Most adults take the time to plan for the future, but they might not plan for what will happen when they pass away. Failing to take the time to create an estate plan can mean that California laws stipulate who is going to get what from your estate. The intestate laws take over when there isn’t an estate plan in place.
There are several things that you have to think about when you are getting ready to create your estate plan. It is imperative that you don’t make mistakes that can be costly to your heirs or that might mean that settling the estate takes longer than it should.
Value of the estate
If you have an estate with a value that will be taxed, you can sometimes pay down the estate so that your estate won’t be heavily taxed. There are limits to what you can do per year. The limit in 2019 is set at $14,000 per spouse, so a married couple can give away a total of $28,000 per year. This can be excluded from estate taxes, so it is often beneficial to take advantage of this.
Executor of the estate
You can name a person to handle your estate. You should ensure that you make the right decision because the person will have to handle several duties when you pass away. They take care of the distribution of assets, filing the final income tax return and paying creditors from the estate. While you might be tempted to name your spouse or another family member, you might need to choose someone who isn’t going to have to try to do these duties while they are distraught.
Your estate plan must be in writing or else it won’t necessarily be followed. You need the will written and executed in accordance with the law. You must have any trusts properly established. You also need to think about your final days and what you want those to be like. With this in mind, you should set up a living will and powers of attorney designations that outline your wishes for your health care and finances.
If you have minor children, you should also set up guardianships for them. This lets the courts know who you want to raise your children if you aren’t able to. You still need the remainder of the estate plan, but this is an added consideration for young parents.