Who Needs an Estate Plan?

Almost everyone needs an estate plan. Many people think the term “estate plan” is something only high net worth individuals need. Not true.


Spoiler alert - almost everyone

Many people think the term “estate plan” is something only high net worth individuals need. Not true.

An estate plan is a set of documents that protects you and your family. Essential estate planning documents include:

  • Will
  • Durable Power of Attorney
  • Advance Health Care Directive and HIPAA

Everyone over 18 needs these documents: 

Will

The Will states how you want your assets to be distributed when you pass away.

Durable Power of Attorney

The Durable Power of Attorney allows a family member or friend to manage your assets and pay your bills if you become incapacitated.

Advance Health Care Directive and HIPAA

The Advance Health Care Directive and HIPAA allows a family member or friend authority to talk to your doctors and make health care decisions for you if you can’t.

Every adult needs these essential estate planning documents regardless of net worth. These essential estate planning documents have nothing to do with taxes.

If you own a home in California, then a Will will not be enough. Real property worth more than $50,000 will go through probate. When you pass away, your Will names the beneficiaries of your home, but your home will have to go through probate to get to them.

What is Probate?

Probate is a complicated court procedure that requires a judge, attorney, executor and appraisers, and it is very expensive and time consuming. A simple California probate usually takes one year to complete.

Revocable Living Trusts Can Help Avoid Probate

Fortunately, you can plan your estate to avoid probate, with a revocable living trust. If you establish a revocable living trust, which, like a Will names the beneficiaries of your estate, and you transfer your probatable assets to it, then your family will avoid probate.

Assets that go through probate in California include real property worth more than $50,000, and/or bank accounts, brokerage accounts and other assets that in total are worth more than $166,250. Retirement plans, such as IRAs and 401ks, do not go through probate so long as you have named a beneficiary.

As a California resident, if you are a homeowner, or if you have large bank and investment accounts, your estate plan should include a Revocable Living Trust along with a Pour-Over Will, Durable Power of Attorney, Advance Health Care Directive and HIPAA.

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