What is Estate Planning
Estate planning is all about being diligent in the care and maintenance of all that you have worked for during your lifetime. It's also about taking your responsibilities seriously, and doing whatever you can to make sure you are fulfilling your obligations faithfully. Your first responsibility in planning your estate is to yourself, your spouse, and your children, and to ensure that both you and they are provided for. Although, you do not need a spouse and children to require effective estate planning, the existence of a spouse and children nearly mandate a comprehensive estate plan. This means using a will, a revocable trust, and powers of attorney; life insurance, health insurance, and long-term care insurance; IRAs and annuities; and other means to be sure that you and your family's needs are met. The word "plan" is very important. You cannot plan anything once you have departed or become incapacitated. Estate planning is not for the "then," whenever that might be, it is for the "now."If you desire to avoid or minimize estate taxes, keep your estate in the family, distribute family assets or personal mementos according to your wishes, and retain the ability to make other choices, you must have a plan. Estate planning is all about you, your family, and your estate. It's about taking responsibility to ensure that your estate -- everything you own and control -- is preserved and used for the benefit of those you love. Finally, estate planning is about life, not death. Through an effective estate plan, you can live on, in and through your family, your estate, your hopes and plans and dreams. You can live on, but only if you plan.
The Basics
As an alternative to a Will, some may choose to dispose of their assets through the use of a revocable trust. A revocable trust is also commonly referred to as a "living trust." To ensure consistency, throughout this text, we will exclusively use the term revocable trust. A revocable trust can be used to manage your assets during your lifetime and afterward. You are the beneficiary of the trust assets while you are living (meaning you can do with them what ever you want), and you have complete control over the trust. You are free to buy and sell assets in and out of your revocable trust, and, as the name implies, the trust may be revoked or terminated at any time. Like a will, you designate beneficiaries in the event of your death, however, unlike a will, you gain the advantage of being able to distribute your assets while avoiding courts and the attorneys.
Avoiding Probate
Possibly the greatest advantage of a revocable trust is that the assets held in the trust are not subject to probate upon your death. Probate is a formal court process whereby a judge, or court personnel, oversee the distribution of your estate. Probate may, at times, be lengthy as well as costly, depending upon the estate. Because a court only has jurisdiction over assets personally owned by you, if your trust owns your assets, the court has no jurisdiction over your assets (even if you completely own the trust). As shown below, California law sets forth the minimum costs of probate based upon the estate's gross asset value. These fees to do not include extra-ordinary fees for the sale of assets, tax preparation, and litigation.
| Gross Asset Value of Entire Estate | Minimum Cost of Probate Without Proper Estate Planning |
| $200,000 | $14,000 |
| $300,000 | $18,000 |
| $400,000 | $22,000 |
| $500,000 | $26,000 |
| $750,000 | $36,000 |
| $1,000,000 | $46,000 |
| $2,000,000 | $66,000 |