As you begin to think about estate planning, it can be helpful to understand how an estate plan works and what it can do. With these basics under your belt, you can begin to make the right choices to help your estate planning attorney prepare a plan to fit your needs and wishes.

An estate plan can help you provide for your family’s future. To discuss how you can create an estate plan that fits your family’s needs, contact OC Wills & Trusts for a free consultation.

Estate Planning 101

Some questions that frequently arise during the estate planning process include:

What is in a good estate plan?

A good estate plan will address these four primary aspects:

  • Preserving your assets by minimizing estate taxes and avoiding probate
  • Directing the disposition of your property upon death
  • Identifying someone to make healthcare decisions on your behalf
  • Authorizing an agent to handle your finances if you become incapacitated

The exact content of your estate plan will depend on many factors, including the size of your assets, your family situation, and your personal goals.

Why do I need an estate plan in California?

Dying or becoming incapacitated without an estate plan can leave your family vulnerable. Some specific solutions provided by an estate plan in California include:

  • Naming guardians for your children
  • Identifying the person who will control your finances if you become incapacitated
  • Naming someone to make healthcare decisions on your behalf if you are unable to do so
  • Protecting your estate from taxes and probate expenses
  • Controlling the timing and conditions for transferring your assets to recipients
  • Providing for any loved ones with disabilities or special needs

Estate plans can address almost any issue that may arise when you die or become incapacitated.

Why should I create a will or a trust?

Wills and trusts are not just for individuals with a high net worth. Almost everyone can benefit from a will or trust. These documents provide legally binding instructions to an executor and probate judge. As a result, a will or trust guarantees that your lawful instructions will get carried out.

Why should I update my estate plan?

Your estate plan should change as circumstances change. Some specific reasons you may need to update or even redo your estate plan include changes in:

  • Tax laws
  • Estate laws
  • Family circumstances
  • Your mental or physical health
  • The ability of those appointed to act as your executor, or control your healthcare or financial decisions

As you encounter changes in your situation, an estate planning attorney from OC Wills & Trusts can help you determine whether it is necessary to update your estate plan.

FAQs About Trusts

Trusts often seem a mysterious arrangement only used by the wealthy. But trusts can provide benefits to almost anyone who wants to protect their assets and control how those assets are distributed upon their death. Some frequently asked questions about trusts include:

Do some married couples still need an AB trust?

Yes, but the need is limited to married couples with estates worth more than $25.84 million. AB trusts are formed when each spouse had a separate estate tax exemption. The law was amended so the surviving spouse can use the unused portion of the deceased spouse’s estate tax. 

What are dynasty trusts?

Dynasty trusts are simply trusts intended to remain in operation for multiple generations, instead of disappearing after distributing assets to immediate beneficiaries. These trusts get used for estates with over $12.92 million at risk of having to pay a gift tax or generation-skipping tax.

How can home and business owners use living trusts?

Although living trusts can protect assets from estate taxes, their most valuable benefit is that they do not have to go through probate. As a result, your beneficiaries will not incur probate expenses and will receive their inheritance more quickly. 

This is particularly important for small businesses or farmers who need their estates to pass quickly, so their beneficiaries can keep the business running.

What are pet trusts?

Pet trusts can preserve assets for the maintenance of pets. They can also designate who will care for the pet. A pet trust is often better than simply putting your instructions into your will because the trustee you name will ensure that your instructions get carried out.

What is the most common reason a married couple needs to amend their living trust?

A couple may amend their trust for many reasons, including the birth of children, divorce, or a change in financial circumstances. But the most common reason comes from changes to tax laws. For example, a change in the estate tax exemption eliminated the need for AB trusts for most couples.

Why do I need a living trust if I have a will?

The main benefit of a living trust over a will is avoiding probate. But a trust can also protect assets from estate taxes and explain what you want to be done if you become incapacitated. A will cannot accomplish any of these tasks.

Contact an Estate Planning and Trusts Lawyer

An experienced estate planning lawyer can simplify the estate planning process and determine which options best fit your specific situation. To discuss your estate with a knowledgeable team in Orange County, California, who can tailor your estate plan to your wishes, contact OC Wills & Trusts for a free consultation today.