To ensure your assets are properly managed after your death, it is important to begin the process of estate planning as soon as possible, whatever your age or health condition. Estate planning allows you to direct the preservation and transfer of your assets carefully, so you have the assurance that your valuable and sentimental possessions are passed on to your loved ones. A successful estate plan also allows you to plan for control of your assets if you become incapacitated by permitting certain family members or an estate attorney to see that your wishes are carried out.
Without proper estate planning, you risk leaving your loved ones in a serious bureaucratic predicament after your death. Not taking steps now to develop a detailed estate plan means that your estate can enter into probate. Often taking years to settle, probate is the process in which, due to the absence of an estate plan, the court assumes responsibility for overseeing the distribution of a decedent’s assets, settles any outstanding debts, and handles any other remaining financial affairs.
Take control of your estate, limit potential uncertainties, and spare your loved ones the hassle of contending with the probate court by creating a detailed estate plan today. If you have questions about planning your estate or would like to consult a professional Palm Springs estate planning attorney to safeguard your assets’ future, contact Bochnewich Law Offices today. Our expert team has decades of experience in estate litigation and can navigate every aspect of the estate planning process.
What Is the Difference Between a Will and an Estate Plan?
Many people mistakenly believe a will and an estate plan are interchangeable, but these documents are not the same and cover different components of your plan for asset distribution after death. A will can delineate your wishes for how your property is managed, such as directing specific assets to certain family members, but an estate plan goes more in-depth and provides a more comprehensive outline for your Palm Springs estate planning attorney and your loved ones. An estate plan allows you to make several crucial decisions for your future. It results in the best outcome, especially if your estate includes a substantial amount of property or assets.
The Six Essential Components Your Estate Plan Must Include
To develop the most comprehensive estate plan, you must include the following six essential components:
The most fundamental, well-known aspect of estate planning is a last will and testament, which specifies your wishes concerning the management and distribution of your assets. While not as exhaustive as an estate plan, a will is still incredibly helpful and will often form part of a more thorough estate plan. Your will should include the selection of an executor, or the person who supervises the estate settlement process from the first step to completion. An executor will hold responsibility for collecting your assets, paying your bills and debts, submitting tax returns, petitioning for court documents, and distributing your assets on your behalf. You can choose more than one executor, and many people decide to appoint a lawyer or financial advisor as a co-executor.
A trust is a fiduciary agreement that allows one person to maintain assets to benefit another person or persons. This instrument comprises a settlor who creates the trust, a trustee who manages it, and beneficiaries who accept the benefits stipulated in the trust. A trust can be prepared in various ways and can stipulate precisely how and when beneficiaries receive the assets it contains. Trusts generally are handled outside of probate, meaning beneficiaries may secure access to them in a shorter time than would be involved in an asset transfer based on a will.
Trusts come in two primary forms: revocable and irrevocable. In a revocable trust, you retain access to the assets during your lifetime, and these assets are treated like any other portion of your estate during your lifetime. This agreement is flexible and can be altered or terminated at any time if your intentions or circumstances change. In an irrevocable trust, your assets are relocated out of your estate, meaning you are unable to alter your terms for asset management or terminate the trust after the trust has been officially executed. This prevents your assets from being subject to estate taxes and relieves you of the tax liability carried by the income produced by the assets.
- Beneficiary Designations
As part of your estate plan, you must name a beneficiary for each of your accounts, including bank accounts, stocks, brokerage accounts, and retirement accounts. By naming a beneficiary, you are considering these accounts to be “payable on death.” If you fail to do this, the court will decide how these funds are allocated. Beneficiaries must be over 21 years of age and considered mentally competent. Make sure you regularly update this list to ensure it stays current and will not cause issues for your loved ones in the future.
- Guardianship Designations
Naming a legal guardian for your minor children ensures they will be properly taken care of and their needs will be met until the time they reach adulthood. You can choose a spouse, family member, or close friend as a guardian; just make sure to choose a trustworthy, reliable person who shares your values and is undoubtedly willing to care for your children. This person will be responsible for managing any funds left to your children but is legally obligated to follow state guidelines regarding how the funds are spent and invested. Without specifying guardianship designations, the court will decide who will be responsible for raising your children. In rare cases, the court can order that your children be reduced to wards of the state.
- Durable Power of Attorney
A durable power of attorney (DOA) is a document that gives someone the power to make legally valid decisions and take specific actions on your behalf if circumstances arise where you are determined mentally incompetent. Without a DOA, the court will have the authority to choose how your assets are managed, and this decision rarely correlates exactly with your intended wishes. This document empowers your agent to handle your financial affairs, negotiate real estate deals, and make other legal decisions. A DOA can go into effect immediately following your incapacitation and typically continues up until your death, but it must be determined while you retain use of your mental faculties and cannot be established after becoming incapacitated.
- Healthcare Power of Attorney
The other essential document in your estate plan that fills a critical role is the healthcare power of attorney (HCPA), which specifies a person to be given legal authority to make all healthcare decisions on your behalf if you become incapacitated and unable to do so yourself. By designating someone as an HCPA, you are quite literally placing your life in their hands. Therefore, you must choose someone who can be trusted to follow a recommended treatment or another course of action that you would be expected to agree with if you were capable of making this decision.
When to Review and Update Your Estate Plan
Reviewing and updating your estate plan regularly is essential, but there are certain life events that should also prompt you to do so, including:
- Marriage, separation, or divorce
- Significant injury, illness, or disability suffered by your spouse or another family member
- Change in your financial status
- Opening or dissolving a business
- Borrowing a large sum of money or taking on any other type of liability
- Purchasing a large asset, such as a piece of property
- Receiving an inheritance or sizable gift
- Birth or adoption of a child or grandchild
- Change of circumstances around your designated guardian for any minor children
- Your executor or trustee undergoes a change in circumstance or dies
Start Planning Your Estate Today With Bochnewich Law Offices
Estate planning is a complex area of law. Protect your family by investing in a plan early. The only way to guarantee that you can create the most comprehensive, legally binding estate plan is to hire the services of a Palm Springs estate planning attorney. At Bochnewich Law Offices, we offer personalized, superior quality legal assistance to loyal clients throughout Southern California. Our team is exceptionally knowledgeable in all matters involving estate planning, including complex tax issues, and we have the experience, skills, and resources to handle even the most challenging cases successfully.
When you choose our practice for help with your estate planning, you can achieve valuable peace of mind that your assets will be properly secured and distributed after your death. For expert guidance during your estate planning process, contact Bochnewich Law Offices today for a free consultation by calling us at (760) 776-1380 or submitting the appointment request form on our website. With a deep dedication to providing our clients with the best possible legal representation, our respectful team takes a fully transparent, hands-on approach. We will treat you with the utmost care and compassion throughout every stage of estate planning.