When you hear the phrase “estate planning,” you might immediately assume this area of the law does not apply to you. After all, how many people have an estate? But estate planning is vital for families of all sizes and of all tax brackets and talking to a Mission Hills estate planning attorney can make the difference in how your family is taken care of in the future.
Whether you are married and have young children, are a single parent, are married without kids, or in a committed relationship but are not legally married, your family would benefit from planning your estate.
No one wants to consider their end-of-life plans. It is a conversation no one wants to have. Most of us don’t want to think about what might happen to our loved ones after we die. However, without proper estate planning, your family could be thrown into chaos after you die.
5 Reasons Estate Planning is Essential
Today, we will discuss the 5 most important reasons to hire an estate planning and trust attorney to help plan your estate.
- Ensuring Your Assets are Distributed According to Your Wishes
The primary purpose of estate planning, and the one most people are familiar with, is creating a will. A will stipulates how one’s property will be split in the event of one’s death.
If you aren’t wealthy, you may assume this is unnecessary. But most people have a number of assets that would be in flux if they suddenly died.
Bank accounts, retirement accounts, stocks, bonds, real estate, cars, jewelry, musical instruments, and collectibles all have value, and it is crucial to consider who would receive them if you passed.
Let’s look at a hypothetical: imagine you are in your mid-50s and are engaged to the woman who will soon be your second wife.
If you suddenly pass away tomorrow and don’t leave a will behind, who would be in charge of your property?
Legally, this is murky territory. When someone dies without leaving a will, the courts will split your assets. This is called dying “intestate,” and each state has its own laws and regulations for this occurrence.
If your parents are still living, one of them may be assigned to be the executor of your estate and not your fiancé. The executor determines how assets are divided. Your parents could decide to leave your fiancée out of the process entirely, leaving her unprotected.
If you don’t have any living relatives, or if they decline to be your executor, the probate courts will assign a public trustee to divide your property.
Additionally, what will happen to your children and your ex-wife in this scenario? Perhaps you intended all your property to transfer to your children, but the courts decide to split your assets between them and your parents. They could end up with a smaller portion of your assets than you would have liked.
But without express wishes from the deceased, the courts and your appointed executor will have to make such decisions themselves.
Estate planning is all about protecting your loved ones. While it can be difficult to imagine the end of your life, things will be much more difficult for your family if you do not take the time to plan for it.
- Protecting Your Young Children
If you have children who are minors, thinking about your own (or your spouses’) untimely death is likely even more painful. No one wants to think about such grim circumstances but ignoring the possibility will not make it any less likely.
Estate planning lets you name who will become your child’s guardian in the event of your death.
You may assume that your parents or a sibling would become your children’s guardian, but without a will stipulating your wishes, your family members could decide not to take responsibility.
Or what if you don’t trust anyone in your family to care for your kids and would prefer a friend care for them? Without a will, this is extremely unlikely.
Your children could end up living with an unfit family member or being placed in foster care.
If you have minor children, you should speak with a trusted family member or friend and let them know that you would like them to be your children’s guardian if anything happens to you. You can then add this directive to your will.
You can make individualized requests for your children’s care in your will, as well. If one of your kids has health problems, you can create a financial plan for their continued medical care.
Estate planning also allows you to establish trusts for your children. This will protect their inheritance from greedy adults who might try to take advantage of them and ensure that they only have access to the assets you left behind once they are adults.
- Saving Your Family Money
Believe it or not, without proper estate planning, your family could lose money.
When someone passes away without a will, their assets are divided by probate courts.
A trustee is assigned to the estate, and they will pay off any outstanding debts, comb through your accounts and assets, and divide your property as they see fit.
This process can be quite costly. Any court costs and attorney’s fees will come out of your estate, and in big cities like Los Angeles, the courts are so busy that this process can last for months.
By the time your intended beneficiaries receive their share of your estate, they may have lost a significant portion to court fees.
Proper estate planning also protects your assets from the IRS. An experienced attorney will help you create a will that minimizes the impact of state and federal taxes on your assets.
After you die, your property is vulnerable to estate taxes, inheritance taxes, gift taxes, and income taxes. These costs can significantly lessen the amount your loved ones will receive.
After working all your life to provide for your loved ones, it would be a shame to let a significant portion of your estate be lost to bureaucratic red tape.
- Preventing Squabbles Over Property
You may think that property disputes are the stuff of daytime soaps and Agatha Christie novels, but in emotionally charged situations, even tight-knit families can be overtaken by strife.
Picture this: you have two daughters, Lisa and Anne. Lisa has two children, and Anne has one. You pass away, leaving no will and no trusts for your daughter or grandchildren. Anne, your older daughter, is named the executor of your estate.
Lisa believes that she should inherit two-thirds of your estate, and Anne should receive one-third, essentially splitting your estate according to the number of grandchildren.
However, Anne believes that the estate should be divided 50-50 between siblings.
Without a directive from their parent, the sisters could soon be in an ugly conflict. It can be tempting to pass these decisions on to the younger generation, but this places enormous stress on grieving people.
Estate planning allows you to minimize family feuds and ensure that the aftermath of your death is as peaceful as possible.
- Protecting Your Medical Interests
So far, we have discussed estate planning as it pertains to death and wills. But this is not the only area where estate planning is essential.
Did you know that planning your estate could help you if you become sick or grievously injured?
Your attorney can help you create a durable power of attorney and a healthcare proxy. These documents record your wishes for your medical and legal concerns if you are ever incapacitated.
A durable power of attorney appoints a family member or friend to manage your affairs if you become medically unable to do so. Perhaps you end up in a coma or experience a debilitating brain injury; you’ll know that your legal and financial decisions are in the hands of someone you can trust.
Similarly, a healthcare proxy appoints a person to make medical decisions for you if you cannot communicate your wishes.
Your healthcare proxy will make decisions regarding your care, and ideally is a person with whom you have discussed your wishes concerning the end of your life.
These directives, also known as a “living will,” keep things uncomplicated if you are even injured or incapacitated. Without them, the court will appoint an individual to make your medical decisions – usually, an immediate family member.
This could mean that parents are making medical decisions for an estranged child, or a sibling with very different religious views has to decide whether to keep their brother on life support.
Worst of all, if you do not have a living will and your family members are unwilling to make such decisions, the courts may appoint someone of their choosing, who may have no idea what you imagined for your end-of-life care.
Helping Families in Mission Hills Plan Their Estate and Trust
Whether you have a tight-knit biological family or a chosen family of dear friends, they should be provided for in the event of your death. While it can be difficult to consider such matters, it is time well-spent.
If you would like to speak to an attorney in Mission Hills that practices in estate and trust planning, contact The Law Offices of Larry D. Simons right now. Call us at (818) 672-1778 and take the first step towards protecting your loved ones.
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