The biggest misconception people have about estate planning is that it's just about what happens after you're gone. While making those decisions is certainly an important part of the planning process, there's more to the story. A professionally prepared plan that's personalized to fit your unique needs protects your interests now and in the future—essentially creating a roadmap to help you live your best life.
Elements of an Estate Plan
Even though everyone's circumstances are unique, there are four key elements of an estate plan that you must consider:
- Will. If you were to die without a will, California's intestate laws would determine how your possessions were distributed. If you're part of a blended family or estranged from certain relatives, it's likely that the state's ruling wouldn't match your personal preferences.
- Trust. Creating a trust can help protect your assets from creditors, avoid the time-consuming probate process, and minimize overall tax liability. In most cases, a trust can be thought of as a supplement to a will that is used to create a more comprehensive estate plan.
- Power of attorney. If you become unable to speak for yourself and manage your own affairs, power of attorney documents give the person of your choosing the authority to act on your behalf. You'll need two separate documents: one to choose who you want to oversee your health care concerns and the other to ensure the proper handling of your finances.
- Healthcare documents. Spelling out what your wishes are regarding resuscitation and other life-sustaining procedures ensures that you will receive the proper healthcare in the event of a medical emergency.
Other Factors to Consider
Beyond the basics, some questions to ask yourself as you think about your estate planning goals and objectives include:
- If you have minor children, who would you want to care for them if you were gone? What financial resources would this guardian require?
- As your income continues to grow, how will you minimize your tax liability to ensure you and your heirs aren't unfairly penalized?
- If you own a business, what steps do you need to take to ensure the company you've worked so hard to build continues to thrive?
- If you have a loved one with special needs, how will you provide for their care without jeopardizing their ability to receive vital government benefits?
- What can you do to distribute your assets in a way that minimizes conflict among your heirs?
- If you're actively involved in charitable work within your community, how do you want to include this commitment to giving back as part of your legacy?
Don't Assume You're Already Protected
Estate planning is best thought of as an ongoing process. Your plan needs to be updated as your situation continues to evolve. Some of the many situations that should trigger a review of your plan include:
- Marriage or divorce
- Birth or adoption of a child or grandchild
- A family member suffering a disabling injury or needing to enter a nursing home
- Significant increase or decrease in income
- Purchasing a vacation home or investment property in another state
- Changes in relationships with the people named in your power of attorney documents
- Changes in relationships with your heirs
- Tax law changes
Even if you don't believe anything significant has changed, it's still recommended that you review your existing planning documents every three to five years. This proactive approach helps avoid unpleasant surprises.
You Don't Have to Make These Decisions Alone
There are lots of decisions to make as part of the planning process, but you're not alone. At San Diego Legacy Law, we're committed to providing our clients with the information they need to take control of their futures. Our founder, attorney Nicole D'Ambrogi, holds an LLM in International Taxation with concentrations in Financial Services and Wealth Management—a background that provides her with the ability to offer the "big picture" advice you won't find at the typical document-focused estate planning firm.
San Diego Legacy Law serves clients throughout San Diego, as well as those in La Jolla, Del Mar, Rancho Santa Fe, El Cajon, Poway, Spring Valley, Chula Vista, Santa Rosa, Petaluma, Novato, and Healdsburg. Contact us today to schedule a consultation to discuss your estate planning and asset protection needs.