Nonprobate assets are assets that are not distributed through you will. These assets pass to beneficiaries according to a document or other instrument in which you direct how the asset is to pass upon your death. Among the most widely understood nonprobate assets are life insurance policies and retirement plans where you name a beneficiary through the plan or policy documents. Nonprobate assets can also include financial accounts that are held jointly with right of survivorship or have a transfer on death designation.
The term personal property refers to your assets that are not land or real estate. Personal property includes vehicles, boats, jewelry, artwork, furniture, electronics, bank accounts, stocks, etc.
The term “personal representative” (also known as “PR”) is the modern term for “executor.” This is the person nominated in a person’s will to manage the estate. When confirmed by the court to serve as PR, this person is required to perform a number of tasks, including notifying the heirs and beneficiaries of his or her appointment, gathering and selling the estate’s assets, determining the value of the estate, handling the debts and taxes of the decedent, and distributing the assets according to the last will and testament. In most cases, a PR is a trusted, close relative or friend of the decedent, but can also be an institution like a bank or trust company. In selecting a PR, it is best to choose someone who has good organizational skills, who will follow the law and directions in the will, and is able to work effectively with lawyers, accountants, banks and financial advisors.
Power of Attorney
A power of attorney is a document in which you, as the “principal,” name another person to deal with third parties in handling your financial and/or health care matters. Powers of attorney can be made effective immediately upon signing of the document, or they can be made effective only when you are declared incapacitated. In these documents, you typically grant a person broad powers over your financial and health care affairs, but you can also limit the powers to particular tasks, such as selling your house. The person whom you grant these powers to is called the “attorney-in-fact” or “agent” in the document. People often refer to this person as their “power of attorney,” but that is technically incorrect.
The “principal” is the person who creates the power of attorney and grants an agent or attorney-in-fact the power to handle certain financial and/or health care matters for them.
Probate assets are assets that are distributed to beneficiaries through your will. If you have no will, probate assets are the assets that pass to your heirs through Washington’s default law on inheritance (see “Heirs”).
Probate is a legal process by which a person is appointed by the court to sell or transfer a deceased person’s belongings, pay all of the bills, and then distribute the remaining assets according to the person’s will. If there is no will, the person appointed by the court distributes the decedent’s assets according to Washington’s default law on inheritance.
Real property includes land, real estate and items that are attached to the land, such as buildings and other permanent structures.
In a will, residuary bequests are also referred to as the “rest, residue and remainder” of your estate, which is comprised of the gift you make after all specific and general gifts are made. Usually, residuary bequests are based on a share or percentage of what is left after your specific and general gifts are made. For example, a gift of twenty-five percent of your estate to a child is a residuary bequest and will only pass to that child after all general and specific bequests are made, assuming there is anything left.
Small Estate Affidavit
A small estate affidavit is a sworn document in which a person claims certain assets of a decedent that are being held by another party. The affidavit must meet the requirements of the state in which it is used. For example, Washington has many elements that must be in the affidavit, including the decedent was a resident of Washington, that the value of the probate estate is less than one hundred thousand dollars, and that all creditors have been handled, among other requirements.
A specific bequest is gift that you make through your will of an identifiable asset of your estate, such as a house, bank account, car, jewelry, etc.
Generally, a trust is a legal instrument in which a person or entity (the trustee) holds property for the benefit of another person (the beneficiary) pursuant to the terms of a written trust agreement. A trust can be a free-standing document, or it can be contained in a will (a testamentary trust), which becomes effective only when a person dies.
A trustee is the person responsible for managing and administering a trust. The duties often include prudently managing funds contained in the trust, answering questions from beneficiaries, distributing assets of the trust, following the instructions in the trust, and paying the bills and taxes of the trust. A trustee can be a person, a trust company, or a bank.
A will is a document in which you describe how your probate estate should be distributed at the time of your death. The will should also name a personal representative who will be responsible for carrying out the instructions in your will. To be valid in Washington, the will must be signed by you and two witnesses. It does not need to be notarized, but it should include an “attestation” provision where the two witnesses swear in front of a notary (or execute a valid declaration stating) that they were present when you signed the will, they signed as witnesses in front of you, you wanted them to be your witnesses, you understood that this was your will, and that you appeared of sound mind.