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Have you ever wondered if you need estate planning? You may say: “I do not need estate planning! I am not rich.” Some say: “I have a will. I do not need estate planning.”

Everyone needs estate planning. Whether your estate is small or big, you need estate planning. A will may not be enough to plan for your estate while you are living and also when you are gone. If your estate is small, you need to plan who will receive your property after your death, who will manage your debts and assets, and who will make sure that your assets are distributed according to your wishes. If your estate is large, then besides the above, you also need to plan for probate and estate taxes which are both payable upon death. If your estate at the time of death is more than $100,000 in California, and you do not have an estate plan, then a probate — distribution of assets through the courts — is usually required. A will may not be enough.

What estate planning means. Many people incorrectly believe that estate planning is simply the writing of a “will.” That is wrong. There is much more: Estate planning is a planning process. It plans for the management of your property and affairs during your lifetime as well as after your death. It provides for the management of your financial affairs and health care issues during your life time if you are unable to do so. It provides for the distribution of your property after your death and the manner and timing of distribution; when, how and to whom the property will be distributed; who will take care of your minor children, and how they will be provided for during their lifetime. Estate planning also includes titling of your properties based on your marital status and other circumstances to plan for tax advantages. Preparation of a will is not enough. A will is one of the several documents that are required for the financial, business, tax and medical planning for the family.

Documents involved in Estate planning. There are a number of documents involved in Estate planning. A will is one of them. A living trust, durable power of attorney for economic decisions, durable power of attorney for health care decisions and transmutation of property are some of the major documents that are each individually drafted depending on the needs of each individual. The proper titling of properties is also undertaken. Basically, all necessary documents needed to achieve the desires of an individual during his or her lifetime and after death are executed. These documents, however, can be revised as circumstances change during the lifetime of the individual. Further, if the person making an estate plan is not a U.S. citizen, then special provisions must be incorporated in the planning documents because people who are not U.S. citizens do not enjoy the same tax exemptions as U.S. citizens.

Providing for minor children. Children are one of the biggest concerns for parents. Estate planning allows parents to address the following issues for their children:

• Who will serve as guardian for my kids when I am gone?
  
• Will the court take over my children if I am gone suddenly?
  
• Who will take care of my children?
  
• Who will provide education, health care, support and maintenance for my kids?
  
• Who will manage and control the inheritance of property for my kids?
  
• Will my child gain complete control over my property at age 18?
  
• Who will oversee my child if he or she is not properly utilizing the inheritance?
  

A well drafted estate plan can answer and take care of all the above questions. Parents can select guardians for their minor children and provide guidelines regarding care, education, maintenance, support and lifestyle for the children. Without an effective estate plan, the courts will decide who will take physical care and custody of your children and how their inheritance is to be managed. The child may also be able to take complete control and disposition powers at the age of 18 if no plan or direction has been provided for by the parents. The child may then spend his entire inheritance before he even graduates college! All these concerns can be avoided and peace of mind achieved by a well prepared estate plan.

Who receives the inheritance. Probate proceedings usually follow if there is no estate plan and a living trust is not in place. After the death of a person without a will where the value of the estate is greater than $100,000, the estate enters probate. Probate is the legal process of administering the estate of a deceased person by resolving all claims and distributing the deceased person’s property under a valid will. It is expensive and time consuming. The whole process may take one to two years and cost more than $50,000 for an estate valued at $1,000,000. Not only that, the whole matter becomes a matter of public record that anyone can have access to. A will does not preclude a probate. The estate must go through probate.

Living trust. An estate plan will include a living trust. A living trust avoids probate. This saves a great deal of money and time when administering an estate after the death of the person. It is a partial substitute for a will. All your assets are transferred into this living trust. These assets are administered through the living trust during your lifetime and transferred to the beneficiaries upon death. There is no need for court intervention or probate for the purpose of transferring your assets to your beneficiaries. Various provisions for the distribution of assets and their timing are embodied in the living trust. Trustees and successor trustees are named in the living trust. The provisions of the trust are changeable during your lifetime. Upon death, the living trust becomes irrevocable or non-changeable.

Pour-over will. A will does not completely replace a living trust. Instead, a pour-over will is put in place in an estate plan. The pour-over will takes into account the assets that are not transferred to the living trust for various reasons and serves as a catch-all provision.

Durable power of attorney for economic decisions. In this power of attorney document you name someone you trust to handle your financial and economic decisions if you are unable to manage these affairs. This power of attorney kicks in when you are disabled due to a physical or mental disability or are otherwise unable to take care of your affairs. The person you appoint is empowered by this power of attorney to handle your financial affairs when you are disabled. If you do not have a power of attorney, then the courts may appoint a person to handle financial affairs and make decisions on your behalf, which may be time consuming and expensive. Moreover, the court may not appoint a person of your choice. Therefore, if you have a power of attorney in place, then you can have a person of your choice be appointed and have them manage your financial and economic affairs the way you want. However, this durable of power of attorney has to be executed and put in place in writing in your estate plan while you are capable of making this decision.

Durable power of attorney for health care decisions. In the durable power of attorney for health care decisions you name someone you trust to make medical and health care decisions on your behalf if you are unable to do this yourself. This power of attorney kicks in when you are disabled due to a physical or mental disability or are otherwise unable to take care of your affairs. If you do not have a power of attorney in place then the courts may appoint a person to handle these affairs and make decisions on your behalf, which again may be time consuming and expensive. Instead, you can have a person of your choice be appointed to care for you and have this person manage your medical and health care decisions the way you want. This document also allows you to give specific directives to the person about any specific desires you may have regarding the use of life support treatment or disposing of your remains in a particular fashion. However, this durable of power of attorney also has to be executed and put in place in writing in your estate plan while you are capable of making this decision.

What to do now? If you do not have an Estate Plan and has been procrastinating all these years, the time to get started is now. It is not too late—call an attorney to make an appointment and be on your way to financial and emotional peace of mind.