Back to Basics.

I was talking to a well respected CPA who handles large estates (meaning large enough to have to file a federal estate tax return, which as of this year 2009 means an estate with a value of more than $3.5 million dollars) as a majority part of her accounting practice. While she was married, she did not have kids. So I asked her if she had an estate planning attorney. I was aghast to find out that this person felt that estate planning documents weren't needed as their estate wasn't "complex." I was also shocked to find out that this person had little knowledge of the basic benefits offered by having an estate plan in place.

For most individuals, estate planning is very important. In California, having a proper estate plan in place will typically avoid probate. It will also make your wishes known in case something happens.

Here are some key things to understand.

Estate planning has multiple purposes, but at a minimum:

1. It usually avoids probate where there is a trust involved
2. It usually avoids a conservatorship if you are unable to manage your affairs
3. Where you have minor children, it can nominate guardians for those children
4. It puts in writing your agents for financial and medical decision making should you become unable to make your own decisions
5. It puts in writing your wishes for medical decision making and end of life choices
6. It allows your agents to review your medical files and discuss medical issues with your doctors

Estate planning for most individuals and couples include the following documents:

1. Revocable Living Trust -- this usually avoids probate
2. Companion Pour-Over Will -- this is a back-up document and names guardians for minors
3. Durable Power of Attorney for Financial Affairs -- for almost everything else with money and assets
4. Advance Health Care Directive -- for medical decision making and wishes

That's it. Even those with more complex estates still need these four documents at a minimum. They are the cornerstone of every estate plan. And for most individuals and couples, this is all they need. If you have a much larger estate or complex needs, then your estate planning attorney may recommend additional planning to include insurance planning, tax planning, business entity formation and other kinds of trusts.

But trust me, for most individuals especially those residing in California and who own a home as their largest asset, these are the four documents needed and comprise of the typical estate plan for most individuals and families.

I strongly recommended that this CPA consider putting an estate plan in place for her and husband to avoid probate if something were to happen to them. Losing a loved one is very traumatic and having to deal with the time and expenses of probate will only make it worse. This I know from experience having to deal with probate for my father's estate when he passed away in 2001.

Consider giving an estate planning attorney a call. If you are in Southern California, feel free to email me directly to see if I can assist you with your estate plan.

________
Estate Planning, Probate and Trusts involve complex areas of law. Individual circumstances must be considered before any advice can be given.  The general information above is not to be construed as legal advice, which can only be given after consideration of the unique facts of each matter. Please seek the advice or counsel of your attorney, financial advisor or CPA as it may be appropriate.

Comments

[Elaine Renoire]

But what is a person to do when the court rolls all over their advance directives in favor of forcing a guardianship?

Unlawful and abusive guardianships are destroying more lives everyday - and the victims have no where to turn for help.

Visit NASGA at StopGuardianAbuse.org and http://NASGA-StopGuardianAbuse.blogspot.com

Yours,
Elaine Renoire
NASGA

[Life Insurance Trusts]

For many seniors, it is very important to leave something behind for their loved ones when they die. Because of this, many have embraced a trust when in the process of estate planning. A trust is a legal arrangement which enables one person or one institution full control over any property that will be given to a third party. The benefit of trusts is that more assets can be preserved, and your heirs won’t have any extra delays or costs, nor will they be tied up in probate in the event of your death.

Rose.