FAQ's | Estate Planning
What is Estate Planning?
Estate Planning involves an orderly strategy and your instructions of how to distribute your assets to your loved ones after your death and how to manage your assets in the event of your disability. If you don’t create an estate plan the disposing of your assets and distributions of those assets become a task of the court system.
So if you wish to make your own decisions as to who should receive which of your assets or to what extent, you can accomplish that by creating an ‘Estate Plan’.
What does an Estate Plan accomplish?
An Estate Plan gives you complete control of your assets, not only during your lifetime when you are fully capable of making your own decisions, but also during your disability as well as after your death and the manner of distribution of your assets among your loved ones.
What is included in your Estate Plan?
Your ‘Customized Estate Plan’ would include the following:
- A Revocable Living Trust, due to its flexibility.
- A Will, which will allow you to appoint a Guardian for your children, and distribute your assets to your loved ones without going through the probate process.
- Disability Planning, which includes Financial Disability Planning and/or Medical-Health Disability Planning.
Overall, the creation of an Estate Plan is a very personalized process. It is not a one size fits all!
Is a Living Trust and Estate Planning the same?
A comprehensive “Estate Plan” includes a “Revocable Living Trust” as only one of several documents. A Living Trust is a necessary part of an Estate Plan together with other important documents such as a Will, Financial Power of Attorney, HIPPA Authorization, Health Care Power of Attorney, Deeds, Assignments, Declaration of Intent, Certificate of Trust, Tangible Personal Property Declaration, etc.
What is a “Trust”?
A Trust is a private contract that enables you to transfer control, use and enjoyment of your assets to others in the event of your disability or death. Assets titled in the name of your trust escape court supervised process (avoids Probate).
What is a “Will”?
A Will in its ordinary sense of the word as we know it, is a document that designates the individual(s) who will be authorized to manage our assets in the event of our death as well as the manner in which we like our assets to be distributed among our loved ones.
What is the difference between a “Will” and a “Trust”?
Well, a traditional Will “guarantees court process” after death. Whereas, a “Trust”, avoids the expensive and lengthy court process.
A Will just informs the probate court of your intentions, wishes and desires as to disposing your assets upon your death only, but does not operate upon disability. A Will does not dispose your assets. It does not distribute your assets to your beneficiaries, it only clarifies and identifies who should get what.
But a Trust operates as the vehicle of disposing your assets during your disability, and after your death, so that the involvement of probate court proceedings will be avoided altogether.
What happens if I die without an Estate Plan?
In California, if someone dies without an Estate Plan and owns assets more than $166,250, as of 2022, the question is how will his or her assets be divided and distributed among the family members? The State of California has already written a standard Will for all individuals in that category. The logic is that if someone who is now deceased wanted to take control his or her assets, he or she would have done that. Since they did not leave a Will or a Trust they must have intended for the State of California to decide for them, as far as who should get what, when, where, and how. The State of California only has one formula for division of assets for everyone in California, there is no provision for customizing the plan according the heirs needs, health, age, or whether or not they were close to the descendent or not. If you want for a stranger and a judge to decide the financial matters of your family you don’t really need an estate plan. It has already been decided for you.
What is “Probate”?
“Probate” is a legal court supervised process required to administer the estate of a person who dies without a Will (called “Intestate Laws”). The probate process in Los Angeles Superior Court can take a year or longer if complicated issues exist or if claimants or beneficiaries appear in court with conflicting interests or claims. The probate process is expensive and often stressful for the family of the deceased.
Do I need an Estate Plan even if I don’t have a lot of assets?
Estate Plans aren’t just for the wealthy! An Estate Plan can still help you avoid the expensive and lengthy process of Probate for the assets you do have. It will clarify who you intend to have as the beneficiary of your assets. You will also be prepared for any medical emergencies that might come up unexpectedly. Overall, your intentions, wishes and desires will be made clear!