Estate planning provides for the orderly distribution of your assets after your death. You get to pick who gets your assets and whether they get them free and clear or subject to restrictions. If you die without estate planning your minor children would get their inheritance free and clear on their 18th birthday. With estate planning you can leave your assets to your minor children in trust until they reach a more mature age.
Estate planning may avoid probate. Probate involves court supervision of the distribution of your estate. Probate involves court costs and attorneys' fees which must be paid by your estate before your estate can be distributed to your heris. With estate planning probate can be eliminated.
Estate planning may reduce estate taxes. Estate taxes are imposed by the federal government on estates over $675,000 (in the year 2001). With estate planning estate taxes can be reduced or eliminated.
Probate is court supervised distribution of your estate. Each county has a probate judge and he/she and their staff keep track of estates which need probate. Probate is required if you die owning an asset such as real property which requires your signature on a title to transfer title to someone else.
For example, suppose a husband owned a home at the beach, and he re-married, and kept the title in his own name. His will leaves the beach home to his second wife and in his will he names his wife as his personal representative (the person who winds up the deceased person's affairs and distributes the estate to the heirs).
Then assume that his wife wants to sell the beach house. She will find that she cannot sell they house because she needs her deceased husband's signature on the deed and, of course, he is dead. This will be required by the title company. The wife will tell the title company that she inherited the property under the husband's will, but the title company will advise her that before they can accept her signature on the deed they need some official proof from the probate court that she is authorized to handle the estate and sign legal papers for the estate.
What she will have to do is see an attorney who will prepare the probate paperwork and file it with the court. There are court filing fees and attorney fees. Then the probate court will issue some official paperwork called Letters Testamentary which the wife can show to the title company and the title company will then accept her signature on the deed as the duly court-appointed personal representative of her deceased husband's estate.
