Estate plans can provide many protections for those who utilize them. For many affluent California residents, reducing estate taxes is often of concern. Fortunately, estate planning can help them achieve that goal, but it is important that plans are updated when changes to the law take place.
Transferring assets is a vital part of trust preparation
Many California residents believe that using a trust as part of their estate plan is wise. This line of thinking can often allow individuals to take advantage of the many benefits a trust can offer. However, it is important to remember that trust preparation goes beyond simply creating the trust and that assets need to be put into it.
In some cases, individuals will transfer some assets to a trust when they create the account, but in other cases, they may intend to transfer assets later but forget or otherwise not get around to doing so. In the latter case, a trust that has no assets transferred into it is useless. If a person leaves assets out of a trust or forgets to put them into the account, those assets would be addressed through the probate process.
Regardless of amount of wealth, wills can benefit all adults
Over the years, most people in California and across the country accumulate various assets. Many of these assets could prove beneficial to family members in the future, and as a result, people generally want those assets to pass on to those loved ones. However, without wills and other estate planning documents in place, who gets what might not be as guaranteed as one would think.
A will is a great starting point for a comprehensive estate plan, but according to a recent survey, only 32% of adults who responded indicated that they have a will. The main reason given for not creating one is that individuals do not have a considerable amount of assets. As a result, they believe that they do not need a will.
Health care directives can bring peace of mind
Most people want to feel as if they have at least a modicum of control in any given scenario. There are certainly situations in life that no California resident can control, but often, preparations can be made that could at least act as a guide for handling certain ordeals as best as possible. For instance, many individuals may benefit from creating health care directives that would allow them to provide instructions for care in a health crisis they cannot control.
If an accident or illness results in a person suffering serious injuries, being in a coma, having cognitive impairment or facing a terminal diagnosis, that individual likely cannot communicate his or her wishes for care. An advance directive is a document that could allow parties to express how they would like this type of scenario handled before in the event they cannot speak for themselves. The document can include wishes for care, such as all life-saving measures, only comfort care or something in between, and it could include a do-not-resuscitate order to use if a person stops breathing and does not wish to be resuscitated.
Probate issues: What is an insolvent estate?
When a person in California or elsewhere spends more money than he or she earns in income, it can create serious financial problems. For instance, such a person might rack up substantial credit card debt. If a person has an estate plan but the estate is bankrupt, it can cause a lot of problems for loved ones when complicated probate issues arise.
An estate owner might die owing more debt than the estate has in equity. In such circumstances, the estate in question must be liquidated in order to pay off the debt. It is possible that inheritors of an estate may choose to pay back loans left outstanding when a decedent's estate is insolvent. Probate judges typically try to help reduce such debt as much as possible.
Wills, other planning documents can benefit loved ones
It is common for people to think that they have plenty of time to get certain affairs in order. Unfortunately, too many individuals in California and elsewhere end up in difficult situations without having made the needed plans to handle certain details. In particular, many parties do not create wills or advance health directives that could help their loved ones handle financial matters and other important affairs after a loved one's incapacitation or passing.
Though numerous people think of estate planning as something for themselves, creating a plan can benefit loved ones just as much as the person making the plans. It can be immensely overwhelming and stressful for loved ones who do not know what to do in a potentially dire situation. Having instructions can bring a considerable amount of relief.
Probate begins with filing and validating the decedent's will
Being in the position to handle a person's final affairs can be rewarding and challenging. Some California residents may be happy to act as a loved one's executor in order to close the estate and ensure that the person's final wishes are carried out. Of course, the probate process also involves taking various legal steps, starting with filing the will with the court.
Filing the will and having it validated by the court begins the legal process of settling the estate. The executor will need to locate the document, take it to the appropriate court and file a petition to open probate. The court may also need a death certificate or other documentation before starting the process. A hearing will likely take place to ensure that the will is valid, and this step can include allowing heirs and beneficiaries to review the document and raise any concerns they may have about its validity.
Follow instructions to see a loved one's estate through probate
Handling a loved one's final affairs can be a bittersweet time. Many California residents undoubtedly feel grief over a family member's passing but may also remember the loving time they spent together as they assess the final estate. Of course, if a person is an executor and must see the estate through probate, it can be a confusing and stressful time as well.
Understanding probate is not always easy, and in some cases, formal legal proceedings may not be necessary. However, if a person left behind a will, that document will need to be probated with the court. After filing it with the court and ensuring its validity, the executor will need to follow the instructions in the will as well as handle remaining bills, filing final tax returns and much more.
Should a college-bound child create a power of attorney document?
Many California parents will be sending their children off to college for the first time this year. Though it is an exciting time, it can also be emotional and, with the current state of the world, nerve-wracking. As a result, it is wise to take measures to ensure that parents have the ability to care for their children should anything happen, and those measures could include obtaining a power of attorney.
Some individuals may think it drastic or even silly to have a college-aged person create a power of attorney document. However, even if parents still consider their college-bound student a child, that child has likely reached the age of 18, meaning he or she is legally an adult. As a result, parents no longer have automatic control over their child's decisions or personal affairs, including if something puts their child in a medically compromising situation.
Deciding trustee fee is an important part of trust preparation
Deciding to use trusts as part of their estate plans can help numerous California residents more effectively express their management wishes for certain assets. Of course, trust preparation takes a lot of consideration, and one aspect to consider is how much to pay the trustee. Trustee fees are essentially the compensation paid to the person for managing the trust. How much should a trustee receive?
The grantor, or person creating the trust, has the opportunity to indicate how much a trustee will receive and how the fees will be distributed. For instance, a trust that generates a regular income and contains valuable assets may warrant an annual fee set as a percentage of the trust assets. If a percentage does not seem applicable, a flat fee could also apply.
