estate planning

Estate Planning Basics for Seniors in California

If you are one of the many people who spend more time planning dinner than you do about estate planning, this article is for you. A customized estate plan clearly expresses your wishes regarding the distribution of assets after you die and the designation of someone to make decisions about your medical care and finances in the event you become incapacitated and unable to do so.

An estate plan offers peace of mind, but it does much more. It prevents family squabbles over your assets through clear, legally enforceable documents controlling the distribution of your estate. It also ensures that the person in control of your medical care and finances in case you become physically or mentally incapacitated does so in a way that is consistent with written and legally enforceable directives contained in your estate planning documents.

3 common myths about estate planning

Dispelling two of the most commonly held myths may be a good place to begin a discussion about estate planning. First, you do not have to be a millionaire living in Beverly Hills to need an estate plan. Ensuring that assets you accumulated during your life are distributed according to your wishes after your death is important regardless of their value.

The second myth is that California has a process to distribute assets to relatives after a person dies, so you do not need an estate plan. Yes, state law has a process to distribute your estate, but it is complicated and may not reflect your wishes.

For example, you may have helped one of your children to start a business by providing financial assistance. In order to be fair to your other children, you planned to reduce that child’s share of your estate, but unless you have a will or trust as part of an estate plan, California law calls for an equal division among all of your children.

The third myth is that estate planning is all about what happens after you die. A key element of estate planning includes documents appointing someone to manage your finances and make health care decisions should you be incapacitated and unable to make them or communicate your wishes.

Importance of estate planning

Importance of estate planning

The process of estate planning forces you to evaluate and take stock of the real and personal property you own. Once you have an idea of the asset and financial picture, your attorney creates documents formalizing the decision you make for the distribution of wealth after you die. These documents may include wills and trusts.

Other estate planning documents let you grant authority over financial and health care decisions to someone you trust. These may avoid lengthy and costly court proceedings for your family to have someone appointed to handle your affairs should you become physically or mentally incapacitated.

Important elements of estate planning in California

Important elements of estate planning in California

State laws govern the documents that become part of an estate plan. If you live in California, the following are the most common estate planning documents:

  • Last will and testament.
  • Living trust.
  • A durable power of attorney.
  • Advance health care directive.

A last will and testament, which you may know as a will, maybe the first thing that comes to mind when the conversation turns to the topic of estate planning. Wills are legally enforceable documents allowing people to direct how the assets they own should be distributed after death.

While it is true that California law contains a procedure, known as intestate succession, to distribute a person’s wealth after they die to their relatives, it may be contrary to what the person intended. A will prevents that from occurring by letting you leave instructions for the person handling the estate to follow.

You may decide after consulting with an attorney to transfer some or all of your assets into a living trust. The trust assets are managed by a trustee you choose and may contain language directing for distribution of the assets according to your wishes. Unlike a will that must be filed with a court and probated after your death, trusts avoid probate. An excellent article may be found at California Mobility explaining more of the differences between wills and trusts.

Two important documents California seniors should consider making part of their estate plans are a durable power of attorney and an advance health care directive. A durable power of attorney lets you authorize someone you trust to handle your financial affairs. Unlike a will that does not become effective until after you die, a durable power of attorney ensures that a serious illness or other incapacitating condition does not leave you and your family without someone to handle your finances.

An advance health care directive in California is a two-part document. The first section lets you authorize another person to make medical decisions, including end-of-life decisions on your behalf should you be incapacitated. The second section lets you give detailed instructions about your preferences for health care to guide the person you appoint to make decisions consistent with your wishes.

Get advice from a professional

Get advice from a professional

Now that you know the importance of estate planning, the best way to begin is by scheduling a consultation with an estate planning lawyer. The lawyer can create an estate plan customized to implement the decisions you make regarding your wealth and health care.

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