Estate Plan: Protecting Your Loved Ones and Your Legacy

Nobody likes to think about death, whether it’s their own or that of a loved one. But if you hide your head in the sand and figure you’ll deal with it when the time comes, you’re not only lying to yourself, but you’re doing yourself and your loved ones a disservice.  I get it. It’s uncomfortable to think about dying. But we all die and it’s not fair to leave our loved ones a tangled legal mess to figure out.  And if that doesn’t convince you, maybe the cost of probate will.  I’ll get into all of that in this blog.

What is an estate plan? 

At its most basic, an estate plan is a comprehensive package of documents which includes your will, living trust, healthcare directives, powers of attorney and, if you have minor children, guardianship instructions.  It includes a detailed accounting of your property and belongings. This encompasses real estate, cars, household goods, bank accounts, family heirlooms, and even your pets.

Every estate plan will differ because everyone’s situation is different. A single person with no children will have a very different estate plan than a married couple with children. A person married to their second spouse is going to have a different plan than someone who has been married to the same person for 30 years. If you put together an estate plan when you’re married and then later get divorced, you need a new plan to address the change in status as well as property.

Estate planning checklist

Here’s a checklist you can use to get yourself started.  It is in no way comprehensive, but it will help get you started and keep you on track:

  • Take an inventory of your property and belongings and how you hold title to each asset.
    • Includes real property, vehicles, family heirlooms, items with sentimental value, bank accounts and anything you want to ensure gets distributed to your beneficiaries
  • Make a last will and testament (and if you have a trust it will be a pour over will).
  • Designate legal guardians of any minor children
    • Without this, the person you want to be their guardian will not be able to perform the duties of guardian.
  • Consider creating a living trust
    • Your estate planning attorney can advise you on this. See the discussion in this blog of who needs a living trust.
  • Find and designate a trusted fiduciary (or manager)
    • This can be a family member or a professional fiduciary
  • Consider designating someone you trust with power of attorney
    • This is different than designating an executor or a trustee, but it can be the same person.  This is someone you allow to make decisions on your behalf. 
  • You can identify the POA to take effect only if you become incapacitated, or you can set it up to take effect even if you’re capable of making your own decisions. Check with your attorney for the best option for your situation.
  • Prepare for estate tax obligations
    • Don’t leave it to your heirs to come up with the money to pay estate taxes upon your death, consider where they will be able to access the funds to pay those taxes
  • Get your digital assets in order. This includes passwords and access to: bank accounts, IRAs, retirement accounts, pensions, crypto holdings, etc.
  • Make a guide for your fiduciaries so they know where to find information and documentation they need to distribute your estate
  • Revisit your documents periodically. Make updates to the will and or trust as your family dynamics and possibly wealth changes – beneficiaries and heirs die, reach adulthood, etc.; bank accounts and digital assets change or are deleted; property is purchased and sold.

Do I need a trust?

While everyone should write out a will to identify which belongings go to which heirs, not everyone needs a trust. But anyone who has real property – a home, land, commercial building – should have a trust.  Anyone with minor children, whether or not they have real property, should have a trust and guardianship instructions. A trust ensures that your beneficiaries don’t have to go through a probate proceeding to claim the property and money you want them to have.  A will by itself MAY to through probate and that can cost four, five, even 10 times more than the $2,000 to $5,000 cost of engaging a trust attorney to draft your trust.  Even worse, without a will your estate still goes through probate, but you don’t get to direct who gets your assets.

Why do trusts avoid probate?

Trusts don’t die so they don’t go through probate. The property properly funded in the trust transfers from the initial trustee – the person who executed and funded the trust – to the successor trustee. The property remains in “Smith Family Trust” until it is distributed.  It is only the trustee that changes (the legal owner). With just a will, the property belongs to the decedent, and the people named in the will need to go through the probate process to prove their legal right to the property as beneficiaries.  Probate can take anywhere from one to two years in a busy county like Orange County, California.

Can I use an online service to write my trust?

DIY is the American way. But with a trust, you should pay a professional. You can use an online program to write your trust.  However, having just any trust may not be better than having no trust at all.  The online services guide you through the questions you need to consider in drafting your trust. But the problem is, it’s not going to ask you probing questions to make sure you haven’t left anything out. So, it’s better to find a good trust and estate attorney to draft the trust document for you and help you through the process. The interactive dialogue and the trust attorney’s experience will close the loopholes and legal errors you may inadvertently introduce into your DIY trust document. If your trust document has legal errors, your heirs could end up going to probate after all. 

What next?

This blog is merely intended to provide an overview of the estate planning process.  Listen to my podcast episode to learn more with some true-life stories from my career as a trust and estate attorney.  Both the podcast and this blog are merely intended to open your eyes to the reality that you should have a comprehensive estate plan including a will, trust and health care directives and ensure that your trust is properly funded.  If you need a trust drafted, contact me at www.thepattonlawfirm.com for a consultation.

ThirtyFiveSixtyFour
ThirtyFiveSixtyFour
Are you ready to die? Legally, that is. Find out with special guest Andrea Patton, Estate Planning Attorney
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