- Living trusts
- Powers of attorney
- Advance directives/living wills
Estate planning overview:
When we talk about estate planning, the first questions is always: What is it?
Estate planning includes how you will dispose of your personal assets after you pass away, but it also involves much more. It includes making the decisions about who will take care of your minor chldren should something happen to you. It includes who you will designate to handle your affairs should you become incapacitated – as well as how you want your affairs to be handled. It includes decisions about where and how you want to be laid to rest. It is the responsible choice for those who want to protect their loved ones from pain and expense in addition to the grief that comes with passing on.
But the more important question is: What does it mean?
I think we all have similar thoughts when we think about what will happen when we pass away. We think: “I trust my family to do what’s right and what’s appropriate.” We think, “Whatever they want will be fine with me – I don’t want to decide and have them wish I’d done something different.” We think, “Really, I’ll be gone so it’ll mean more to them to do everything the way they want. I don’t – won’t – care.”
But I’d like to show you perhaps a different way to think. Imagine for a moment that it’s not you that is passing away, but rather your closest family member – except for this exercise let’s choose someone other than our spouse. Take a quick moment to think of how difficult that would be to lose someone you love so dearly. And now, imagine all that there is to do when someone passes away:
- There’s the funeral, which generally happens pretty quickly and plans are made within hours of the death. There are decisions to be made about clothing, caskets, scheduling day and time, who will read, what will they read, will there be a gathering afterwards, will there be food, where will it come from, who will be invited, and who will pay for it all…it’s overwhelming
- Then there’s the will – is there one? The life insurance, the retirement accounts, the bank accounts. You go to the house: do you know where your loved one keeps the important documents? Would you be tearing apart the desk, the file cabinet, the drawers? What would you find? How would you feel about having to search? Would you appreciate that your loved one “trusted” you to make all the decisions?
- Once you find the documents – did you find them? – you have to figure out how to transfer the property, and generally – without a plan – this means the probate process, which we’ll go over below.
- In come the lawyers, the lawyer’s fees, the appraisers – the strangers, in your home, and in your life.
- To transfer the property, the pay the debts, to sell the house – or even transfer it – to get access to the bank accounts…all of these things can take weeks, months and years.
- The probate process, which is the court procedure for transferring your property when you don’t have an estate plan or have just a will, is a long, arduous process. It involves:
- Multiple court hearings and appearances, lawyers, accountants, appraisers…
- A timeline of 2-3-5 years…or more
- Cost: A huge cost. Probate fees and costs can take up to 8-10% of your gross estate – that’s your assets not including your debt, so if you have a house worth $300,000 and nothing else, probate fees can be up to $30,000. An estate with just $1 million will pay up to $100,000, or more.
- You have – your family has – worked your entire LIFE to create and build your estate. Why give it to lawyers and courts?
In the probate process, while the cost is a big consideration, the time is also key because you and your family need and want to move on from the death and the grief, and when the probate process continues on for years and years – and you can’t sell the house, and you can’t get access to the accounts, then it drags out the normal emotional process way beyond what is healthy.
In the hours following the death, you go to the funeral home, and the director tells you that your loved one came in years ago and chose their own service, with music, readings, flowers, and everything all picked out and paid for. You don’ t have to decide a THING except what day to do it. Oh, and your loved one already planned – and paid for – the life celebration party afterwards. There are no decisions to make – the director tells you to go home, grieve, and take care of your family.
You get to the house, and you already know where the estate plan binder is. Because you’ve already been over it, you know there’s a letter right inside that’s intended to be instructions for you on what you need to do. You go to it, and feeling overwhelmed by everything, you decide to just call the lawyer – me. What do I tell you? I say – there’s nothing you have to do right now. You, take care of your family, grieve, and get back to me in a couple weeks – if you still need me – when you’re ready to move forward.
Those early hours, days and weeks are precious – precious time to be with your loved ones, to remember and celebrate to one who has died, and to work on our own processing of what’s happened and what it means to us. An estate plan gives you that time.
When it comes time to assess the assets, pay the debts and transfer the property, the process:
- Involves no lawyers and no court
- The fees are overall generally less than $100
- Takes a few days to a month, depending on how quickly YOU work
Does that sound like something you’d prefer to have from your loved one than the first example, the probate process when you have no estate plan, or just a will?
Then, I ask, why are you not doing this for your loved ones? How could you not, knowing now what you do?
So let’s get into a little bit about what estate planning involves…
The centerpiece of any good estate plan is the living trust, which is simply a document that allows your estate to pass to your family without the court process of probate. Having a living trust does not change your control of your property or your ability to sell it or take out a loan on it.
But the estate plan is SO MUCH MORE. It includes your powers of attorney, which give you the right to determine who will make decisions on your behalf if you cannot make them. This can be critical, because any of us can be incapacitated at any time, and we want to make sure we have the RIGHT person making the decisions.
Your estate plan includes who will get what of your “stuff”: I have found that the biggest arguments after a death aren’t about the house or the accounts, but about the smallest things – rings and the china and the antiques and the portraits and the bracelets. There can be a lot of misunderstandings, and once you’re gone, you can’t help resolve these disputes, so figure it out beforehand!
The estate plan includes pre-need planning for your funeral, ensuring you have enough life insurance or long-term care insurance – which are important aspects of estate planning, and getting your affairs in order, so I work with other expert professionals to ensure that you have the best service out there.
Your family, your loved ones, mean the most to you in the world. When you die, you can leave them the gift of pre-arranging and pre-planning everything so the burden of your passing isn’t greater than it needs to be or greater than they can bear.
What are you waiting for?
Ready to get more specific information? You can reach me at 925.307.6543 or cmm@McPhersonLawGroup.com.
Wondering if I work in your area? I work in the Alameda, Contra Costa, and San Joaquin counties, servicing cities such as Dublin, Oakland, San Ramon, San Leandro, Danville, Alamo, Pleasanton, Livermore, Tracy, Stockton, Walnut Creek, Union City, Fremont, Hayward, Blackhawk, Lafayette, Orinda, Moraga, Piedmont, Castro Valley, Pleasant Hill, Brentwood, Concord, and more.