5 Answers to Estate Planning Questions

Throughout San Diego County, Californians are taking the initiative and creating estate plans to prepare their families for the future. At Jenkins & Jenkins, Estate Planning Attorneys we work with a wide range of clients who ask us various questions about estate planning and how the process works. This article aims to provide you with helpful information before you begin consulting an estate planning attorney.

 

Here are the top five questions about estate planning we often receive as trusted estate planning attorneys in San Diego:

 

Question #1 — What Does Estate Planning Entail?
Essentially, estate planning is when you devise a strategy for transferring ownership of properties, bank accounts, and other assets to your chosen beneficiaries when you are no longer around. However, estate planning entails a lot more than simply determining everyone in your immediate family’s inheritance. It also includes optimizing how that inheritance will occur from a tax, process, and protection perspective, naming healthcare directives and detailing medical wishes, providing for business succession, choosing guardians, and much more.

 

Ultimately, your estate plan is what keeps your family out of court while you’re alive and out of court after you pass away, all while making sure that your family will be taken care of in the best way possible.

 

 

Question #2 — Should I Create a Living Trust?
Incorporating a living trust into your estate plan can be incredibly beneficial for you and your family because they give you more control over your assets and can provide your family benefits far beyond what a simple Last Will and Testament could. Also, they can help your family avoid the probate process which is something that is very time consuming and expensive in California. We usually recommend all individuals who own real property, have minor children, have specific wishes for inheritance, OR who have unique family dynamics set up a Living Trust as part of their Estate Plan. There may also be times where your specific wishes or scenarios give way to incorporating an Irrevocable Trust into your plan as well, but our trust attorneys in San Diego can help guide you on that based on your individual circumstances.

 

 

 

Question #3 — What Is Power of Attorney?
Power of attorney is when you designate someone to make important financial and medical decisions on your behalf when you are no longer able to do so. A power of attorney often goes into effect when someone becomes medically incapacitated, though sometimes it makes the most sense to have powers of attorney take effect immediately (we’ll help guide you on what makes the most sense based on your circumstances). When selecting someone, make sure that you can trust their integrity and decision-making abilities. You may have one individual who you trust to make financial decisions and one to make medical decisions, and that’s quite alright. Since they are different documents, you can name one person to take care of finances and another to take care of the medical side of things, as well as backup choices for each role.

 

 

Question #4 — Why Is It Important To Avoid Probate?
California probate is costly, time-consuming, and can cause considerable turmoil among family members. You should try to avoid probate in almost all cases if you can.. Here is an example of how probate can have plenty of negative consequences:

 

You have an estate that exists of a $800,000 house in San Diego (with a $500,000 mortgage), a bank account with $50,000, and an investment account with $150,000 (with no beneficiaries). Probate is triggered because the gross value of your estate is $1,000,000 (the mortgage does not offset this value for Probate purposes).

 

Your family will first have to petition to open probate and be appointed executor/administrator, publish the information in a local newspaper so that everyone knows the family business, and wait about 4 months to even start the process. In that time all assets are frozen and may not be used by anyone (who pays the mortgage?).

 

They will then have to carry out the marshalling of assets, paying off of debts, accepting/rejecting creditor claims in Probate, dealing with the Probate referee, additional court filings, etc. Assuming things go smoothly they will then prepare an accounting for court approval and wait another 3-4 months for the court to approve the actions and accounting, and finally allow for distributions to occur. This sounds easy enough but the average process in San Diego is about 18-24 in total!

 

Furthermore, since we’re already in Probate court, it is MUCH more likely that challenges and infighting occur compared to a private trust administration. Then there’s the cost which are set by state law – in this case Probate fees and administrative costs would be about $50,000(!) – which is money that should go directly to your heirs and beneficiaries, not courts attorneys! Ultimately, probate is something you want to avoid.

 

 

Question #5 — Can I Reduce My Estate Taxes?
Yes, estate planning allows you to reduce the amount of taxes you owe to the government. However, in California, tax reduction strategies are more viable for individuals with fairly large estates (the federal threshold sits at about $12 million per person currently, but is projected to reduce to around $6.5 million per person in 2026). If you own a significant amount of real estate, you will undoubtedly want to look into ways you can minimize your tax liability. These are the types of cases where a discussion on transferring assets into an irrevocable trust or making a charitable gifting plan comes into play. It is also extremely important for anyone who loses a spouse prior to 2026 to make smart tax moves in the first 9 months following the spouse’s passing. There are simple strategies that can make future planning much easier if acted upon in this window, but they are “use it or lose it” steps that cannot be utilized later.

 

 

 

Jenkins & Jenkins: Estate Planning Simplified
Here at Jenkins & Jenkins Estate Planning in San Diego, we provide you with the legal tools and resources to begin preparing your family for the future. Ultimately, we want to help you protect your assets and set aside money for family members to inherit at some point down the road. Schedule an appointment with us today, and we can immediately begin drafting estate planning documents!

 

Testimonial from Dinah, Satisfied Estate Planning Client in San Diego
I do not normally provide reviews, but the estate planning service my husband and I received from Attorney Michael Jenkins was exceptional that it prompted me to write in order to express our total satisfaction from the experience. After the first meeting, we knew that we found exactly what we were looking for to get our estate planning updated. It is akin to seeing a top-notch doctor with an outstanding bedside manner where you know that you are in good hands. Attorney Michael is as sympathetic as he is very knowledgeable, he is very articulate as he is attentive. I was impressed at how he conveyed genuine interest in our needs and was able to break down difficult aspects of estate planning into something easier for us to understand and finally, how he applied his knowledge to meet our needs. We would definitely recommend Jenkins & Jenkins for any estate planning needs. They are the best Team. We cannot thank them enough.

 

Kristen

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