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Estate Planning


What is estate planning?


Estate Planning simply means "planning" on how your "estate" - your property - will be legally transferred to your loved ones upon your incapacitation or death.

Goals of effective Estate Plans include; avoiding probate, reducing estate taxes, and having a wide assortment of protectons.

An estate plan usually includes several documents to give you control over your financial affairs and other important issues such as guardianship of your minor children. Estate planning documents include wills, trusts, and powers of attorney for finances and for health.

Through the use of life insurance, trusts, family limited partnerships, limited liability companies, and charitable giving, estate planning can also be used very effectively to reduce ones taxable estate to leave as much of a legacy as possible to your children.

What makes up my property?


There are two types of property under the law. "Real" Property refers to real estate. This includes both houses and land. The second type of property is called "personal" property, which includes cars, cash, jewelry, stocks, bonds, and any other type of personal belongings.

What is a will?


A will is a legal document that, upon your death, allows you to name people or charities to receive your assets; name guardians for your minor children; name the person that you want to handle your financial affairs and distribute your assets; and set forth your burial wishes.

What is probate?


Probate is the name of the legal process by which a court oversees the distribution of property left by a will. Probate includes filing the decedent's will with the local probate court, identifying and inventorying the decedent's property, appraising the property, paying off debts and taxes and then distributing what is left.

What are the advantages to avoiding probate?


Probate is usually very time consuming and expensive. Avoiding probate is often a major goal in estate planning. Probates are a matter of public record. Other methods of distributing property are usually faster, less expensive, and private.

What are estate taxes?


Many estates never have to pay estate taxes at all. If the total value of your assets is under $1.5 million as of January 2004, you do not have to pay any estate taxes. The total asset value is being raised each year until the year 2010, when estate taxes may be eliminated altogether. For larger estates, there are many ways to reduce estate taxes through effective estate planning.

What happens if I die without a will or other estate documents?


Your property passes pursuant to California law, which determines the order in which your legal heirs inherit your assets. Many individuals do not want their assets distributed as the state would distribute them. The method to avoid having the state make the decisions for you is to complete an estate-planning package in which you determine how your assets will be distributed.

What is included in a "standard" estate package?


There is no real "standard" estate package. Most estate plans need to be modified based upon your own family and financial situation. However, most estate plans will include at least the following: a revocable trust, a pour-over will, and powers of attorney for financial and health matters.

What is a trust?


A trust is a written document that is created to manage your assets. Generally, the terms of the trust cannot be changed upon the creator's death. A trust will provide for the distribution of your assets on or after your death. So, it is a substitute for a will and does not need to go through the probate procedure.

What is a "revocable" trust?


A revocable trust can be amended or revoked (cancelled) by the person who created it at any time during the creator's lifetime, as long as the creator is competent in the eyes of the law. This is different from an irrevocable trust which cannot be amended or revoked once it is validated.

What is a statutory will?


This is a document available for people in California, who have very small estates, with almost no assets. The document is a basic "fill-in-the-blank" form, which forms a legal will when the instructions are followed. This form does not avoid the probate process nor does it allow for customization.

What is a pour-over will?


A 'pour-over' will is used in combination with a trust. The will takes any assets that were not transferred to the trust and "pours" them into the trust upon death. The trust is used as the primary device by which you want to have your financial affairs managed. It will be established to avoid probate and hopefully, to take advantage of beneficial tax laws. A pour-over will ensures that any late acquired assets or assets not contemplated when the trust was established are put into the trust to be distributed per your wishes.

What is a power of attorney for financial matters?


A power of attorney for financial matters allows you to name an individual to handle all aspects of your financial affairs should you become incapacitated or are declared incompetent to handle your own affairs.

What is a durable power of attorney for health matters?


This is a "health directive" or "Living Will". It gives a named person the power to handle your medical affairs, in the event that you are unable to make competent medical decisions for yourself. Additionally, you may direct the doctors as to exactly what life-sustaining measures that you want to take or not to take in specific circumstances.