A Comprehensive Guide to Understanding Estate Planning Law
An estate plan is the collection of documents that govern where your assets go after you pass away. It also includes directives for how you want your health care, and estate handled if you become incapacitated.
Whether you are planning for your future or that of a loved one, the process can be overwhelming. This article will help you understand the key terms and different aspects of estate planning law so that you can make informed decisions.
What is an estate?
An estate is the sum of all the assets an individual owns or controls – including real property, financial securities, cash, and personal possessions. An estate can also include a deceased person’s life insurance policy and any other monies that may have been generated through a death or other event.
When a person dies, their estate goes through a process called probate. The process settles their debts, taxes, and other obligations and then distributes their estate as outlined in the will or as local law requires.
The estate’s assets are split among the inheritors and can be very large, sometimes leading to big tax bills for the beneficiaries. It is why having a solid estate plan is vital to avoid a large tax bill for your loved ones.
If you want to learn more about California estate planning law, contact an experienced estate planning attorney. They will help you understand your options and ensure your estate is handled precisely as you want.
An estate consists of all the property an individual owns or controls at their death, whether in their sole name, held as part of a partnership, joint ownership arrangement, or through a trust. A person’s gross estate includes all the money they made through investment income, Social Security, and any other monies they could generate during their lifetime.
What is a will?
A will is a formal document that specifies how your assets should be dispersed in the event of your passing. It also names the people and organizations you want to inherit your assets.
It will help you avoid confusion and disagreement after your death. They also allow you to name a person you trust as your executor and choose guardians for any minor children you have.
While a will can be prepared and executed by anyone over 18, it is often wise to seek legal advice from an estate planning attorney before finalizing your plan. Failure to do so can leave decisions about your estate in the hands of judges or state officials and may lead to family strife.
There are many types of wills. They include holographic, self-proved, notarial, and serviceman’s wills.
Most will also have witnesses who can vouch for the testator’s understanding and intent. Selecting a witness with no financial or personal stake in your decision is a good idea.
Some of the most common assets not covered by wills are those governed by beneficiary designations or titling and passing outside your probate estates, such as life insurance, retirement plans, accounts, and employee benefits. You should check to make sure you have the proper beneficiary designations on these assets and keep them up to date.
Define a trust
In the event of your passing, another party can manage your assets thanks to trust. It can also help you avoid the hassles and fees accompanying owning property outright.
A grantor, or the owner of the assets that comprise a trust, drafts a trust agreement in which they designate a trustee and one or more beneficiaries. The trustee oversees the trust’s assets, allocating them to the beneficiaries and ensuring they are used per the grantor’s instructions and terms and conditions.
The benefits of creating a trust include customizing your plan, controlling how and when assets are distributed, and offering tax efficiencies. In addition, trusts can protect your assets from an arduous probate process, shield your estate from creditors, and offer you added control over your assets during and after your lifetime.
The key to establishing trust is setting your goals and creating a plan. These goals can include age attainment provisions, parameters on how your trust assets are used, or limitations on how much money a beneficiary can receive each year.
What is guardianship?
A guardianship is a legal relationship that gives someone the authority to decide on another person’s behalf. It is often used when a person cannot make decisions due to mental incapacity or disability, but it can be used for many other reasons.
A person must be able to communicate their needs, wishes, and goals so that the guardian can make sure they are appropriately taken care of. It is usually achieved through person-centered planning.
The guardian must be able to consider the ward’s needs and wishes, including those for medical treatment, financial matters, and educational opportunities. In addition, the ward must be able to express their views and preferences regarding such issues.
Guardianship is an extensive term to address all aspects of an individual’s care. It can include how a ward is paid and where they live. It can also have their medical care and whether they can marry or carry a driver’s license.
Sometimes, a person can create a supported decision-making agreement, a less restrictive alternative to guardianship. It allows an individual with a disability to choose one or more trusted people who can help them get information about their options, understands the risks, and makes decisions.
A guardian must be chosen carefully and can be a relative, friend, employer, or professional. In some jurisdictions, a prospective guardian must post a surety bond before the court can appoint them.
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