What Assets are Included in an Estate
By Lane V. Erickson, Idaho Estate Planning Attorney
When it comes to estate planning one of the most basic places to start is with what exactly is included in the estate. Many people think that an estate is something that only wealthy people have. In fact, most people don’t understand that while they are alive they too have an estate. By understanding what is included in a person’s estate, we are able to help our clients craft and prepare a customized written estate plan that not only provides protection to them while they are alive, but also creates a plan of distribution of all the assets in the estate after our client passes away.
The purpose of this article is to talk about the types of assets that are included in a person’s estate. It’s also important to note that an estate always includes the debts or obligations that the individual also owes. So, for example, if there is a mortgage on a home and the home is an asset of the estate, the mortgage then is a debt of the estate. A home can be transferred by the estate, but the debt or mortgage obligation associated with the whole will also go with that asset.
Our goal is to help our clients understand exactly what is in their estate so that they have control over making distributions add taking care of any debts and obligations that exist. At the Racine law office, we have assisted our clients for more than 70 years in the creation of customized estate plans to meet the individual circumstances and needs of each of our clients. Our Premier Idaho estate planning attorneys have the skill, knowledge, and expertise necessary to answer all of your questions in to help you with your own personal estate planning.
The purpose of this article is really to describe and discuss the types of assets that are and are not included as part of your estate. By doing this, our hope is that we can help you understand a little more about how estate planning can help you in the distribution of the assets that are included in your estate.What is NOT an Asset of a Person’s Estate
The best place to start is with a list of items that are not included as an asset of a person’s estate. Again, it’s important for you to first understand that every adult in Idaho has a legal estate. As was mentioned above, an estate includes all of the assets and all of the debts associated with that individual. Well this may seem simple enough we’re going to complicated a little bit by stating that a person can own an asset that does not belong to their estate.
To keep things from getting confusing will make a list of those types of things that are assets but that are not included in the estate. These usually involve things such as life insurance policies, individual retirement accounts, 401K accounts, pension accounts, annuities, and similar types of policies or accounts. Now let’s use an example to help illustrate why these assets are not part of your estate.
Most people are familiar with life insurance policies and how they work. A life insurance policy is a contract that a person enters into with a life insurance company. In the contract it will say that if the individual makes their regular premium payments, which are usually monthly, then the insurance company agrees that it will pay a lump sum to a certain named individual after the owner of the life insurance policy dies. When a beneficiary is named, and the life insurance policy owner dies, the life insurance company has a contractual obligation to pay the money in that life insurance account directly to the person named as a beneficiary. As a result, the money is in the life insurance policy are never paid to the estate of the individual who passed away.
The other types of assets listed above which include, individual retirement accounts, 401K accounts, pension accounts, annuities, and similar types of policies or accounts work very similarly to the life insurance policy examples listed above. Usually, these assets have either a named beneficiary, or the owner who passes away was the only beneficiary. As a result, when an individual dies, these assets are almost always not included in the estate. This is important to understand because if these items are not included in the estate, then the individuals last will and testament will not control how these assets are distributed. Rather, as with the life insurance examples listed above, distributions are made to beneficiaries based on the terms and conditions in the contracts.What IS an Asset of a Person’s Estate
Having talked about what is not included as an asset in an estate, now let’s talk about what is included as an asset of an estate. Any other property that the individual owns whether it’s tangible or intangible personal or real estate is included in the estate of the individual. It’s easy for people to envision a house, a car, a bank account, valuable items such as jewelry, coin collections, guns, and those sorts of things. However other intangible items may be included as an asset of the estate. These could include bank accounts, anybody’s that are owed to the decedent, patents, copyrights, trademarks, and other such items. These and similar items, are all included as assets in the estate of an individual both while they are alive and after they pass away.How Assets in an Estate Can Change
The final thing that you should understand is that assets that are in an estate can change at just about any time. It is easiest to understand this by using the house as an example. While you are alive, you may purchase a house. The house is an asset of the estate. However, you might sell that house and choose to live in a different house. Or, alternatively, you may buy a mobile home, or a tent, or a condo, or you may simply take the money and put it into the bank account. In each of these examples, these assets that are in your estate are changing but they are still assets.
When it comes to estate planning, the assets that end up in your estate after you pass away can only be those assets that you own at the time that you pass away. Tell the straight this again, another example will be helpful. We once helped a client who had a collectible car that he wanted to have given to one of his sons. This client listed this car in his last will and testament and stated that it would go to his son. However, while this individual was alive, he sold the car and use the money to purchase a different car. Now we are in a situation that when this client passes away, if he doesn’t make a change to his last will and testament, the car he originally listed to go to his son no longer exists. As a result, that gift to his son would simply laps and would not be made.
Through these examples, it becomes clear how Assets in an estate can change. When this occurs, it’s important for an individual to update their estate planning documents, such as their last will and testament, so that it reflects the assets that currently exist, and the gifts that the individual wants to give after they pass away.
We have assisted numerous clients in defining the assets they have in their estate, and in keeping their written estate-planning updated so that it accomplishes what they want. This would include making distributions of certain Assets in their estate to their family or loved ones after they pass away. We are confident that we can help you too!Enlist an Idaho Estate Planning Attorney to Help You
Our team of Idaho lawyers can help you with any of your estate planning or probate needs. Whether you are seeking to create or review an estate plan for yourself or would like to help a loved one, we are available to discuss your options and answer your questions at an initial consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a consultation. You can also email us directly at email@example.com or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho Estate Planning problems.