Leave More Than Memories, Leave A Legacy

You don’t do estate planning for yourself; you do it for your loved ones.

Estate planning is important because it ensures that those you leave behind are looked after. You do it for the people and the organizations that you care about and that you want to make sure they are supported.

Estate planning lets them know you care about them, even after you are gone.

Estate Planning Is A Process, Not An Event

Most people know they need a plan in case the unexpected happens; however, they may be unaware of what is involved in the estate planning process.

Estate planning is laying out in writing what you want to happen to your assets after you die. It also documents who you want to make key medical and financial decisions for you during your lifetime if you can’t make them yourself.

Creating a formal plan and making sure it’s enforceable with legally valid documents means that you get to choose what happens to your assets and your end-of-life healthcare. Estate planning can also significantly reduce the anguish your family might experience if they had to make these decisions without your input.

A core belief at Safeguard Investments is that there are no one-size-fits-all financial plans, and the same holds true for estate plans.

Many people feel their situation is unique. But I can guarantee they won’t bring up an issue that an experienced estate planning attorney hasn’t seen before. The attorney can advise you on what other clients have done in the same or similar situation to address those same issues.

“For new clients, we sit down with them and provide them with information on what estate planning is and how it works. We explain all the documents needed to make a complete estate plan. We then discuss their specific needs and goals to assure that their plan meets their needs.“ says Joseph Hudack, an estate planning attorney we often refer clients to.

“For clients that have already engaged in the estate planning process, we are happy to  sit down with them, explain to them what their trust documents say, how they need to treat the assets, and what they need to do so that they know what their obligations are as far as protecting it,” says Hudack.

(For a deep dive into the intricacies of estate planning, I recommend you check out the interview that our own Rick Rivera did with Hudack.)

Know this: No decision is a decision. If you don’t make these decisions while you’re able to, a system of laws exists to make them for you when you pass away or become legally incapacitated.

Obtaining advice about these decisions from an experienced estate planning attorney is crucial when making these types of decisions. It is always better to know your options and then decide what you want to do, as opposed to waiting for something to occur and then finding out too late.

Where There’s A Will, There’s A Way

Hudack says that when most people think of planning for death, they just think of wills.

A will is a document that states who you want to receive your assets and, if you have children, who you want to become their guardians. It also states who should carry out your wishes, a role called executor of the estate.

Here’s what will happen after you die if you have a valid will. The person you named as executor of your will submits your will to the probate court. Your estate will go through probate if your assets exceed a certain threshold (which varies by state).

Probate is a court-supervised process of confirming a will’s validity, collecting up the decedent’s assets, paying their creditors, paying their taxes, and distributing the remaining assets to heirs as specified. In California, this probate process takes approximately 18 months to two years and will cost the decedent’s estate thousands of dollars.

“Having a will is good, but it is not an estate plan,” says Hudack. “A will does not avoid probate court as most people think. We tell our clients, ‘Why make your heirs spend thousands of dollars to get your assets through the probate court when you can spend a fraction of that to avoid the probate court with an estate plan.’”

Completing beneficiary designations is important because of probate. Those simple forms ensure your beneficiaries will receive certain assets with a slight delay after your death, and no court fees will reduce their value.

Trust Me, There Is A Better Way

Probate can be public, but a private way to distribute your assets and avoid probate is by setting up a living trust.

When you create a trust and place assets into it, such as your home, those assets become the legal property of the trust. The process is designed to be quick, inexpensive, and private, though there may still be accountant and attorney fees to settle the estate, and it may still take a few months, the costs of trust administration is a fraction of the costs of probate.

Living trusts are also called “revocable living trusts” because they can be changed or dissolved during one’s lifetime. One can sell or remove trust assets, add new assets, or change the beneficiaries, for example.

There are other reasons to create a living trust in your estate planning besides avoiding probate. Placing assets in a trust lets you name someone, your successor trustee, to manage your assets while you are still alive if you cannot. You cannot accomplish this with a will.

But if you have minor children, you will still need a will to name their guardians. You will also need a will to distribute assets not held in trust, such as personal possessions.

A Final Warning

But here is my strong warning for all the families we serve: Have you heard the expression, “You get what you pay for?” There are DIY websites that offer low-cost help with wills and trusts. Do not attempt to make an estate plan on the cheap. Too much is at stake.

Yes, I am a frugal person, but families just trying to save a couple of bucks on an estate plan can end up costing themselves tens of thousands of dollars in taxes while they are alive and even more to their kids after they’re gone.

This is undoubtedly a time to invest time, energy, and money in getting it right.