It's simple and important to set up your estate plan
April 2, 2022
Planning for what happens after death can feel daunting. It's tempting to say "this can wait", but having such a plan is crucial, and the best time to set it up is now. It's essentially an act of love - planning to ensure those who you care for the most can continue to thrive beyond your journey on earth. The good news: this can be simple to do. The first step is to get knowledge.
Practically, have you wondered about what will happen after you pass on? Who are your heirs, and who will see through the distribution of your assets? In California, if you do nothing or DIY your will, your inheritance matter will probably go through "probate" - a court proceeding that's surprisingly cumbersome, costly, and time-consuming. This is often seen as the worst-case scenario of what could've happened. However, you don't have to go that route. By law, we have powerful tools to customize our wishes and plan for the financial future of our loved ones.
Collectively, these tools are called "estate planning." Let's take a closer look. What is a better way to introduce them than through a quick round of "myth vs. truth"?
#1 Everyone needs proper estate planning
Myth
Only rich people need an estate plan. (What does "estate" mean anyway?)
Truth
By way of definition, the estate is the gross value of your total assets calculated at the time of death. In California, the probate threshold is relatively low ($166,250 as of March 2022). Most Californians need to set up a living trust or some other planning mechanism to avoid probate.
Besides "rich," you may be tempted to insert a whole host of other words in the statement: only married people need an estate plan, for example. It would still be far from the truth. Everyone, married or not, has heirs with whom their assets can potentially end up. What does that look like for your situation? It's a crucial question to ponder.
#2 Your loved ones may not “automatically” inherit your family home
Myth
After I pass away, my family home will automatically pass to my children or parents.
Truth
What defines "family home"? How is the title held on your home? Are the children here in agreement about the disposition of the real property? Not only should you be concerned about these questions, but the probate judge will also. Unfortunately, nothing in navigating these issues suggests an automatic process.
#3 Protect your future self
Myth
I am not a homeowner. I don't need to set up a living trust or do estate planning.
Truth
Having a properly-funded living trust is one way to achieve probate avoidance. Contrary to common beliefs, non-homeowners can also trigger probate if the gross value of all assets owned at death exceeds the probate threshold ($166,250 as of March 2022). Think bank account balance, heirloom jewelry, or unspent large-sum cash gifts received at significant transitions in life.
Even if your estate value is shy of the magic number ($166,250), you still need other estate planning documents (e.g., POA, AHCD) to protect yourself in the most uncertain, vulnerable, and needy times of life if you ever come across those.
Action Step for you:
An experienced California trusts and estates planning attorney can guide you through the process and provide peace of mind knowing that all the important steps are taken care of.
For a free estate planning consultation, call our office at 510-214-6465.