CA Estate Planning Blog

Tuesday, July 19, 2016

The Essentials of Estate Planning

What areas should my estate plan cover?

Estate plans have an important purpose: to protect your assets and your family in the event of your incapacity or death. Though not pleasant to think about, creating a comprehensive plan to manage unpredictable future occurrences is a gift for those you love. Not only will it keep them safe, it will help to prevent possible conflicts among family members. Of course, in order to construct a durable estate plan, it is crucial to work closely with an experienced estate planning attorney.

Steps Involved in Estate Planning

Before creating an estate plan to fulfill your personal needs, it is a good idea to understand the issues involved and the necessary steps to take:

Outline Your Plan

It is always a good idea to outline the scope of a project before inserting the details. The outline is a check list for what you want the plan to accomplish. It should cover the following areas:

  • Your will, without which you will die intestate and the state will decide on the distribution of your assets. A will facilitates the probate process. With a will and a revocable trust, you may avoid probate altogether. 
  • Your designated representatives, the individuals you choose to handle the management and distribution of your estate, to administer any trusts you have created, and to be guardians to any minor children or special needs adults you leave behind.
  • Protocol if you become incapacitated to address such matters as power of attorney, living will or advanced directives, and HIPAA authorizations.
  • Ways to minimize tax exposure, especially if you have an estate over $5.45 million or if you live in a state with state estate taxes.
  1. Verify Asset Ownership and Beneficiary Designations

    When you die, your assets with beneficiary designations, such as IRAs, retirement accounts, life insurance policies, and non-probate assets, will go directly to named beneficiaries or surviving owners (where there is joint ownership) and not to those named in your will. You should make sure these assets and beneficiary designations meet your desired distribution plans.

  2. Gather Important Documents and Information

    In order to make creating your estate plan a more efficient process, collect relevant data before meeting with your estate planning attorney, including

    • Current financial statement
    • Family contract information
    • Tax returns
    • Current planning documents (e.g. existing wills and trusts)
    • Beneficiary designations for all accounts and policies
    • List of advisors, including accountants and financial advisors

       

  3. Protect Pertinent Data

Keep copies of all your important documents in a safe, fire/weatherproof location. This location should not be a bank safe deposit box since access to such a box may not be accessible when needed. In addition to having hard copies, you should save such information in protected electronic form. You should also consider providing copies of these documents to your doctors, financial institutions and other involved parties.

Because of the complicated laws surrounding inheritance and the management of affairs of people who are incapacitated, you should not consider undertaking estate planning by yourself.  Any mistakes you make in a do-it-yourself plan will not only cost your family time and money, but can cause enormous emotional distress at a time when your loved ones are most vulnerable. This is one of those times when consulting with an expert is absolutely imperative. Estate planning should always be done with the guidance of an experienced wills and trust attorney.

 


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