Estate Planning Information

Wills, Trusts, and More: Estate Planning Information

Documenting Your Decisions

An attorney can help you document your desires clearly and can provide guidance to your family and/or representatives during a difficult time, when you would be unable to do so yourself. There are many tools that can be used, but they generally break down into four categories: wills, trusts, powers of attorney, and advance health care directives.

A Last Will and Testament provides for the care of minor children by establishing guardianship and dictates how you want your remaining assets are divided among your heirs. An executor or administrator is named to oversee the distribution of assets and pay any taxes, debts, or other obligations that are due.

A Trust is a separate legal entity that is structured to hold assets that you transfer to it. Trusts help prevent financial uncertainty, delays, and family discord after death by directing the prompt distribution of the estate. Unlike a Will, the contents of a Trust typically avoid Probate and are also kept private. Some Trusts can be used to reduce taxes.

A Power of Attorney allows a designated individual to handle critical financial transactions on your behalf and is especially important if you become incapacitated. The powers granted can be very broad or extremely limited and can range from signing checks for household expenses, to arranging the sale of property, to managing a business.

An Advance Healthcare Directive (also called a Healthcare Power of Attorney) expresses your preferences concerning life-sustaining procedures, healthcare decisions, and the general care you wish to receive in the event of incapacitation.

What is Probate?

Probate is the means by which state courts validate a Will and clear the Executor to pay debts and taxes, sell property, distribute funds, and perform other tasks necessary to settle an estate. If there is no Will, the court will appoint an Administrator for the estate to perform all necessary tasks to settle the estate.

The Problems with Probate

Probate can be a lengthy and expensive process. Often, probate costs consume 3-7% of an estate’s value, even more so if there are disputes that increase legal fees. Because the courts are involved, nothing can be done until the Will is validated and the Executor or Administrator is appointed. This can prevent access to money needed for family expenses (including burial and funeral) and the operation of a business. Most estate plans seek to avoid probate to some extent, if not entirely.

If your estate is larger than $100,000 in California, court involvement will be necessary to “Probate the Estate.”

Getting Ready To Form Your Plan

Taking some time to think about things before meeting with an attorney will lead to a much more productive and meaningful meeting. Also, if you are married, you should discuss your desires and decisions with your spouse to ensure that both of your estate plans work together and do not create future conflicts.
Before your meeting, it can be helpful to:

  • Determine what property you currently own (and plan on owning upon your death) and how you would like that property divided.
  • Review life insurance coverage and your personal financial situation (specifically debts and family obligations).
  • Think about potential healthcare decisions and who you would want to make them on your behalf.
  • If you have children, decide who you would like to designate as they physical guardians and/or their financial guardian (it can be separate individuals).