What Is Estate Planning?
You might have heard this term mentioned at work or with family and friends, but perhaps you don’t really know what it is all about, why it is important, or how to go about it. Essentially, estate planning involves deciding who should inherit what and how you’d like your affairs to be handled if you die or become incapacitated.
Estate planning involves detailed control over your health, finances, bank accounts, and personal property while you’re still alive as well as when deceased. It shouldn’t be mistaken for a “will,” which is a plan for asset distribution after death.
Estate planning answers questions such as:
- Who exactly is going to take charge of my business when I am no more?
- Who receives specific control over my real property?
- Who inherits my real estate?
- Who gets custody of my minor children?
- Who will arrange for my medical care or make medical decisions for me if I’m incapacitated?
Estate planning is very important because it helps to save time and money. It prevents you from dying intestate (dying without a will), which leaves the administration of estates up to intestacy laws instead of giving you control over asset division. More importantly, it protects your business and family from unnecessary tax implications or complex legal issues if you become incapacitated.
Is Estate Planning Pretty Much the Same in Every State?
State-specific laws guide the transfer of assets, marital property, and financial accounts. This brings us to some important questions about state-specific estate planning:
- Are there state-specific estate planning laws in different parts of the US?
- Are estate plans created in one state valid in another? Are they freely portable?
- Do I need to be concerned about my estate plans when moving from one state to another?
The answer to the first two questions is “not really” and the third is “most definitely.” Many states acknowledge estate plans and documents generated in other states, but there are notable differences in estate planning laws.
State-to-state differences arise from the fact that there are variations in provisions concerning trusts, investments, and assets between states. Planning attorneys also have functional differences from state to state. Finally, state inheritance laws can vary and affect estate planning law.
Different states adopt different inheritance laws concerning:
- Community property (adopted in nine states including California, Texas, Washington, Nevada, and others)
- Common law (adopted in 38 states)
- Elective community property (adopted by Alaska, Tennessee, and Kentucky)
These notable differences make estate planning services from businesses like A People’s Choice very valuable. Our legal document service can’t offer legal advice, but we can review and fine-tune all the documentation needed for your California estate plan for far less than you’d pay a lawyer.
5 Key Reasons to Learn the Differences in State Specific Estate Planning Laws
Although US states are constantly working towards the adoption of uniform laws and federal requirements guiding the powers of attorney and trusts, we’re not there yet. Thus, it is still very important to learn of the differences in state-specific and advanced estate planning laws. Here are our top 5 reasons for studying up on this subject.
1. It affects estate plan validity
What happens if you move and, due to a state estate planning law, your plan is no longer valid? If you should die or become incapacitated, your estate plan wouldn’t take effect and your estate would be left to general state law. That’s not a situation you want to be in.
2. It can lead to delay and complications
Adequate knowledge of state-to-state differences helps to curb delays and complications. Such situations are bound to arise due to variations between estate planning law in different states, especially for a complex estate. However, doing what you can to mitigate them helps to protect your assets and beneficiaries during the probate process.
3. Estate plan interpretation varies from state to state
Estate planning attorneys could tell you that although various state laws provide similar provisions as the basis for estate planning, the interpretation and extent of implementation are not identical. Learning about your new state’s laws can help you adjust as needed.
4. State laws sometimes link your legal documents in different ways
Some states directly or indirectly link estate plans with marriage laws, estate taxes, divorce laws, and many more. This leads to the possibility of one set of laws overlapping those of another state. Naturally, this may have consequences for your estate planning documents and cause a legal issue, so be sure to take heed.
5. The laws governing estate plans consistently change
Laws are constantly shifting, so even if you’ve lived in a state before, you may want to review current laws. State estate laws undergo frequent review, modification, and amendment, so what was acceptable years ago may not be anymore. Additionally, interpretations may have changed over the course of several amendments. This is something you’ll want to know as you adjust your estate.
State-Specific Estate Planning Laws in California
California has peculiar variations in its estate laws, though the general principles are uniform across the US. Some of the state-specific estate laws in California are:
1. California Euthanasia Laws
These are specific laws that control euthanasia (“mercy killing”) and any life support withdrawal medical directive from an individual who has a terminal illness. You may want to consider this when making health care decisions, long-term care choices, and life care calls in your estate plan for your future self.
2. California Trust Laws
These legal requirements are concerned with effectively managing an individual’s assets while they are still alive. They ensure an easy transfer to a particular relative or loved one after death. This may be especially applicable if someone else relies on your contribution to manage their financial affairs.
3. California Living Wills Laws
This set of laws controls the documented treatment preference of an individual if they lose consciousness or become incapable of communicating their wants. The person can also declare if they want to be euthanized or left on life support. This is related to #1 on the list, but you can also use these laws to make a personal decision about the type of care you want if you’re incapacitated.
4. California Wills Laws
These contain laws that control the drafting, signing, and implementation of a will. Unlike laws in other states, California will laws do not accept “oral wills.” If you were relying on one in your previous state, it’s time to consider estate matters in your new state.
5. Revocable Living Trusts in California
These laws control the activity of a loved one over the property of an incapacitated or deceased individual. This is to prevent properties from going through probate whenever possible.
6. California Durable Power of Attorney Laws
These control the legal transfer of authority to a specific person to make artificial life support decisions for an incapacitated individual. For example, if you experience any complications during surgery, the power of attorney may chip in to make some critical medical decisions on your behalf.
7. California Civil Statute of Limitations Laws
These are laws that place limits on the period over which an individual can be sued over wrongdoing. This can prevent someone from going after your estate after you pass away.
Legal Estate Planning Documents You Need to Prepare in California
The following are documents that need to be prepared for legal estate planning in California. Keep in mind that you don’t necessarily need all of these in every situation.
- Last will and testament
- Revocable living trust
- Financial powers of attorney (POA)
- Proof of identity documents
- Advanced healthcare (AHCD)
- Living will
- Pour-over will
When to Seek Power of Attorney
Power of attorney is assigned to an individual who is 18 years or older chosen by “the donor” (estate holder). This person effectively manages the health, finance, and assets of the donor if death or incapacitation strikes.
In estate planning, you may want to assign power of attorney from the very beginning of the plan. This ensures that you have peace of mind that you’ll be cared for according to estate law if something happens. It also ensures that a competent person is present to represent your best opinion.
Need Help Reviewing or Initiating Estate Planning?
Estate planning initiation or review is a tedious process and is almost impossible without legal assistance. A People’s Choice possesses a highly qualified team of legal document assistants that can provide you with all the estate planning documents you require for a much lower fee than a law firm.
A People’s Choice can help you fill out your estate administration or planning documents completely and correctly the first time, avoiding delays and costly errors. Many of our clients have successfully initiated their estate planning in California through us, and we can help you do the same. To get started, you can contact us here or call us directly at 800-747-2780.