As you perform estate planning with your attorney, several estate planning tools are recommended to protect your property and finances. Learn about these essential tools below, and contact our Orange County estate planning attorney at Ourfalian & Ourfalian if you have estate planning questions.
Did you know that only about 1/3 of Americans had an estate plan before the pandemic? Many of us do not want to think about passing away, but protecting what you worked hard for in life is important if you have property and assets.
Our belongings are distributed to our family members when we pass away according to our estate plans. However, if you do not have one, the state of California will decide who gets what, and few of us want that. This is known as ‘dying intestate.’
In California, if you do not have a will, your spouse would receive 100% of community property and ½ to 1/3 of separate property if you have children. Perhaps that is what you want, but it is usually better to lay everything out with an estate plan.
Ultimately, estate planning means not leaving it to the government to decide how to divide your money and property and which assets go to whom. If you have family members who do not get along, not having an estate plan can lead to a contested will or estate, which can rip a family apart. No matter how large or small your estate is, having a plan set up with some or all of the following estate planning tools is critical:
Also known as the last will and testament, the will is the most essential part of estate planning that people use to control who gets what when they die. Dying without a will means leaving many critical decisions about your assets to the state.
A will can be flexible, and it usually names an administrator or executor to distribute your assets when you pass away. The will must be signed, dated, and witnessed. It also is critical that you were of sound mind when you created the last will and testament.
If you do not have a will, the state of California will name the executor, who is usually a close relative. It is essential to have a will so you can name who your executor is.
While a will is a critical part of your estate plan, it has limits. The biggest issue with having a will is that it goes to probate court, which provides your executor with instructions. However, probate is expensive, so you can use other tools to reduce the need for probate.
Power of attorney allows someone to make crucial decisions in your name. The power of attorney document usually limits what the person can do in your name. However, durable power of attorney can more generally represent your wishes if you are incapacitated.
For example, with an estate plan, durable power of attorney allows you to name someone to make financial decisions if you are in a coma or otherwise incapacitated. Also, a healthcare power of attorney states who your physicians should talk to if you cannot speak for yourself, and medical decisions must be made. You can also identify specific instructions related to specific medical procedures or your health in general for your agent to follow.
A revocable living trust is a legal document that decides how your assets will be handled following your death. The assets can include real estate, bank accounts, investments, and personal valuable possession. The revocable living trust, contrary to a will, is used to avoid the probate process and to protect your privacy and the privacy of your beneficiaries following your death. It can also be used to minimize estate taxes after your death.
An irrevocable trust contains assets to protect them from creditors and taxes… Similar to a revocable living trust, an irrevocable trust is established by the trustor to transfer some assets to a designated beneficiary; however, unlike a revocable living trust, the irrevocable living trust cannot be changed or canceled by the trustor once established.
The main reason for establishing an irrevocable trust is to reduce the size of the trustor’s estate because assets transferred to such trust as exempt from the trustor’s taxable estate. Setting up an irrevocable trust can be challenging, so contact our Orange County Estate Planning Attorney to help you in the process.
Using the full arsenal of estate planning tools, your Orange County estate planning attorney can create a plan that reflects your needs and wishes. Please contact our Orange County estate planning attorneys at Ourfalian & Ourfalian now at (818) 550-7777.
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