of interactions with the court following a person's death.