Who Are the Parties in a Limited Partnership?

02 – What’s an Estate?

By: Barry E. Haimo, Esq.

October 2, 2017

 

What’s an Estate?

 

An estate is a legal entity just like a person, corporation, limited liability company, limited partnership and trust. An estate comes into existence only by going through the probate process in the probate court. It is formed for the limited purpose of wrapping up a deceased person’s legal life. There’s a designated responsible individual (DRI) for the duration of its life and that person usually always has to hire an attorney to help facilitate the movement through the often complicated process. Like a business entity, it may have a tax identification number (TIN) (or employer identification number (EIN)). Similarly, it may even file income tax returns and pay income taxes. Ultimately, the estate is closed and the deceased person’s legal life is also closed.

While the estate is open, it’s purpose is to identify assets, beneficiaries, and creditors of the deceased. All must receive notice and an opportunity to assert a claim of right. Utlimately, if there’s any assets left, they are distributed to the beneficiaries either according to statute or by will. It is commonly misunderstood that a will avoids probate. We call that the ABCs of probate. Please read our post on estate administration to learn more information on that process.

With respect to assets, an estate consists of assets owned solely in the deceased’s name alone. This does not include assets that pass to the appropriate beneficiaries by operation of law, such as assets owned “jointly” or assets with a “life estate” designation. Similarly, it does not include assets that pass to the appropriate beneficiaries by contract, such as life insurance, annuities, individual retirement accounts (IRAs). Anything owned in a trust generally would likewise be excluded from being part of a deceased’s estate because, like an estate, a trust is a formal legal entity that owns the asset; i.e. it was not owned by the person directly. This is a common probate avoidance technique but should be used carefully and properly. All assets owned in the deceased’s name alone at the time of death are referred to as the “Probate Estate”.

The Probate Estate may consist of real estate, stocks, bonds, cash, bank accounts (checking accounts, savings accounts, money market accounts). It will also include vehicles, pets (yes people do pet trusts), interests in privately held companies, personal property, artwork, copyright protected work and other intellectual property, and the like.

Please note that in Florida the above does not apply to a situation where a surviving spouse is left less than the minimum required percentage of the deceased’s assets (presently 30%). In that case, the surviving spouse may pursue his or her right to receive 30% of the deceased’s “Elective Estate”, which includes more than the “Probate Estate”. Such an election is time sensitive.

Hopefully this post helps you understand more about an estate. Please continue reading our knowledge base to learn more.

Author:
Barry E. Haimo, Esq.
Kaleem Sikandar, Esq., contributor
Haimo Law
Strategic Planning With Purpose
Email: barry@haimolaw.com
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