If you are thinking about starting the process of estate planning, there are certain steps you can take to ensure you don’t miss anything. Not every step or task in the order of estate planning detailed below will be necessary for every individual, but after you complete your directives for your estate, you should confirm you’ve got all your bases covered by going over your estate plan documents with an experienced estate planning lawyer. Follow through the general estate planning steps below to get started with California estate planning.
Step 1: Determine Your Estate Planning Goals
By defining your goals at the beginning of the process, you’ll save time by streamlining your efforts to address the areas of estate planning that are important to you. Most individuals embark on estate planning for the basic reason of taking the burden off their loved ones of handling their estate following their death. By determining what exactly your estate plan should accomplish, you can determine what types of documents your estate plan will include, such as a trust, a will, a living will, etc. Therefore, one of the first things you should do is name your beneficiaries.
Another common goal of estate planners is to minimize tax burdens on their estate. If this is important to you, you should familiarize yourself with state and federal tax laws regarding inheritance taxes and other related taxes. Consequently, this step will help you determine what types of accounts and estate planning options can most effectively meet your needs for tax considerations.
If one of your estate planning goals is to protect your assets from debtors, creditors, probate, contesting parties, or some other risk, then you’ll want to consider establishing a trust or some other legal framework that can safeguard your assets from those specific threats.
Many individuals have an interest in estate planning because they want to protect their family and/or assets should they become unable to make decisions regarding their estate due to medical incapacity. In this case, you will need to include a power of attorney and an advanced healthcare directive, as well as designate someone to act on your behalf, in your estate planning documents.
Step 2: Take Inventory of Your Assets and Debts
This step involves organizing information regarding your assets, debts, and obligations. Create a list of your financial accounts, including bank accounts, retirement accounts, investment portfolios, real estate, vehicles, jewelry, and anything else you have with value, along with the estimated value of each asset. You should also include any partnerships in businesses with details about your percentage of ownership, shares, etc. Lastly, list any financial obligations, such as debts or liabilities you have, such as mortgages, credit card bills, car loans, etc.
Then, formulate a plan and instructions for how you would like each of your assets to be managed or sold, how you would like your assets to be distributed and to whom you wish them to be distributed, and a plan for fulfilling the financial obligations and paying your debts after you pass.
Step 3: Draft and Finalize the Necessary Documents to Fulfill Your Wishes
You likely already know who your beneficiaries are, but you’ll also need to designate a trustee if you will be establishing a trust, an executor if you’ll be including a will in your estate plan, a power of attorney if you need to create an advanced health directive, and a guardian for your minor children, if applicable. You will also need to nail down distribution portions and/or structure a plan for dispersing assets within your trust if it applies. A qualified estate planning attorney can be an invaluable resource at this phase of the process to ensure you have addressed everything and met the goals of your efforts without any legal questions.
Step 4: Revisit Your Estate Plan Periodically
It is important to revisit and revise your estate plan at a minimum of every five to 10 years. However, it’s never a bad time to update your estate plan, especially after a significant life event happens, such as a birth, death, marriage, divorce, medical diagnosis, or other major change. Also, an estate plan should be revisited after the acquisition or selling of assets such as real estate or vehicles. It is to be noted that in California, the dissolution or annulment of the marriage of an individual automatically revokes their former spouse’s disposition, appointed power, designation of assets or property, or fiduciary nomination unless the will specifically indicates otherwise. Consequently, any pre-existing trust or will is also invalidated by a marriage to a new spouse.
FAQs
Q: What Is the Inheritance Law in California?
A: The California Inheritance Law states that if an individual passes away without a will, their estate goes to their spouse. If they weren’t married at the time of their death, their children are the next in line. If they have no children, the succession then goes to their parents, then their siblings, then their grandparents, and then their extended family (e.g., aunts, uncles, nieces, nephews, cousins). If there are no relatives and their spouse preceded them in death, the spouse’s relatives can be named as successors. Otherwise, the estate is turned over to the State of California.
Q: What Is a State of California Estate Plan?
A: An estate plan in California is a legal directive for the distribution of an individual’s assets and debts following their death. It may include different documents and financial holdings such as a will, an advanced health directive, and/or a living trust. An individual’s estate is the assets they own at the time of their death. Plan documents allow someone to manage what will happen to their assets after they die.
Q: How Much Does an Estate Have to Be Worth to Go to Probate in California?
A: For a deceased individual’s estate to be required to go through probate in California, the total value of the estate must be at least $166,250, and there is no exception to this law. Any assets not eligible for a simple transfer of ownership will require probate.
Q: Who Is Considered an Heir to an Estate in California?
A: The first heirs-at-large to an estate in California is a surviving spouse and surviving children. Grandchildren would also be a direct heir if the parent related to the owner of the estate is deceased, according to California’s Intestate Succession laws.
Seeking Legal Advice for Your Estate Planning Efforts
Estate planning can be a complicated feat, but the tighter your documents, the more likely your estate plan will be carried out to your wishes and not subject to contesting parties or delays in probate. If you would like to create a seamless and unchallengeable estate plan that meets your goals, protects your assets, and safeguards your loved ones following your death, reach out to Fishman, Larsen & Callister and speak to a member of our legal team. Estate planning doesn’t have to be a drawn-out process. Let us help you finalize your estate plan so you can spend your time on other things.