15th Jun 2016
Have you ever stopped to think about what will happen to your possessions once you pass away? Several people consider their loved ones and put trusts and life insurance policies in place; however, they fail to appropriately plan for their estate. One of the biggest misconceptions with estate planning is that you must be rich or retired to have an estate. If you own anything at all, you have an estate.
Your estate includes both tangible and intangible possessions and real property including your home, rentals, property or land. Your possessions include both those you can touch, such as your car or art collection and those you can’t touch such as your checking account or IRA. In order to establish a proper estate plan, you will need to meet with an estate planning attorney. Below are some common estate planning questions you may discuss during your appointment.
1.What is an Estate Plan and why do I need one?
An estate plan is a legal document outlining what you want to happen with your estate if you become incapacitated or you pass away. An estate plan typically includes a will, a power of attorney, a healthcare power of attorney and a directive for healthcare. Even if you do not have a large amount of assets, your estate plan will identify the individuals designated to make financial and medical decisions on your behalf either during your life or after your death.
2.What is the difference between a Living Trust and a Will?
As mentioned above, trusts and wills are two components of your estate plan. These estate planning tools allow you to decide who receives your money, property and assets after you pass away, and who will manage, settle, and distribute your estate after you are gone. The advantage to living trusts are that they avoid probate, which can be costly and timely. Living trusts settle more quickly than the average probate and allow families to carry out estate planning in private rather than in court.
3.What if I do not have a Trust or Will?
If you die before you have a will or trust in place, your assets will go to the remaining joint owner(s) or to your designated beneficiaries. If you do not have a joint owner or designated beneficiary, your assets may be subject to probate. Probate is a legal process that takes places after someone dies. Probate cases become public record and anyone has access to your case. If you are able to avoid probate, it will likely save thousands of dollars and a significant amount of time.
4. Can you explain Special Needs Planning?
If you are responsible for caring for a loved one with special needs, you will need to develop a plan to care for your loved one after you pass away. You do have the option to set-up a Special Needs Trust. It is important to set-up this trust carefully so that it acts as a supplement and does not replace public benefits. This type of trust is most often set-up as a sub-trust of your living trusts or family will.
5. Can I include pets in my Estate Plan?
In 2008, California adopted a revised pet trust statute that allows for you to include the care of your pet in your estate plan. You can set aside a certain sum of money to benefit your pet and you can also nominate a caregiver for your pet.
6.Should I have a Living Will or a Medical Power of Attorney?
A living will and medical power of attorney deal with health-related issues. Your living will typically identifies what type of care you would like at the end of your life, including if you desire life-sustaining medical treatments. A medical power of attorney allows you to name someone else to make medical decisions when you are unable to make them yourself. It is wise to include a living will and medical power of attorney within your estate plan.
7. Do I need a Durable Power of Attorney?
Yes. A durable power of attorney is one of the major components of an estate plan. It is a document that allows you to name someone else to make financial decisions on your behalf. This includes paying your bills or selling your car should you become incapacitated and unable to do so on your own.
8. When should I review my Estate Plan?
I recommend my clients review their estate plan at least once a year. A good time to review your estate plan is during tax season when you are already going through paperwork. Sit down and review your plan with your estate planning attorney and make any changes if necessary.
9.What if I need to change my Estate Plan?
Many factors influence your estate plan. These factors include family circumstances such as births, deaths, marriages and divorce, financial changes such as bankruptcies and inheritances, changes in relationship, and purchasing and selling real estate. It is common for these circumstances to lead to changes in your estate plan.
When you need to make changes to your estate plan, you simply work with your estate planning attorney to do so. It is also important to note that tax laws can sometimes affect your existing plan. If this happens, I suggest working with your accountant and estate planning attorney to make any necessary changes.
10. When should I start Estate Planning?
You should start estate planning as soon as possible. The early stages of planning are critical. Call me directly at 1-714-385-0044 to schedule a consultation.