What is an estate plan?

An “estate plan” refers to all the documents that memorialize what will happen to your assets and who will have decision-making authority over your financial affairs and health care in the event that you die or become incapacitated (that is, if you are no longer able to make decisions concerning your personal or financial affairs). Your plan should indicate who or what entity you want to receive your assets, what each person or entity will receive, and when you want each person or entity to receive it. Your estate plan should also include instructions for your personal and medical care in the event you become incapacitated, and you may choose to also include post-death instructions regarding your funeral or burial. Importantly, depending on your personal circumstances, you may also need to designate a guardian (and, likely, a backup guardian) to care for your minor child or children in the event of your death.

The specific documents constituting your estate plan may include a will, trust, financial power of attorney, advance health care directive, and other related documents. Working with an experienced and empathetic attorney will help you best tailor your estate plan to ensure your instructions are followed, your assets are safeguarded, and your loved ones are spared the legal and financial tumult of litigation, probate, or adverse tax consequences following your death.

Who should have an estate plan?

Just about everyone benefits from having an estate plan. Far from being a tool only of the ultra-wealthy, elderly, or terminally ill, estate planning is important for individuals and families of all ages, income levels, and circumstances. Having a clear and legally valid plan in place to provide instructions in the event of your incapacity or death—stating who will manage your financial affairs, raise your young children, inherit your assets, or make medical decisions for you—provides peace of mind, helps your beneficiaries avoid probate (saving your loved ones from what is often a long, expensive, and burdensome court process), allows you to plan for any expected adverse tax consequences following your death, and lessens the likelihood of family discord in the absence of instructions from you.

Also, it is important to keep in mind that if you die without a will and/or trust in place designating who will inherit what from you, then your assets will be distributed according to California’s laws of intestacy, which essentially provide that your closest relatives will inherit from you. Instead, having an estate plan allows YOU, rather than the state, to determine who will inherit from you. But, even if these laws mirror who you would want to name as beneficiaries of your estate in a will, you should still have a comprehensive estate plan in order to plan for your incapacity, avoid probate of your estate, and provide clarity and peace of mind to you and your loved ones.

While most people should have an estate plan in place, doing so is particularly important if you own real property or other assets of significant value, if you have minor children or loved ones with special needs, or if you anticipate tax concerns following your death.

What if I find it difficult to think about my death?

Few if any of us enjoy talking about our own mortality or infirmity. Most of us, in fact, prefer not to think about such things at all. It is not surprising that we tend to put off the difficult and sometimes emotional decisions involved in making an estate plan. Yet, estate planning should really be thought of as an act of selflessness, a gift to your loved ones. Making a comprehensive estate plan allows you to protect them after you’re gone, designating assets for their future security and sparing them the extra costs, tough decisions, legal battles, and family discord that may potentially arise when you die or become incapacitated without an appropriate estate plan in place.

Understanding this tension felt by many of our friends, relatives, and clients—that is, wanting to have an estate plan in place but feeling reluctant to think about or plan for their deaths—we approach these discussions with warmth, patience, and empathy. At Toni Michaels Law, it is our goal to make the process of estate planning as straightforward and comfortable for you as possible. We are here to answer any and all of your questions, and we are skilled at asking you a series of focused questions that will help you distill big ideas or desires into small, distinct decisions that, together, form your comprehensive estate plan. Precisely because we don’t know what the future holds, it is important not to put off creating your estate plan.

What is probate and why should I try to avoid it?

Probate is a court process in which, after you die, your assets are inventoried, appraised and ultimately distributed by court order to your heirs (that is, the people who will inherit under law if you die without a will) or beneficiaries (that is, the people or entities designated in your Will to receive your assets), after payment of your remaining debts and expenses. A probate case is “opened” for your estate (which consists of all of your assets required to be probated) when a personal representative/fiduciary (called either an executor or an administrator, depending on the circumstances) is appointed by the probate court to administer your estate. In California, even a run-of-the-mill probate case requires the executor/administrator to produce required documents and information, file numerous documents with the court, attend hearings and satisfy of certain other requirements, all on a specified timeline, with more complex situations necessitating additional steps and court filings.

There are several drawbacks to the probate process, chief among them that probate is expensive, time consuming, public and burdensome. With respect to probate being expensive, your estate will be responsible for payment of filing fees and other court fees, appraisal fees, executor/administrator and attorney compensation (the amount of which is set by statute) and other costs, which chip away at the value of the estate left for your heirs or beneficiaries. What’s more, your heirs or beneficiaries generally have to wait to receive their shares of your estate until the very end of the probate process, which may take nine months, one year or even longer to complete. Another concern is that probate is a public process; that is, most of the documents filed with the court in a probate case are available to the public upon request, which could result in your intimate financial or personal arrangements being publicly disclosed through court filings. But, perhaps the most obvious downside of the probate process is that, even with the assistance of a skilled probate attorney, the process places an administrative burden on the executor/administrator of the estate, who may be your still-grieving family member or close friend. Simply put, probate is a generally avoidable hassle for your loved ones.

Fortunately, there are relatively simple and widely used strategies that you can take advantage of now to avoid probate of your estate following your death, for example, owning your home and other assets in the name of a revocable trust. At Toni Michaels Law, we will talk with you to determine whether setting up a revocable trust or other strategies to avoid probate are right for you, given your specific circumstances. We will carefully explain these concepts to you, answering all of your questions, in order to demystify probate, trusts and other estate planning concepts and tools. We want you to be empowered to make informed decisions about your estate plan and also to feel comfortable with the decisions you make.