Estate planning refers to managing and planning for the future of your assets, finances, and related matters. The estate planning process allows individuals to make decisions on how things will be managed in the event of their death or incapacitation. An individual can make critical decisions while still capable of doing so and control how their assets are distributed. A comprehensive estate plan will also include information on how medical care is to be handled if certain choices become necessary. There are many estate planning decisions to be made. These should be given careful consideration. The choices made in the estate planning process are likely to have a meaningful impact on you, your family, and the legacy you leave behind. Financial decisions can also affect businesses you have established. An estate plan can include directions on business succession. A knowledgeable estate planning lawyer can advise you throughout the process to help you minimize tax liabilities and protect your assets effectively. The Estate Planning Process When you create an estate plan, it becomes the instructions for what will take place after you pass away. It will include the method of distributing your assets. Beneficiaries are named, and you can specify exactly how they will receive their inheritance. If the assets are moderate, the estate planning process will likely be simpler. If assets are more numerous, there are likely significant benefits to be gained by an estate planning attorney’s advice and assistance. The attorney can help properly value your assets. This works to ensure the estate and beneficiaries do not have excessive estate taxes and gift taxes. When transferring assets to your future generations, you can select the timing and method of asset distribution. Inheritance can happen before or after your death or incapacitation. Transferring assets is usually accomplished by means of a will or trust. While there are similarities between a will and a trust, they are different legal documents. Other documents can also be included in the estate plan. Healthcare directives give the person of your choice the right to make decisions regarding your health and well-being in the event of your becoming incapacitated. Durable power of attorney gives the person you appoint the job of managing your financial affairs. These documents both work to ensure that your wishes are respected. Wills in California A deceased individual’s assets are distributed as stated in their will. Wills may also outline who would become the guardian for any children of the deceased. The person creating the will is called the “testator.” It is legally required that the testator be mentally and legally capable of making the decisions that go into a will. If someone dies before making a will, the distribution of assets will follow the state’s beneficiary hierarchy. The deceased’s relatives will systematically inherit the assets. The state’s beneficiary hierarchy does not take into account the relationship each relative had with the deceased. A will goes into effect after the testator passes away. After the will is filed with the court, the process of probate begins. Wills are public documents that cannot be kept confidential. The state of California assesses probate fees, and the process is often a lengthy one. Using a Trust to Protect Assets Trusts protect assets and direct their handling and distribution. This protects against unnecessary probate delays and costs. Depending on your objectives, family dynamics, and finances, an estate planning attorney will recommend and help customize the appropriate type of trust for you: • Educational Trust – Support can be provided for the education of beneficiaries. • Charitable Trust – Specific charitable organizations can receive assets. • Irrevocable Trust – This protects assets from certain legal actions. • Living Trust – Assets can be controlled before the trustor (person who created the trust) passes away, and assets are then transferred to beneficiaries after the trustor’s death. • Special Needs Trust – Provision for individuals with disabilities can be made while maintaining eligibility for governmental benefits. • Life Insurance Trust – The beneficiary can be the trustor’s life insurance policy. • Spendthrift Trusts – The trust controls and administers the trustor’s assets. Estate Planning to Establish Your Legacy Wills and trusts can be complex. But when properly executed, they benefit all parties by protecting assets, minimizing taxes, and efficiently distributing assets to beneficiaries. The Law Office of Timothy G. Mishler can help you create an effective and comprehensive estate plan to meet your needs. Call (626) 357-3223 to schedule a free consultation.