When planning for the future, terms like estate planning and probate often come up, but many people aren’t quite sure what they mean or how they differ. Understanding these two key legal processes can help you protect your assets, minimize stress for your loved ones, and ensure your wishes are honored after your passing. Let’s break down estate planning and probate, highlighting their differences and why they matter.
What is Estate Planning?
Estate planning is the process of arranging and preparing legal documents to outline how you’d like your assets and family to be taken care of upon your death or if you become incapacitated. A comprehensive estate plan ensures that your wishes for your loved ones and assets are honored both during your lifetime and after your passing. With the right strategies, estate planning can also help minimize taxes for your beneficiaries.
An estate plan involves more than just a will; there are several key factors to an all-encompassing estate plan:
- Trust: A legal arrangement that allows a third party (a trustee) to manage assets on behalf of beneficiaries, often helping to avoid probate.
- Will: A legal document specifying how your assets should be distributed and who will carry out your wishes.
- Power of Attorney: A document granting someone the authority to make financial or medical decisions on your behalf if you cannot do so.
- Healthcare Directive: Also known as a “living will,” this document outlines instructions regarding medical treatment in case you cannot communicate your wishes.
- Beneficiary Designations: Naming who will receive assets from accounts like life insurance policies and retirement funds.
Who Needs Estate Planning?
Estate planning isn’t only for the wealthy or older adults—it’s for everyone. Estate planning has numerous benefits, including eliminating family conflicts, protecting minor children, reducing taxes, and ensuring your assets are distributed according to your wishes.
If you fall into any of these categories, consider establishing an estate plan:
- Parents with minor children: Ensure guardianship and financial security for your children.
- Homeowners: Protect your property and ensure a smooth transfer to beneficiaries.
- Business owners: Succession plan and protect business assets.
- Unmarried couples: Secure legal protections for your partner.
- Individuals with assets: Even small estates benefit from clear directives.
- People with specific healthcare wishes: Establish advance directives and power of attorney.
- Anyone who wants to minimize family disputes: Provide clarity on inheritance and decisions.
- Those who want to reduce taxes for heirs: Use strategies to lower estate taxes.
- Caregivers of dependents with special needs: Set up trusts to ensure lifelong care.
- Retirees and seniors: Protect assets, plan for long-term care, and create a legacy.
In conclusion, estate planning is right for anyone who wants to control their assets and provide peace of mind for their loved ones after they’re gone.
What is Probate?
Probate is the legal process of administering an estate after someone passes away. If the deceased person (also called the decedent) has a will, probate ensures that their wishes are followed. If there is no will, the probate court will determine how the estate is distributed according to state laws.
The steps of probate are as follows:
- Filing a Petition: The executor (named in the will) or a court-appointed administrator begins probate by filing paperwork with the local probate court.
- Notifying Heirs and Creditors: Heirs, beneficiaries, and creditors are informed of the decedent’s passing. Creditors can make claims against the estate for unpaid debts.
- Inventorying Assets: The executor or administrator gathers and values the deceased’s assets, including real estate, bank accounts, investments, and personal property.
- Paying Debts and Taxes: Any outstanding debts, taxes, and legal fees must be paid before assets are distributed to beneficiaries.
- Distributing Assets: Once all debts and expenses are settled, remaining assets are distributed according to the will (or state laws if there is no will).
- Closing the Estate: The probate court officially closes the estate after distribution.
Probate can take months or even years to complete, delaying asset distribution and causing stress for everyone involved. It’s also costly, with legal fees, court costs, and executor fees, which can reduce the value of the estate. Probate records are accessible to the public, meaning anyone can access details about the estate and your beneficiaries. Due to these concerns, many people take action to avoid the probate process altogether.
When is Probate Required?
Probate is required if:
- The deceased owned assets solely in their name (without a joint owner or beneficiary).
- There is no valid will to guide asset distribution.
- Disputes arise among heirs or beneficiaries.
Estate Planning vs. Probate
The main difference between estate planning and probate is that estate planning involves making arrangements for your loved ones and assets before you die. In contrast, probate is settling your estate after you’ve passed. Take a look at the graph below to understand the primary differences between probate and estate planning:
| Estate Planning | Probate | |
| Purpose | Prepares for asset distribution and management | Oversees asset distribution after death |
| Timing | Done while the person is alive | Takes place after death |
| Legal Documents | Includes wills, trusts, powers of attorney, and healthcare directives | Governed by state probate laws and the court |
| Control | The person creates a plan based on their wishes | The court oversees the process based on the will or state laws |
| Time & Cost | Helps avoid costly legal processes | Can be lengthy and expensive |
How to Reduce the Need for Probate
While some estates must inevitably go through probate, you can take steps to reduce its impact:
- Create a Living Trust: Trusts allow assets to pass directly to beneficiaries without probate.
- Use Beneficiary Designations: Assign beneficiaries on life insurance, retirement accounts, and payable-on-death (POD) bank accounts.
- Own Property Jointly: Assets with joint tenancy or rights of survivorship pass directly to co-owners.
- Gift Assets Before Death: Giving away assets while alive reduces the estate’s size and probate requirements.
Work With Kelly Cardon to Plan & Avoid Probate
If you’d like to avoid probate but don’t know how to start estate planning, it’s time to work with the professionals. At Kelly Cardon Law, we provide comprehensive estate planning solutions, including drafting wills, establishing trusts, and more. We’ve been serving Northern Utah residents for over 30 years, and we’ve become a trusted estate planning firm in the breathtaking Beehive State.
Don’t try to plan ahead alone. Work with the experts and gain peace of mind for your future. Contact Kelly Cardon Law to partner with our estate planning attorneys and reduce your need for probate.
