Roughly half of all Americans don’t have a will, so if you’ve already taken this vital step to protect your assets and successors then congratulations are in order – you’re already ahead of the curve! While a will is a necessary document that every person who owns assets should have, it is still a relatively simple document that may not cover everything you want it to. You may want to consider creating an estate plan that involves the use of a living trust, plus other important documents like a power of attorney for finances and health care directives. 

To over-simplify it, an estate plan is a more comprehensive way than a will to instruct how your estate is to be distributed after your death, and how your assets should be managed if you become disabled and unable to make financial or health care decisions. Estate plans can save you and your successors substantial amounts of money in court costs, legal fees, and taxes. Consider the following items when creating an estate plan:

1. Do you have/are you expecting children/grandchildren? This is an important factor to consider when creating an estate plan. Beyond appointing a guardian to take care of minor children, you may also need to appoint a guardian who will manage the assets they will inherit until they reach the age of majority. You may have assets that already contain a beneficiary designation such as a transfer on death (TOD) account. If not, then your will may be used to instruct who will receive such assets. This could point you in the direction of forming a trust. In California, we use CUTMA accounts: California Uniform Transfers to Minors Act (“CUTMA”) is a modernization of the Uniform Gift to Minors Act, and became effective in 1985. It allows parents (or other guardians) to manage the assets of their minor children up to the age of 25.  Ask yourself if your young adult (18 or older) grandchildren are responsible enough to manage the money for their own best interest? Are they receiving tuition grants or qualifying for student loans based on their income? A gift could mean a loss of benefit. All of these questions and more should be considered before you decide a Will combined with transfer of death (TOD)accounts are the way to go.  

2. Minimize probate and maximize privacy. An estate plan that uses a living trust will allow your heirs to move through the administration process as quickly and efficiently as possible. With only a will, a process called probate must be used at your death. Information brought forward in probate court is public knowledge and all of the terms of your will plus the assets you own will become part of the public record. Also, probate can be very expensive. Even an uncontested probate could take longer than a year to pass through probate court and attorney’s fees and court costs can start to add up. Constructing an estate plan with an attorney before probate can help avoid most of these costs and loss of privacy.

3. Consider your digital information. One thing that’s often forgotten, but necessary in today’s digital age, is what happens to your online information after you die? Many of our day-to-day activities are conducted online and this may present issues for your family after you die. For example, if you invest or bank online, it can be an incredible hassle for your heirs to decode your online financial life. Consider storing your passwords in a safe place and then give access through a power of attorney to someone you trust who will be able to help your family manage your online footprint. An estate planning attorney will be able to sit down with you and go through your online accounts and help you decide which ones will need attention in the event of your death or disability.

4. Location and size of your estate. The Tax Cuts and Jobs Act of 2017 doubled the size of the federal estate tax exemption to $11.4 million per person in 2019. That means unless your estate is larger than $11.4 million, you may be exempt from paying federal taxes on it. However, depending on where you live you may be subject to state-level estate taxes. There are currently 17 states, and the District of Columbia, that impose some sort of estate or inheritance tax.

If your questions go beyond our four tips, join us at an estate planning workshop presented by The San Diego Planning Partnership (SDPP), a non-profit that offers free workshops that cover essential long term care and estate planning topics. They offer unbiased information and expertise from professional and experienced volunteers, in an objective manner and without solicitation. Even if you already have a plan, the workshops provide an opportunity for a “check-up,” and help ensure that your current wishes will be honored. To register for  a workshop near you, simply click here: SDPP Workshops

There are many other factors to consider when constructing an estate plan, some of which can be complicated.  But all in all, we all need a plan. Please do not hesitate to reach out to our office if you wish to meet with an estate planning attorney to discuss how best to protect your legacy.

Yvonne Amrine
#life is short, plan
Phone Number: 760-642-7072