People who develop estate plans enjoy peace of mind because they know that preparations have been made to take care of their loved ones. When California residents make these preparations, one of the most important decisions they face is choosing a responsible person to act on their behalf after they pass away or become incapacitated by an illness or injury. Depending on the kind of estate planning document involved, this person can be designated an executor, a trustee or a person authorized to make important financial or health care decisions.
Wills and trusts
A last will and testament is an estate planning document that details how a deceased individual’s assets should be distributed after they pass away. Wills in California do not have to be notarized, but they must be in writing and signed by the testator and two witnesses. Assets are divided after the estate has gone through a process called probate. During this process, the will is verified, debts are settled and any outstanding taxes are paid. Individuals who wish to avoid probate can draft trusts instead of wills. Assets placed in trusts are no longer owned by the grantor, so probate is not necessary.
Powers of attorney
Financial and health care powers of attorney are documents that give trusted individuals the authority to pay bills and make important decisions about investments and medical treatment. Living wills are documents that allow people to state their preferences about what kind of medical treatment they should receive and the point at which that treatment should cease.
Updating estate plans
Estate plans should be revisited from time to time and updated if necessary. This is a particularly prudent step when tax laws are changed or after major life events like marriage, divorce or the birth of a child.