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Message #662 Estate planning (Pt. 1)?

mp3 #662 Do You Need Estate Planning? (mp3 file)

What is estate planning?

What is involved in estate planning?

What is included in your estate?

Who needs estate planning?

Who should help you with your estate planning documents?

How can you find qualified attorneys and other professionals?



What is estate planning?


Estate planning is a process. The process generally has two parts. One part involves planning for the management and disposition of your property, both during your lifetime and after your death. The second part is planning for your own personal and health care, in the event that you are no longer able to provide for such care.

Like many people, you may think that estate planning only requires the preparation of a will. But estate planning encompasses much more. As you will see, estate planning may involve financial, tax, medical, and business planning, as well as the preparation of a will. The purpose of this SmartLaw message is to summarize the estate planning process, and what the process means to you.


What is involved in estate planning?


The form or your estate plan will depend upon your particular circumstances. In planning your estate, your goals and wishes should be given the highest priority. In addition to your goals and wishes, you should consider your family and its needs, and the nature and extent of your property. During the estate planning process, you will need to answer a number of important questions. Major questions concern who will receive property upon your death, and the manner in which your property will be distributed. Depending upon your circumstances, you should determine:

-Who should administer your estate after your death?

-Who should be the guardian of your minor or incompetent children?

-How can federal estate and other taxes be minimized?

-How will your executor or trustee pay for death taxes if any are due?

-How should you and your spouse hold title to your assets?

-If you cannot care for yourself, who do you want to take care of you?

-If you cannot manage your estate, who do you want to do so.

-Who should receive the proceeds of your life insurance or your retirement benefits?


What is included in your estate?


Your estate consists of all property or interests in property which you own. This means that the furniture which you own is part of your estate (regardless of whether or not you own a home or rent an apartment. Your estate may also consist of money held in bank accounts, stocks or bonds, real property (including your home), life insurance or retirement benefits.

The value of your estate is equal to the "fair market value" of each asset that you own, minus your debts, which include the mortgage on your home. In general, "fair market value" may be thought of as the present value of an asset, or the cost of currently purchasing or otherwise acquiring an asset. In assisting you with your estate plan, your attorney will need to know about the property which you own and its value. The value of your estate is important in determining whether, and to what extent your estate will be taxed after your death, and the resources which you will have available if you become disabled.

To help you with your estate planning, your lawyer will also want to know about your current financial situation, and how your financial status might change in the future, particularly after you retire. Your lawyer should review your important personal papers and records, including any existing will, deed to real property, pre- or post-marital agreements, and federal and state income tax returns. Your lawyer will also need to know about any pension and profit-sharing plans in which you participate, any business or insurance you own, and the mortgages and other debts which you may owe.


Who needs estate planning?


Almost everyone needs estate planning, regardless of the value of his or her estate. If your estate has a small value, your estate planning may only focus upon who is to receive your property after your death. If your estate is larger, your attorney will discuss with you not only who is to receive your property upon your death, but also different ways to preserve your property for your heirs. For example, estate planning often involves planning to reduce or defer the amount of federal estate (death) taxes, which otherwise might have to be paid on your death.

However, regardless of the size of your estate you will want to designate who, if you become disabled, is to manage your affairs, to care for you and to make health care decisions. You also will want to consider such alternatives as durable powers of attorney for health care and property and conservatorships of the person and estate.


Who should help you with your estate planning documents?


Wills and trusts are legal documents which should be prepared by a qualified attorney. However, many other professionals and business representatives may become involved in the estate planning process. For example, certified public accountants, personnel managers, pension consultants, life insurance salespersons, and bank officers, often participate in the estate planning process. Within their area of expertise, these professionals can assist you in planning your estate.


The state bar urges you to seek advice only from professionals who are qualified to give estate planning advice and always inquire about that individual's qualifications.


How can you find qualified attorneys and other professionals?


Some lawyers who work in the estate planning area are "certified specialists" in estate planning, probate and trust law. This designation means that they have met standards for certification set by the State Bar of California. However, not all lawyers who have experience and expertise in estate planning have sought certification.


You can obtain referrals from someone whose judgment you can trust - friends, associates, or your employer. Or, you can call the Lawyer Referral Service of the Los Angeles County Bar Association at (213) 243-1525.



If you decide to hire a lawyer, you should understand what services are to be provided and how much they will cost. California law requires that a lawyer explain, in writing, the nature of the services to be rendered, the cost of those services, and the payment terms. You should indicate your understanding of the terms and conditions of the lawyer's employment, by signing the fee agreement which your lawyer should prepare.

The cost of estate planning depends upon your circumstances, and the type of estate planning which do. The cost generally will include the attorney's discussing your estate plan with you and for preparing any trust agreement or other legal document which you may need.

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