Why You Need a California Estate Planning Attorney
What is an Estate?
Your estate includes all your assets, both financial and non-financial, from houses to smaller personal items. It’s everything you own—everything you’ve worked so hard to accumulate in your lifetime. Distributing an estate after you die can be straightforward. However, the quick, complete, and hassle-free distribution of your estate hinges on the quality of your estate plan.
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What is Estate Planning, and Why Is It Important?
Estate planning is the process of leaving clear instructions as to what will happen to you and your assets when you pass. It can also relay your wishes regarding medical and financial decisions should you become incapacitated, care of minor children, and more. It serves as your voice when you aren’t around or able to make your wishes known.
Without an estate plan, your loved ones—or the court—will be left to decide how your estate will be handled. That can lead to indecision about healthcare, cause unnecessary stress, arguments among family, and financial problems. It can also result in money from your estate being wasted on expensive probate court processes or, in some cases, assets being seized by the State Department of Unclaimed Property.
On the other hand, careful estate planning serves to streamline the distribution process, make things easier on your loved ones, and minimizes the estate tax paid by your family, ensuring more of the legacy you leave behind goes where it belongs.
Estate Planning is not just for the rich
One misconception we often encounter is that estate planning is only for the rich. The word “estate” conjures up images of the Kennedys or the Rockefellers. The reality is, though, that the kinds of issues we seek to address during the estate planning process are applicable to virtually everyone. Who will look after your children if you are not able to? Who will make your financial decisions and ensure that your bills continue to get paid if you are hospitalized and incapacitated? Who will make your healthcare decisions and ensure that your healthcare wishes are honored? How will you ensure that the assets you have worked hard to accumulate will not be lost to creditors and predators? What will your legacy be?
I can’t think of anybody for whom these questions are irrelevant; irrespective of their financial situation.
With that being said, for families that have accumulated several million dollars of assets or more, there are more advanced estate planning issues that need to be addressed. Minimizing potential estate tax exposure is a major component of the advanced planning that we do for families in that category. We will be able to advise you whether or not advanced planning of that nature is appropriate for you.
What’s in an Estate Plan?
Contrary to popular belief, estate planning is not about documents! It is about working with a skilled and empathetic attorney who delves deeply into your family and asset situation, uncovering any relevant family dynamics along the way. That attorney should then guide you through the process of creating a plan that will leave a legacy in the way that is right for your family. Every family is different; there is no one size fits all plan.
With that being said, documents are of course important and are the byproduct of the planning that we do. While the exact documents that comprise your estate plan will be unique to your financial situation, priorities and family dynamics, they may include a:
- Last Will and Testament
- Revocable Living Trust
- Certificate of Trust
- Assignment of Personal Property to Trust
- Financial Power of Attorney
- Advance Health Care Directive
- Living Will
- Health Insurance Portability and Accountability Act (HIPAA) Release
Let’s take a closer look at each of these elements, their purpose, and why they may be a crucial aspect of your estate plan.
Last Will and Testament
A Last Will and Testament, more commonly known as just a “will,” details what will happen to your estate, who will manage any assets you leave to your minor children if you have any, who will care for those children, and names an executor (the person who will ensure the terms detailed in your will are followed.)
Critically, a will must be filed in probate court. In most cases, this means that your family will be dealing with the court process for perhaps 18 months or longer. A portion of what you leave behind will also be lost to attorney fees, executor fees, filings fees, appraisal fees and any other costs associated with the probate court process.
In California, if you don’t have a valid Last Will and Testament, the state will distribute your estate to your closest relatives, beginning with your spouse and children. If you don’t have a spouse or children, the court will reach out to other family members, such as your parents, grandparents, or siblings, before moving on to more distant relatives such as cousins. If no family member claims your estate, it goes to the State Department of Unclaimed Property.
Revocable Living Trust
A revocable living trust functions much like a Last Will and Testament but, crucially, will avoid your loved ones having to go through the probate court process if you die or become incapacitated. Instead, after you pass away, a successor trustee that you have selected will manage or distribute your assets in the manner you have set out in your trust. A trust also enables you to protect your assets in the event that a surviving spouse or children have any creditor issues, are sued, file for bankruptcy, or get divorced. A trust also keeps your assets out of the public record, protecting your family’s privacy.
While a Living Trust offers many benefits over a Last Will and Testament alone, you do still need a will as it names your executor, covers the care of your children, and functions as fallback guidance for assets that you don’t move into your trust. A will created alongside a revocable trust is known as a “pour over” will.
When establishing your trust, you may need to create a few additional documents:
- Certificate of Trust: A Certificate of Trust can be used as proof by your trustee/s that they have the authority to act on behalf of your trust. It acts in place of your full trust document and helps protect your privacy—your trustee won’t have to share all the information in your trust with financial institutions.
- Assignment of Personal Property to Trust: This document is used to transfer your assets to your living trust. It can’t be used for real property with a title or deed, such as real estate or vehicles.
- Financial Power of Attorney: Like the aforementioned Advance Health Care Directive which addresses healthcare decision making, a Financial Power of Attorney names an agent who can handle financial matters on your behalf. Powers of Attorney can be effective immediately upon signing, or can be “springing”, meaning that they only come into effect upon the occurrence of a particular event. A Durable Power of Attorney continues in effect even if you are incapacitated.
Advance Health Care Directive
An Advance Health Care Directive allows you to choose who will make healthcare decisions for you if you are unable to make them yourself. “Living Will” provisions should also be included outlining in general terms what your wishes would be in various medical scenarios, such as whether life sustaining treatment should be withheld or withdrawn in particular circumstances.
When you set up a Living Will, it’s best to sign a Health Insurance Portability and Accountability Act (HIPAA) Release, as well. This form allows medical professionals to share information about your health with your loved ones.
Frequently Asked Questions
Our experienced legal team is happy to help you decide which estate plan elements are right for you—and to answer any additional questions you may have. Here are some common queries our clients ask:
In simple terms, probate is the process of confirming your will is valid, ensuring any debts and taxes are paid, and distributing your estate. In California, unless your estate is valued at less than $166,250 (as of 2021) or is in a trust, typically, probate is required.
The probate process is handled by your executor and relies on instructions left in your will—which is one reason it’s crucial to create a will and name an executor. The probate process becomes even more complicated when there is no valid will.
Estate tax, or inheritance tax, is sometimes due on the fair market value of inherited assets. Estate tax law is complex, and your beneficiaries may not owe anything at all. For instance, surviving spouses often are exempt from estate taxes. Federal tax rates also vary based on the value of the estate. When establishing your estate plan, we’ll help you explore how much, if any, estate tax your loved ones may be responsible for. If there is potential estate tax exposure, we will help you to reduce or even eliminate that exposure.
As mentioned, both a Last Will and Testament and Living Trust detail how to deal with your affairs and distribute your assets. However, a will is only effective in the event of your death, whereas a trust additionally provides a blueprint to handle your finances while you’re still alive but incapacitated. This helps to avoid the need for a conservatorship court process (sometimes referred to as “living probate.” A comprehensive estate plan will often include both a will and trust.
A financial planner is concerned with your current finances and helping you achieve long-term financial goals. Estate planning attorneys organize the distribution of assets and fulfillment of wishes after your death or, with living wills and health care proxies, during periods of incapacitation.
Get Help from a Skilled San Diego Estate Planning Attorney
You’ve worked a lifetime to build your estate. Careful estate planning is the best way to guarantee it goes to your loved ones as intended. At Weiner Law, we create wills and trusts that protect estates in San Diego and elsewhere in California financially and legally. You can trust us to help you craft an estate plan that will ensure your wishes are carried out.