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When Should You Do Estate Planning?

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You have worked hard to achieve the financial status you enjoy today, whether that status qualifies you as one of the Sacramento area’s wealthiest individuals or provides you and your loved ones with enough financial security necessary to live comfortably. It easily follows, then, that you most likely wish to continue providing that security to your spouse (if one exists), your children (if any), and even yourself if you should suddenly find yourself unable to do so actively. Fortunately, you don’t need to be married, have children, or even consider yourself wealthy to benefit from estate planning.

When Should You Begin Estate Planning?

If you are reading this information and wondering when the best time is to begin estate planning, the short answer is: “now.” In fact, due to the uncertainty of life and the ever-changing nature of the world and the circumstances it causes, the team at Huber Fox, P.C., remains firm in our belief that it is never too early for estate planning—and careful preparation for what comes next.

Regardless of your current circumstances, it is important to take steps now to ensure that you meet your (and any loved ones’) needs today and after you pass away. In this guide, we will reveal important considerations as well as several essential tools as you begin to plan your estate. However, for unique questions specific to your estate, contact Huber Fox, (916) 237-8781.

What Is Estate Planning?

Of course, before you can begin estate planning, it is important to understand what estate planning is. In short, estate planning involves determining how you want your assets divided and distributed in the event of your death or incapacitation (i.e., the legal state of being unable to make these important financial decisions for yourself, such as a vegetative state). Estate planning is a process rather than a single act and usually involves numerous decisions regarding every asset you currently hold, as well as any future assets.

As a result, most people wish to consult trusted professionals to ensure that the lasting decisions made during estate planning are not only wise at the time of decision making but remain beneficial as time goes on. In this way, estate planning is an ongoing process that continues as assets increase or disappear, marriages and children are added, and other circumstances change. For these purposes, you may choose to hire a financial advisor as well as an experienced estate planning attorney.

What Are the Benefits of Estate Planning?

While the benefits of estate planning can seem quite simplistic on the surface—i.e., to make sure your estate is distributed according to your wishes after your death—there are, in fact, some rather specific benefits to establishing an estate plan. Benefits of beginning your estate planning as soon as possible include:

  • Preparing for incapacitation. Even young and relatively healthy individuals are at risk for sudden mental or physical incapacitation due to an accident or trauma. Planning now ensures that your estate can be distributed according to your wishes. It ensures that you have a living will/durable health care power of attorney to make any life support or medical treatment decisions in your stead.
  • Determining trustees for your estate’s assets. Preparing now gives you the ability to assign a professional trustee, family member, or other trusted individual the responsibility of acting as trustee or executor for your estate. After your death, the administration of your assets can then proceed smoothly.
  • Designating guardians for any minors involved. Choosing the individuals you wish to raise any minor children in the event of your death is an extremely personal decision, but if left undecided in the event of your death, the courts may handle it. Including such a designation in your estate planning can ensure the proper individuals receive guardianship over any current or future children.
  • Protecting your business. If you operate a business, the continuation of your business affairs will be determined by a court unless you make the proper considerations in advance. Including your intentions for your interest in any small, personally run, or family-owned business will ensure that your business affairs are handled properly after your death.
  • Protecting your assets. Your financial assets and properties should be distributed to the proper parties after your death, and estate planning outlines the specific distribution. You can also utilize estate planning to ensure any beneficiaries properly manage any assets they inherit from you, protecting them from predatory individuals and unwise investments.
  • Reducing the burden on your family. Making important decisions now—including planning funeral arrangements, designating a trustee, establishing guardianship, distributing assets, and more—eliminates ambiguity when it is time for your family to settle your estate. In this way, estate planning results in diminished strain on your loved ones.

What Should You Include in Your Estate Planning?

To put it simply, your estate planning should include your entire estate—that is, all your assets, as well as any end-of-life considerations you feel you may be required to make before death. Of course, what, exactly, your “entire estate” entails can differ widely depending on your current circumstances. Further, your estate will almost certainly change as the years go on—especially if you do not consider yourself near the end of your life now.

Because the assets you hold can vary, it is essential to create your own list of assets instead. To help, we have created a brief list of potential assets you may want to include:

  • Real estate, including homes, unoccupied land, and other holdings
  • Cars, motorcycles, boats, and other types of vehicles
  • Valuable possessions like collectibles, art, antiques, coins, and more
  • Stocks and bonds, as well as mutual funds
  • Valuation of any life insurance policies
  • IRAs, 401ks, and other retirement savings
  • Health savings accounts
  • Cash in checking and savings accounts
  • Certificates of deposit
  • Stake, interest, or ownership of a business

Be sure to carefully value each asset you list, which can include account statements, professional appraisals or valuations, or—in the case of treasured items difficult to value—the value your loved ones may place upon them.

Don’t Neglect Planning For Your Family’s Future

Of course, the valuation of all your assets will remain a burdensome second thought if you fail to consider what will happen to your family after your death or incapacitation. The addition of new family members—including a spouse or children—is often the impetus for many individuals to begin estate planning in the first place. Take the necessary steps now to ensure your family will receive the above-listed benefits.

  1. Ensure you have life insurance in place. If you have worries about whether your spouse or family can maintain a similar standard of living after you are gone, it is important to replace your income. For most people, this involves purchasing a life insurance policy.
  2. Choose a guardian. At this point, it is not only necessary that you choose the ideal guardian for any children—or future children—but that you explicitly name that person in your estate planning documents. Do not rely on the courts to carry out your wishes absent any written documentation.

What Documents Do You Need for a Comprehensive Estate Plan?

While the specific documents you will need to file can vary depending on your assets and your current personal circumstances, many common choices may work for you. Assess the potential value of each of the directives on this list, and determine which best fits your situation:

  • Will. A will is, most often, a written, witnessed legal document that explicitly states your wishes regarding the distribution of your assets as well as the guardianship of any children. While oral or unwitnessed versions of a will may be possible depending on the circumstances surrounding your death, a written, witnessed document gives you the best chance to make these decisions according to your desires. Most people utilize the services of an estate attorney to prepare and witness a will.
  • Medical directive. As an addition to a living will, if you cannot make medical decisions on your own, you can establish your wishes regarding your medical care in written form. You may also want to establish a medical power of attorney for health care to make these decisions for you. If combined, the two are usually termed an advance medical directive.
  • Trust. If you have significant assets, creating a trust may be the most appropriate way to ensure they are protected and distributed according to your wishes. A living trust can be altered by you (the trustor) at any time before your death, and you can designate a trustee who must care for your assets and distribute them to your beneficiaries according to the beneficiaries’ best interests. In addition, distribution will occur without the need for probate court, speeding your beneficiaries’ access to your estate.
  • Financial power of attorney. If you become incapacitated and unable to manage your finances on your own, a durable power of attorney can perform your financial actions for you. Alternatively, establishing a limited financial power of attorney allows you to specify which actions and situations the power of attorney can manage, including paying your taxes, monthly payment of your bills, or even asset management.

Other Considerations

Aside from the various directives listed above, you may hold other types of assets that require additional consideration. For example, any retirement plans and insurance policies—including life insurance, health savings plans, and others—may have required you to specify your beneficiaries. Be sure those named align with your current wishes, as individual accounts and their beneficiary designations typically outweigh those listed in a will.

It is also important to ensure you have not neglected to name beneficiaries on any of these products or for any of your critical assets. If you fail to provide specific information, a probate court will likely need to distribute the assets concerned according to state law. Finally, similar state laws can affect whether your estate is subject to estate taxes or inheritance taxes. Currently, California state law provides the following:

  • There is no state inheritance tax or estate tax in California.
  • Current federal estate tax becomes effective if the estate is worth over $11.58 million per person.
  • Any federal estate tax is typically paid from the estate before distribution to beneficiaries.
  • Trust taxes only apply to income generated from assets in the trust after the trustor’s death, as new income.

Should You Consider Professional Estate Planning Assistance?

As mentioned earlier, many individuals choose to utilize the services of a dedicated financial advisor and estate attorney to aid them in estate planning. However, would you benefit from estate planning assistance? Although every estate is different, the answer is: almost definitely.

Estate attorneys are uniquely experienced in the complex state and federal laws that affect wills, trusts, powers of attorney, child guardianship, and other directives in California. Especially if your estate is large, complex, or your beneficiary designations are complicated, an estate attorney can prove essential to ensuring your estate is divided among your beneficiaries without being held up in probate court. Similarly, an estate attorney can help you provide complex advance directives for end-of-life and medical care should you become incapacitated.

Even for less-complex estates, while you may be able to determine who should receive your assets, guardianship of your children, or even make medical and financial decisions on your behalf without the help of a professional, at a bare minimum, you will still need to draft the associated legal directives, sign, and have them witnessed. In addition, an experienced estate attorney can aid you in determining the value of your assets or help you locate a professional to help. Perhaps even more importantly, an estate attorney can ensure your wishes are legally enforceable.

Contact a California Estate Attorney

If you have worked to build an estate of any size—from small and modest to sizable—you can rely on the experienced estate attorneys at Huber Fox, P.C. Our skilled team can help you develop a comprehensive estate plan that meets your needs now and adapts seamlessly as your situation changes throughout your life. Contact us today at (916) 237-8781, or navigate to our website for more information.

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