Regardless of where you are in life or what you want to accomplish with your estate plan, everyone who creates a plan in California will likely rely on at least four important tools. These tools will protect most of your important interests, and allow you to achieve most of your estate planning goals. Even if you and your attorney decide that you need additional tools to help you, understanding what these four important tools do and how they work can give you a much better understanding of why estate planning is so important.
Important Tool 1. Your will.
A last will and testament serves as the most basic, and one of the most important, estate planning devices you will make. This important tool gives you the ability to make inheritance choices. You can make almost any inheritance choice you want as long as you are sure that your will meets some basic legal requirements imposed under California law. In addition to these basic requirements, however, your will must also include additional elements that will allow it to work in conjunction with the other important tools you create. In a trust-based plan, the will typically plays a secondary, but still important, role.
Important Tool 2. Your revocable living trust.
Most people believe that they will use their will to make inheritance choices. While this may be true for some with modest estates, your last will and testament will most likely serve as a secondary inheritance vehicle in a trust-based plan. The primary way you will distribute inheritances after you die will likely be through your revocable living trust. Your trust not only allows you to make inheritance decisions, but also allows you to do so largely outside of the probate process. Except for modest estates, a will does not offer the probate avoidance benefits a revocable living trust provides.
Important Tool 3. Your durable power of attorney.
Do you know who would step in to manage your affairs if you became incapacitated tomorrow? If you don’t have a durable power of attorney, the answer to this question is not clear. A durable power of attorney gives you the ability to name a representative who will take over managing your affairs if you lose your ability to make choices. This tool is an important part of every estate plan regardless of how much property own, what inheritance choices you make, or any other issue your plan addresses. As is the case of a will, in a trust-based plan, the power of attorney typically plays a secondary, but still important, role.
Important Tool 4. Your advance health care directives.
Similar to the need for durable power of attorney, your estate plan will need to include an advance health care directive. These directives allow you to make medical decisions now, while you are still capable. Should you lose the ability to make choices, your medical directives will communicate your wishes to your health care providers. They should be paired with an important medical information disclosure document mandated by the federal law commonly referred to as HIPAA.
CAUTION: While these documents are at the core of a good estate plan, there are other documents that should be included to provide a comprehensive plan to ensure that your affairs can be handled without unnecessary and expensive court proceedings. Working with an experienced and qualified estate planning attorney is the best way to get the plan that will best fit your needs and goals.
- Estate Planning for Young Professionals: Building a Foundation - March 3, 2024
- How to Deal with Debt and Mortgages in Estate Planning - March 1, 2024
- Estate Planning and Philanthropy: Leaving a Charitable Legacy - February 28, 2024