What is estate planning?

Estate planning is a method of organizing your affairs and assets. You do not need to be wealthy to have assets to organize.  Estate planning is for everyone.

The most effective estate plan is tailored to each individual person.  It can take on many forms and use a variety of legal tools. Some of those tools include a valid will or trust to transfer property and assets to others, such as family members, friends, or even charitable organizations.

What is a will?

A will is a formal and legally binding document that details how, and by whom, minor children should be cared for and how to handle the decedent’s property.  It is an integral part of an estate plan.

A person who executes a will is referred to as a “testator.”  A will is a highly personal document that requires close attention to ensure that it reflects the testator’s most current wishes.  However, revisions to a will (also known as “codicils”) must meet certain legal requirements.  The physical location of a testator’s will is something that close family members should know, but the contents of the will should be kept confidential.

What kinds of wills are valid in California?

California recognizes four different types of wills, the most common being those drafted by lawyers on behalf of a testator.  Each type of will must meet specific formalities to be valid in California.  The right attorney, one who is knowledgeable and trustworthy, can make all of the difference because of the document’s legal significance.  The other three types of wills recognized in California are holographic (handwritten) wills, form wills, and valid out-of-state wills.

What is a trust and what role does it play in an estate plan?

A trust is a method by which a person can transfer property and/or money out of their individual name(s), oftentimes while still maintaining control over the asset.  There are many types of trusts, but the two most commonly used in estate plans are living trusts (“inter-vivos” trusts) and testamentary trusts.  Consult an attorney to learn which type of trust best meets your needs.

The inter-vivos or living trust is created during the lifetime of the trust creator (called the “trustor”) and the property is legally transferred during the trustor’s life.  Property in a living trust will not be considered part of the probate estate upon the person’s death.  A living trust typically transfers all of the property that would have been addressed in a will.  A testamentary trust on the other hand is actually created in the will itself, and the property in the will passes to a beneficiary after the settlor’s death via said trust.

What else is necessary?

Other estate planning tools, which will be discussed in part two of our Estate Planning is for Everyone series, include a durable power of attorney, advance health care directive, funeral plans, and succession plans for family-owned businesses.

Next Article: Estate Planning is for Everyone (Part 2): Other Estate Planning Tools