Yes, you really do need estate planning
Thinking about your estate plan, will and living trust can be uncomfortable. It may be tempting to delay it. More than half of Americans do not have a will.
But estate planning can provide you with peace of mind and spare your loved ones from the costs and difficulties of probate. This FAQ will help you to understand why.
What is estate planning?
Estate planning exists to organize a client’s property so that it can be disposed of at death according to the client’s desires, while minimizing the cost and time required to transfer assets to the client’s beneficiaries.
Estate planning also enables a client to make sure that someone is prepared to manage the client’s property if that client is no longer capable of doing so.
Estate planning isn’t just about your will
In addition to managing your affairs when you pass away, estate planning outlines how you want your affairs to be managed in the event that you become incapacitated and unable to tend to your own affairs.
You do not need to be wealthy in order to have an estate plan. A well-designed estate plan provides you with a contingency plan for the future.
How estate planning can help you
Estate planning can help you in the following ways:
♦ Your property will go to the beneficiaries of your choice, not to some other unexpected beneficiary.
♦ Your estate can avoid probate, which is expensive and slow.
♦ Reducing or eliminating inheritance taxes, the costs that the government imposes on wealth transfers (e.g. “estate taxes” or “death taxes”.)
♦ Minimizing or eliminating capital gains taxes imposed on property transferred at death.
♦ The ability to name a conservator of your choosing who can manage your affairs for you if you no longer can.
♦ Asset protection.
♦ Avoiding conflicts if it becomes necessary to appoint a guardian for your minor children.
| Effective estate planning can keep your estate out of probate. Learn more about the problems associated with probate by reading our California probate FAQ. |
| A premarital agreement can play a useful role in estate planning. Click here to learn about how premarital agreements can help you and your future spouse. |
Should I have a living trust?
Living trusts can be useful to many people. They are flexible, allowing one to add and remove assets over time. With a trust, you can appoint a conservator to manage your affairs if you become unable to do so. Living trusts can be particularly helpful to individuals who are unmarried or have remarried, those with estates larger than $150,000, and those who have minor children as heirs.
To learn more about living trusts, click here to read The Honest Lawyer’s living trust FAQ.
Are all estates subject to estate taxes?
Theoretically, yes. In practice. no. Current federal law limits estate taxes to only very large estates, while gifts to spouses and charities are never subject to estate taxes.
As of 2023, only the portion of estates of individuals that exceeds $12,920,000 is subject to estate taxes. This figure is referred to as the unified tax credit amount.
Accordingly, few people currently have to worry about estate taxes. Estate planners today are more concerned with minimizing capital gains taxes that might be owed when a beneficiary sells an inherited asset, as well as with protecting wealth from creditors.
Your estate plan should include provisions for the possibility that you may need a conservator, assign power of attorney to a trusted individual and/or plan for the care of your children. A qualified estate planner will assist you with preparing these.
| Estate planning and probate are easier to understand when you learn the terminology. Learn more by clicking here for our glossary. |
| Are you about to leave on vacation, but don’t yet have an estate plan in place? No need to panic. Click here to learn what you can do to prepare a partial temporary plan before your departure. |
Planning for future contingencies
Of course, what Congress hath given, Congress can taketh away. On one hand, it is possible that Congress could eliminate or reduce the estate tax. On the other hand, Congress could increase the tax rate and/or decrease the “unified credit” amount so that more estates are subject to taxation.
Fortunately, you don’t have to be able to predict the future in order to formulate your estate plan. Proper estate planning will allow you to adjust to changing circumstances and should put your mind at ease.
| To request your free consultation or if you have any questions, please call Zev at (949) 200-7607, send an email to or complete the contact request form on this page. Thanks for your business. |