What is an Estate Plan?

Hi there, I’m California Family Trust Attorney Laura Meier, the founder of the Meier law firm in Newport Beach, California. I help California families prepare for and navigate major life events with compassion and care. So I want to talk to you today about what is an estate plan? And do you need one? And does it really protect you?

Those are questions I often get. Sometimes even at a dinner party, I’m like, let’s change the topic. But it’s so important, especially for those of us who have other people who rely on us to make sure we are protected, and that they would be cared for the way that we want if we should get sick or pass away.

Understanding Your Estate Plan

Technically speaking, an estate plan is a set of legal documents that you, along with your attorney, would prepare in advance to make sure that all of your assets would pass to who you want, if you were to pass away, without having to go through a long and expensive court process known as probate. Probate can easily cost 10s of 1000s of dollars, if not more, and a lot of delays.

The other thing that an estate plan does is it protects you if you get seriously ill and you can’t make your own decisions It makes sure that your medical decisions could be made, your finances could be handled, and that if you have children that they would be cared for in the way that you would want and by whom you want.

Who Needs An Estate Plan?

  • The short answer really, is that almost every adult needs some form of estate planning. The 18-year-old who’s just starting out and doesn’t have a lot of assets might simply need a Medical Directive and a financial power of attorney so that if they get hurt, their parents can still have the authority to make those kinds of financial and medical decisions for them if they can’t make them for themselves.
  • Later in life, when we buy a home and have more assets, or if we have a family or anyone who relies on us, and is dependent on us, we really need to make sure we have an estate plan. So that way if something happened to us, our families would not end up in a court nightmare.

What Happens Without Estate Planning In Place?

So those who don’t have an estate plan, are relying on California’s default plan for them. Meaning, that if you don’t do your planning yourself, California is going to step in with its own plan. And spoiler alert — you’re really not going to like it.

Basically, in a nutshell, California’s default plan for your family when you don’t create a plan yourself, is that your minor children could be placed in the care of strangers. And then a judge who doesn’t even know your family would have to choose who the guardian of those children would be.

It also provides that your assets would have to go through a very long and expensive court process known as probate that could cost 10s of 1000s of dollars if not more. It is also not uncommon for probate to take two years plus just to be completed. This means someone in your family is having to open up probate, someone’s gonna have to hire a lawyer, someone’s gonna have to do the paperwork, and all these hassles and delays. And it is so expensive.

California’s default plan also means that if you have minor children, everything you left behind for them, would go to them outright without any restrictions on their 18th birthday. And then if you’re leaving money to your spouse (and some people are fine with this, some people aren’t) they will be free to give it away to a new spouse, if they ever got remarried. Or if they got sued later on, it could be taken — there’s no protection or restrictions over that money that’s going to your spouse if you left it through probate, which many families worry that that’s not the best setup.

Medical Decisions Under California’s Default Estate Plan

California has a different default plan that your medical decisions can’t be easily made if you become seriously ill. That’s because our federal laws and state laws provide that your medical information is private and can’t be disclosed without your consent.

That’s great in theory unless you really would need people in your family to understand why you’re in the hospital and you would want them to make decisions for you. And so without that authority, oftentimes families are having to run into court to get appointed to be your medical decision-maker during a dire situation. And it’s not like a Starbucks where you just stop in and stop out. It’s a very long process, and it causes a lot of heartbreak and delays. And then, most significantly, the courts may be appointing people who you may not have necessarily wanted to be making those decisions for you.

Preserving Your Legacy

And then finally, with California’s plan, they’re not in the business of preserving who you are or your legacy. And so that oftentimes leaves a lost legacy, especially when you’re leaving behind little ones.

So California’s default plan is definitely not what I would want for your family. It’s not what I would want for myself. The good news is that with an estate plan, if it’s done correctly, you can actually protect your family. And you can make sure that if you were to become sick or pass away, that everyone you love would be taken care of, and that you would be taken care of in your end of life situation, and that your family could receive money however you’ve chosen, with ease and without having to go through court at all.

What Does My Estate Plan Need?

The way that is accomplished is you set up an estate plan with your attorney and make sure that you have all the documents in place, and that you’re properly funding your estate plan. So what is a good estate plan in terms of how it can protect you? You want to make sure it has some key components.

First of all, you are going to need a revocable living trust, typically. And what a revocable living trust is, it’s simply a legal document that says, This is who I am, this is who I love. This is who I want to get my money, this is who I want in charge of my money. These are the terms of how the money should go to my spouse, or kids or favorite charity, or a friend or partner or whoever you want to benefit.

What’s nice about it, it’s a private document. So you’re not having to go through court and all those delays and all that cost, you set it up in advance. And you can really make sure things would play out the way that you would want.

Your estate plan should also include a will and what the will does is it just says, Hey, if I forgot to put things in my trust, like my bank account, or home or anything like that, that’s what I wanted. And it’s kind of a safety net, we can use to then go into court if we must to transfer an asset after you have died. If you weren’t able to do that, while you weren’t living. As a side note, your estate planning lawyer should be really good at making sure they’re staying on top of that with you. So you won’t even have to use the will.

Additionally, if you’re a parent of young children, you need to determine who you would make a guardian for your children. So that’s very important.

An estate plan will also include your Advanced Health Care Directives and financial power of attorneys. That way if you do get seriously ill, rather than your family having to go through court to get authority to make decisions for you, they can simply have these documents. These important documents indicate to the financial institutions or to the hospital that because you are now incapacitated, your loved one can step in and manage your finances and manage your medical care, and to ensure that you would be safe and taken care of.

And then lastly, what an estate plan does is it preserves your legacy. And this is one of the most important things that even great estate planning attorneys often overlook. And that’s making sure that who you are as a person gets preserved.

So one of the things I want to encourage you to do is to talk on audio or video to your loved ones. share with them your special memories, what’s in your heart, what you want for them. And if nothing else, just tell them. I love you one last time.

Hopefully, this tutorial has helped you understand why you need an estate plan. What happens when you don’t have one and how it really protects you. And we’re here your friends at the Meier law firm to stand with you on your journey, not just initially but for life to make sure that you have that partnership and you feel competent that you truly can have an estate plan that protects you and everyone you love today and always.

Get Started On Your Estate Plan Today

We know how overwhelming it is to prepare for and navigate difficult life events. Schedule a planning session and together we can determine the best way to set up your estate plan in order to avoid probate and protect what you care about most.