IMPORTANT ESTATE PLANNING TERMS TO KNOW
The pandemic and its daily statistics about hospitalizations and deaths raised awareness of the need to plan for the future, especially among young adults, according to Caring.com’s 2021 Wills and Estate Planning Study.
The number of young adults with a will increased 63 percent since 2020, but despite this new awakening, the percentage of Americans with wills has not significantly changed, with only 32.9 percent of adults saying they have any estate planning document in place.
Everyone pretty much knows what a will is, even if just in the sense of having seen wills read on TV dramas, with gasps of disapproval and surprise arising from the assembled heirs and would-be beneficiaries.
TV drama aside, a last will and testament is the basic building block of estate planning – or preparing for the future for your loved ones once you’re gone. However, there are many other estate planning instruments that can also secure peace of mind for all.
The estate planning attorneys at The Elder & Disability Law Firm, APC, stand ready to explain what these instruments are and why they are needed. Start with a will, but build from there for the safety and security of all.
The Elder & Disability Law Firm, APC, proudly serves clients throughout Southern California, including the cities of Redlands, Rancho Cucamonga, Riverside, Palm Springs, and neighboring communities. Contact us today to get started.
WHY IS ESTATE PLANNING IMPORTANT?
What happens when those two-thirds of all Americans pass away without an estate planning document like a will or trust? The court system takes over. If you die intestate – without a will or other document – your assets will need to go through probate court where a judge will decide who gets what.
A will, though it still goes through probate, can name an executor for the estate and specify who gets what. The court will supervise but generally not intervene unless there are unresolved challenges or legal issues.
A living trust, in contrast, names a trustee to carry out the trustor’s wishes. The trustee executes the wishes of the decedent outside of probate court. This can often speed up the process and keep matters private. Probate proceedings become part of the public record.
UNDERSTANDING ESTATE PLANNING TERMINOLOGY
To help you understand the tools and terminology of estate planning, we have compiled this list of terms and their definitions:
ESTATE: Your estate is everything you’ve accumulated throughout your lifetime, including cash savings, property, mementos, retirement accounts, life insurance policies, and other assets. Note that anything with a named beneficiary, such as a life insurance policy, does not need to be designated in a will or trust or go through probate. It automatically passes to the named beneficiary.
WILL: Formally known as a last will and testament, a will allows you to designate your beneficiaries and specify which assets they’ll receive. It also names a personal representative who will become the executor of the estate during probate proceedings.
INTESTATE: This means dying without a will or trust that specifies your beneficiaries or names someone to become the executor of your estate, leaving the distribution of your assets to the dictates of a probate judge.
TRUST: A living trust names a trustee to manage your estate, or assets, once you are incapacitated or dead. As the grantor, or settlor, you assign all your assets to the trust and manage them as the trustee while you’re alive. The trust also specifies and assigns your assets to your beneficiaries when you die.
HEIR: Generally, heirs are your immediate family members such as your spouse, children, or siblings. You can name them as beneficiaries in your will or trust to receive a designated asset or percentage of assets.
BENEFICIARY: In addition to your heirs, a beneficiary can be anyone you name in a will or trust to receive something of value when you’re gone; maybe a friend or business associate.
EXECUTOR: The executor is generally the personal representative you name in your will to take over and distribute your assets during probate proceedings. A trustee named in a trust would assume a similar role but outside of probate court.
POWER OF ATTORNEY: A power of attorney (POA) assigns to someone else the legal right to manage your affairs for you, in whole or partially. For instance, you could assign someone a power of attorney to manage all your assets while you recover in a hospital.
ADVANCE HEALTH CARE DIRECTIVE: This is a document in which you state your preferences for treatment should you end up in a hospital incapacitated and unable to speak for yourself. You must also name someone to convey those decisions for you.
GUARDIANSHIP: If you have minor children with no one to care for them once you’re gone, you can name a guardian to provide for their care, but you must do so in a will. You cannot name a guardian in a trust.
CONSERVATOR: If you become incapacitated with no one named to take charge of your affairs (as through a trust or POA), a court may appoint a conservator to manage your affairs for you.
HIRE AN EXPERIENCED CALIFORNIA ESTATE PLANNING ATTORNEY
You never know what challenges life will throw your way, so it’s best to be prepared. You need to plan not only for your loved ones but also for yourself. Everyone has different needs and goals, so estate planning should be done with individualized consultation.
Let us help you create peace of mind with thorough individualized estate planning. Contact us today at The Elder & Disability Law Firm, APC. We have helped countless others like you throughout Southern California, and we stand ready to help you.