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By Sarah Philips

Why Engage in Estate Planning?

Estate planning involves the preparation of wills and trusts and other instruments that help manage your property when you are living and upon your death. This is an important process for you as well as your aging parents. The number one reason to engage in estate planning is to avoid dying intestate, i.e., without any directions for the distribution of your property. If you die intestate, the court will determine who your heirs are as defined by law and will order the distribution of your property accordingly. Estate planning empowers you to direct what property goes to whom upon your death.

Other important benefits of estate planning are:
  • Avoiding the expensive and time-consuming probate process
  • Minimizing taxation of your estate
  • Planning financing of nursing home stay
  • Avoiding conservatorship.

Estate planning involves up-front expense, but in many cases it results in significant savings. Your heirs will enjoy the financial benefits of avoiding probate and estate taxes. And you will enjoy the peace of mind of knowing that if you need to stay in a nursing home or become incapacitated, your affairs will be handled by people you have designated. You and your heirs will benefit financially from your estate planning, but most importantly, you will gain peace of mind.

Engage an attorney or not? If your estate is valued at more than $100,000, you own real estate, have a blended family, or want to plan for nursing home expenses or possible incapacity, you should definitely hire an attorney. An attorney will discuss your particular situation with you, explain taxation issues and the advantages and disadvantages of estate planning instruments. An attorney will also make certain that your instruments are properly drafted and implemented.

What to Look for in an Attorney?

It’s important to find an attorney who will take the time to listen to you and answer all your questions. There are many options and choices in estate planning. Some instruments provide shelter from taxation, but are very restrictive and expensive to administer. It’s important to know all the trade-offs and make an informed decision. It’s also important to know how to maintain your estate plan and what to do when circumstances change. Hire an attorney that you can trust to handle your estate issues for the rest of your life.

Will or Trust?

The major difference between a will and a revocable living trust is that a will does not go into effect until you die and a trust goes into effect when you sign it.

The trust’s principal advantages are:
  • The avoidance of probate
  • The provision for the management of your affairs if you become
  • incapacitated

Minimizing Taxation

The set-up costs of a trust are greater than the set-up costs of a will-based estate plan. However, the advantages of the trust in the case of a large estate, an estate with real estate, and the estate of a blended family usually outweigh the disadvantage of the start-up costs. The larger the estate, the more useful a trust will be. A trust gives you lots of tools for managing your estate while you are alive and many options for distribution of your estate upon death. The decision about whether to have a will or a trust involves weighing the advantages and disadvantages of the will vs. the trust. This is a discussion you should have with a lawyer. Encourage your parents to do the same.

Sarah J. Phillips is a licensed attorney in the State of California with a private practice in Sonoma, Napa, and Marin Counties. She has been a member of the California Bar since 1985. She is an expert in general practice serving individuals and small businesses with an emphasis in elder law, estate planning and administration, elder abuse litigation, and personal injury litigation. She has BA cum laude in Spanish from Beloit College in Wisconsin and a JD from Franklin Pierce Law Center in New Hampshire. She has taught high school Spanish, raised three sons, and served as a board director for various schools and nonprofits.

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