Secure Your Family’s Future: The Vital Importance of Estate Planning for Young Families
Starting a family is a wonderful journey filled with joy and love. However, it also brings new responsibilities and considerations. Estate planning is not just for the wealthy or the elderly; it’s a crucial step for parents with young children. Here’s why:
Guardianship: Without a proper estate plan, California courts may decide who will care for your children if something happens to you and your spouse. Your voice and preferences may not be considered. With a personalized estate plan, you can nominate the people you think are most suitable while also providing funds to allow your children to travel to spend meaningful time with other family members and loved ones.
Asset Distribution: Your assets may not be distributed according to your wishes. California’s intestate laws could mean that assets go to unintended beneficiaries or that your children receive their inheritance at the whim of a judge. Do you want your children to receive assets at 18? Would you be concerned if a judge gave your assets to a third party who is caring for your children?
Tax Efficiency: An effective estate plan can help minimize estate taxes, leaving more for your loved ones. Without one, your estate may face unnecessary tax burdens. Not all assets are created equally. Most people want to leave their assets in equal shares among their children, but a gift of a primary residence has a different result than the gift of a vacation home or income property. Retirement accounts also require special consideration.
Your Own Wellbeing: Anyone can suddenly lose capacity. It is critical to give the right people both instructions and authority to care for your body and your finances. Spouses do not automatically have this authority in California.
What Happens in California Without an Estate Plan (The Estate Plan You Already Have)
In California, if you don’t have an estate plan in place, the state’s intestate succession laws come into play. Here’s a simplified overview of what could happen:
Guardianship: The court will decide who becomes the guardian of your children. This decision may not align with your wishes or values.
Asset Distribution: California law dictates how your assets will be distributed. Your spouse may not inherit everything automatically, and your children may receive their inheritance at age 18, which might not be ideal.
Probate Process: Without a will or trust, your estate will likely go through probate, which can be time-consuming, expensive, and public. Please take a look at our probate calculator. Even a modest home in California’s metropolitan areas can mean almost $50,000 in probate fees.
Conservatorship: No adult has the right to act for another adult. This means that if you cannot attend to your own affairs and do not have the right authorizations in place, your loved ones will have to ask a judge for permission to act for you. This is both expensive and emotionally exhausting, as well as an invasion of your privacy.
How to Opt-Out of California’s Estate Plan
The good news is that you can take control of your family’s future with proper estate planning. Here’s what you can do:
Nominate Guardians for Your Children: Designate guardians for your children and specify how your assets should be distributed.
Establish a Trust: Protect your assets, avoid probate, and maintain privacy.
Power of Attorney: Designate someone to make financial and healthcare decisions on your behalf if you become incapacitated.
Health Care Directives: Every adult needs a health care directive. Even if you trust your loved ones to do what is best for you, if the time comes, they will want specific written instructions on everything from organ donation to who you want in the room.
Review and Update: Life changes, so it’s essential to revisit and update your estate plan as needed.
