Probate attorneys in Orange County work extensively with wills and trusts, as well as in situations where one was never created. But for the typical citizen, these topics can seem quite mysterious. When you throw in words like “estate” (only rich people have those, right?) and “probate” (is that when liquor was illegal?), things can get even more confusing. Here, a probate attorney from Orange County walks you through some of the most common estate planning terms.
Assets
Assets are anything that you have that can be owned or controlled in a way that produces value. Obviously, money is an asset, but so too are property, vehicles, businesses, stocks and bonds, other investments, personal items, and more. If it can be converted into cash, it is considered an asset and should be accounted for in your estate plan. If no will is created, the probate court may end up doing this accounting after your passing.
Beneficiary
A beneficiary is the person who is named to receive inheritance, such as all or part of a life insurance policy or the ownership of assets of a trust. The word is often used to describe heirs when they have been specifically named.
Estate
An estate is not simply some rambling mansion on acres and acres of land in some exotic locale. Really, your estate is determined by adding up all of your “assets” and subtracting your “liabilities.” The difference is your net worth and is what will be passed on to your heirs.
Heirs
An heir is someone who may receive part or all of your estate upon your death. This term is often used when the probate process is used to designate who will inherit personal items, property, money, etc.
Liabilities
While you would generally consider your home to be an “asset” to be passed on to your “heirs,” it can pose a liability. These are outstanding bills and debts that need to be cleared up, either before the probate process or with the assistance of a probate attorney. Some costs will be ongoing throughout the process, such as the mortgage on that home, property taxes, and many other administrative expenses.
Living Will
This document explains your ‘end of life’ wishes should you become somehow incapacitated. It covers things such as who will be in charge of making medical decisions for you, as well as outlining what decisions you would like to have made.
Probate
When an individual dies without having made clear, legal wishes about his or her “estate,” the courts must step in to determine how best to divide the “assets” and take care of any financial obligations. This is done through a process called probate during which everything is accounted for and decisions are made based purely on legal precedent.
Trust
There are a number of different types of trusts that can be created as a part of your “estate” plan. These are used to transfer your property, money, etc. to another person before or after your death. This may seem redundant when using a “will,” but there are a number of benefits to creating a trust, one of which is that it can save a tremendous amount of money for you and your “heirs.”
Will
Aside from seeing “the reading of the will” on some television drama, many people are still uncertain of what this mysterious document is all about. Also sometimes called a testament (as in “last will and testament”), a will is a legal document that determines how your “estate” will be managed after your death. It names an “executor of the estate” and outlines your wishes for “inheritance” and “beneficiaries.”
There is a lot to know about estate planning law, and this quick list will at least familiarize you with some of the most common terms. If you are currently administering an estate and aren’t sure what to do next, you may benefit from contacting a probate attorney in Orange County.
