When the rich and famous fight over their estates, it often makes the news, so some think that having an estate plan is only for the wealthy, which is a common misconception. Having a well-considered estate plan is important for people in every walk of life who want to protect their finances and avoid conflicts among their family members. An effective estate plan can care for your loved ones – and also, keep them out of the courtroom. Proper estate planning eliminates fear and confusion while providing genuine peace of mind.
You will very likely need to consult an estate planning attorney as soon as possible if you own your home or a business, if you support your family, or if others rely on you. Effective estate planning isn’t done informally or in haste, and you cannot wait until it’s too late. Estate planning is much more than writing a will, and it’s not just for celebrities and tycoons. Today is not too soon to start an estate plan, as we all know that tomorrow is never guaranteed. If you have no estate plan in place, arrange at once to consult with a good estate planning lawyer, and in southern California, with an experienced Orange County estate planning attorney to begin the process or to have your existing estate plan updated or revised.
WHAT IS ESTATE PLANNING AND WHO NEEDS IT?
Estate planning is about making wise, informed choices to ensure that your directions and wishes are followed as precisely and faithfully as possible. But far too many of us put off estate planning, resulting in no plan at all. According to a 2014 survey conducted by Rocket Lawyer®, 64 percent of adults in the United States do not have a will, and 57 percent said they simply hadn’t gotten around to it. Frankly, the time to act is now, and you may need more than a will. For many of us, effective estate planning requires the creation of several detailed financial and legal documents.
Although most people only think about estate planning when they become parents – or when they reach middle age – there’s no reason to put off estate planning once you become a legal adult. When you turn 18, your parents can no longer make financial or health decisions for you. An estate plan specifies who can make those decisions on your behalf and under precisely what circumstances.
If possible, you’ll want your estate to avoid probate; the legal process sometimes needed to settle an estate after someone’s death. Probate isn’t only expensive – it can sometimes take months or even years, and you don’t have to be wealthy for probate to take place. In several states, any estate exceeding $20,000 could be subject to probate. Having an estate plan minimizes the likelihood that your loved ones will have to endure – or lose money to – the probate process. A proper estate plan distributes your property and assets the way you want, quickly and cost-effectively. Listed here are the six most common documents that are a part of most estate plans:
1. FORMS NAMING BENEFICIARIES
Beneficiary forms specify who receives the assets in your life insurance policies, 401(k)s, IRAs, and other accounts after you pass away. Your beneficiary will probably be your spouse if you’re married, but you should be aware of the probate trap; if a beneficiary dies and you fail to update your beneficiary forms before your own death, the assets in those accounts will go through probate court. Many choose an estate plan that lets them avoid probate by designating their own trust as a secondary beneficiary.
2. TRANSFER ON DEATH AND PAYABLE ON DEATH FORMS
Several other forms also help your assets avoid probate by specifying who receives what upon your death. A payable on death or POD form tells your bank who should receive the amounts in your checking or savings accounts. A transfer on death or TOD is similar but used for brokerage accounts. A transfer on death deed specifies who takes over the deed to your home. Like beneficiary forms, it's imperative to keep these forms up-to-date.
3. THE LIVING WILL
Also referred to as an advance health care directive, a living will is the estate planning document that provides your instructions and wishes for your medical care when you’re unable to make those decisions or to articulate or express those instructions directly. A good estate planning lawyer can help you draft a living will that safeguards your interests – when you can’t – in a variety of possible scenarios. Your living will can provide genuine peace of mind with the assurance that your directions will be followed, and your wishes honored.
4. THE DURABLE POWER OF ATTORNEY
A durable power of attorney is a dependable, uncomplicated way to arrange for someone you trust to handle your finances if you are incapacitated. Everyone over age 18 should have a durable power of attorney. As an adult, parents no longer have the authority to tell a hospital how to treat you after an accident, and they can't access your bank accounts for funds to cover medical expenses.
A durable power of attorney can go into effect the moment you sign it, or it can be drafted so that it takes effect only if a doctor certifies your incapacitation. A durable power of attorney can give your family – or whoever you designate – the guidance they need when you can’t. In southern California, an experienced Orange County estate planning attorney can help you create the durable power of attorney document that best fits your circumstances and wishes.
5. THE LAST WILL AND TESTAMENT
The last will and testament is probably the document most closely associated in people's minds with an estate plan. It specifies how you want your property and assets divided and distributed upon your death, and it can also specify who becomes the guardian if you have children who are minors. However, a will has to go through the probate process, and as a public record, it makes your personal financial business public, so you may consider using a will only in the short term until you have established a living trust.
6. THE LIVING TRUST
In several ways, a living trust is similar to a will. A living trust explains how your property and assets are to be distributed upon your death and who will act as the guardian to your minor children. A living trust appoints a trustee to carry out your wishes on your behalf. A living trust does not go through the probate process, and in fact, you can take advantage of it to help you manage your assets and property while you’re still alive. Essentially, a living trust lets you serve as your own trustee until your death or incapacitation. The trust can also serve as a beneficiary or as a secondary beneficiary, which many people find convenient.
WHERE CAN YOU TURN FOR ESTATE PLANNING HELP?
It’s never too early to start thinking about putting together an estate plan. Everyone’s estate planning needs will be different. An experienced estate planning attorney can help you with beneficiary forms, advance healthcare directives, wills and trusts (and disputes regarding them), asset protection and minimization of estate taxes, special needs trusts for disabled children, and many other estate planning services. In southern California, let an experienced Orange County estate planning attorney answer your questions and address all of your estate planning concerns. Don’t wait to make the call and to get started promptly.