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5 Myths About Estate Planning

A properly prepared estate plan will allow you to designate specific beneficiaries for all your assets, appoint trustees to manage your assets in case of death or incapacity, appoint guardians over your minor children, and appoint agents for your Powers of Attorney for Health Care and Property.

There are many misconceptions about estate planning that often lead to individuals delaying or avoiding the preparation of an estate plan altogether. Below are the top five misconceptions that we have encountered with clients:

1. A Will is all I need to protect my assets.

In California, if the decedent’s assets, including real property, are worth more than $150,000, then the estate must go through the expensive and time consuming process of probate. Therefore, if your assets are worth more than $150,000, a revocable trust can be crucial in avoiding probate and allowing the trustor to specify disposition of assets, designate specific beneficiaries for all the assets, and appoint trustees to manage the assets.

2. I only have a modest estate and do not need an estate plan.

You should always have an attorney assess your estate to determine if its value requires a will or a trust. If your assets exceed $150,000, you should consider a revocable trust. If you have minor children, you should at least have a will which designates guardians for your children. Even if your estate is small and there are no children, you should at the least have a Power of Attorney in which you appoint an agent to make medical or property related decisions in the event you are incapacitated or unable to make such decisions. In addition, your health directive can indicate burial instructions, your wishes to be an organ donor, and other end of life decisions. These are decisions that you can make so that your loved ones are aware of your wishes and are not left having to make difficult choices.

3. I’m too young to worry about estate planning.

As estate planning attorneys, one of the most frequently asked questions we receive is, “when do I need estate planning?” After seeing families scramble as a result of inadequate or incomplete estate planning, instinctively the answer is “yesterday”.

Every time this particular question comes up, it is difficult not to think of the times when a client has literally been fighting the clock. The truth is, it doesn’t matter how old you are or how much of an estate you have putting an estate plan in action as soon as possible is the best thing you can do for yourself and your loved ones.

4. I’m married and everything will go to my spouse.

Being married can make the transfer of assets easier. However, a number of circumstances make marriage even more complicated from an estate planning standpoint. Often, we have clients who are married and have children from previous marriages or relationships. In these situations, it is a common misconception that upon the death of the parent and surviving spouse, all the assets will flow to the surviving natural born children and step-children of the surviving spouse.

Pursuant to the Probate Code, the basic rule is that absent legal adoption, stepchildren will not inherit a share from the step-parent’s estate. Moreover, the step-parent, as the surviving spouse, would inherit all the assets from the deceased spouse who could have natural born children from a previous marriage. Thus, to ensure that children from a previous marriage or relationship inherit your property, it is important for blended families to have a trust to ensure not only that one’s assets are protected against probate, but that the assets will go where you intend. It is somewhat complicated when spouses have children from prior marriages to determine what the children should receive on the death of a step-parent or natural parent. Planning in this area is a must.

5. I do not need to review my estate plan.

As a general rule, it is always wise to revisit your trust at least once every two years to ensure that (1) the disposition of your estate to your named beneficiaries still makes good sense; (2) your named successor trustees remain qualified; (3) your assets are properly funded into your trust; and (4) your estate plan still matches your wishes. Often our clients come through our doors and have no clue what is in their estate plan. It is crucial that you revisit your estate plan from time to time to ensure that your assets are protected and your plan is in line with your present life circumstances.

Should you need to create a new estate plan or update your existing one, please do not hesitate to contact our attorneys. We work around the clock to help each of our clients with their estate planning needs.


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