Estate Planning Test
Is Your Estate Plan Up-to-Date?
Take this simple test to see if it is.
1. Have you prepared a will or a trust? Without proactive planning, you are relying on the California probate code to determine how your assets pass, to whom they pass, and when they pass. In addition to having potentially undesired results, probate is perhaps the most costly and time consuming means of passing your assets to your loved ones.
2. If you have a will or trust, has it been reviewed in the last two years? Even assuming that there have been no family or financial changes since your plan was last reviewed, there have been major tax law changes in 1997 and in 2001. An out-of-date estate plan could be worse than no plan at all. Our experience is that people view estate planning as an event rather than a process. Keeping your plan current is vital to achieving the goals you set out to accomplish.
3. Are all of your heirs 18 and financially responsible? Under California law, children can inherit property when they 18 years of age, without restriction. Proper planning is crucial to prevent an heir from squandering his or her inheritance, or worse, from causing harm to himself or herself.
4. Are you absolutely certain that your assets will not be subject to probate? We encourage you to make a list of each asset you own, including real estate, and identify how each asset is going to avoid probate. Assets owned as “joint tenancy with right of survivorship”, “husband and wife as community property with right of survivorship”, assets owned in the name of a trust, and assets that pass by beneficiary designation (such as IRAs, life insurance, etc.) should avoid probate. Everything else is subject to probate. (Also, note that assets owned jointly are typically subject to probate upon the death of the last joint owner to die.) Probates can be costly and typically require twelve (12) to eighteen (18) months from the date of death to conclude.
5. Do you have assets titled jointly with a child or children, or someone else? Holding assets jointly with someone other than a spouse is quite common, but has some potentially devastating consequences of which most people are unaware. California law provides that a creditor of a joint owner can attach a lien on the entirety of the property. A creditor would include a divorcing spouse, judgment creditor or business creditor. Additionally, problems can be created if joint tenants die in the wrong order.
6. Is this your first marriage? Second or subsequent marriages present unique planning issues, particularly if both spouses have children from a prior marriage. Proper planning is critical to prevent undesired results.
If you answered “No” to any of the above questions or “Yes” to #5, you should make an appointment to speak to an attorney about your estate plan.