The last question probably caught you off guard but did not surprise you in the least bit. The government will charge you to die if you don’t plan for it properly. If you are like us here at the Heffel Law Firm, you will cringe at the thought of giving Uncle Sam more money than your kids.A properly drafted estate plan will allow you to keep the greatest portion of your property and money exactly where you want it. Here are five estate planning strategies to think about before you get started:
In California, the magic probate number is $150,000. That means that if your net worth is less than $150,000 and you do not own any real property, your family will not have to probate your estate and will be able to administer your estate through the small estate affidavit. California calculates your net worth based on the gross market value of the property you own, not the equity you own. If you own a home and is appraised at $500,000, but you have a mortgage of $490,000 California calculates your estate using the $500,000 property value and not the $10,000 equity. If you are worth more than $150,000 your family and loved ones will have to open probate on your estate; this is where a Will will come into play.
When you die without a will your estate (all of your prized possessions and loved ones) will go through probate. Probate is a court proceeding that determines who is entitled to a piece of your estate. If you don’t have a will, the state will determine who is entitled to your belongings. This is how you hear about estranged family members coming into an inheritance. If you don’t want your great uncle Jimmy, who has an active drug addiction, inheriting your prized possessions than you will want to consider a will. A Will tells the Court how you want your assets to be distributed among the people that you choose. Your Will is the picture on the outside of the box of your puzzle. You can write your own Will, but if you have anything of value and want to maintain a little control after your death, it is advisable to seek professional help in drafting your Will.
Trusts exist to protect a person’s financial assets from creditors and ensure that they pass directly to the desired recipients. There are two distinct types of trusts: revocable and irrevocable. In a revocable living trust, one person alone (or with a spouse) serves as creator, trustee, and beneficiary. The trust creator retains ownership of these assets, and since its terms permit change or termination at will, the revocable living trust offers no protection against creditors who could force it to dissolve and surrender its assets.
Conversely, an irrevocable trust transfers asset ownership and control from the creator to a trustee. This loss of proprietorship protects the assets from future creditors and ensures that they will ultimately pass to the designated recipients. There are several drafting strategies that can protect you and your family. The best way to determine what is right for you is to meet with a licensed attorney to discuss your specific estate planning needs.
Although it may seem inconceivable now, you may one day find yourself incapable of making your medical decisions. A health care directive, or living will, can help to ensure that your treatment proceeds as you would have wished. The law generally insists that providers adhere to the directives of a health care agent that you have named in this document.
In certain situations, it is legal for medical providers to stray from your directive’s mandates when they go against the policies of the institution, violate a physician’s conscience or would in their opinion result in inadequate care. In cases like this, however, doctors cannot proceed without first informing your appointed agent and permitting the transfer of your care to an alternate provider. If the medical establishment should insist upon furnishing treatment that conflicts with your directives, you may have grounds for a lawsuit.
In the event of your death or incapacitation, legal documents known as powers of attorney empower reliable individuals to take charge of certain matters in your stead. It is vital to draw up at least two separate powers of attorney: one to oversee your health care concerns and the other to ensure the proper handling of your finances.
Powers of attorney normally come in one of two flavors. The nondurable variety will expire if you should become mentally incompetent. A durable power of attorney, on the other hand, will stay in effect even if you become entirely unable to handle your own affairs. The estate planning attorneys at Heffel Law Firm can advise you on drawing up financial and medical powers of attorney.
Are you overwhelmed, yet? Don’t be! The best way to plan for your future it proactively, because the alternative is reactively and by then it is too late. We are happy to meet with you and discuss your hopes, dreams, and desires for your estate. Our goal is to provide your family protection and you piece of mind.