Estate Planning Primer for clients
Quick primer for people new to the process.
Estate Planning Primer for newly initiatedMy short primer on estate planning is that it offers one of the most substantial ways that you can define how our laws, in particular property rights, affect your family. It offers you ways to organize your assets (both how they benefit you now and after your passing), formalize family decisions (such as guardianships), gain some protection from creditors, do some tax-planning, and make health-care decisions ahead of time.
Based on how you want to approach your plan and the specifics of your life situation, your strategy can include anything from a simple will and a health-care directive, to a full suite of documents (trusts, will, health-care directives, powers of attorney, etc.) that maximizes your present-day wishes.
You may already have a plan in place, and if so, I’d recommend that you review that plan with someone every 3-4 years. Many of the tax law changes and some of the estate planning recommendations specific to your situation likely have changed in recent years. Moreover, your wishes and perspectives on your plans may have changed
Estate Planning termsWILL: Without any planning, state law will dictate who inherits your assets after your death. The easiest way to be sure your specific wishes are met is to prepare a simple will, also known as a basic will, to formalize your plan.
TRUST: A trust is a legal entity created under state law with a purpose to manage and distribute assets to your defined beneficiaries. Trusts can be used to minimize taxes, simplify or eliminate the probate process, and protect assets. They can be as simple or as complex as the situation and your plans demand.
ADVANCE DIRECTIVE: An advance directive is a legal document to spell out your decisions about end-of-life care ahead of time. It also allows you to designate someone to make health care decisions on your behalf, guided by the directions included in your directive. We use a format named “Five-Wishes”.
FINANCIAL POWER of ATTORNEY: A power of attorney is a legal document you sign to grant someone you trust with authority to make decisions on your behalf. It can grant authority as broad or as narrow as you decide, and typically only springs into effect if you become physically or mentally incapacitated.
PROBATE: California Probate is a legal proceeding required to settle a deceased person's estate, paying all debts of the decedent, and distributing the property to the heirs and beneficiaries. It is avoidable with proper planning. If not avoided, the process costs upwards of $4,000 and can take the better part of a year.