An estate plan is a set of legally binding documents that allow you to prepare for the inevitability and unexpectedness of death. You must prepare and execute the paperwork properly with the help of an experienced lawyer to ensure its enforceability and effectiveness. Reviewing your estate and choosing the appropriate tools you will use to transfer ownership of the estate assets is all a part of estate planning.
Estate planning is the process of determining the preservation, management and distribution of your assets upon death. One of the primary reasons people create estate plans is to pass on their assets automatically and directly to their designated beneficiaries without the need to go through probate.
Why do you want to avoid probate, and how?
Probate can cost anywhere from tens to thousands of dollars in California, especially when delays and disputes arise. It also prevents your beneficiaries from immediately receiving and benefiting from the assets you left behind for them. Probate is a time-consuming and unnecessary burden your family will have to assume if you do not have the right estate plan in place. Here are different estate planning tools that can help you bypass the probate process:
- Living trust
- Transfer on death (TOD) designations
- Payable on death (POD) designations
- Jointly owned accounts
- Jointly owned properties with rights to survivorship
- Life insurance policies
A will almost guarantees probate because the court will need to verify its legitimacy before authorizing the executor to fulfill the will instructions. Still, it can supplement your other estate planning accounts and documents. Furthermore, a will can allow you to do more than transfer assets.
Estate plans can do more than transfer assets
What people may not readily know is that an estate plan can help you plan for when you do not have the capacity to make sound and sensible judgments. If you get critically ill and cannot make decisions, you can explicitly write down on your will the kind of advanced medical directives you want and those you refuse to receive. You can also assign guardianship of your minor children in your will, so they do not fall victim to the system. A will also enables you to give someone a power of attorney to act on your behalf concerning financial and estate matters.
An estate plan can preserve your legacy and protect your family if done correctly. The sooner you begin estate planning, the more you can learn the right tools to use and update them regularly.