Generally speaking, estate planning is the process by which a person arranges for their own desired distribution of their property at their death. The majority of people die without ever doing any estate planning because they think the law will automatically provide appropriately for the distribution of their assets to their heirs.
Unfortunately, it is impossible to know whether or not their testamentary wishes are actually fulfilled. Others are reluctant to do their estate planning because of the discomfort inherent in thinking about their own mortality. However, the benefits of doing one’s own estate planning far outweigh the benefits of leaving it up to chance
Who needs an estate plan?
Most everyone understands the importance of implementing an estate plan when one is married with children. Planning for the care of children if disaster strikes is foremost on the minds of most parents when they are contemplating their estate plan. This is often the impetus for doing their estate planning in the first place.
Regrettably, many single individuals are unaware of the consequences of not having an estate plan should something happen to them when they are really the ones who need it most. Since there is no one with “automatic” legal authority to step in and take over should they become incapacitated or should they die, the court is forced to get involved.
This process, called “probate” is expensive and time-consuming for all concerned. Preparing even a simple estate plan will allow a single person’s estate to be administered without going through the probate court process.
What might be the financial cost of NOT implementing an estate plan?
Dying without an estate plan will probably force your family to become involved in a “probate” in order to administer your estate and distribute your assets to your heirs. Even if you become incapacitated without doing advance planning, a certain type of “living probate” may be necessary. Probate, being a court proceeding, can be a long, drawn-out, costly undertaking.
For example, in California, a simple probate will often take from nine months to two years and will cost from 4-10% of the value of the decedent’s estate. Though states’ probate courts vary in their efficiency, probate proceedings are of public record and privacy goes by the wayside. Implementing a properly executed estate plan will help your family avoid the probate court if you become incapacitated or when you die.
A Comprehensive Living Trust Estate Plan prepared by Day & Associates is an excellent way to achieve the many benefits of a thorough estate-planning package. Benefits of the Comprehensive Revocable Living Trust Estate Plan
- Avoids probate at death, it is expensive (sometimes 7% or more of the gross estate), and time consuming (9 – 24 months)
- Prevents court control of assets at incapacity and can help avoid costly conservatorship
- Provides maximum privacy
- Allows for quicker distribution of assets to heirs on death
- Can be revoked or changed at any time
- Can reduce or eliminate estate taxes
- Can protect minors with special needs Documents Included in the Living Trust Estate Plan
- Revocable Living Trust (if married, Joint with A/B/QTIP provisions, if appropriate)
- Trustee’s Certification of Living Trust
- Community Property Agreement (if both spouses choose to have one)
- Pour-over Wills
- Durable Powers of Attorney for Asset Management, Funding and Special/Limited Powers
- Advance Medical Directive (Power of Attorney for Health Care) with HIPAA release forms
- General asset transfer documents and letters
- Specific transfer documents (i.e., Quitclaim or Trust Transfer Deed for primary residence)
- Explanatory materials regarding selected estate-planning concepts
- Location Lists
- Final Instructions Checklist and Burial Instructions Forms
Other Types of Estate Planning Documents
Many other types of trusts and entities may be used when developing a complete estate plan for a client including but not limited to the following: