If you reached this website because you are looking for information about how to protect your family from an estate planning perspective, you are making a very prudent move. This being stated, there are a lot of terms tossed around that the average layperson would not be familiar with, and this is understandable.
In this blog post, we will provide a partial glossary of relevant terms. It is going to be “partial,” because there are so many of them, and we will look at some others in a future blog post.
The last will or last will and testament is the estate planning device that most people have heard about. Unfortunately, there are some misconceptions about last wills. It can seem as though they facilitate fast, effective, and efficient asset transfers, but this is not the case. Read on to see the reason why.
Probate can be described as the legal process of estate administration. If you use a last will as the centerpiece of your estate plan, you would name an executor in the document. This person would be the estate administrator, and the executor would be required to admit the will to probate.
This process will take somewhere in the vicinity of eight or nine months to a year before to reach completion. The heirs that are named in the will cannot receive their inheritances during this interim, and there are significant expenses that pile up during probate.
The probate court would also step in to sort things out when a person dies intestate. This is the condition of having no estate planning documents at all. Probate will enter the picture when someone is seeking a guardianship order for an incapacitated adult or a child as well.
A trust is a legal device that can facilitate postmortem asset transfers. There are a number of different trust thats can be utilized, and the revocable living trust is the one that is effective for the widest range of people. There are other advantages, but if you use a revocable living trust, the trustee that you name in the document would be allowed to distribute assets to the beneficiaries outside of probate.
Another type of trust is a supplemental needs trust. Many people with disabilities rely on government benefits like Medi-Cal and Supplemental Security Income that are only available to individuals with limited resources. If you make a person with special needs the beneficiary of a special needs trust, the assets can be used to improve their quality of life without jeopardizing benefit eligibility.
Trusts can also be used by people that are exposed to the federal estate tax. Most of us don’t have to worry about it, because there is a rather large estate tax credit or exclusion. This is the amount that you can transfer before the tax would become applicable. In 2019, the amount of this exclusion is $11.4 million.
Advance Directives for Health Care
In addition to the events that will take place after you pass away, it is important to prepare for end-of-life matters when you are devising an estate plan. This will include the utilization of advance directives for health care.
One of them is a living will. With this document, you state your preferences with regard to the utilization of life-sustaining measures like artificial hydration, artificial respiration, and feeding tubes. With a durable power of attorney for health care, you can empower someone to make medical decisions on your behalf that have nothing to do with life support.
Attend a Seminar!
There is plenty of written content here to explore, but that’s not all. Our estate planning attorneys are holding a series of seminars in the coming weeks. They are offered on a complimentary basis, but we do ask that you register in advance, because space is limited. You can get all the details if you visit the seminar page right here on this website.