What is Estate Planning in Simple Terms?

The legacy you leave after death can have a lasting impact on the ones you knew and loved. Often, the value that you have added to the planet with your life is extended by what your estate plan does years after you have moved on. Anyone concerned today about the future of their estate is rightly concerned. The financial climate now is quite unusual, and for many people foreboding. Interest rates are high and the stock market is down. Unemployment is not bad, but possibly driving inflation. In other words, there are many sources of concern, but the economy is still holding on.

To make sure that you’re doing what you need to do to achieve your future financial goals, you should have an estate plan in place. An estate planner can help you create one. After a plan is created, it will be executed and monitored to make sure it is working to meet your goals. It involves many decisions, that are best made in advance, with experts. For example, the situations when you want to avoid probate (spoiler alert: almost always!) and how to avoid it are important to identify and manage.

What is Estate Planning in Simple Terms?

 In simple terms, estate planning is setting up a system that monitors and directs the components of your estate. For the most part, most people want to make sure that they maximize the value of what they have achieved through their work and dedicate it to philanthropic or family legacies. It can be accomplished with an attorney or tax advisor. The advantage of an attorney is that they have knowledge in tax and other substantive areas that you might need, including real estate and business law. The first step is to make sure that you have a list of goals, even if they may change over time. They generally do because conditions change, and households change.

An estate planner is familiar not only with the legal structures related to estate planning, but they have worked with high net-worth individuals in many situations and can predict needs before they might normally be known. The expert planner will know the tax consequences of various transactions and holding strategies and how to minimize their impact. Similarly, court and attorneys’ fees can be a substantial part of estates and properly planned estates can avoid much of their impact.

Estate Planning Tools

Once the goals and needs are identified, the proper tools are selected. For example, a survey of trusts and the type that might be best suited for the estate will be discussed.

Different trust types include:

  • Testamentary Trusts
  • Qualified Terminable Interest Property (QTIP) Trusts
  • Charitable Remainder Trusts
  • Generation-skipping Trusts
  • Grantor Retained Annuity Trusts, etc.

More common instruments include wills, health care directives, beneficiary determinations, and powers of attorney. Decisions about business succession are relevant in some cases, as well as the designation of property ownership (joint tenancy with rights of survivorship, tenancy by the entirety, tenancy in common, etc.) Strategies for philanthropic giving, including gifts to make an impact in areas that you find important, can make an estate plan more exciting to many people. Even modest gifts can make a big impact, particularly if they are matched externally. Donor-advised funds (a simple and tax-efficient charitable means) and long-term appreciated securities are great avenues for making your resources stretch into the future for the benefit of the many. Similarly, impact investing, where you keep your assets in specific industries, or out of deleterious concerns, can also augment your good intentions.

Health care and child custody decisions are important and strangely not thought of at first by many individuals when planning their estates’ disposition. Sometimes that is the result of youth or strong health conditions. However, it is important to keep in mind that the best parts of plans are hopefully those that do not come into play – the parts where one is planning for the worst. Murphy’s law is universally understood and feared for the very reason that it seems to strike when we are unprepared – If anything can go wrong, it will. With a well-thought-out plan, the number of things that can go wrong is minimized or eliminated. In 99% of cases, at the very least, one should avoid intestate succession. When someone dies without a will, the distribution of assets is settled by statute. Spouses, children and parents may benefit or suffer, relative to the wishes of the benefactors if this occurs.

As you can see, the worth of a planner is strongly correlated to her ability to anticipate things that will happen that impact an estate. The ability to see what could impact financial conditions, household population and health and mortality of the stakeholders is vital. This has a major impact on your estate. Laws in different states and countries can result in vastly different outcomes. Courts can seize or block asset transfers and bleed estates dry.

Protecting your Wealth, Well-being, and Assets

 In stable times and crises, good advice from experienced professionals when crafting your estate plan is invaluable. Our proficient attorneys can provide planning tools and legal instruments to protect and maximize growth, direct assets to the heirs of your choice, and reduce risks. We are happy to assist by fielding your questions, providing legal advice, examining your estate plan, and any task that can help move you towards this step. Call the trusted estate planning attorneys at Lowthorp, Richards, McMillan, Miller & Templeman at (805) 981-8555 or fill out our online contact form. Our attorneys live and work primarily in the California Tri-Counties area – Ventura, Santa Barbara, and San Luis Obispo.




NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Cristian R. Arrieta, Lowthorp Richards McMillan Miller & Templeman, A Professional Corporation, 300 E. Esplanade Drive Suite 850, Oxnard, CA 93036