In this article:
What is Considered to be Part of a Probate Estate?
What is Considered to be Part of a Trust Estate?
Debts of the Decedent
Multi-state or International Assets
Introduction
The complexities of life do not end with our passing. In fact, the task of distributing a deceased person's assets, whether they had an estate plan or not, can be an intricate process. In this guide, we aim to make it easier for individuals who may lack knowledge about the probate process and the various factors that affect estate distribution.
What is Considered to be Part of a Probate Estate?
The probate estate consists of all the assets that were owned by the deceased individual. These assets could be real estate properties, personal items, bank accounts, or shares, among others, as long as they were not jointly owned or assigned to beneficiaries through other methods like a Payable on Death (POD) designation or rights of survivorship.
For instance, consider this generic case: A deceased individual, John, owned a house, a car, a personal bank account, and a jointly owned bank account with his wife. In this case, only John's house, car, and personal bank account would be part of his probate estate, but not the shared bank account.
What is Considered to be Part of a Trust Estate?
A trust estate, on the other hand, consists of all assets that have been placed into a trust by the deceased before their death. These assets bypass probate and are administered according to the trust’s terms upon the trust’s creator’s death. Trusts can include almost any asset, such as real estate, bank accounts, investment accounts, or personal items.
Consider the case of a woman, Jane, who has put her house and bank accounts into a trust for her children. Upon her death, these assets would not be part of her probate estate, but instead would remain in her trust estate and pass directly to her children according to the trust’s terms.
Debts of the Decedent
When an individual dies, their outstanding debts don't simply disappear. Generally, their estate is responsible for paying these debts. There are different types of debts that the estate may need to settle.
Secured Debts
Secured debts are loans that are backed by an asset, such as a mortgage which is secured by a house, or a car loan secured by the car. If the loan is not repaid, the lender can take the asset. If the deceased had any secured debts, these would need to be repaid by the estate.
Unsecured Individual Debts
Unsecured debts do not have any assets backing them. Examples are credit card debts and personal loans. If the deceased left any unsecured debts, these would also need to be settled by the estate.
Medicaid or MediCal Debts
If the deceased was a recipient of Medicaid or MediCal benefits, their estate might be required to repay these benefits. This is known as estate recovery.
Multi-state or International Assets
If the deceased owned assets in more than one state or country, these assets are subject to the probate laws of the jurisdiction in which they're located. This might require initiating separate probate proceedings in each jurisdiction, known as ancillary probate. For example, if a California resident owns a vacation home in Hawaii in their individual name, probate might need to be initiated in both California and Hawaii.
conclusion
The distribution of a deceased person's estate can be a complex process, especially when considering factors like probate and trust estates, the decedent's debts, and multi-state or international assets. But with the right knowledge and guidance, this process can be navigated effectively, ensuring a smooth transition of assets. At Harbor Probate Law, we empathize with the challenge of navigating estate distribution following the loss of a loved one. We are here to support and guide you through every step of the process, with a dedicated team who strive to make the process as straightforward and painless as possible. Contact us today to find out how we can assist you during this challenging time.