Friday, September 24, 2010

Why do you need an Estate Plan?

When a loved one dies, the family is often too grief-stricken to be able to calmly and rationally deal with disposition of assets and belongings. Added stress may exist if a family is coping with the loss of one or both parents of minor children. It is best therefore, for everyone to ensure that they have thought things through ahead of time, and engaged in estate planning while still in good health, in order to reduce uncertainties. What exactly is estate planning and how do you do it?

Your estate is the sum of everything that you own before your death, as well as anything that comes into place - insurance, pensions etc. - after your death. This includes your house or other real estate that you own, money in savings or investments, retirement benefits, pensions, any collectibles you have or other personal belongings, as well as any death benefits paid out by your insurance company after your death.

Estate Planning is not just for the wealthy or the elderly. It is something that should be done by young couples - especially those with children - and single people as well. Most people have more assets than they realize; it is best to begin to protect them just in case anything was to happen. Estate planning should be undertaken before you need it; while it may be unpleasant to think about death or becoming medically incapacitated, you need to make these decisions while you still can.

There are two main reasons to do estate planning. The first, and most common reason, is to be able to determine how your assets will be divided amongst your loved ones. This helps prevent disputes, but more importantly makes sure that those who need the most protection, care and funding are taken care of after you are gone. However, the second reason to do estate planning is one that is often ignored; planning for what will happen if you are incapacitated and unable to provide direction for your own assets, medical care etc.

In protecting, and determining division of your assets, the most commonly used tool is a will. While wills can range from video to hand-written or even wills uttered on the deathbed, most people do not have information to create a will that addresses all contingencies. If a will is not properly executed the will go through an extensive and expensive probate process that will delay access to the funds by those who may need them the most. Estate planning law can be complicated and it is best to consult someone who specializes in drawing up wills and trusts to help reduce the amount of taxes paid and ensure a speedy process.

Finally, guardianship is the process by which someone who is incapacitated can be protected. The role of the guardian is to both protect the assets of the individual that they are responsible for, as well as ensuring that this individual has food, clothing, shelter etc.; that they are provided will all the necessities of life. The guardian uses the incapacitated person's money to provide the care that they need so you should ensure that your future guardian is someone you will trust implicitly. Guardianship attorneys have a dual role in helping you select and plan for your guardian, and in helping your guardian carry out their duties to you. 


If you have any questions regarding estate planning, feel free to contact me at (951) 737-4040 or Personal Family General Counsel.