Have you put off creating an estate plan? If so, have you listened to countless family members, and maybe even well-meaning friends, tell you how important it is to have an estate plan in place? While their prodding is undoubtedly well-intentioned, their time and energy might be better spent explaining to you exactly what an estate plan can do for you. Understanding the benefits of having an estate plan in place, after all, will be far more likely to prompt you to finally get started on your estate plan.
Components in an Estate Plan and the Benefits Offered by Each
The components you decide to include in your estate plan will depend on your unique needs and circumstances. Consulting with an experienced and qualified estate planning attorney is the only way to decide which estate planning tools and strategies should be utilized in your overall plan. Nevertheless, there are a number of goals that are commonly found in an estate plan. Learning more about how an estate plan can help you achieve those goals and about the overall benefits of some common estate planning components, may help convince you to get started on your plan.
- Avoiding the intestate succession laws. If you die without so much as a basic Last Will and Testament in place, you will leave behind an intestate estate. Doing so is tantamount to letting the State of California decide what happens to your assets after you are gone. Pursuant to the state’s intestate succession laws, only very close relatives will likely inherit from your estate. You give up the right to decide who receives family heirlooms and sentimental items from your estate. Creating even the most basic of estate plans ensures that you decide who inherits from your estate and exactly which assets they receive.
- Protecting assets intended for your minor child. Legally, your minor child cannot inherit directly from your estate. If you die without making provisions for your child’s inheritance, a court will have to decide who controls those assets until your child reaches the age of majority. If you fail to plan ahead through proper estate planning, the assets you leave behind for your child could wind up in the hands of someone you don’t trust and who doesn’t have your child’s best interests at heart. Creating a trust to protect your child’s inheritance lets you decide who will manage those assets and offers a certain amount of continued control over how the assets are spent through the trust terms you
- Planning for the possibility of incapacity. Incapacity is not a concern that is limited to the elderly. On the contrary, incapacity can strike anyone at any time as a result of a serious accident or debilitating illness. If you do suffer a period of incapacity, someone will need to make personal and financial decisions for you. A court will have to decide who that person (or persons) will be if you didn’t plan ahead. Your loved ones could also wind up battling over the right to make those decisions for you which could tear your family apart. Including an incapacity planning component in your comprehensive estate plan prevents such an unwanted outcome.
- Planning for the high cost of long-term care. The average yearly cost of long-term care (LTC) in California is almost $100,000 in 2019. Because neither Medicare nor most health insurance policies, with limited exceptions, cover LTC, your retirement nest egg could be at risk if you are faced with the need to pay for the high cost of LTC. By including a Medi-Cal planning component in your overall estate plan now you can protect your assets and ensure eligibility for Medi-Cal if you need it down the road.
- Honoring your wishes. Life and death health care decisions may need to be made for you at some point, such as whether to accept artificial hydration and nutrients. If you have an opinion about end of life medical treatment, the only way to ensure that your wishes are honored is to execute the appropriate advance directive and include it in your estate plan. Likewise, if you have specific wishes with regard to how your body is handled after you are gone, the only way to ensure that wishes are honored is by creating a funeral planning component within your estate plan.
Now that you have a better understanding of what an estate plan can do for you, isn’t it time to get started creating your plan?
Contact a Sacramento Estate Planning Attorney
Please download our FREE estate planning checklist. If you have additional questions or concerns regarding estate planning, or you are ready to get started on your plan contact us at the Northern California Center for Estate Planning & Elder Law to find out today by calling (916)-437-3500 or by filling out our online contact form.
- Living Trusts and Incapacity Planning - March 31, 2020
- Estate Planning and Charitable Giving — Key Points - March 29, 2020
- Over-Funding Your Retirement Plan: A Potential Estate Planning Problem - March 27, 2020