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FAQ: Why is Estate Planning Important?

Unfortunately, according to AARP, as many as six out of every ten adults in the United States do not have so much as a simple will, let alone a comprehensive estate plan. When an unexpected death occurs, this lack of planning for the future can leave loved ones confused and unsure of how to proceed. Not only must they deal with grief but must also attempt to navigate the maze of issues that must be taken care of following a death. While there are many reasons estate planning is important, there is probably an equal number of reasons many of us avoid estate planning like the plague. Perhaps the number one reason for avoiding estate planning is no one wants to confront their own mortality and think about death or dying.

When you think about what would happen if you did not appoint a guardian for your minor children, or how your family would deal with your assets if you left no instructions, it becomes clear just how important estate planning really is. One of the most pervasive myths regarding estate planning is that it is only for the super-rich. Virtually every person who has any assets at all would benefit from an estate plan. Attorney Mark Gullotta is a highly experienced California estate planning attorney who can make your estate planning experience as easy and painless as possible, minimizing any unwelcome surprises, and always providing a comfortable planning experience.

How Does an Estate Plan Protect My Family?

Estate planning is one of the most important things you can do to provide for your family in the future. No matter your age, your net worth, or your health status, an estate plan is the most loving thing you can do for your family members. Estate plans allow you to choose who will care for your minor children in the event of your death, as well as who will inherit your assets. You are also able to pass your assets to your loved ones in a way that minimizes tax burdens. Among families who could potentially engage in conflict after your death, estate planning significantly minimizes such conflict, as well as ugly legal battles.

What Should Be Included in My Estate Plan?

While the contents of your estate plan will be largely dependent on your specific situation in life, most estate plans will include the following:

  • A will or trust—In many cases, an estate plan will require both a will and a trust. A will can ensure assets are properly distributed according to your wishes and can include naming a guardian for your minor children. A trust can help limit estate taxes in some cases, and legal challenges in most cases. Beneficiaries named on life insurance policies or retirement accounts will usually receive the asset outside of a will or trust.
  • A Durable Power of AttorneyA Durable Power of Attorney allows a person of your choice (called an “agent”) to act on your behalf if you were unable to do so because of incapacitation. If you do not have a Durable Power of Attorney, the court may determine what happens to your assets. Under a Durable Power of Attorney, your agent can be given the power to transact real estate, enter into a financial transaction, or make other legal decisions on your behalf.
  • Beneficiary designations—Beneficiary designations must be made on assets such as life insurance and retirement plans. It is important to name a contingency beneficiary in case the beneficiary you designated is deceased. If a named beneficiary is not be over the age of 18 or is not mentally competent, a guardian or a custodian under the California Transfer to Minor’s Act (CUTMA) will need to be named to act on behalf of the minor or incompetent.
  • A Healthcare Power of Attorney or Advance Health Care DirectiveIn the state of California, a Healthcare Power of Attorney is generally known as an Advance Health Care Directive. The Advance Health Care Directive designates a trusted individual to make major healthcare decisions on your behalf in the event you become incapacitated. You should choose a backup individual to make these decisions in the event your first choice is unavailable or unable to act for some reason.
  • Guardianship designationsIf you have minor children, a guardian designation is imperative, since few parents would want the court to make this decision. You will choose an individual or couple who have similar child-rearing views as your own and who are not only financially sound but willing to raise the children. A contingency guardian should be named as well. Imagine if you truly cannot stand a certain relative, yet the court sends your children to be raised by that relative simply because you left no guardian designation, and you will realize how important such a designation really is.

Can Digital Assets Be Included in My Estate Plan?

While digital assets are a relatively new phenomenon, your estate plan should definitely cover your digital assets. You can name a separate executor for your digital assets or let the named executor handle both your physical assets and your digital assets. Either way, the person you name to handle your digital assets will need information that allows them to access your computer, your online accounts, and other digital assets.

Digital assets can include e-commerce accounts (eBay or online stores you operate or other income-generating websites), digital intellectual property such as patents, trademarks, or copyrights, PayPal or other online payment systems, email, photographs, music libraries, documents on your device, documents or other items in the cloud, social media accounts, gaming accounts, blogs, accounts with utility companies, bank accounts, and shopping accounts.


Can My Wishes for My Pets Be Included in My Estate Plan?

If you have beloved pets, it is important that you include your wishes for the pets in your estate plan. You can designate a person or persons to take the pets following your death, however, it is extremely important that you choose someone who likes pets, is not allergic, lives somewhere that allows pets, and is financially able to provide for the pets. If you have an exotic pet that is more difficult to find a home for or just cannot find an appropriate person, there are certain charitable organizations that will accept pets in exchange for a charitable bequest in your will.


Can Family Traditions Be a Part of My Estate Plan?

While traditions can be difficult to commit to paper, cherished family heirlooms or special items that could easily end up lost or discarded can be alluded to in your will and listed on a separate paper. You might also simply make a list of those items, and state in your will that the list exists, and is in your safe deposit box, safe, or another safe place. While such a list may not hold up in court, a judge is likely to consider your written wishes should there be a dispute.


When Should My Estate Plan Be Updated?

Every person who has an estate plan prepared should understand it is not a “one and done” task. As a general rule, it is recommended that you update your estate planning documents every three to five years. In between those updates, you should regularly review the documents, perhaps once a year, in case there has been a major life event over the past year—marriage, divorce, birth, death, significant change in assets, etc. Any time you have one of those major life events, you should have your estate plan updated. Changes in the law, significant changes to your business affairs or investment structure, or changes in your beneficiaries or executors should also trigger an estate plan update.


Getting Help for Estate Planning from Attorney Mark Gullotta

If you want to ensure your family members and loved ones are taken care of after you are gone, an estate plan is essential. If you do not want the state of California making decisions regarding your assets and heirs, an estate plan is essential. If you want a trusted friend or family member to make medical decisions on your behalf, rather than the state or a person you would not choose to make those decisions, an estate plan is essential. Mark Gullotta has been certified as one of the top attorneys in North American for the years 2015-2019. If you are in the San Mateo County area,  contact attorney Mark Gullotta today to discuss your estate plan and ensure your loved ones are taken care of.

DISCLAIMER: The information provided in this document is not legal advice. No attorney-client relationship is created as a result of this presentation. The content is intended to be a general overview of the subject matter covered and is educational and informational only.