What is Estate Planning?

Estate planning is the process of organizing an individual’s personal and financial affairs in a way that maximizes the individual’s enjoyment of his or her own estate during life while planning how that estate should be distributed and used upon that individual’s death. Specifically, estate planning is used to ensure that your final property and healthcare wishes are honored, and that your loved ones are taken care of when you are no longer able to care for them. Estate planning is more than just a will. This process involves financial, tax, medical, and business planning as well. A will is just one part of the planning process. You will need other documents as well to fully address your estate planning needs.

What is Included in My Estate?

Your estate consists of all of your personal property, real property, and all other assets. Specifically, your estate may include bank accounts, real estate, stocks and bonds, furniture, cars, jewelry, life insurance proceeds, retirement accounts, and payments that are owed to you. These assets can be in your name or held in joint title with another.

Who Needs Estate Planning?

Everyone, regardless of the size of their estate, needs an estate plan. An estate plan allows you to designate someone to manage your assets if you are unable to do so, make health care decisions, and decide how you want your property distributed.

If you fail to make an estate plan, a judge will simply appoint someone to handle your assets and they will be distributed to your heirs according to California law. Estate planning allows you much greater control and flexibility for handling your assets and property.

How Can Estate Planning Help Me?

Estate planning can help you by providing for the distribution of your business, home, and personal property upon your death. For example, your estate plan may involve deciding how you want to use and manage your business, investments, real property (such as a home) and personal property (such as family heirlooms, jewelry, cars, etc.) during your life, and what happens to these items upon your death.

This means that you can plan for a certain family member, or friend, to receive your home or a specific sentimental object upon your death. Conversely, if you would rather your estate be divided equally among certain individuals or pass entirely to charity, you can organize your estate to achieve this goal as well. In addition, estate planning can be used to protect your assets upon a divorce or dissolution of a domestic partnership, protect your assets in the event of a bankruptcy, and minimize the impact of taxes. Moreover, estate planning allows you to plan for your own care, or the care of a minor child, if you become unable to care for yourself. Along with other issues, you can leave detailed instructions on if and when life support should be used to keep you alive and whether or not you would like to be an organ donor. You can also appoint a specific person to replace you as the primary caregiver for your minor child.

What Questions Should I Ask Myself in Order to Help My Attorney Create a Successful Estate Plan?

Before an attorney can create an estate plan tailored to your specific needs, you need to have an understanding of what you want to achieve with your estate plan. These questions may help you along your way to figuring out how you would like your assets distributed:

  • What are my assets and what are they worth?
  • Who should be my beneficiaries?
  • When would I like that individual or group to receive that asset?
  • Who would I like to take care of my minor children in the event I am unable to do so?
  • Who would I like to be responsible for my personal care if I am unable to care for myself?
  • What would I like to be done with my remains upon my death? Where would I like to be laid to rest, buried, or have my ashes scattered?

How Much Does Estate Planning Cost?

Estate planning costs vary from case to case depending on the types of documents and legal instruments that are needed to achieve your personal goals and the complexity of your estate and plan. Please don’t hesitate to contact our experienced estate planning attorney at Rhodes Law for more information. You can reach us at (707) 536-1088 or via email.  

What is a Will?

A will is a written document that allows you to designate how your property will be distributed upon your death. A will also documents your other wishes, including the choice of guardian for your children. Upon your death, your will is irrevocable and fully enforceable through the probate process.

The person who is disposing of his or her property through the will is called the “testator.” Those individuals you name to receive your property are known as “beneficiaries.” The terms “gift,” “bequest,” “legacy,” and “devise” are used to refer to the transfer of the property from you to your beneficiary.

Among other things, your will should include the names of your beneficiaries. Beneficiaries often include loved ones, close friends, and charitable organizations. In addition, the will should name a guardian to take custody of your minor children and a guardian to manage the assets that have been distributed any minor children.

Lastly, your will should name an “executor.” This is the person who is responsible for managing your assets after death. The executor is a very important role, and this person should be chosen wisely as he or she is responsible for collecting and managing your assets, paying any debts, expenses and taxes that may have been due. After all debts, taxes, and expenses are paid, the executor obtains court approval and distributes your assets according to your will.

What is the Probate Process?

Probate is the court-supervised process of distributing a deceased person’s assets according to their will or California intestacy law. The process is initiated by the executor of the will, and it allows the executor to take control of your property and dispose of it according to the provisions of the will. If the deceased person died intestate (without a will), a family member or heir may initiate this process.

After the executor named in your will has initiated the probate process, he or she then takes charge of your assets, pays your debts and, upon court approval, distributes the rest of your estate to your beneficiaries. It is not uncommon for the probate procedure to take longer than 6 months. Less complicated procedures govern the distribution of estates to spouses or the disposition of estates consisting of less than $184,500 (in 2023) in total assets.

The probate process has advantages and disadvantages. One advantage of the probate process is that the probate court is designed to quickly resolve disputes regarding the distribution of assets through a well-defined process. Also, the probate court reviews the executor’s or administrator’s handling of each estate, which further protects the beneficiaries’ interests.

One major disadvantage is that the probate process lacks confidentiality. Probate makes your estate plan, and the value of your assets, part of the public record. This means that any member of the public can gain access to these records and the information they contain. Another disadvantage is that because lawyer’s fees and executor’s commissions are based on a statutory fee schedule, probating a will may cost more than the management and distribution under a living trust. Also, probate proceedings generally take longer than the administration of a living trust.

Can I Change or Revoke my Will After it is Created?

Yes, a will does provide you with the flexibility of modifying or revoking it after it has been created. In fact, it is a good idea to occasionally review your will to make sure that it reflects your current assets and property. Good times to review your will include before and/or after you get married, divorced, have a child, or experience any other major life event.

If you find yourself in a position were you are considering modifying or revoking your will, you have several options. First, you can make minor changes by creating a “codicil.” A codicil is a supplement, or an addition, to a will. It may explain, modify, add to, subtract from, qualify, or otherwise alter your will.

However, if you decide you want to make major changes to your will, you have the option of revoking your previous will. After revocation, your prior will be ineffective. Thus, it is good practice to revoke your prior will and create a new will that reflects your current testamentary desires.

It is very important that you do not modify or alter your current will by crossing out provisions or writing in new provisions. California probate law is very specific, and taking such actions may jeopardize your will’s validity. It is best to seek the help of an experienced attorney in order to alter or revoke your current will or to execute a new one.

Does a Will Take Care of Distributing All of my Property?

A will most likely will not take care of distributing all of your property. A will typically affects only assets that are in your name at the time of your death. Some assets that are likely not covered by a will may include:

  • Life insurance policies and Retirement plans. Proceeds distributable from these are forwarded to whomever you have named as beneficiary in the documents. This will ignore whoever your beneficiaries might be in your will.
  • Assets owned as a joint tenant with right of survivorship. Assets held in joint tenancy with right of survivorship will pass to the surviving joint tenant upon your death. These assets do not pass in accordance with any directions in your will.
  • “Transfer on death” or “pay on death.” Certain securities and brokerage accounts have a designation that certain beneficiaries obtain the assets in that account when the account owner dies. The assets are distributed according to the terms of the designation, and not your will.
  • “Community property with right of survivorship.” Married couples or registered domestic partners can hold assets as “community property with right of survivorship.” When the first spouse dies, assets designated this way would pass directly on to the other partner without taking the will into consideration. Further, you cannot devise your partner’s half of any community property in your will.
  • Living trusts. Generally, assets held in a revocable living trust are distributed according to instructions in the trust and not according to the provisions in your will. This is done without court supervision.

What will Happen if I Do Not Create a Will or an Estate Plan?

If you die prior to the creation of an estate plan or will, your estate passes according to California’s law of intestacy. Under the intestacy laws, all of your community property (most property acquired during marriage) will be distributed first to your spouse or domestic partner. Your spouse or domestic partner also receives part of your separate property (property owned solely by you), and your children, grandchildren, parents, siblings, and other relatives may also share in your separate property.

If you have no spouse or domestic partner, all of your property will be distributed to your children or grandchildren, parents, siblings, or other relatives. Friends, non-registered domestic partners, and organizations will not be entitled to any part of your estate. The California intestacy law leaves you with no choice as to how your property should be distributed or who receives each asset. The State of California is the beneficiary of your estate only if you die leaving no living relatives.

What is a Revocable Living Trust?

A revocable living trust is primarily an estate planning tool that can serve useful property management functions during a client’s lifetime. However, it is primarily used as a convenient and efficient method of distributing a person’s property upon his or her death. More specifically, your assets are put into the trust and are administered for your benefit during your lifetime. At your death, these assets are transferred to your beneficiaries.

The person who is distributing their property through the trust is called the “settlor.” The settlor may amend or revoke the trust at any time, provided the trust does not state that it is irrevocable. A revocable living trust does not remove all need for a will. Therefore, you would still need a will, usually known as a “pour-over will,” to cover any assets that are not in the trust.

The person who is managing the trust property is called the “trustee.” Often times, many settlors desire to act as the trustee for their own trust. This provides the settlor with complete control over the trust assets during their lifetime. In addition, a successor trustee may also be appointed to manage the trust if you should ever become unable or unwilling to do so yourself.

While a trust may be more expensive than a will, its benefits often are outweighed by its higher start-up costs. One of the main benefits of a trust is that it avoids “probate.” The California probate process can be expensive as it often includes the need for attorney conducted procedures and documents which can increase costs. In addition, probate fees in California can be substantial. Avoiding probate also helps maintain some (but not all) confidentiality relating to the contents of the settlor’s estate.

What are Irrevocable Trusts?

An irrevocable trust is a trust that cannot be changed or revoked once it has been created. These trusts are usually tax-sensitive documents. A few examples would be irrevocable life insurance trusts, irrevocable trusts for children, and charitable trusts.

Who Should I Appoint as Trustee?

A trustee is the person responsible for managing the trust property. Many people choose to be the initial trustee of their own trust, allowing them to retain control over the trust property during their lifetime. However, if you are short on time or experience, you may choose to appoint someone else to serve as your trustee. Choosing a responsible and trustworthy trustee is very important as this person will act with considerable authority and minimal, if any, court supervision. You also have the option of naming multiple co-trustees if you prefer. When considering who to appoint, you should consider whether the potential trustee has sufficient time and experience to perform the job effectively. In addition, it is important to make sure that person does not have a conflict of interest.

I Already Have a Living Trust, Do I Still Need a Will?

Yes, you likely will need a will even if you already have a Living Trust. Your will affects any assets that are titled in your name at your death and are not in your living trust. If you have a living trust, your will would likely contain a pour-over provision, which simply states that all such assets be transferred to the trustee of your living trust after your death. Your will can nominate guardians for your minor children as well, but all assets held in a trust for your children would still be managed by the trustee.

What Should I Do if I want my Assets to “Pour Over” into my Trust after my Death?

If you already have a trust and want your assets at death to “pour into” the trust so that they are distributed according to the trust provisions, you should talk to the attorneys at Lonich Patton Ehrlich Policastri about developing a “pour over will.” A “pour over will,” or “testamentary trust,” is a will in which you direct all of the assets named in your will to be distributed directly to your living trust upon your death.

What Else Should I Do to Protect Myself and My Assets?

Aside from executing an estate plan, there are several things you can do at home to protect yourself and your assets. First, make a list of all of your assets and your debts and let your executor and family know where they can find this list. This list should include all of your bank accounts, safe deposit boxes, stocks, bonds, real estate, and other assets. In addition, it is a good idea to include the names and addresses of anyone to whom you owe money.

Second, it is a good idea to make a list of all of your professional advisors, such as your attorney. Providing your family and professional advisors with this list can help increase communications between all parties, and ensure the proper parties are contacted upon your death, illness, or incapacity.

Third, you should set up a durable power of attorney. A durable power of attorney is a person who is appointed to make property management decisions for you if you become unable to make them yourself. This person is required to act solely in your best interest.

Lastly, you should issue an advanced health care directive. An advanced health care directive is a document that allows an appointed agent to make health care decisions for you if you are unable to do so. Specifically, this document would address your wishes in regards to life sustaining treatment, other health care issues, organ donations, burial instructions, and your funeral arrangements.

How Should I Provide for my Minor Children?

It is especially important that you plan for the care of your minor children in the event you and/or your spouse are unable to care for them. Under the eyes of the law, a child under 18 is a minor and is neither legally qualified to care for him or herself nor is he or she legally competent to manage his or her own property. Creating an estate plan will allow you to choose a guardian to care for your child upon the event of your death or incapacity. In addition, this is a helpful way to keep the peace within families and avoid custody battles between well meaning family members. If you choose, you may also appoint a separate person to act as the guardian of the child’s property.