Estate planning is the process of anticipating and arranging for the disposal of an estate during your life.
Estate planning typically attempts to eliminate uncertainties over the administration of the probate and maximize the value of the estate by reducing taxes and other expenses. Guardians are often designated for minor children and beneficiaries in incapacity.
Estate planning involves the will, trusts, beneficiary designations, powers of appointment, property ownership (joint tenancy with the rights of survivorship, tenancy in common, tenancy by the entirety), gift and powers of attorney, specifically the durable power of attorney and the medical power of attorney. More sophisticated estate plans may even cover deferring or decreasing estate taxes or winding up a business.
If an estate is not automatically devised through a trust, directed beneficiary of joint tenancy, it is necessary to “probate the estate”, whether or not the decedent had a valid will. A court having jurisdiction of the decedent’s estate (a probate court) supervises probate, to administer the disposition of the decedent’s property according to the law of the jurisdiction and the decedent’s intent as manifested in his testamentary instrument. Distribution of certain estate assets requires selling all liquid assets, including real estate. There are exceptions for smaller estates.
If the decedent dies without a will, known as intestacy, the estate is distributed according to the laws of the state where the decedent resided, or as held by the court. If the decedent died with a will, the will usually names an executor (personal representative), who carries out the instructions laid out in the will. The executor marshals the decedent’s assets. If there is no will, or if the will does not name an executor, the probate court can appoint one. Traditionally, the representative of an intestate estate is called an administrator. If the decedent died with a will, but only a copy of the will can be located, many states allow the copy to be probated, subject to the rebuttal presumption that the testator destroyed the will before death.
