Estate planning involves creating a comprehensive plan that lets you determine how your assets will be distributed when you pass away, who will care for your minor children if you are unable to, and how your healthcare and financial decisions will be handled if you become incapacitated. Estate planning can often seem complex and daunting, and for that reason many people put it off. However it is crucial to ensure that your loved ones are protected.
Without an estate plan in place, California law determines who receives your property, manages your affairs, and raises your children. If you become incapacitated without planning documents in place, your family could be required to seek guardianship through lengthy and expensive legal proceedings. An estate plan minimizes the potential for uncertainty and conflict in the future, and it can significantly reduce burdens on loved ones, including tax liability.
Why is Estate Planning in California Necessary?
Estate planning is often perceived as something reserved for the wealthy or older people. However, the truth is that everyone, regardless of their age or financial status, can benefit from having a comprehensive estate plan in place. In California, where state laws and regulations play a significant role in the distribution of assets, having an estate plan is not just a recommendation; it’s a necessity. Here are some reasons why:
- An accident or illness can cause incapacitation at any age. Having the right documents prepared enables family or friends to assist with financial matters and authorize medical treatment.
- An estate plan allows you to provide for the management of your assets if you are incapacitated and the distribution of your assets when you pass away. Without an estate plan, the state will decide how your assets are distributed according to intestate succession laws. This can often result in your assets going to the last people you’d want to receive them. For example, if you are separated but not legally divorced, your estranged spouse could inherit your entire estate.
- Estate planning in California is necessary to protect your minor children. An estate plan allows you to designate a guardian for your minor children in the event of your passing. Otherwise, the guardian will be chosen by the court, and the choice may not align with your wishes.
- An estate plan can allow you to eliminate or reduce estate taxes and other tax liability.
The Elements of a Comprehensive Estate Plan
A comprehensive estate plan typically includes a will, a living trust, a durable power of attorney for finances, and an advance health care directive. A will is essential for designating guardians for your minor children and outlining how your assets should be distributed. Creation of a living trust can allow assets to pass assets to beneficiaries without the need for a lengthy, public, and expensive probate process.
A durable power of attorney for finances allows you to appoint someone you trust to make financial decisions on your behalf if you cannot do so. In California, an advance health care directive enables you to appoint someone to make healthcare decisions if you become incapacitated and to provide instructions about the type of care you would want to receive in certain situations if you are not able to communicate on your own.
Estate Planning and Divorce in California
Divorce can be emotionally charged and complex, especially in California, where state-specific laws and regulations can significantly impact the outcome. One critical aspect often overlooked during this time is updating your estate plan. When you're going through a divorce, it's essential to remember that your current estate plan may still list your soon-to-be ex-spouse as the primary beneficiary of your will or trust. Without an update, your spouse could inherit a significant portion of your assets, even if that is no longer your wish.
Moreover, your estranged spouse may still have the power of attorney over your finances and healthcare decisions. This could give them the authority to make crucial decisions on your behalf, decisions that may not align with your preferences or best interests.
In California, where community property laws dictate that any assets acquired during the marriage are considered jointly owned, the implications of not updating your estate plan can be even more significant. For example, if your spouse is listed as the beneficiary of your life insurance policy, they could still receive the payout even if you are separated or in the process of divorcing.
Furthermore, an updated estate plan can help protect your child's custody and support rights. By clearly outlining your wishes, you can help ensure that your children are cared for by the right person and that any support payments are used in their best interests.
Contact Holstrom, Block & Parke, APLC for Estate Planning in California
Every adult needs to have an estate plan in place, and it is important to update plans over time as needs and laws change. At Holstrom, Block & Parke APLC, we can help you prepare a plan or update your plans so that you and your loved ones are prepared to face whatever may come in the future. To schedule a confidential consultation, call today at 855-426-9111 or contact us online.