Can you believe there are still people out there who think estate planning is only necessary for the wealthy? That is not true. A basic estate plan is a must for everyone to lessen uncertainty, eliminate unnecessary costs and decrease the stress that can occur for loved ones after an individual passes away. Also, planning covers both incapacity and death.
The Chicago Daily Herald’s article, “Estate planning basics and avoiding probate with a living trust,” explains that the first step in the estate planning process is preparing a list of your assets.
You should review the assets you have and how they’re titled. Once you have this set, think about what you want to happen to your assets after you die.
A basic estate plan is going to have a will. This document explains what you want done with your property after your death. A will is filed with the court upon your passing, and the executor of the will distributes your assets according to the will’s terms. Probate is a legal process whereby the courts determine how to distribute assets titled in your name among your heirs. Probate records are public records that anyone can access. The process takes approximately 12 to 18 months at a minimum in California, although it can often take longer. Probate is frequently required, if the total value of the probate assets exceeds a set amount, or if there is any real estate.
Assets that are held individually with no named beneficiary will go through probate. However, not all assets must go through probate. Qualified assets, such as life insurance, annuities, IRAs, and 401(k)s with named beneficiaries, will go directly to those named beneficiary(s) and will avoid probate. Those assets that have a payable on death or transfer on death designation will also pass directly to the named beneficiary(s) and avoid probate. This could be a checking or savings account. Finally, assets that are held jointly with rights of survivorship will go to the survivor. This is commonly the family home. Only estates, that do not pass automatically via other methods, and whose value exceeds $150,000 are subject to probate in California.
A Living Trust
Another option, if you’d like to keep your affairs private and have your assets pass to the intended beneficiaries without probate, is to consider a living trust as part of your estate plan. A living trust, like your will, is also a document that states where you want your assets to go after you pass. A few of the benefits of a living trust include privacy, the ability to entrust a family member, friend, or corporate trustee to distribute your assets after you die, rather than a probate judge, and saving time, money, and headaches when it is time to distribute assets after your death. Trusts are excellent vehicles to provide for distribution of assets when minor children are involved or those with special needs or addictions.
In addition to a Will and Trust, our office recommends that everyone age 18 and over execute an Advanced Health Care Directive so the correct person can make medical decisions for you when are unable to, including end of life decisions. We also recommend a Durable Power of Attorney so you can appoint an agent to manage your financial assets that are held outside a trust when you become incapacitated.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
For more information and articles on estate planning, probate, and trust law, please visit our website and request our free monthly e-newsletter.
Reference: (Chicago) Daily Herald (December 22, 2016) “Estate planning basics and avoiding probate with a living trust”