ESTATE PLANNING

Estate planning is how you decide how you want your assets to be distributed when you pass away or in the event you become incapacitated. In writing, you identify who will receive your assets and who will be the person(s) to manage your assets, take care of your minor children, and make financial and health-related decisions on your behalf. Effective estate planning helps to avoid problems for your loved ones and avoids potential lawsuits.

No, you are not required to have an estate plan. However, if you don’t have one, you leave decisions regarding what to do with your property to the government and potentially to family members you don’t like. If you don’t have an estate plan, state law determines who gets what through “intestate succession.” Every state has intestacy laws that decide who inherits property if no will or trust exists.  If it doesn’t matter who gets your money, house, bank accounts, or who will care for your kids and pets, then you don’t need an estate plan.    

An effective estate plan includes several documents, but this also depends on your state, the type of property you own, and the size of your estate. For example, if you own a home in California, a trust-based estate plan might be helpful, which includes a trust, pour-over will, healthcare directive, HIPAA authorization, power of attorney, deed-related recording documents, and many others. These documents ensure your assets are distributed according to your wishes, designate decision-makers, and provide clear instructions for your care.

A will is a legal document that outlines how you want your assets distributed and who will care for any minor children after your death. On the other hand, a trust is a legal arrangement where a trustee manages your assets for the benefit of your beneficiaries, which can take effect during your lifetime and often helps avoid probate, but not always.

A beneficiary is a person or entity designated to receive assets, benefits, or funds from a will, trust, insurance policy, retirement account, or other financial instrument after the owner dies.

How often you review your estate plan depends on a number of factors, but generally every 2-4 years. However, significant life events may alter that time frame, such as marriage, divorce, birth or adoption of a child, care for a grandchild, death or removal of a beneficiary, death or change of a trustee or executor, changes in your financial situation, or changes in the tax laws.  

Incapacity refers to a person’s inability to make decisions due to physical or mental conditions. It can result from illness, injury, or cognitive decline and may require a designated individual, such as a power of attorney or guardian, to make decisions on their behalf.

Probate is the legal process that occurs after someone passes away. It involves validating the decedent’s will (if there is one), identifying and inventorying their assets, paying off their debts and taxes, and distributing the remaining assets to beneficiaries. Probate is often overseen by a court and can be a lengthy and costly process, depending on the complexity of the estate and any disputes that arise.

Intestate succession refers to the legal process of distributing a person’s assets when they pass away without a valid will or estate plan. In this situation, state laws dictate how the assets are distributed among the deceased person’s heirs, typically starting with immediate family members such as spouses, children, parents, and siblings.

You never need a lawyer for anything, IF you are willing, able, and have the requisite skill to handle a matter yourself. The operative words are “requisite skill.”  If you perform a task incorrectly, you pay a lot more than had you invested in a lawyer.  Consulting with a competent attorney is advisable for matters that involve setting up trusts, minimizing taxes, navigating legal intricacies, and counseling you on unique family situations. In addition, working with a lawyer provides you with legal advice you can rely on.