Why An Estate Plan Is Necessary?

July 3, 2018

Many people wonder why an estate plan is necessary. The reality is that in the unfortunate event of your death, the government already has a plan for your estate. However, that plan won't be beneficial for you and your family. Without estate planning, the court system will make crucial decisions regarding everything you own and your family's future.

What Does an Estate Consist of?

Some people believe that they don't really have an estate because of the size of their property, and thus, don't see the need for estate planning. But everyone has an estate, regardless of the size.

An estate is a person's net worth while alive or dead. This includes a home, car, bank account, and even smaller assets. It also includes any monies that may be generated after a person's death such as a life insurance policy. The following assets are considered to be part of an estate:

Cash, checking, and savings accounts
Jewelry, art, vehicles, and antiques
Home and land
Retirement accounts, life insurance, stocks and bonds
Businesses and business interests
Any debt or obligations owed

Estate Planning Fresno, California

Regardless of where you reside, it's important to have a last will and testament, a living will, and a durable power of attorney set in place to protect you and your family. If you die without a will, California state law dictates that the entirety of your estate will be distributed by the probate court. This process is complicated, but the end result will be that the court will decide who receives your assets and how they are distributed. If you own joint accounts, the co-owner will generally receive the balance upon your death. In California, certain assets such as a house could be registered in your county of residence as a community property in which case, your surviving spouse will become the owner upon your death. California also has a unique system in regards to the payment of probate lawyers. California probate lawyers can charge a percentage of the gross value of the probate estate. Although these lawyers are not mandated to change this fee, most of them do.

Last Will and Testament vs. Living Will

The last will and testament is an important document that is the first brick in any well-crafted estate plan. It will provide specific details regarding the dissemination of your assets. The last will and testament will typically cover the following four areas:

Who will serve as the executor or personal representative of the will
Who will be the guardian of minor children
Who will manage the assets left to minor children
Who will inherit property

A will can provide peace of mind in knowing that your assets will be distributed according to your wishes. However, if you die without a will, California's law dictates that your property will go to your closest relatives beginning with your spouse and children. But If the court cannot find any living relatives, your assets will be seized by the state.

A California Advance Healthcare Directive, otherwise known as a living will, provides instructions regarding your medical care should you become incapacitated and unable to make decisions for yourself. This document contains specific directives regarding your wishes in the event of any severe medical crisis or end-of-life situation. A living will is put in place while a person is still alive.

Durable Power of Attorney

In California, a durable power of attorney makes decisions for an individual even if he or she becomes incapacitated and unable to make decisions for an extended period of time. The person executing the document is referred to as the “principle.” The person chosen to make decisions for the principal is called the ”agent.” According to California law, two witnesses or a notary must be present to watch the signing of the power of attorney document for it to be considered valid. A durable power of attorneys is an essential part of the estate planning process. Your agent could be the person who prevents you from being declared incompetent by the court system if you become mentally incapacitated. If properly drafted, the durable power of attorney document can ensure that your financial security, health and medical interests, and quality of life are protected.

Although many people don't look forward to it, creating a comprehensive estate plan is an essential part of life planning. It relieves families of the burden of trying to decipher their loved one’s wishes after he or she passes away or becomes disabled. It is important to remember that a wise person prepares for the future while still in good health.

Estate Planning Fresno

The Fresno Real Estate Planning Council is a local organization in Fresno, California for certified public accountants, attorneys, life underwriters, and financial planners who are dedicated to the common goal of ethical financial and estate planning. This council is a reputable resource for individuals who are seeking a qualified estate planning professional.