PART 2: WHEN SHOULD ESTATE PLANNING BEGIN?
ESTATE PLANNING: WHO, WHEN, AND WHY?
This is the second part in our three-part series of blog posts discussing the “Who, When, and Why?” of estate planning. For part one: “Who Needs Estate Planning?”
WHEN SHOULD ESTATE PLANNING BEGIN?
If you have any children, valuable assets, or a business; or if you simply have concerns about your own care and well-being in the event you can’t take care of yourself someday, waiting to prepare an estate plan can have disastrous repercussions.
If you have children, estate planning is a must. Start as soon as possible for the sake of security and protection of your children.
If you have any assets, estate planning is almost always useful.
If you want to make sure that things don’t fall apart if you should ever become disabled or incapacitated, estate planning must be considered. It’s best to plan now, and not wait for something to go wrong because some choices can potentially evaporate upon your incapacity.
If you want to keep your family out of probate court and avoid probate costs, estate planning is essential.
If you want to protect your assets from creditors to the greatest extent possible while maintaining some control over those assets, estate planning can potentially be the best way to make it happen. You can give your children greater asset protection than they would ever be able to create for themselves if they tried to protect their own assets in the future.
If you want to avoid having the fruits of your labors squandered in limbo, probate costs, inefficient management, estate taxes, or with foolish spending, estate planning is the way to get there.
If you want to protect the fruits of your labor from a former spouse and the ‘new family,’ while making sure your children are cared for and taken care of, estate planning is the tool to get this done.
If you want the information about your assets to be kept private and not entered into the public record, estate planning may be right for you.
WHEN SHOULD AN ESTATE PLAN BE REVIEWED?
Because lives change, the needs of an estate plan also change. It’s a good idea to hire an estate planning attorney that will review your estate plan for you every year or so, without it costing you anything extra. As a rule of thumb, an estate plan should be revisited every few years, at a minimum, and during major life events, such as:
3) Decline in Health
4) New Children
5) the Decade mark
First, during the estate planning process beneficiaries and trustees may be selected. In the event one of these individuals passes away it is important to select a replacement to ensure that your desires are met.
Second, after a divorce it is important to re-visit your plan to ensure that you update all of your documents. In California, the law will consider provisions of a will invalid after a divorce. California Probate Code Section 6122 revokes provisions in a will that dispose of property to the ex-spouse, designate an ex-spouse as a trustee, or confer any special power to the ex-spouse. However, this revocation only takes effect after a finalized dissolution or annulment. Keep in mind that a simple decree of legal separation is not sufficient for California law to revoke the provisions listed above; meaning that until the divorce is final an ex-spouse may still have rights. Further, the law may not cover all documents within the estate, resulting in distribution of assets in a way you may not have intended.
Third, if you are diagnosed with a life-threatening condition it is important to update (or start!) your plan.
Fourth, a new addition to the family is an important life event, and cause to revisit or start an estate plan. If your estate plan was developed before you had a child, you may need to update to include your new family member. In addition, part of the estate planning process includes naming a guardian for minor children. Wouldn’t you rather be the person who selects the guardian of your children?
Fifth, every decade that passes is a good mark to update your estate plan. As time passes many factors may change in your life from your financial situation to your family size. In addition, tax laws are constantly changing so you want to make certain that you are taking the necessary steps to make the best tax decisions and take advantage of any benefits available.
—->Coming soon: we will be discussing why estate planning should be considered.
By: Bobby Kouretchian and Alejandra Garcia
Mr. Kouretchian provides strategic counseling and customized legal service to individuals, families, entrepreneurs, estates and businesses in the areas of estate planning (wills and trusts), corporate law (formation, governance, finance), contract law, and trademarks.