What Is an Estate Plan and Why Do You Need One?

What Is an Estate Plan and Why Do You Need One?

Estate planning isn’t just making a will in case of your untimely demise. It is preparing for any situation in which you are incapacitated and ensures your affairs are in order in case of death.

What is Included in an Estate Plan?

1. Will

2. Living Trust

3. Advanced Healthcare Directives

a. Durable Power of Attorney

b. Living Will

c. Do Not Resuscitate (DNR) Order

d. Physician’s Order for Life-Sustaining Treatment (POLST)

e. Organ and Tissue Donation

Wills (Prob. §§6100, et seq.)

When people think about estate planning, they generally think of the will. A will is a document in which you can make your final wishes known. This document will inform the courts, family and friends who you want to care for your children as well as how, asset distribution, pet care, and more. Without a will, it will be up to the probate court to determine where and with whom your children will live as well as asset distribution.

Living Trust (Prob. § 15400)

A living trust is a trust which allows you to transfer your assets or property to a person of your choosing (trustee) while you are still alive. There are essentially two main types of living trusts: revocable and irrevocable. A revocable living trust allows you to place the items into a trust while you are still living and the benefactor would receive them upon your death, after taxes. It allows the flexibility to modify the trust, remove or add beneficiaries, set or change the terms of the trust and determine how the assets are managed.

An irrevocable trust does not offer the same flexibility that a revocable trust does but has its own benefits. Once an irrevocable trust is established, you are not able to modify any aspect of the trust (there are certain exceptions, but those exceptions will come with great difficulty). It does offer a benefit to the benefactor in that they will not have to pay taxes on the assets upon death, nor would they be responsible for any taxes on income earned from said assets.

While a revocable trust is easier to establish, an irrevocable trust can be more difficult, and it would be in your best interest to hire an experienced estate planning attorney in Los Angeles to assist you.

Advanced Healthcare Directives

Advanced Healthcare Directives is another big one that you can’t afford to go without. The Advanced Healthcare Directives is comprised of several documents that will act as your voice in the event of becoming medically or mentally incapacitated. The set of documents can include:

Durable Power of Attorney (Prob. §4650, §4700 et seq.)

The Durable Power of Attorney is a document in which you would name an individual (an agent) to act on your behalf (the principal). This would allow the agent to pay your bills, speak to creditors and much more while you’re incapacitated. It’s important to choose someone who has your best interests at heart. A durable power of attorney as opposed to a general power of attorney only becomes effective once the individual becomes incapacitated (if created specifically for incapacitation).

Living Will (Probate §4600 et seq.)

A living will is direct how your children and assets will be handled in the event of incapacitation. It is this document in which you’re able to make your final wishes known. The living will only become effective if you, the principal, are in a persistent vegetative state or irreversible coma.

Do Not Resuscitate (DNR) Order

The Do Not Resuscitate Order is a part of the living will. It is a document in which you make your wishes known whether you’d like to be resuscitated should the need arise.

Physician’s Order for Life-Sustaining Treatment (POLST)

This document allows you to choose a primary and secondary physician to carry out your end of life treatment. The secondary comes into effect if your first-choice physician is unwilling or unable to carry out your wishes.

Organ and Tissue Donation

Also, as a part of your living will, you’ll be able to make your wishes known if you’d like to donate any organs or tissue in the event of your death.

That may be a lot to take in and you may be wondering where to start. The best and safest way to structure your estate planning and all that comes with it is to consult and work with an experienced estate planning attorney in Los Angeles for the best outcome.