In this article, you will discover:
Estate planning is the process of making important decisions about what happens to your assets after you pass away. It is never an easy process emotionally, but avoiding doing so can cause far more harm. There are many additional considerations beyond just financial assets which need to be taken into consideration, such as:
When all are taken into account during the estate planning process, it is called an Entire or Complete Estate Plan, which is the recommended choice to avoid complications later.
If you fail to complete an estate plan, your family will have to go through Probate. This is when an outside executor is appointed, and assets are distributed (often divided) as best they can to the recipients of your Will, if you have one, or through intestate succession ordered by the Court if you do not have a Will. Unfortunately, the probate process can often become quite complicated, lengthy and costly, especially if real estate assets are involved.
The COVID pandemic has only slowed the process, meaning that probate can take up to multiple years. There is also the financial cost to take into consideration, which can become quite high, depending on the size of your estate. For example, for a typical nuclear family with a couple of kids and a house, you might be facing Probate costs of up to $20,000 or more.
The estate planning process helps avoid both the costs and hardships of this process.
There are websites that offer a limited version of estate planning services, and if all you want is just a simple Will, then this might be sufficient. Unfortunately, with regards to an estate plan and a trust, these online tools will most likely be inadequate — especially if you own real estate property.
If you don’t properly put those particular assets into your estate plan and into your trust, especially real property, then your beneficiaries will still have to go through the probate process to have those assets properly transferred into your trust, meaning you will have done the online planning for nothing.
Since every state has its own laws regarding estate distribution and handling, you will want to ensure the estate plan is prepared properly under the laws of California. A generic plan you find online may not be drawn up properly according to California law. So, if you’re a California resident and/or own property in California, it’s important for you to know that an online or out-of-state Trust and Will may not be held up here in California.
Remember, it is crucial to transfer assets into the estate plan and trust in the right way so that they can be properly distributed. If you try to transfer assets to someone else or sell a house or other property, and the process is not properly executed in the first place, you won’t be able to actually transfer those assets and you’ll still have to go through the court probate process.
A proper estate plan, put in place under the guidance of a California estate planning attorney, ensures optimal results and minimizes costs and burdens to your family.
There are several key documents required for your Estate Plan, which may not be the same as versions for other states.
While a living will is a very common term elsewhere, the correctly named version you need in California is an advanced healthcare directive. This nominates a representative to make healthcare decisions for you should you become incapable of making those decisions for yourself.
The HIPAA waiver waives your HIPAA rights so that anybody you have designated will have access to your (normally confidential) medical records.
The dementia directive is an entirely optional document that allows you to choose your own healthcare decisions in advance. If ever you get in a position where you become unable to make decisions for yourself (for example in an incapacitated or in a state of dementia) this document provides guidance to the person that you’ve chosen to make those decisions.
Your dementia directive can include whether or not you want to have as much or as little assistance as possible with regard to such considerations as artificial life support, pain relief, feeding tubes, or whether or not you want to remain in your home. This can avoid your loved ones a lot of heartbreak and difficult decision-making when facing end-of-life decisions, as they will be fully informed of what your preferences are.
The most important document provided to ensure the protection of minor children is a Guardianship. The document includes the nomination of guardianship, indicating the person who will take care of your minor children should you and your spouse pass away or be incapacitated.
This avoids surviving family members or the government having to make that decision on your behalf, and ensures your children will be taken care of by those you trust most.
There are two ways to look at estate planning. The primary purpose of an estate plan is for considerations after you pass away: avoiding probate and passing your assets on to your chosen beneficiaries. But there are other considerations in estate planning, many of which can arise during your lifetime.
One example is guardianship. If you become incapacitated in a hospitalized state but have not passed away, the estate planning process would provide guidance as to what happens with your assets, and how they can be taken care of for minor children. You can also provide terms as to how old those children can be cared for, well beyond 18. You can provide certain provisions at the age of 25, and/or others until 35, for example.
Distributions do not necessarily occur at the age of 18, the estate planning process can help you put restrictions on these provisions. All of these terms can be handcrafted to the guidelines that you desire, ensuring that children can be provided for during your lifetime as well as after your death, if necessary.
These plans and provisions are not limited to the wealthy either. While the term “trust fund babies” often indicates the children of the very wealthy who have gone through the estate planning process, the same process can very well benefit an ordinary family with more limited means — even during your lifetime.
Additionally, Powers of Attorney and HIPAA waivers are often used during ones life in times of need. Power of Attorneys can be useful if assistance is needed for financial affairs. HIPAA waivers are helpful to allow others to assist in medical needs and making medical decisions.
It is never too early to start the estate planning process, though it can very suddenly become too late. A small amount of planning ahead can save your family a great deal of grief, strife, and expense later, which is why careful and professional estate planning is always necessary.