If you're just getting started with your estate planning, you might hear words that are unfamiliar to you. Estate planning can be confusing, especially if you don't understand the vocabulary that's being used. Before you start planning your estate, it's important that you take the time to familiarize yourself with the language that will be used. Here are four important terms you should understand before you start planning.
The last thing you want to do is pass away intestate. Intestate means that you've passed away without a valid will. When that happens, it's up to the courts to determine how your assets will be divided. Unfortunately, courts don't always take the family's wishes into consideration when dividing your estate. To protect your assets, and ensure that your property is divided the way you want it to be, you need to make sure that you have a valid will.
Once you've passed away, your estate goes through a process known as probate. During this process, the courts ensure that all the assets are collected and accounted for properly. The courts also ensure that all creditors are properly paid. In most cases, the creditors will be paid off before any funds are passed on to the surviving family members. If you've left a will, the courts will ensure that your wishes are carried out.
Individuals who wish to contest your will – argue against it – will have the opportunity to do so during probate. To prevent problems if someone contests, you should make sure your will contains specific details about how you want your assets divided.
The person you choose to be your personal representative will be in charge of representing you once you've passed away. This person will act on behalf of your estate in any and all legal proceedings. It's important to note that your personal representative will not represent family members. They will serve to protect your estate once you've passed away.
Trusts are designed to be a legal arrangement that protects cash, bonds and other property for a specified amount of time. For instance, if you have property that you want to pass to a grandchild, you can place that property in a trust. The trust will be protected until the grandchild reaches a specific age – which you determine. Once the grandchild reaches that age, the trust will be opened and the proceeds will be transferred over.
Now that you're in the process of estate planning, you need to understand the process. The information provided here will help you understand the vocabulary that will be used during the process. For help with your estate planning, be sure to sit down with an attorney who specializes in this type of law.
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