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"What is an Estate?" This question, while appearing simple on its face, generates a few other questions. The word is used in so many contexts - estate planning, estate trust, testate estate, intestate estate, estate accounts, estate homes, estate personal representatives, estate administrators and estate executors. So, let's start with its meaning within the context of a probate estate. An estate is testate if the person has a will at the time of death and intestate if the person died without a will.
Probate, in the words of one of California's busiest Superior Courts, is "when the court supervises the processes that transfer legal title of property from the estate of the person who has died (the "decedent") to his or her beneficiaries.
Usually, you have to fill out court forms and appear in court to do the following:
- Prove to the Court that the Will is valid (this is usually routine),
- Appoint a legal representative with authority to act on behalf of the decedent,
- Identify and inventory the decedent's property, and have that property appraised,
- Pay debts and taxes, and
- Distribute the remaining property according to the terms of the Will or to the decedent's heirs."
Many of California's Superior Courts, like Los Angeles County Superior Court, provide a helpful instructional guide "regarding the steps to start a probate proceeding or obtain Letters of Administration after an individual has died."
The term "Estate" may also reference a Trust Estate. Trust estates don't necessarily have to go through a court procedure. Other common examples of non-probate transfers (transfers that don't involve going to probate court) include:
- "If a particular asset (like a retirement plan, life insurance policy, or a bank account) already has a named beneficiary, that asset goes to the beneficiary (or beneficiaries, if there are more than one) without going to court.
- If a house is owned by two or more people as joint tenants, the other owners have the right of survivorship, which means that they inherit the entire property in their name.
- Real estate sometimes can be transferred without court with a transfer-on-death deed (also called a beneficiary deed).
- Property in living trusts can be transferred without going to court.
The IRS is particularly interested in what's in your estate, especially if the gross assets meet the threshold for assessment of an estate tax. The IRS explains that
"The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death (Refer to Form 706 (PDF)). The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all of these items is your "Gross Estate." The applicable property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets.
Once you have accounted for the Gross Estate, certain deductions (and in special circumstances, reductions to value) are allowed in arriving at your "Taxable Estate." These deductions may include mortgages and other debts, estate administration expenses, property that passes to surviving spouses and qualified charities. The value of some operating business interests or farms may be reduced for estates that qualify."
All this is only a brief description to the question posed: What is an estate? California law firm Hackard Law is often involved in litigating the questions surrounding an estate. Should assets transferred to undue influencers prior to the person's death be in the estate? Should bank accounts that were to be held in trust be outside the estate because assets were mistakenly put in a joint account rather than a trustee account? The questions go on.
The bottom line: It pays to know what type of estate assets are involved - probate estate assets, trust estate assets, non-probate assets and/or marital assets. Hackard Law represents clients in California's major urban areas when estate, trust and elder financial abuse disputes arise. We protect beneficiary interests across the state, including in Los Angeles, Orange, Santa Clara, San Mateo, Alameda, Contra Costa and Sacramento. You can reach us today at 916 313-3030.