Thinking about your own mortality can be a challenging thing to do. Yet, coming to terms with the inevitable is the first step in being proactive about planning for your estate and the financial security of your loved ones.
So, how do you go about talking to your parents about the importance of estate planning? There are several ways to approach the matter.
If you're reading this blog, then you may be interested in creating or modifying an existing estate plan. Many Californians find themselves overwhelmed by the mere thought of taking such actions.
Some find it difficult to discuss and plan for their own mortality, while others simply have so many assets and debts that they feel unable to think about all of them at the same time. Regardless of your how you feel about estate planning, it is necessary if you want to protect your assets while at the same time provide for your loved ones. Engaging in estate planning even allows you to dictate how you want to be cared for in the event that you are unable to make those decisions on your own.
Trusts are powerful estate planning tools that Californians can utilize to help bring their vision of the future into reality. In order to successfully do so, though, they must understand how trusts work and how to utilize them to their advantage.
This is especially true considering the fact that there are a variety of trusts available to those planning their estates, each with their own benefits and drawbacks. This week, we're going to take a step back and take a look at the life of a trust in hopes that Californians will develop a better basic understanding of these legal entities.
A will can be an integral part of your estate plan. It typically dictates how assets are to be divided, which sometimes includes pouring assets over into a trust. Poorly drafted wills can present a number of legal problems, including the risk that the document will be deemed legally invalid. Additionally, a bad will can lead to family infighting that the testator probably wanted to avoid. This is why it is usually best for Californians to work with an attorney who can help them ensure that their wills are clear and enforceable.
Yet, due to their legal nature, wills are sometimes impersonal and don't allow a testator the opportunity to explain why the estate is being distributed as indicated in the will. Also, a will typically doesn't specify how the testator hopes the estate's assets will be used. This is where letters of instruction can help.
It wasn't that long ago that everything a person owned could be physically touched. Money, items of personal property, journals, and even photographs could be held in one's hand. Nowadays, though, much of our lives has be digitized. Thousands of dollars can change hands without ever touching paper money, and our most cherished memories are often stored somewhere online. While this convenience may make our lives easier, it can make estate planning trickier.
To start, most of these digital assets require secured login before they can be accessed. Those who fail to take this into account when planning their estate may leave their loved ones with no way access and manage those assets. This may mean that those assets, such as photographs and personal writings, will be forever deleted considering that many web-based services delete accounts after a certain period of time after an account-holder's death.
Oftentimes, a will serves as the foundation of an estate plan. When a will is improperly drafted, an individual's estate may be in jeopardy. This is because a poorly created will can lead to ambiguity, challenges, a lengthy probate process and even an undesired distribution of assets. Therefore, Californians need to be diligent in their efforts to create their wills and update them regularly. Skilled legal professionals may be able to advise as to how best to utilize these estate planning tools.
One option is to use what is referred to as a "pour-over will." Although even a basic will typically dictates how assets will be passed on to heirs, a dated will can mean that certain assets are missed. In these instances, those unidentified assets may pass down in accordance with state law, which may not be in-line with a testator's wishes. Additionally, a testator may not have as much control over assets that are not placed in a trust. Assets that aren't place in a trust are not subjected to the trust's conditions, though. This is where a pour-over will can help.
Many Californians own significant property that they want to protect for their heirs and beneficiaries. Although these individuals may be familiar with estate planning and how it can be utilized to avoid the long, drawn-out probate process, they may not be aware of how assets that are owned out of state will be handled upon their passing.
Generally speaking, assets must be dealt with in the state where they are located. Therefore, a Californian who passes away and owns real estate in Arizona will have that out-of-state property subjected to Arizona's probate laws. This is called ancillary probate. Having to have assets probated in multiple states can be expensive and may result in a significant delay of estate assets. This is why it is critical that Californians who find themselves with this potential carefully consider their legal options.
A common misconception amongst Californians is that estate planning is reserved for those who have reached the later stages of their lives. Although older individuals should ensure that their estate plans are suited to their wishes, younger people can and should utilize the estate planning tools at their disposal, too. Those who realize this often turn to a simple will to ensure that their bases are covered, but those who have children may be leaving their estate vulnerable by doing so.
Simply put, assets that are left to a minor child are inherited outright when they turn 18. On its face, this fact may not seem concerning, but when examined more closely, many 18-year-olds are simply unequipped to adequately manage inheritances. For these young people, an inheritance may seem like it is going to last longer than it actually will, thereby spurring them to spend recklessly.
It's a scary reality that millions of Americans live with a chronic illness. In fact, some statistics indicate that more than 130 million people are affected by these conditions, and that number is only expected to grow for the foreseeable future.
Some of these individuals have diseases that will prove fatal, while others are fortunate enough to survive, but even those in the latter category can face significant health challenges and limitations. Although it may be difficult for these individuals to think about it, estate planning should be a priority.
On its face, estate planning can seem relatively easy, especially for those who just want to leave their assets to their spouse or children. For these individuals, a simple will may suffice to meet their needs, but even these documents can be fraught with legal issues. For an example of the complexities and confusion that can arise when a will is improperly handled, just read our recent post about Aretha Franklin's estate and her handwritten wills. To avoid potential problems related to the creation of a will, Californians should consider working closely with an estate planning professional.
There are many issues that can derail a will, and other estate planning vehicles, but a skilled attorney will know how to deal with those matters. He or she can help an individual take the steps necessary to diminish or eliminate claims of incapacity, coercion, and undue influence. Additionally, a legal professional can help ensure that a will is drafted in accordance with applicable laws, thereby ensuring its legal validity.
If you would like to discuss representation or have another question about my firm, please call 916-248-4465 or email my Sacramento, California, office to arrange for a consultation.
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