It is a common misconception that a person who has a will has an estate plan. While it is better to have a will than to die intestate (without a will), a thorough estate plan can do much more than merely state who gets your things after your death.
A California estate planning attorney can talk with you and explain what makes a great estate plan for you. Everyone’s situation is different, so a cookie-cutter estate plan is not the best option.
Five Goals of a Great Estate Plan
You might want to consider these suggested goals when crafting your estate plan. Some of these topics will apply, while others might not, depending on your circumstances.
Protecting You During Your Lifetime
Some people do not bother to create a will or living trust because they think these documents will not benefit them. They do not realize that estate planning can protect them while they are still alive. No matter how fit or cautious a person is, life as they know it could change without warning. A perfectly healthy person could become incapacitated in an instant by a car accident, heart attack, or brain aneurysm.
Without a power of attorney for financial matters and a medical power of attorney (also called a medical directive or other names), the disabled person could be at the mercy of other people he would never have chosen to make his decisions for him. The only way to have input as to who will manage your money and have decision-making authority on your medical care if you cannot perform those tasks for yourself is to have the appropriate legal documents.
Distributing Your Assets and Naming an Executor
Wills and trusts both distribute your assets to your beneficiaries and designate someone to administer your estate. Generally, a will is a simpler, less expensive document than a trust. A trust can deal with special circumstances, like making arrangements for the education and care of minor children and safeguarding their assets until they are old enough to handle it properly.
The additional cost of a living trust is usually well worth the expense. Trusts do not have to go through the probate courts, so these estate planning documents are more private than wills. Going through probate court tends to cost more and take longer than most trust administration.
Minimizing Estate Taxes
A great estate plan will develop strategies for minimizing or avoiding estate taxes. One common way that an estate plan can accomplish this outcome is by setting up a schedule of gifting during the person’s lifetime. One must take care to follow the tax laws to avoid causing estate and gift tax consequences.
Addressing Special Circumstances of Your Loved Ones
If you have a child with a disability, your estate plan could include a special needs trust that sets up funds for the benefit of the disabled child without jeopardizing his eligibility for government assistance. Also, specialized trusts can be useful for a person who has a child with addiction or money management challenges. These trusts protect the child from squandering the assets.
Long-Term Care Planning
Your estate plan might include a trust that protects your assets in the event that you or your spouse needs to move into a nursing home. The spouse who remains in the family home could end up destitute without appropriate estate planning.
A California estate planning attorney can help you design a great estate plan that meets your needs and goals. Contact our office today.