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While nobody wants to think about death or disability, establishing an estate
plan is one of the most important steps you can take to protect yourself
and your loved ones. Proper estate planning not only puts you in charge
of your finances, it can also spare your loved ones the expense, delay, and
frustration associated with managing your affairs if you were to pass away
or become disabled.
Providing for Incapacity
If you become incapacitated, you won't be able to manage your own financial
affairs. Many are under the mistaken impression that their spouse or
adult children can automatically take over for them in the event they become
incapacitated. The truth is that in order for others to be able to
manage your finances, they must petition a court to declare you legally
incompetent. This process can be lengthy, costly and stressful.
Even if the court appoints the person you would have chosen, that person
will have to come back to the court every year and show how they are spending
and investing each and every penny. If you want your family to be able
to immediately take over for you, you must designate a person or persons
you trust, using proper legal documents, so that they will have the authority
to withdraw money from your accounts, pay bills, receive distributions from
your IRAs, sell stocks, and refinance your home. A will does not take
effect until you die, and a power of attorney may be insufficient.
In addition to planning for the financial aspect of your affairs during
incapacity, you should establish a plan for your medical care. The
law allows you to appoint someone you trust - for example, a family member
or close friend to make decisions on your behalf about medical treatment
options should you lose the ability to decide for yourself. You can
do this by using a durable power of attorney for health care, in which you
designate the person whom you would prefer to make such decisions.
In addition to a power of attorney for heath care, you should also have a
living will that informs others of your preferred medical treatments, such
as the use of extraordinary measures in the event you become permanently
unconscious or terminally ill.
Avoiding Probate
If you leave your estate to your loved ones using a will, everything you
own will pass through probate. This process is expensive, time-consuming,
and open to the public. The probate court is in control of the process
until the estate has been settled and distributed. If you are married
and have children, you will want to make certain that your surviving family
has immediate access to cash so that they are able to pay for their living
expenses while your estate is being settled. It is not unusual for
the probate courts to freeze assets for weeks or even months while trying
to determine the proper disposition of the estate. Your surviving spouse
may be forced to apply to the probate court for needed cash to pay current
living expenses. You can imagine how stressful this process can be.
With proper planning, your assets can pass on to your loved ones without
undergoing probate, in a manner that is quick, inexpensive and private.
Providing for Minor Children
It is important that your estate plan addresses issues regarding the upbringing
of your children. If your children are young, you may want to consider
implementing a plan that will allow your surviving spouse to devote more
attention to your children, without the burden of work obligations.
You may also want to provide for special counseling and resources for your
spouse if you believe they lack the experience or ability to handle financial
and legal matters. In addition, you should discuss with your attorney
the possibility of you and your spouse dying simultaneously, or within a
short duration of time. A contingency plan should provide for persons
you'd like to manage your assets as well as the guardian you'd like to nominate
for the upbringing of your children. The person, or trustee, in charge
of finances need not be the same person as the guardian. In fact, in
many situations, you may want to purposely designate different persons to
maintain a system of checks and balances. If you do not create a
contingency plan, the decision as to who will manage your finances and raise
your children will be left to a court of law. Even if you are lucky
enough to have the person or persons you would have preferred selected by
the court, they may have undue burdens and restrictions placed on them, such
as being required to provide annual accounting.
You should give careful thought to your choice of guardian, ensuring that
he or she shares the values you want instilled in your children. You will
also want to give consideration to the age and financial condition of a potential
guardian. Some guardians may lack child-rearing skills you feel are
necessary. Make sure that your plan does not create an additional financial
burden for the guardian by providing the financial resources necessary to
care fro your children.
Another issue to consider in this respect are whether you'd like your
beneficiaries to receive your assets directly, or whether you'd prefer to
have the assets placed in trust and distributed based upon a number of factors
that you designate, such as age, need, and even behavior and education.
All too often, children receive substantial assets before they are mature
enough to handle them properly, with devastating results.
Planning for Death Taxes
Whether there will be any estate tax to pay depends on the size of your estate
and how your estate plan works. Several states have their own separate
estate and inheritance taxes that you need to be aware of. There are many
well-established strategies that can reduce or eliminate death taxes, but
you must start the planning process early in order to implement many of
them.
Charitable Bequests '“ Planned Giving
Do you want to benefit a charitable organization or cause? Your estate
plan can provide for such organizations in a variety of ways, either during
your lifetime or at your death. Depending on how your giving plan is
set up, it may also allow you to receive a stream of income for life, earn
higher investment yield, or reduce your capital gains or estate taxes.
A well-crafted estate plan should provide for your loved ones in an effective
and efficient manner by avoiding conservatorship during your lifetime, and
probate, estate taxes, and unnecessary delays following your death.
You should consult a qualified estate planning attorney to review your family
and financial situation, explore your goals, and learn about the various
options available to you. Once your estate plan is in place,
you will have the peace of mind of knowing that you have provided for yourself
and your family in case the worst should happen.
The Attorneys of Lane Law Group assist clients with Estate Planning, Wills,
Trusts, Probate/Estate Administration, Residential Real Estate, Corporate
Law and Limited Liability Companies in San Pedro California as well as Manhattan
Beach, Hermosa Beach, El Segundo, Wilmington, Harbor City, Lomita, Rancho
Palos Verdes, Palos Verdes Estates, Rolling Hills, Rolling Hills Estates,
Long Beach, Torrance, Carson, Redondo Beach and Gardena in Los Angeles
County. |
