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  • Writer's pictureWendi Gundersen

"I have a will so my estate plan is done"

I have heard this many times. Unfortunately, if you have only a will, your estate plan is incomplete.

What is an estate plan?

An estate plan is a comprehensive plan that protects your assets, provides for your loved ones when you are dead, and protects you if you are incapacitated.

A complete estate plan typically includes a will, a revocable trust, a durable power of attorney, and an advance healthcare directive. Of course, you may need a few more things depending on your marital status, whether you have minor children, or whether you own a business. An attorney should be consulted to determine the documents you need for a complete estate plan.

The Will

A will tells your loved ones your wishes after you die. But a will must go through probate, if your gross estate is larger than $150,000. If you end up in probate, your estate will end paying thousands of dollars in attorney fees and court filing fees.

In California, it is easy to have an estate larger than $150,000. If you own a house your estate is likely already bigger than $150,000 because you cannot use your mortgage to offset the value of your house for probate purposes.

The Trust

This is where a revocable trust comes into play. Putting your house in a revocable trust takes it out of your estate for probate purposes. If you put enough of your assets into the trust, you can avoid probate altogether. And avoiding probate saves your estate thousands of dollars, saves your loved ones time, and protects your privacy.

Plus, a trust can protect you, if you are ever incapacitated.

Planning for Incapacity

What happens if you are in a car accident, and you are hospitalized for a few weeks? Who will pay your bills? Who will make health decisions for you, if you cannot make them for yourself? What happens if you are mentally unfit to care for yourself?

A will cannot help you in this situation because it is only effective after you die. But a revocable trust, durable power of attorney, and an advance healthcare directive can help you.

A durable power of attorney allows you to choose a person you trust to manage your financial affairs, if you are incapacitated. It does not prevent you from managing your affairs at any time, and it can be customized to fit your situation.

An advance healthcare directive allows you to choose a person you trust to make healthcare decisions for you, if you are incapacitated. It also enables you to specify in advance the types of healthcare you want to receive and the types of care you do not want to receive.

A revocable trust enables you to appoint a successor trustee to manage your estate, if you are ever mentally unfit to do so. Without it, the state will decide who manages your estate.

So, as you can see, a will is just the beginning. If you want to avoid probate, protect your assets, and be prepared for your incapacity, you need a complete estate plan.



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