Do you need an Estate Plan

Last edited 80 days ago by Ted Broomfield

Summary

This blog is aimed at readers who are considering whether they need an estate plan. People who have minor children and/or own real property may want to strongly consider an estate plan. If you are concerned with taking care of your financial needs or leaving instructions about critical mediation conditions if you become incapacitated, you may need an estate plan. Finally, if you have strong feelings about your remains after you die, you may need an estate plan. If any of these scenarios applies to you and you do not have an estate plan when you become incapacitated or die, then it is much more expensive, and you will have no control over the decisions that get made; your wishes may not be followed. You may need an estate plan. Details follow.

Do I need an Estate Plan?

Only you can answer that.

Answering a few simple questions can help you determine if you need an estate plan.

Do you want to choose who will care for your minor children after you die? If the answer is yes, you need an Estate Plan.

Do you have a child or children who is under the age of eighteen (18) years old?

If you have a child or children who is under the age of eighteen (18) years old, only an estate plan can allow you to determine who will be that child’s or children’s guardian if you [or you and your spouse] pass away before that child becomes an adult.

Do you want to save your beneficiaries money? If the answer is yes, you need an Estate Plan.

Do you want to help your beneficiaries avoid paying large and avoidable amounts of money to the State of California?

Probate is very expensive compared to a Trust and is based on the gross estate value, regardless of how much the loan on the property is. For example, the Probate Fee for a million dollar home with no debt is the same as the Probate Fee for a million dollar home with eight hundred thousand is debt.

Basic Probate Fee for $800,000 is $19,000

Basic Probate fee for $1.2 million is $25,000

Basic Probate fee for $2.0 million is $33,000

Basic Probate Fee for $3.0 million is $43,000

Do you have real property in California that is worth more than $60,000? If the answer is yes, you need an Estate Plan.

In the State of California, property valued in excess of $60,000 can only be transferred on one of four ways after death of the owner.

In general, for most situations, for property located in California there are only four ways to transfer that property after death:

If the person who died is married and the property is titled as Community Property, with rights of survivorship, the surviving spouse can file a Spousal Property Petition.

If the property is titled in the name of a Trust, the property can be transferred according to the instructions in the Trust

If there is a Transfer on Death deed, the property can be transferred on death by filing an affidavit of death.

Probate, which is expensive - see above.

Do you have a complex financial situation that would hurt you and / or loved ones if someone didn’t take care of the bills? If the answer is yes, you need an Estate Plan.

If a person becomes incapacitated and cannot take care of the day-to-day financial bills, like rent, mortgage or property tax that can lead to financial disaster - either after the person’s recovery, or for the person’s beneficiaries

Rent, mortgage, property tax, credit card bills all continue, even if a person becomes unable to pay those bills.

If you want to protect your money and property, either for yourself or your loved ones if you become unable to pay your bills, you may want to consider a Springing Financial Power of Attorney.

A Financial Power of Attorney gives another person control over your finances if you become incapacitated.

A Springing Financial Power of Attorney only becomes effective, meaning the other person only has any ability to direct your finances, upon the occurrence of an event, like a coma, or something similar.

Are you concerned what happen to the remains of your body after you pass away? If the answer is yes, you need an Estate Plan.

Only a testamentary document can direct how your remains can be handled after your death.

A testamentary document is a document, like a will, trust or advance healthcare directive that gives instructions that legally must be followed after your death or incapacity.

One thing is for certain, if you have minor children, but you don’t have a valid guardianship document that instructs the Court who will be your children’s guardian if you and any other current legal guardian die, the Court, and not you will determine who your child’s of children’s guardian is.

Another thing is for certain. If you own real property worth more than $60,000 in California and do not have a valid Trust or a properly recorded Transfer on Death Deed recorded, that property will need to go through the probate process to be transferred after your death. In addition, without a will, trust, or transfer on death, the Court will decide who gets the property according to the probate code, and not your wishes.

If you are concerned for who will manage your finances and health care decisions if you become incapacitated, then you may want to consider an estate plan, or at least an advance health care directive and springing financial power of attorney.

If your only assets are financial assets like bank accounts, retirement accounts and brokerage accounts and your beneficiary forms are updated, and that satisfies you, you may not need an estate plan.

Feel free to contact my office for a consultation.

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