Estate planning is the process of organizing and setting your affairs in order in the case of death, incapacity or disability. What makes up someone’s estate is everything they own and everything that they want to accomplish in planning for their ultimate demise, disability or incapacity. Everybody has their own estate: some are large, some are small, some are specific, and some are general. For most people, their estate comprises their personal property, their cash, their investments, their real estate and their personal property.
Who Needs Estate Planning and Who Does It Benefit the Most?
Since everybody has an estate, everybody should plan one.
In terms of who does it benefit the most, the general idea is everybody thinks that the rich people really benefit the most but the reality is that anybody who has a home, anybody who has some financial assets like bank accounts or investments, anybody that has a family with children, they all really benefit from estate planning because you want to protect yourself, you want to protect your assets and you want to protect your family. That is really why people do estate planning; to protect themselves, their family and their assets.
What are the Common Misconceptions That People Have About Estate Planning?
The biggest one is that estate planning is just for rich people because people think that they are the only ones that really benefit from it. The reality is everybody benefits from estate planning because if you donot properly plan your estate, then the state in which you reside is going to get involved in the management of your affairs.
Most people don’t realize that in California, if you own a home, then you’re going to need to do your estate planning. You are going to need to set up a revocable living trust because if you don’t have a trust, when you die, all your assets are going to go into the probate system and your family is going to be stuck in the court system for a year at a minimum.
What are the Factors that Contribute to a Well-Designed Estate Plan?
One factor that contributes to a well-designed estate plan is picking the right people to handle the correct job responsibilities. For instance, you want people with a good financial background and who are trustworthy to be managing your financial estate.You want people that are competent to handle emotional and medical decisions to be the ones deciding what happens to you if you become incapacitated or disabled, who is going to make life planning decisions for you such as where you are going to live and who is going to take physically take care of you.
The other factors that are involved in a good estate plan would be just planning out who you want to receive your assets, when do you want them to receive them and how are they going to be managed while young people are growing up so that the assets are not misappropriated or wasted or put in jeopardy. Most obviously a well-designed estate plan will maximize the benefit to your family and keep your family and your loved ones out of the probate system if everything is set up properly.
What is a Will and How Does it Work?
A Last Will and Testamentis basically a set of instructions that dictate what happens if you die. It says who you want to be the executor your will – that’s the person who will administer your estate. The will then says who gets your assets in the event that you die. It can say how and under what terms and conditions they receive the assets.Perhaps most importantly, a will nominates guardians for your minor children.
What a will does is provide some organization of your affairs to be managed through the court system. What a will does not do is it does not avoid the probate system so that all of your affairs are going to be put in front of a judge and subject to court’s scrutiny. Unfortunately, that means that all your affairs become public record which most people don’t really like all very much.
A will does not keep you out of the probate system. There is a big misconception that if you have a will, your affairs will not have to go through probate but that is just not true. The reality is that a will is really a piece of paper signed by a deceased person. The only value that the will has is when a judge signs a court order saying that the will is valid and this is how the estate assets are to be managed and distributed. So until a judge signs off on a court order such as that, the will itself has no value.
In terms of how does someone make a will, well there are people that have written their own wills in handwritten form and then have it witnessed by a couple of people. Most people have an attorney draft a will for them to make sure that it’s done property, that it says what it needs to say, and that it’s executed properly so that it cannot be challenged in court.
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