A lot of people seem to think that estate plans are just for rich people, but that couldn’t be farther from the truth. In fact, the main benefit of an estate plan for us non-rich masses is that it provides those we leave behind with some certainty and peace of mind after we’ve moved on. But what is an estate plan and how does one work?
A relatively straightforward estate plan consists of the following: (1) a will; (2) a trust; (3) an advance health care directive; and (4) a durable power of attorney. For those of us with young kids, our estate plan will also include a nomination of guardians of minor children. There are other documents as well but those are the main components, and if you’re a couple then you’ll each need a set of documents (but only one trust and one nomination of guardians between you).
As I wrote above, the main point of an estate plan isn’t really for us; rather, it’s for our loved ones we leave behind. Consider your house, for example. If you own it yourself and you pass away, how does title to the house get transferred to someone else? And how do you make sure that said someone else is the person you would have wanted it to go to?
Without an estate plan, your heirs have to go to court for a process called Probate, which takes a lot of time and lots of money in attorney’s fees and you have almost zero strategic control over how it will end up. At the end of the Probate process, the court will have issued orders transferring your property to the people the law says are to get it, but it will have probably taken at least the better part of a year, and at a cost of thousands upon thousands of dollars in attorney’s fees. Even worse, if you didn’t have an estate plan, then you have no guarantee that your assets will be transferred to the person or people you wanted to receive them.
But, with an estate plan, all that can be avoided. An estate plan will state exactly who gets what, how you want things to be handled after you’re gone, and who’s to manage your assets and their distribution. Simple and easy with no court and no attorney’s fees.
There’s a lot more to it all than the above short paragraphs, but that’s the gist of it. Call me if you’ve got any questions. If you’re a public servant (LEO, fire, military, teacher, etc.), then I discount my fees for you.
Greg Borman is an attorney in San Diego, California, and has been practicing law for well over a decade. In addition to an estate planning practice, he also represents small and medium-sized businesses and their owners in transactions of all kinds, including intellectual property. He can be reached at (858) 232-7100 and/or at firstname.lastname@example.org.