In California, it is not uncommon for people to marry more than once. Certain matters must be handled when in this situation, and one that many people forget is how to deal with drafting estate planning documents to account for the new marriage. This is especially worrisome if it is a blended family with children from both spouses' previous relationships becoming part of the equation. There are certain issues that might be forgotten, but are not any less important.
For those that have significant wealth and blended families, drafting estate planning documents is especially important if the person wants to avoid probate and disagreements among their family members after death. These circumstances apply to many people in California, whether they are in the entertainment industry, in business or in some other endeavor that has led to them having substantial assets. It is an unfortunate reality that even if the person was diligent in estate planning, there can still be legal battles over the estate. Such is the case with the late actor and entertainer Alan Thicke.
For those in California who understand how complicated and contentious probate can be, the chance to avoid it should be considered. When estate planning, the person should also be aware of the options in avoiding probate. An example of when it is possible to avoid probate is if the property falls below a certain amount. If the person who died left $150,000 or less to the heirs, then it might not be necessary to go through the probate process.
Estate planning in California should be thought of as a method of organizing one's life for the future when he or she is no longer there. It is a positive step for the heirs whether there is a substantial estate or one of more modest means and making sure that it is complete and in place is a wise decision for anyone. Those who are reluctant to create a coherent estate plan should remember certain steps to take and realize that it is essential for their own peace of mind and their family's future.
While Californians are advised to take the necessary steps to have a coherent and well-organized estate plan, the basics are sometimes lost on them. The most foundational matter after moving forward with the document itself and having all the "I's" dotted and the "T's" crossed is to know where it is and be prepared for the time when heirs will need to find these documents. It might sound like a silly dispute, but litigation can result if the estate plan documents are nowhere to be found. With this in mind, there are certain steps to take.
Preparing an estate plan that takes care of your loved ones extends beyond your property and your wealth. It also includes debt management. A recent study by Experian found an average consumer debt of almost $62,000 per individual. That’s a lot of money and, after removing mortgages from the figure, it still comes to roughly $13,000 per person.
Many people in California view an estate plan as little more than a directive about how to divide and distribute their assets after they die. While this sentiment is correct, it does not account for important matters such as minimizing estate and gift taxes or avoiding or minimizing capital gains taxes. Also, small business owners in Sacramento often overlook the connection between a proper estate plan and passing their business to the next generation.
Most people in California don't have to be concerned about estate taxes when they prepare an estate plan. The federal estate tax only applies to estates that are worth more than $5,490,000. Married couples can effectively combine their estate tax exemptions, meaning that up to almost $11 million of their combined estates can be shielded from estate taxes. At the state level, California has eliminated its estate and inheritance taxes.
Some readers may remember the probate fight involving former model Anna Nicole Smith and the estate of her deceased husband, Texas billionaire J. Howard Marshall. Smith married Marshall in 1994 when she was 26 and he was 89. When he died the following year, Smith was not named in his will. She challenged the will unsuccessfully in a Texas probate court. She later filed for bankruptcy in California, and argued in that proceeding that Marshall's eldest son, Pierce Marshall, had improperly prevented his father from leaving an inheritance to her.