Estate Planning: The Simple Facts for Parents
Tuesday July 13, 2010see more by jen
I am so happy to introduce a new Tiny Oranges Sponsor, Bettenhausen Law, a local Orange County law firm that specializes in Estate Planning and Family Law. I am passionate about spreading the word on how important it is to do an estate plan to protect your kids. We just did ours last year when our daughter was 3, and after I learned how much is at stake if you don’t have one, it was, well, downright scary. But it doesn’t have to be! Getting it done will bring you so much peace of mind and will be one of those things you can CHECK off your list.
Here are the reasons WHY it’s so important and some frequently asked questions in a fabulous article written by Baron Bettenhausen to easily break it down for parents.
Estate Planning: The Simple Facts for Parents
by Baron J. Bettenhausen
“In today’s fast-paced society we spend so much time running to and from work, school, swim lessons, soccer practice, etc, we hardly take a break to catch our breath. We beat ourselves up over all those things we ‘need’ to do – clean the house, pay the bills, get the groceries… and we yearn for those things we ‘hope’ to do – read a book, take a vacation, start a new hobby… We rarely find the time for those ‘hope to-do’s’, so we constantly put them off, telling ourselves “I’ll do that when the work is done and the time is right.”
As an Orange County attorney, I have worked in and around estate planning for some time, but it wasn’t until the birth of my own daughter that I came to see how important it was for parents to have a plan in place should the worst happen. This was one of those things on our family’s ‘hope to do’ list but soon realized that it’s a ‘need to do now’ to protect my most precious asset, my daughter.
Nobody likes to think about their own mortality but when you have children it no longer is a choice, but a necessity.
With that in mind I decided to compile this list of FAQ. I have found that just about everyone knows they need some type of estate planning but hardly understand why you need it and why it is so important to do now. As a parent, here are a few questions you may be asking yourself about estate planning:
What is the difference between a Will and Trust?
This is the most frequently asked question I receive about estate planning. Probate is the legal process for determining how to distribute the estate of a deceased individual. A will is a legal document that instructs the court on how to distribute your assets after death. Without a will, the court will make the major decisions regardless of what you or your loved ones may have wanted. In California, probate is typically expensive and lengthy, especially without a will. In probate, your estate (assets and debts) becomes public and is subject to an overburdened court system. A will eases the process of probate by making your wishes known. However, the most important function of a will for parents is the designation of who will be the guardians for your minor children. Who will raise your children if you are no longer around and is that the person you would choose?
While important, a will is only operative in the event of your death and is meaningless in the face of incapacity. It can be extremely difficult for your loved ones to get access to your assets if you are in a hospital and unable to communicate. With a trust, your successor trustee can manage your affairs until your recovery or in the event of death, a correctly titled trust will not be subject to the very public, time consuming, and expensive probate process. It is important to consult with someone who understands how a will and trust work together to protect you and your children.
It is also important to note that an estate plan should include much more than just a will and a trust. A knowledgeable attorney will also help you prepare a Living Will or health care proxy designating your medical power of attorney and outlining your health care decisions in the event of your incapacitation.
I don’t own a home or I don’t have much money so do I really need a will and trust?
It is impossible to know if you need a trust without a competent evaluation of your estate, but in general, if your estate is valued over $100,000 or you own real estate valued over $20,000 then it will be subject to the expensive and lengthy probate process unless a trust is in place.
Everybody needs a will. However, if you have minor children then it is especially vital that you have a will appointing a guardian for them in the event of your death. Who will raise your children if you are not around or who will manage their inheritance if they are too young? Previously cooperative families can become bitter antagonists over these questions if left unanswered by you, and if you do not have any other family or your choice of guardian is not family then you absolutely must have a legal document designating someone as guardian.
What if I don’t have a guardian yet or cannot agree with my significant other about a choice?
Appointing a guardian for your minor children is one of the most important yet most difficult steps in an estate plan. This is especially true for those who don’t have any immediate family members. I believe your children are your most valuable asset and it is not sufficient to just have one guardian. I always request my clients provide two alternate choices in the event the first or second is unavailable or incapable at the time one is needed. If you cannot prioritize your options or are struggling with your partner in finding a mutually agreeable appointment, remember that even the person you consider your last option is infinitely better than having the state decide in your place or in the worst case deciding to put your children into the state system.
Can’t I just go to Staples and pick up a “Do it Yourself Kit” without paying for an attorney?
I would much rather you have a will using a do-it-yourself kit than to not have one at all. However, a will is an important document communicating your desires after you are gone. It may happen that you get everything right when you do it yourself, but you will never know if you made a critical mistake because the problem will not become apparent until you are gone and unable to fix it. You should get the most competent advice you can regarding your estate. You should also remember that a will does not become operative unless you die. An estate planning attorney can help you plan in the event you are incapacitated and unable to communicate.
The Most important unasked question….
Can’t I just take care of an estate plan later? I’m young and healthy and have plenty of time.
This actually is not a question I receive but is the most common reason I see for people to procrastinate in creating an estate plan. Life is fragile and I can not tell you how much grief and stress I have witnessed because of procrastination in creating or updating an estate plan. It is difficult for loved ones to deal with the requirements of Probate while grieving a loss and if there are children left behind, families can fight over who will take them. All this can be avoided with a little preparation and advice from a competent attorney.
I encourage you, as a parent, to consider providing a will and/or trust for your family on your ‘need to do now’ list and protect what is most important to you.
Contact us today for a one-on-one estate planning consultation (California residents only).
All Tiny Oranges readers will receive a complimentary consultation and 10% off document services (Will, Trust, Health Care Directive, and Power of Attorney) at The Law Office of Baron J. Bettenhausen.
Click HERE for contact information on Bettenhausen Law.