Friday, March 13, 2009

Why Do I Need a Formal Written Estate Plan?

In California, everyone has an estate plan even if they have no Will or Trust. That is because California law provides a detailed scheme of who is entitled to your property when you die. However, very few people would be happy with the results under the law because the law does not take into account an individual's wishes or family situation.

Regardless of who you are, how much money you have, who you want to inherit your estate or when you want them to receive distribution, your wishes are likely very different from the basic disposition provided under California state statutes. For instance, if both spouses ultimately die from a common accident but one outlives the other, even for a short time, all of the property of both spouses could go to the survivor's family rather than be split between the heirs of both spouses.

Having no estate plan can also be a problem for those with minor children. For example, if a couple with children died, California law provides that the children would be entitled to full ownership of the property, including any businesses, at age 18. Most people consider age 18 far too young an age to receive a full inheritance.

However, with a well thought out Estate Plan you can make sure that your children are well cared for (food, clothing and schooling) by a responsible adult trustee and that your minor children receive their inheritance at an age when they are more mature and less likely to blow through their inheritance on frivolous items.

Proper estate planning is important as a means of avoiding Probate Court. When you die without a Will or with a Will but no Trust, your heirs are required to bring the matter to Probate Court. Until such time as someone is appointed by the Probate Court, your assets are frozen and your heirs are unable to access your accounts to pay any bills and expenses.

In addition to being costly, Probate Court is time consuming and many acts require Probate Court approval. Even the most basic of estates can take over one year to close. Moreover, all documents filed in Probate Court are fully accessible by the public.

Another pitfall with the no estate plan philosophy is that lack of clarity most often breeds disputes and heirs tend to fight over the smallest of estates. These disputes are expensive to litigate and the fees incurred by the estate come from the estate's assets.

A properly drafted Will and Trust can avoid both the application of California's default provisions, as well as unnecessary expenses and the inconveniences of Probate Court. Not only does this keep the estate administration private, but it ensures that your wishes are followed and done so in a timely fashion.

We encourage you to contact an experienced estate planning lawyer to create an estate plan or to review your existing estate plan and determine whether changes should be made.

Any questions or comments should be directed to: moravecs@earthlink.net Henry (Hank) Moravec is a partner at Moravecs, A Professional Law Corporation. He focuses his practice on Estate Planning, Trust and Probate Administration, Beneficiary and Trustee Representation, Tax Law, and Nonprofit Law. His practice is located in San Marino, California but he represents clients throughout Southern California and his office is close to Los Angeles, Pasadena and the surrounding areas.