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Estate Planning FAQs

March 1, 2018

Estate planning is a multi-faceted process that touches on many concepts. Because of this complexity, only consultation with an attorney can help you come up with an estate plan that is right for you. Till then, here are a few frequently asked questions about estate planning:


What is estate planning?


When someone passes away, his or her assets and liabilities will pass to a person or institution. Estate planning involves strategizing to minimize potential estate taxes and related costs, as well as coordinating what will happen with your home, investments, businesses, life insurance, employee benefits, retirement assets and other property in the event of death or disability.


Why do I need an estate plan?


People often fail to address estate planning because they do not think they have enough assets or mistakenly believe their assets will automatically pass to their children. Without an estate plan, California intestacy laws will dictate the management of your assets and affairs upon your death or incapacity. This can result in the wrong people inheriting your assets. Failure to establish an estate plan can cause family turmoil as well as unnecessary stress and expenses.


If you pass away without an estate plan, your estate will undergo probate – a public, court-supervised legal proceeding. Probate can be expensive and withhold your assets for a long time before your beneficiaries receive them.


What does my estate include?


Your estate is everything you own, anywhere in the world, including:

  • Your home or any other real estate that you own

  • Your business interests

  • Your share of any joint accounts

  • Your retirement accounts

  • Any life insurance policies that you own

  • Your personal effects

Which estate planning documents are absolutely necessary?


A basic estate plan should generally include the following documents:

  • Revocable Trust

  • Will

  • Durable Power of Attorney

  • Advance Health Care Directive

  • Pour-over Will

Learn more about these documents and how they can help you and your family.


Will my estate be subject to estate taxes?


The federal estate tax levied on your net taxable estate. Your net taxable estate is comprised of all the assets you own or control minus certain deductions. In 2018, the federal estate tax exemption is $11,200,000 (less exemption amounts used during life). Estates above the exemption amount are taxed at 40%. This exemption is indexed for inflation but will revert to lower amounts in 2025, unless Congress makes changes before then. Any estate tax owed will be paid out of your estate, before distribution to your beneficiaries.


Even if you think you won't be affected by the federal estate tax, you may have a taxable estate in the future as your assets appreciate in value.


You should regularly review your estate plan with an attorney to ensure your estate plan takes into account current tax law changes as well as shifts in your individual circumstances and your goals for your loved ones.


What is probate and why does everyone want to avoid it?


Probate is a public process by which a court supervises the transfer of property from a decedent's estate to the decedent's heirs. Without a trust, probate is required where the decedent's assets are valued at more than $150,000. However, if the decedent owned assets through a properly drafted and funded trust, it is likely that no probate is necessary. The length of time- and cost - of a probate depends on the size and complexity of the estate.


Learn more about this burdensome process and how to avoid it. 

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