There is a widespread misconception that estate planning in Orange County is simply a method of directing one’s assets to designated beneficiaries in the event of death.  That’s simply too narrow of a view.  Estate planning is necessary—crucial in fact–in the event that you become incapacitated or otherwise need a loved one to manage your finances.  This can happen, for example, if you are about to undergo surgery with a prolonged recovery period.

In addition, proper estate planning may be necessary in order to reduce an estate tax burden.  Protecting your property is complex.  The amount of money and other assets you have will determine the type of planning best suited to your needs, so the first step of creating any estate plan is taking a thorough inventory.  Depending on your needs, the management of your wealth can involve the creation of revocable living trusts, wills, lifetime gifts, and life estates.

The assets that need to be identified and evaluated when creating your estate planning strategy include investments, real property, insurance policies, and personal effects.  The bottom line is that you want to do whatever is necessary to make sure that your assets are properly managed, that your wealth is distributed to your beneficiaries in accordance with your wishes, and that your tax burden (if any) is minimized.

The Process

Beyond taking an inventory, there are four basic components to estate planning:

•           Property Law

It is important to understand that in the absence of estate planning, property is passed according to a succession plan mandated by law.  The process of estate planning allows individuals to trump the law of succession and make sure their own wishes are fulfilled.  Estate planning also relieves loved ones from the responsibility–the often painful and embarrassing process–of going before a judge and publicly discussing family matters in the event of an incapacitation.

All assets are subject to property law in one way or another, including cash, stocks, bonds, life insurance policies, retirement accounts, and of course real estate.

•     Legal Documents

The two most common documents in an estate plan are wills and living trusts.  These documents contain your instructions for the distribution or management of your assets.  These documents name an executor who will be responsible for the execution of your instructions in the event of your death or incapacitation.

•       Estate Taxes

Understanding your tax burden will help you develop a plan to minimize taxes.  The amount of taxes due upon your death will depend on the value of your assets, and the laws in this area are constantly in flux.  Currently, there are federal estate taxes and you may have an additional state tax burden, depending on where you claim permanent residency.

•     Financial Goals and Plan Development

There are many ways to protect your assets, pass wealth, and minimize taxes.  The type of property you have acquired and your financial goals will determine the methods you need to implement to protect your property.  Your financial goals should include asset protection before and after death, which may involve “gifting” some of your assets during your life, either to individuals or to trusts set up so that you make sure gifts are used according to your wishes.

In order to develop and implement a plan that meets your specific needs, you should consult a knowledgeable professional.  You want to choose an attorney who specializes in estate planning and has implemented systems to ensure that a comprehensive plan is created for every specific situation, not an attorney who dabbles in estate planning.

Let a Professional Guide You

You’ve worked hard to acquire the assets that you have, and you shouldn’t ever have to worry about how those assets will be passed on in the event that something happens to you.  You should know that it will benefit the people for whom you care most, because with that in place, there is really nothing to worry about.

Call us today to schedule your Family Wealth Planning Session.  Our Family Wealth Planning Session normally runs $750 (and we fill up fast at that rate), but this month I’ve made space for the next two people who mention this article to have a complete planning session with me at no charge.  Call today and mention this article.