Estate planning is a process involving the counsel of professional advisors who are familiar with your goals and concerns, your assets and how they are owned, and your family structure. It can involve the services of a variety of professionals, including your lawyer, accountant, financial planner, life insurance advisor, banker and broker.
Estate planning covers the transfer of property at death as well as a variety of other personal matters and may or may not involve tax planning. The core document most often associated with this process is your will.
Estate planning is the process of organizing an individual’s personal and financial affairs in a way that maximizes the individual’s enjoyment of his or her own estate during life while planning how that estate should be distributed and used upon that individual’s death. Additionally, estate planning is used to ensure that your final property and healthcare wishes are honored, and that you and your loved ones are taken care of when you are no longer able to care for them or yourself. Based on your assets and goals, estate planning can involve financial, tax, medical, and business planning as well.
Your estate consists of all of your personal property, real property, and all other assets. Specifically, your estate may include bank accounts, real estate, stocks and bonds, furniture, cars, jewelry, life insurance proceeds, retirement accounts, and payments that are owed to you. These assets can be in your name or held in joint title with another.
Everyone, regardless of the size of their estate, needs an estate plan. An estate plan allows you to designate someone to manage your assets if you are unable to do so, make health care decisions, and decide how you want your property distributed.
If you fail to make an estate plan, a judge will simply appoint someone to handle your assets and they will be distributed to your heirs according to California law. Estate planning allows you much greater control and flexibility for handling your assets and property.
Estate planning can help you by providing for the distribution of your business, home, and personal property upon your death. For example, your estate plan may involve deciding how you want to use and manage your business, investments, real property (such as a home) and personal property (such as family heirlooms, jewelry, cars, etc.) during your life, and what happens to these items upon your death. You can decide whether you want to give your property to a certain family member, or friend or if you want to divide your estate equally among certain individuals or pass entirely to charity.
Moreover, estate planning allows you to plan for your own care, or the care of a minor child, if you become unable to care for yourself. This is often seen where someone is in a coma or develops cognitive impairment such as dementia. Along with other issues, you can leave detailed instructions on if and when life support should be used to keep you alive and whether or not you would like to be an organ donor.
With your estate plan, you can appoint a specific person to replace you as the primary caregiver for your minor child, i.e., nominate a guardian for your minor children in the event you lack legal capacity to care for them or if you pass away when your children are minors.
Whether or not you need a will or trust depends on your assets and goals. When you pass away, your estate (your assets and affairs) will need to be administered. Based on your estate plan (or lack thereof), your estate will either be administered in court via the probate process or out of court via trust administration.
Many people would like to avoid probate of their estate which often requires additional time and expense than the administration of a trust. In California, probate administration of an estate can take several years. Probate is also a public process and many people would prefer to have their estate administered privately.
Generally speaking, if you have no estate plan or if you have only a Will, your estate must be administered through probate court. If you have a properly executed and maintained Trust, your estate can be administered outside of court through private trust administration.
These are a few common considerations for deciding whether a Will or Trust is best for your situation.
Probate is the court-supervised process of distributing a deceased person’s assets according to their will or California intestacy law. The process is initiated by the executor of the will, and it allows the executor to take control of your property and distribute it according to the provisions of the will. If the deceased person died intestate (without a will), a family member or heir may initiate this process.
After the executor named in your will (or appointed personal representative) has initiated the probate process, he or she then takes charge of your assets, pays your debts and, upon court approval, distributes the rest of your estate to your beneficiaries. It is not uncommon for the probate procedure to take several years based on the county.
The probate process has advantages and disadvantages. One advantage of the probate process is that the probate court is designed to quickly resolve disputes regarding the distribution of assets through a well-defined process. Also, the probate court reviews the executor’s or administrator’s handling of each estate, which further protects the beneficiaries’ interests.
One major disadvantage is that the probate process lacks confidentiality. Probate makes your estate plan, and the value of your assets, part of the public record. This means that any member of the public can gain access to these records and the information they contain. Another disadvantage is that because lawyer’s fees and executor’s commissions are based on a statutory fee schedule, probating a will may cost more than the management and distribution under a living trust. Also, probate proceedings generally take longer than the administration of a living trust.
An estate plan is similar to a car in that it needs to be maintained to run well and according to your wishes. Although it would be nice if estate planning were “one and done”, your estate plan should always be current with your life and your goals at that time. Some common reasons to update your estate plan include changing beneficiaries (e.g., new child), changing Trustees or executors (e.g. currently named Trustee died or is no longer the best choice), children are no longer minors (e.g., you choose to change distribution of assets based on the status of your children), married or divorced, assets have changed (e.g., bought new house, started a business, etc.), changed your mind on your healthcare choices, and change in the law.
If you choose to work with an attorney, that specific law firm will set their own costs related to their services. For more information on working with our firm for your estate plan, special needs planning, trust administration or probate matter, please contact us at 424-242-5021.