Estate planning is not just about planning. It’s also about accomplishing what is important to an individual or his or her family, like passing on values to children and grandchildren, and distributing property in a way that creates a lasting legacy and protects privacy. A lot of people have a misunderstanding of estate planning and do not comprehend all that it entails. It’s much more than just a will or a trust. It’s making sure that the assets are properly titled and that they are in a position where if someone dies, he/she is able to pass them on in the way that they desire.
Your estate is comprised of the assets you accumulate during your lifetime: your home, car, bank accounts, investments, jewelry, furniture, a business and so on.
You already know you can’t take it with you when you die, so there has to be some way of distributing your assets to those who are still living. Your estate plan includes written instructions stating who you want to receive something of yours, what they will receive and when you want them to receive it.
Good estate planning should also include planning for incapacity, a guardian and inheritance manager for minor children, transfer of a business, coordination of assets so each person receives what you wish, providing for those who depend on you, tax planning, and more. It needs to include all the areas of your life that would be affected if you were no longer here. It is a process, not a document, and it needs to change as your situation and laws change.
Goals of Estate Planning
The goals of estate planning really are to protect your current assets and to set up a plan that will leave a legacy for your children and family. That plan deals with a lot of technicalities and it involves making sure that your legal documents are properly drafted, and that you will follow through and implement the plan by doing your part of the job. This includes helping with the transferring of title, listing of all of the assets, and keeping everything up to date.
Property Ownership
Property ownership is very important because the way property is owned dictates how it can be distributed. There needs to be an examination in the estate planning process of how you own title to real estate. Sometimes if you hold it in a certain way, like joint tenancy, then it passes outside the provisions of your will or your trust. That may not be what you want. It does avoid probate but it may not accomplish the goal of planning for distributions in the way that you want them implemented.
Additional Principles
There are additional principles involved in estate planning and many of them are the ones that nobody really connects to estate planning. There is no question that there is a lot more to estate planning than just a trust or a will.
There is asset protection planning. You want to make sure that when you set up your estate, you do so in a way that will provide for preservation of your estate during your life, not just for distribution at the time of your death. There are a lot of different areas that have to be classified and reviewed. People sometimes are in a situation where they are going to gain an inheritance and they need to plan for that because it will increase their estate and will also determine the format of their estate planning structure.
Estate planning involves not only you, in the present generation, but also the previous generation and their planning and how that impacts your estate. It also dictates the way that you think about your own legacy and how you want to leave it. May be you want to improve things or have them be different than the manner in which your parents set things up. You may have a different philosophy and your situation might be different. You might have three or four children whereas your parents only had a single child. There are a lot of different factors that have to be taken into account when you are analyzing estate planning.
Who Needs An Estate Plan?
Estate planning is something everyone needs to do – regardless of age, marital status or wealth – if you want to properly distribute your assets and protect your loved ones when something happens to you.
Why Plan?
The reason why you plan is so that your goals and objectives are met. You can’t hit a target if you don’t know where the target is. You have to be in a position where you know what your goals and objectives are. You have a vision and then you have to plan to make this vision become a reality. This planning includes not only designing and developing a structure and drafting documents, but it also includes implementing the parts of the plan that require present and ongoing action. Most people doing estate planning create their will and their trust and they think they are done. They are not. The law changes, their situation changes, their children change.
Sometimes, clients have a child who is or becomes handicapped. They can adjust their planning for their child and create a special needs trust to take care of that handicapped child. There are a lot of parents who are concerned about divorce and creditors’ claims against their children. They want the money that they leave to them to be protected. How do you protect the money that you give to your children in a way that it will be free from claims against ex-spouses and free from claims against creditors? These are all planning techniques that have to be understood and taken into account.
Retirement is another area where planning is very important. The preservation of your assets now will protect them from creditors and other predators. If you don’t plan, then someone else is going to do it for you, either the state or your successor trustee, or personal representative. They are going to do a lot of the planning for you and you really don’t want that. You want to do your own planning.
If you don’t do proper planning, the result may be bitter disputes, misunderstandings, and even litigation. There may be distributions that are in conflict with what you would want. There are many cases of celebrities who have not done proper planning and it’s amazing what happens to their very sizable estates.
Timing is essential, no matter how big or large your estate is, because it gives your issues validity and it gives them a life beyond yours. It’s got to be handled by someone who has the experience and expertise to do it properly, taking into account death and income taxes. It’s a multifaceted approach to your objectives and goals that has to be addressed in the estate planning process.
As was stated, thorough and well thought out estate planning has to include planning for incapacity, a guardian and inheritance manager for minor children, transfer of a business, coordination of assets so each person receives what you wish, providing for those who depend on you, tax planning and more. It needs to include all of the areas in your life that would be affected if you were no longer here. It is a process, not a document, and it needs to change as your situation and laws change.
For more information on Estate Planning In The State Of California, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (714) 384-6500 today.