Some people want to create an estate plan, but never seem to get around to it. Other people do not think they need an estate plan yet because they are too young or do not have children, or because they feel that their estate is too small. None of these are valid reasons to put off the creation of an estate plan. No one likes to face the reality that we cannot live forever. However, a complete estate plan does more than provide for the transfer of property at the time of death; it also provides for life decisions when you are either incapacitated or too ill to make your own personal decisions about your health and finances.
Regardless of the size of an estate, it is always worth protecting. The importance of any estate created through a lifetime of work should not be underestimated. In smaller estates, the goal may be to protect family members in the event of disability, whereas in larger estates the goal may be to minimize estate tax liability. On all estates in excess of $100,000, planning is essential to reduce income and estate taxes and to make certain that assets are protected and eventually distributed to chosen beneficiaries.
Having a will is beneficial because it specifically names who will inherit assets. However, in California a will must be probated in order for it to be effective. Probate is a process requiring that a court Petition be filed so that orders can be made for the distribution of assets pursuant to the terms of the will. In California, the probate process can take over 12 months and, for an estate valued at $250,000, at a cost of over $8,000 in attorney’s fees and costs. If the will allows for a fee for the executor, the costs for probate administration could double.
Although a will by itself will provide for disposition of what are known as probate assets (assets that are solely owned), a will does not necessarily apply to other assets such as a home or bank accounts that are held in joint tenancy, for example, with a spouse. By having a living trust as a part of an estate plan, you can ensure that all of the assets in your estate are distributed exactly as you desire and in an efficient manner to avoid or limit estate taxes.
In the event of ill health or disability which results in incapacity to make financial or health care decisions, the need to hire attorneys for conservatorship actions can be avoided through other “estate planning” devices such as powers of attorney and health care directives. Powers of attorney can provide for a person of your choice to take over your financial matters in the event that your doctor determines that you can no longer continue to make your own financial decisions. In the event that you recover from such a condition, under the terms of a properly drafted power of attorney, you can regain control of your finances. Similarly, in the event that you are unable to make your own health decisions, a person of your choosing who knows your general wishes and desires can make these decisions for you under a healthcare directive.
Call my office (310-444-9998) or email me (bmossjd@gmail.com) to schedule a free 30-minute consultation to discuss how estate planning could help you and give you peace of mind.
