According to Forbes, most people avoid estate planning. They might feel they’re too busy and will get it done at a later time in their lives. They may also fear the expense. Finally, some people also perceive estate planning as some kind of jinx. If you’re like the average Joe, you may prefer to live life as it comes then to plan your estate, literally following the “one day at a time” adage.

However, contrary to superstitious beliefs and tales of exorbitant attorney fees, you really should plan your estate. Planning your estate do you a whole lot of good, and it doesn’t have to be that difficult. In this article, we will explain why estate planning is so crucial and help you plan your estate by breaking the process down into 10 easy steps.

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What Is Estate Planning?

Estate planning is the process of planning out and appointing who takes control of various aspects of your life after death or during incapacitation. This can include:

  • Decisions for major life events
  • Medical decisions
  • Trust income
  • Finances
  • Assets and investments

Estate planning is sometimes mistaken for wills or living trusts. However, estate strategy goes far deeper than that. It can help your dependents with financial uncertainty or assign guardians for children. It also covers medical issues if you’re incapacitated, including a health care proxy, medical decisions, or requests for certain types of medical care.

What Does Estate Planning Cover?

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A will is a basic estate planning device concerned with the distribution of properties. Advanced estate planning involves more detailed control over the following categories.

Medical Care

  • A medical power of attorney
  • End-of-life care decisions
  • General wishes for health care

Financial Arrangements while You’re Still Living

  • Financial planning and long-term care for your tangible and intangible assets
  • Different types of trusts such as a CRT (charitable remainder trust) or property control trusts
  • Capital gains tax for large amounts of trust income

Estate Administration and Distribution

  • Inheritance for adult children
  • Charitable gifts
  • Dispensation for taxes, including gift tax and federal estate tax threshold rates
  • Distribution of different types of income (such as retirement benefits)
  • Administration of property to children without hiring an estate administrator
  • Selecting a contingent beneficiary

As you can see, if you plan your estate well, it can provide a solution to a lot of life’s uncertainties. If you’ve ever wondered how to make sure your business falls into good hands without hiring an estate administrator for large amounts of property, estate planning can provide the answer.

Top Seven Reasons to Plan Your Estate

Conscientious estate planning doesn’t have to be done out of fear of the unknown! Here are our top seven reasons why you should plan your estate.

1. It saves time and money

If an individual hasn’t properly planned their estate before their time of death, their assets get handed to the state. A probate court in a common law property state then determines what to do with the properties by appointing a representative to distribute the assets.

These processes can be costly and time-consuming for family members. Estate planning prevents basic issues such as the wrong person inheriting your assets. It also helps you to avoid unnecessary probate fees associated with an intestate estate.

2. Estate planning provides protection for family

Without a basic estate planning device in place, the probate court will decide who will serve as a guardian for minor children if your spouse passes away. In an estate plan, a proper conservator or personal guardian can be assigned for children without seeking help from professional advisors. This can also be a huge help for unmarried couples with children or a noncitizen spouse.

3. Estate planning provides peace of mind

The fact that the welfare of your family, minor children, or beneficiary designation are protected brings about peace of mind. Family business estate planning also helps to quell a lot of worrisome thoughts due to the lack of an estate or retirement plan. This can even include aspects like a legacy planning process for your business leadership.

4. Estate planning prevents conservatorship upon incapacitation

When an individual becomes incapacitated due to one reason or another and is unable to make crucial decisions, a conservator is normally assigned by the court. In a common-law property state, this procedure is often expensive.

Estate planning allows one to apply for the powers of attorney rather than become a conservatee. This may include finding someone to make financial decisions about real estate property and community property and more along with managing basic issues of a health care directive.

5. Estate planning reduces taxes

Any tax advisor will tell you that according to estate tax laws and central issues, taxes on wealth accumulated by an individual are transferred to the recipients. This includes federal estate taxes, gift tax, and more. A complete estate plan can help you reduce estate taxes by using common workarounds like an irrevocable trust or property control trust.

6. Estate planning protects the wealth and properties of the family

The wealthier you get, the higher the probability of your wealth being challenged in a formal probate process. Estate planning helps to protect the property and wealth of families using means such as:

  • Trusts, i.e. combining estate tax-saving trusts
  • Limited liability companies
  • Life insurance policies

With the help of an estate attorney or on your own, you can even select a durable power of attorney for your finances or joint tenancy property. After you pass away or become incapacitated, such individuals can have control over trust property and all other central issues related to combining estate tax-saving trusts, making sure estate tax laws don’t unduly affect your relatives’ inheritances.

What Happens If You Don’t Plan Your Estate?

Sure, you can avoid planning your estate; many people do. However, not planning your estate leaves you susceptible to a lot of factors. Here are just a few of them.

1. Your estate will be intestate

Dying intestate means that someone died without basic documents for estate planning such as a will. This implies that the individual’s assets will go to probate and their distribution to any adult beneficiary must follow the state laws. They’ll have to meet all the probate fees as per the law. Essentially, with no beneficiary form in place, you will get no control over the types of property each of your family members inherits.

2. It leaves your minor children unguarded

Without an estate plan, your children are unguarded after your demise. If, for example, you and your current spouse have a simultaneous death in an accident, the court will be mandated to provide your kids with a guardian or conservator with no say from you. If no relative is available, they are placed under the state’s foster care. They’ll also receive medical care courtesy of foster parents.

3. It places your assets at the risk of being squandered

After your death notice is released, your assets, savings, and properties can be lost or squandered without an effective estate plan for control over trust property. If you don’t leave any alternate beneficiaries for your estate, your property may end up going to the wrong beneficiaries depending on your financial situation and family situation. In the worst-case scenario, if no beneficiaries are found, your assets will simply go to the state.

4. It leaves you at the risk in the case of incapacitation

Without an estate plan, your family has little or no say in your advance health care directive or financial assets incapacitation occurs. A good estate plan enables you to choose the right powers of attorney for health care.

5. Subjects family to the long, expensive probate process

Without an estate plan to dictate controls over property, relatives are subjected to elongated, time-consuming, expensive processes to recover control over your tangible and intangible assets. The simple key element of estate planning can prevent these legal hassles.

How to Plan Your Estate ­­­­in 10 Simple Steps

Now that you’re thoroughly convinced, let’s take you quickly through our 10 simple steps required to plan your estate! These cover most aspects of estate planning and can get you a long way towards avoiding a probate estate.

  1.   Take an inventory of your net worth using financial records
  2.   Account for your and your family’s financial needs, as well as any other beneficiary (like a favorite charity)
  3. Determine if you need a will or a revocable living trust to mitigate annual trust income tax and real estate tax benefits
  4. Decide whether to enlist the services of a professional estate planning attorney or go with a more affordable option like a legal document preparation service
  5.   Make a plan for the financial power of attorney
  6.   Consider getting a life insurance
  7.   Select your fiduciaries
  8.   Determine if you need advanced estate planning (for complex estates)
  9.   Consider how you can effectively avoid probate
  10. Store your documents, review, and reassess your plan regularly.

When to Seek for an Estate Plan Attorney – Is it Necessary?

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Planning an estate or trust can be done by an individual by following the steps outlined above. It is, however, advisable to get some professional legal assistance because it’s a very tedious process. However, this doesn’t mean you need an estate planning attorney!

A People’s Choice is a legal document preparation service that can help you with the provision, review, and enforcement of estate planning documents. We can also help with documents for planning for your long-term care via a living will

We have an elite team of legal document assistants that can provide you with all the documents you require. Let’s add you to the list of clients who have successfully initiated their estate planning in California! To get started, contact us here or call us at 800-747-2780.

Get help with your California Estate Planning today!

A People’s Choice can save you hundreds of dollars by preparing your estate planning documents instead of an expensive attorney!