Estate Planning is the process of putting your personal and financial affairs in order.
With smart estate planning, you and your loved ones can enjoy serious savings in comparison to those who do not plan ahead of time. Additionally, there are many other benefits of putting your affairs in order, as discussed below.
What is an Estate?
Your estate includes your home, car, bank accounts, retirement accounts, brokerage accounts, digital assets, life insurance, antiques and jewelry, and personal possessions. Creating an estate plan will still allow you to keep full control of your property while you are alive and well. Your property remains yours, and unless you choose otherwise, your property will get disbursed after your death.
Why is Estate Planning So Important?
Estate planning accomplishes many more things than you may have considered. At the very minimum an estate plan achieves the following:
- Your estate plan provides you control of your money. Your estate plan provides the framework for who, when, and how your property gets disbursed after your death.
- Your estate plan will elect someone to assist you in taking care of your everyday financial affairs if you can no longer do so.
- Your estate plan will detail how you wish your health care matters to be handled if you cannot speak for yourself.
- Your estate plan will elect guardians for your minor children.
- Your loved ones are relieved of the burden of trying to organize and finalize your affairs after your death.
- Your estate plan saves your loved ones money by avoiding probate.
In California, your estate plan will almost always include a Revocable Living Trust which enables your estate to avoid probate court proceedings. This not only keeps your personal affairs private but it also saves time and money. Probating an estate in California comes with a big price tag and generally takes more than one year to complete.
Also, there are savings on so-called “death taxes” with estate planning, as compared to the alternative of not doing nothing. An estate plan assists in minimizing taxes, professional fees, and court costs. This is because your estate planning allows for tax planning to minimize taxes such as capital gains taxes, property tax reassessments, and estate taxes (if applicable).
Arrange for Someone Take Care of You If Ever Necessary
There may be a time in your life when your decision-making capacity is so diminished that someone needs to manage your day-to-day affairs. Having an estate plan will provide your loved ones with a method to have someone to take over your affairs without their having to seek a court-appointed conservatorship. By avoiding a public, open court conservatorship proceeding, your privacy is protected; professional fees are reduced dramatically; court costs are eliminated; and your family has access to the money they need to take care of you without having to seek court approval.
Your estate plan will also provide instructions for health care matters, what to do when you cannot speak for yourself, and end of life issues. This is taken care of through an Advanced Health Care Directive (previously referred to as a Living Will). You will have signed the appropriate documents so that your appointed representative will be able to speak to your medical providers on your behalf if such a time comes.
Appoint Guardians for the Kids
In addition, an estate plan allows you to decide whom you wish to be appointed as your children's guardian if you have minor children at the time of your death. If your child is left without a surviving parent, your estate planning can eliminate any court battles for custody. You will also decide who is going to manage your children's money and when it is going to be distributed to your children.
Your estate planning process should be created by an attorney because it can be a daunting and emotional undertaking. It is a complex area of law with the possibility of some unpleasant and unintended consequences if your planning is not tailored to your unique requirements. Attorney Shawna Murray will take the time to learn about you and your desires to ensure that your estate planning is personalized for your needs and to keep you in control of the decision making instead of the courts.
Keep Your Plan Updated
Even if you have previously created an estate plan, it is highly advisable to review your needs every few years and after major life events such as a divorce or marriage; the birth or adoption of a new child; the purchase or sale of real estate; and/or a significant change in your financial situation. Whatever stage of life you are in currently, an up-to-date estate plan is essential.