The Estate Planning Process

Estate planning is arranging for the management and disposal of your assets while you are living and when you die. Your estate is the property you own. Dealing with it involves lifestyle, financial, tax, medical, asset protection, and business planning. Decisions need to be made and documented to insure that your needs and wishes are properly handled.

After an inventory and valuation of your assets you need to decide how:

• Your assets will be managed during your lifetime by you and by others if your unable to manage them yourself.
• Your assets will be distributed during your lifetime and after your death.
• Your personal care will be managed and how health care decisions will be made if your unable to care for yourself.

Without planning and documentation of that plan, a probate court judge will appoint someone to handle your assets and personal care, and distribute your assets to your heirs according to the rules of intestate succession.

Your estate

All of your assets are included in your estate at "fair market value" less your debts. This includes assets held in your name alone or jointly with others, assets such as bank accounts, real estate, stocks and bonds, and furniture, cars and jewelry. It also includes life insurance proceeds, retirement accounts and payments that are due to you (such as a tax refund, outstanding loan or inheritance).

Regardless of the size of your estate you need to do some estate planning, even if it is only to designate someone to manage your assets and make health and personal care decisions for you if you become unable to it yourself. Small or large, you probably want to decide for yourself how and to whom your assets should be distributed after your death. With a large estate, you will likely wish to use various tools to maximize the amount of assets you pass to your beneficiaries.

How assets get transferred

A will is the traditional legal document which disposes of assest in your name when you die:

1. It names individuals (or charitable organizations) who will receive your assets after your death, either by outright gift or in a trust;
2. It nominates an executor who will be appointed and supervised by the probate court to manage your estate, pay your debts, expenses and taxes, and distribute your estate according to the instructions in your will;
3. It nominates guardians for your minor children. Wills are subject to probate court and a judge will supervise the process of transferring your assets to the beneficiaries listed in your will.

Any assets that have designated beneficiaries normally go directly to those beneficiaries regardless of the will. This includes securities accounts and bank accounts that have designated beneficiaries, life insurance policies, IRAs and other tax-deferred retirement plans, trusts (revocable or otherwise), and some annuities. Depending on how they are titled, certain co-owned assets pass directly to the surviving co-owner regardless of any instructions in your will.

The basic starting point is a will, but, depending on your situation, you may need to add many other documents to a well thought-out and comprehensive plan to fully address your estate needs.

Probate Court

Typically, the executor named in your will would start the process after your death by filing a petition in court and seeking appointment. Your executor would then take charge of your assets, pay your debts and, after receiving court approval, distribute the rest of your estate to your beneficiaries. If you were to die intestate (that is, without a will), a relative or other interested person could start the process.

In such an instance, the court would appoint an administrator to handle your estate. Personal representative is another term used to describe the administrator or executor appointed to handle an estate.

Simpler procedures are available for transferring property to a spouse or for handling estates in which the total assets amount to less than $100,000. The probate process has advantages and disadvantages.

The probate court is accustomed to resolving disputes about the distribution of assets fairly quickly through a process with defined rules. In addition, the probate court reviews the personal representative’s handling of each estate, which can help protect the beneficiaries’ interests.

One disadvantage, however, is that probates are public. Your estate plan and the value of your assets will become a public record. Also, because lawyer’s fees and executor’s commissions are based on a statutory fee schedule, a probate may cost more than the management and distribution of a comparable estate under a living trust.

Time can be a factor as well. A probate proceeding generally takes longer than the administration of a living trust. Discuss such advantages and disadvantages with an estate planning lawyer before making any decisions.

The cost of estate planning

The attorney cost for estate planning varies as to the amount of planning and documentation necessary to meet your objectives. We generally work on a fixed fee for our estate planning services.

If you would like more information about estate planning or would like to schedule a consultation, please contact one of our San Diego Estate Lawyers at 858-488-4433.