When someone close to you passes away it can be the beginning of a long and arduous road to settling of their estate. An estate is everything a decedent owned during their lifetime. A settling of an estate through a Court is done either by Probate (decedent with a properly executed Last Will and Testament), or by Administration (where there is no Last Will and Testament; this condition is called intestacy).
The key concept to keep in mind is that everyone has an estate plan even if it was never created. If your loved one did not take minimal steps to provide for their estate plan (by executing a Last Will and Testament, or settling a Trust), then one is provided by the State. Encouraging your loved one to create an estate plan is the only way to make their wishes known about intended any beneficiary designations. And these beneficiaries could certainly be friends, relatives, charities, and any other legal entity. Even pets get their own trusts, so that they are taken care of!
The rules of intestacy are strict, and the distribution of inheritance is usually done by marriage and blood relations. That is why an estate plan is so vital; if your loved one passed without a Will or a Trust, some of their assets may go directly to those who might not have been the intended beneficiaries. If, for example, if they did not have a good relationship with some of their family members, those members may still be eligible to receive their assets. On the other hand, a lifelong friend that they may have promised a valuable gift out of the estate, may end up being cut out as an intended beneficiary because they are not a blood relative.
There are two types of assets: probate and non-probate.
● A probate asset, in general, is everything that your loved one owned during their lifetime (including fractional interests), but that cannot be described as a non-probate asset.
● A non-probate asset is something they owned or had interest in that would pass automatically upon their death, without the necessity of the Court's involvement. Some instances of a non-probate asset are retirement accounts, life insurance policies and property held jointly with someone else during their lifetime (For questions or concerns about specific assets, you can contact: the Law Offices of Vlad Portnoy, P.C.)
It is important to know the value and title of each of your loved one's assets to have a clear picture of the size of their estate for evaluation purposes. Something else to consider are taxes on those assets. Estates over certain amounts are taxable by the New York State, and larger estates are taxable on both Federal and New York levels.
Sure, estate planning isn't as fun as booking a trip but without it, your loved one (or yourself) can't choose who gets everything that they worked so hard for. Without a plan in place, there could be a long-lasting impact on your loved ones, even if you don't have a pricey home, or large investment account to pass on.