 |
WHAT IS ESTATE PLANNING?
If
you were to ask 10 people this question, you
would likely get 10 different answers. Many
inaccurately believe that estate planning is
simply “death planning”. They think estate
planning is only planning for the ultimate
distribution of one’s assets after death.
However, estate planning with a revocable living
trust allows individual choice and control over
legal and financial decisions today,
tomorrow and in the future! Due to
confusion, myths and the more prevalent
affliction called PROCRASTINATION, it is
not surprising that seven out of 10 Americans
have not created any estate plan at all.
People want to do the right thing for themselves
and their families. But all too often these
good intentions have tragic results. These good
intentions include estate planning by executing
a will only - or by doing no planning at all
(information on Wills).
Sadly, unhappy endings are often completely
avoidable. If only they had been educated on
what could happen and how to avoid the problems
associated with not doing their estate
planning....chances are they would have done
things differently.
“But, I do not have an estate, why would I
need estate planning?”
This is a common question that introduces us to
a common myth about estate planning ---- that it
is just for the “wealthy” or “old” people. What
most California residents do not know is that
every individual who owns enough “stuff” to
equal $100,000 worth of assets has an
estate.
ESTATE PLANNING IS LIKE DEATH AND
TAXES... INEVITABLE...
In California, we all have an estate plan chosen
for us by our state government, however, the
state fee schedule for creating this plan for
you is shocking! (See the
probate cost chart). If you choose to create
your own plan, you take control of this
inevitable plan and take it out of government
hands and government fee schedules.
The state also has a plan for you if you become
incapacitated.
Of course, each of these state imposed plans
include mandatory court processes and fees, not
to mention the fees you will also have to pay a
lawyer to help navigate you, and/or your family,
through the Probate Court process!
You can choose your own plan!
You can tailor your estate plan to your
specific needs - your choices. Planning is
something you need to do - regardless of your
age, marital status, or wealth - if you want to
keep control of your assets (your estate) and of
decisions about your medical care when something
happens to you. It’s important to plan NOW,
while you can. Because with estate planning,
no one gets a second chance.
A COMPREHENSIVE ESTATE PLAN
Just like state processes for
licensing
vehicles, taking title to your home and paying
taxes - the State of California has different
court processes that each resident must go
through when they either become incapacitated,
need someone to temporarily take over their
affairs, or at death. UNLESS you create your
own comprehensive estate plan, the State of
California
 has a mandatory court process for
each of these events. If you create your own
estate plan, you can keep it a private plan -
unlike the State’s plan, which is both a court
process and public record.
However, in order to keep your affairs out of
Probate Court in the event of an unexpected
incapacity or at death...and satisfy the State
of California’s requirements, you need to
execute different estate planning documents.
Specific documents become necessary to keep your
affairs private upon the happening of unexpected
incapacity or at death. Once you learn which
document can protect you and your family from a
public court process, you will understand why a
comprehensive plan is so important.
“How much will it cost to get a comprehensive
plan?”
Our estate planning attorneys will execute these
necessary documents (a minimum of 5-6 separate
documents, depending on your marital status) AND
assist you in transferring title of your assets
into the name of your living trust for a
fraction of
the cost for your estate to go through the
probate plan chosen for you by the State of
California. Depending on your individual
circumstances, fees may vary, but will still be
less than the California Probate
Fee Schedule.
A COMPREHENSIVE PLAN INCLUDES:
1.
LIVING TRUST:
A living trust is an entity (much like a
business) that holds title to your assets. You
still retain complete control of your assets and
may treat anything you own just as you did
before creating your trust, however, now you own
each asset as “trustee” of your Living Trust.
With all of your assets owned by your trust, at
death or incapacity, these assets are not
subject to a probate proceeding.
(Probate Section).
WHY? Because your entity, YOUR LIVING
TRUST, holds title to your assets... this
allows you to transfer and/or manage your assets
during life and upon death, through your living
trust without court interference
2. TRUST CERTIFICATION: This
document enables you to show your bank,
investment manager, etc... proof that your
entity, your living trust, holds title to your
assets. This document allows you to establish
your power as trustee of your living trust.
However, this document does not list what you
own, who you are eventual leaving your assets
to, or who will act as your agent or successor
trustee. This information is private. Although
these financial providers need to know what
powers you have as trustee, they do not need to
know the private details of your assets held in
trust.
3. POUR-OVER WILL: This is a back-up
document used when a living trust is executed.
This document covers the “left-overs”, those
assets that mistakenly did not get transferred
to your living trust. If you have neglected to
transfer an asset during life, this document may
transfer a forgotten asset (after death) to your
trust – it backs-up your living trust. You
should, however, take care to manage your trust
properly to stay out of probate!
You can also nominate guardians for minor
children in your will, so that your wishes for
raising your children are upheld by those who
you nominate – Not through court nomination.
4. DURABLE (FINANCIAL) POWER OF ATTORNEY:
This document is a “life planning document”. It
is valid while you are living. If you are
injured or incapacitated, preventing you from
managing your own affairs, the agent you
nominate in your Durable Power of Attorney can
temporarily take over through this nomination.
Your agent will be able to handle your affairs
and sign on your behalf. For example, your agent
can get a home equity loan, on your behalf, if
you needed money for care.
5. ADVANCED HEALTH CARE DIRECTIVE:
(aka
Health Care Power of Attorney): This is another
“life planning document”. The Health Care Power
of Attorney allows you to give legal authority
to another person (such as your spouse, sibling
or adult child) to make any health care decision
for you IF you become unable, due to
injury or incapacity, to make these decisions.
This document also tells doctors the kind of
life sustaining procedures you want and legally
binds these doctors to carry out your choices.
6. COMMUNITY PROPERTY AGREEMENT: This
document is for married couples. Executed by a
husband and wife, its primary purpose is to
identify the nature of the assets. If all assets
are jointly owned, this agreement changes the
property to community property. If one or both
spouses wishes to have certain items remain as
their separate property, the Community Property
Agreement assists in the division. This is
necessary to avoid the problems associated with
joint tenancy property (FAQ
about joint tenancy).
OTHER ESTATE PLANNING DOCUMENTS: Other
documents may be necessary in order to cover the
unique characteristics of your estate. We will
advise you in advance of all fees and costs
associated with any estate plan.
Depending on your individual circumstances, fees
may vary, but will still be far less than the
California Probate Fee
Schedule.
As life changes, so do your choices. This is why
Estate Plan Reviews and Estate Plan Updates are
just as important, as creating an Estate Plan,
for you and your family.
(Estate Planning Quiz)
|
FAQs
