Having an estate plan is important for creating a legacy for all families but 56 percent of Americans do not have a current plan. Estate planning is essential for protecting yourself and your family if you suffer sickness or an accident or die. Regardless of a family’s wealth, most plans have essential components.
Estate planning is important for a spouse, parent, single person, member of a blended family or a business owner who wants to control their heath care and assets if they become incapacitated or die. Planning can include directions on the health care you want to receive, who can make financial and medical decisions for you and who will inherit your assets after you die.
An estate plan can help prevent family members and heirs from fighting over your assets or a court making decisions about your estate under California law.
Most estate plans include a will. In your will, you set forth who will receive your property, identify the guardian of your children, and name an executor to manage your estate.
A durable power of attorney authorizes another person to act on your behalf in financial or legal matters. These are essential if you ever become incapacitated.
A living will governs end-of-life care. You can set forth your instructions restricting care or procedures if there is no hope of recovery.
A trust allows you to transfer property without undergoing probate. Trusts can control your assets while you are alive and after you die.
In addition to preparing documents, estate planning also involves designating beneficiaries. Life insurance, bank accounts, investment accounts and 401(k) plans are among the assets that may be passed to beneficiaries without a will or trust.
Begin by looking at your property and your family’s needs. Take inventory of all your assets including real estate vehicles, personal items and collectibles, bank accounts, life insurance policies, retirement accounts and business assets. Select beneficiary designations.
Keeping the plan current
Your assets, beneficiaries, heirs and wishes may change as your life or wishes change. You should review and update your plan, including named beneficiaries, regularly but at least every five years.
Events that may impact your plan include:
- The birth or adoption of children or grandchildren.
- Children or grandchildren reaching 18.
- The death or changed circumstances of the named guardian of your children.
- Marriage or divorce.
- Purchasing a home or other major asset.
- A career change.
- Starting or closing a business.
- A beneficiary dies or becomes disabled.
- Changes in laws governing taxes or investments.
An attorney can help you plan your estate and select and review beneficiaries. Lawyers can also prepare estate documents that reflect your goals.