No matter your age, if you own property, have children, or have a considerable number of valuable or important assets, then it is important to begin thinking about estate planning. Estate planning allows you to have control over what happens to your valuables after you pass. It involves thinking about how you would like your assets to be distributed, who is going to oversee the distribution of your assets, and how any remaining debts or taxes will be paid.
Estate planning is not just for the old or for the rich. It is for anyone who wants to ensure that what remains of their life after death falls into the right hands.
The first step in the estate planning process is to create an inventory of all your assets and debts. Retirement accounts, insurance policies, property, vehicles, and other valuables should all be included in your inventory.
The next step is to begin thinking about the person or entity you want to be the executor of your estate. The executor is going to handle the distribution of your assets as you specified in your last will and testament. They are also responsible for taking care of any remaining debts you might owe upon your passing. Selecting an executor is an essential step to set your mind at ease and ensure your assets fall into the right hands. Without declaring an executor, the court would have to do so, which can complicate matters and make it take longer for your assets to be distributed. Your wishes may also not be honored in the way you would like.
Once you have created the inventory of your assets and thought about the specific individuals you would like to carry out your wishes after you pass, it is time to draft a will. Creating a last will and testament allows you to settle matters in a written form.
To create a will, you (the testator) must have your wishes written down and signed. Two observers must also be present to observe you sign the will or witness your acknowledgment that the signature is yours. The witnesses also need to sign the will after you do.
To make sure the will is authentic and properly executed, it is best to hire the help of an experienced estate planning and probate attorney.
To further avoid the complications a court may bring when distributing assets, you may also want to consider establishing a living trust. By creating a trust, your assets are put into a trust account where they stay until you are either mentally incompetent or have passed. In the case of mental incompetence, a living trust would lay out funds and instructions for your care.
Once you have passed, your heirs can obtain whichever assets belong to them without having to go through the lengthy and complicated probate process.
Probate is the process where the court chooses a person or entity to manage your assets, distribute them to the rightful heirs, and take care of any remaining debts. Unless you have already established a trust or named proper beneficiaries to all your assets, your estate would likely go to probate.
Probate court is time-consuming — it rarely takes less than a year to complete. It also makes your will public information, allowing anyone from all over the world to view it. Lastly, it is expensive, so it takes away money that could go to your heirs.
To avoid this process, begin estate planning early and remember that the process is ongoing. You may have to modify your estate plan as your life takes different turns and you gain or lose assets.
A: The first step in the estate planning process is creating a legal last will and testament. This involves making a list of all your assets, including your house, car, insurance policies, retirement plans, investments such as stocks/bonds, and any valuable possessions. If you have children, you can use the will to establish a guardian for them in the event of your passing. The next step is deciding the beneficiaries of your assets and getting your will legally observed and signed.
A: There are a couple of things to avoid when creating your will. The first is to avoid talking about your wishes for your funeral. In many cases, your funeral arrangements are going to be made before anyone looks at the will, so these requests should be told directly to a loved one who is in charge of the funeral instead of written in the will. Additionally, do not leave anything to your pets. Instead, choose a trusted family member or friend to take care of your pet.
A: The best way to avoid probate is by beginning the estate planning process early and establishing a living trust. A living trust puts your assets into a trust account, keeping them safe until you pass. After you pass, the heirs you named can access the trust account and receive the assets that were named to them. Additionally, naming beneficiaries on retirement and trust accounts can allow these accounts to be directly distributed without having to go through probate first.
A: When you begin estate planning, it is important to keep these five components in mind to make sure your wishes are properly met:
An experienced estate planning attorney can help you understand what each of these estate planning components is and why they are important to help your estate avoid probate.
At Davis Toft, we have helped many clients carefully plan their estates and talk about their after-death plans. Talk to a Laguna Beach estate planning attorney to simplify the process for you and your family. Contact us today to get started.