What is Estate Planning?

What is estate planning?

Many people think that only wealthy people need to worry about estate planning.  This is simply untrue.  Estate planning is exactly what it means B the planning of your estate.  The word Aestate@ is commonly misunderstood.  Estate simply means Athe whole of one=s possessions.@  Simply put, a person=s estate consists of the assets (or property) that they own B whether big or small.  A person can have a very wealthy estate.  On the other hand, many people have modest estates, consisting of their residences and little else.  Regardless of whether a person is wealthy or of more modest means, he or she still needs to plan for their estate and their future.  

What does estate planning do?

Almost every person should have some sort of estate plan in effect.  A properly drafted and executed estate plan will ensure that your property (whether big or small) is disposed of in the manner you desire.  In addition, a proper estate plan will ensure that your wishes are carried out by the persons you select, either at your death, or in the event that you become incapacitated and are unable to make your own decisions, carry out your own desires, or handle your own financial affairs.


Why should I do an estate plan?

Sometimes, people avoid establishing an estate plan and the reasons for the delay may be numerous.  Often times, people think that they do not need an estate plan because they are not wealthy, or don=t have an Aestate@.  As discussed above, this is a common misconception and is simply untrue.  Another common reason why some people fail to establish an estate plan is because they do not want to contemplate their own death or incompetency.  While these subjects are very difficult, they are necessary to discuss and plan for.  The problem is:  if you do not establish what your desires are for after you die, or become unable to make these decisions, how can you expect that your loved ones will know and follow your wishes?  A proper estate plan can give you comfort in knowing that your wishes will be carried out B whether that decision involves who you want to inherit your house, who you want to have your jewelry (or painting, or china setY.), and whether you want to be kept alive by artificial means should you fall into a coma, or be involved in an accident.  An estate plan can also direct who you would like to care for your minor children in the even of your death.  It can also ensure that your children are cared for as you desire.  


What does a proper estate plan consist of?

Estate planning should be individualized and each person=s situation is unique.  However, generally speaking, a proper estate plan should (at a minimum) consist of the following documents:

• Revocable Living Trust
  • A revocable living trust is the foundation of a solid estate plan.  A trust is simply a legal agreement between the creator of the trust (often referred to as the Atrustor@ or Asettlor@) and a person or entity responsible for managing the assets of the trust (referred to as a “trustee”). Most often, the person creating the revocable living trust acts as initial trustee.  A properly funded living trust ensures probate will be avoided upon the death of the trustor.  Additionally, a properly drafted trust should have provisions for the trustor=s care and management of his/her assets in the event the trustor becomes incapacitated or otherwise unable or unwilling to care for himself/herself and manage any financial matters.  In some circumstances, a living trust can also help to minimize or avoid any estate taxes due.
• Pour Over Will
  • A Pour Over Will is a Will used in conjunction with a revocable living trust.  The Will acts to “pour” or distribute assets to the trust.  Often times, the Pour Over Will catches assets not funded during lifetime, and makes these assets part of the trust upon trustor’s death.  This ensures that such assets are managed in accordance with the terms of the trust.  In California, in order to avoid a formal probate, it is necessary that all assets distributed to the trust by way of the Pour Over Will, be valued at less than $100,000.
• Advanced Health Care Directive (Also referred to as a ALiving Will@)
  • An Advanced Health Care Directive is a document which allows you to instruct others about your care in the event you become incapacitated and are unable to make such decisions for yourself.  An Advanced Health Care Directive will allow you to: (1) designate a person to make health care decisions on your behalf in the event you are unable to do so (called an “Agent”); (2) Specify whether you wish to prolong your life or withhold or withdraw treatment; (3) Request pain relief; (4) Instruct if and how you wish your organs be donated; and (5) Other specific requests you may have.  An Advanced Health Care Directive is essential to a proper and complete estate plan.
• Power of Attorney for Financial Matters
  • A Power of Attorney for Financial Matters authorizes a designated person (referred to as an “agent”) to make decisions, and act on your behalf with respect to any real property, personal property or financial matters.  The person creating the power of attorney (referred to as the “Principal”) can designate when the agent’s authority becomes effective.  The agent’s authority may become effective immediately, or upon incapacity of the principal (called a “springing power of attorney”).

Do I have to hire an attorney to accomplish this?

An attorney is not necessary to establish an estate plan.  In fact, California law allows for a person to write his or her own will, on a piece or paper (or napkin for that matter) in their own handwriting.  However, a proper estate plan consists of many documents to carry out your wishes.  Each person=s situation is different.  Accordingly, each estate plan should be customized to each persons unique situation and address his or her individual wishes.  In order to complete a proper estate plan, a competent attorney in the area of estate planning should be consulted.  


Will it be expensive to hire an attorney to do my estate plan?

At The Law Offices of Bradley S. Erdosi, we pride ourselves on providing quality representation, while keeping our fees very honest.  While this is a common question, the term Aexpensive@ is relative to the individual.  What someone thinks is expensive, another may see as inexpensive.  Whatever the price, it is likely the cost associated with not doing an estate plan, or having a faulty estate plan, will be far greater than the fees you would pay an attorney to do it right.


We offer a free initial consultation.  The fee quoted at the consultation will be a flat fee,  which includes your entire estate plan.  There will be no surprises.  Upon the conclusion of the consultation, you will know the cost before you ever decide whether or not to retain our services!  We assure you that you will find our fees fair and reasonable.