Legal News & Updates

The Importance of Estate Planning

Estate Planning — It’s Not Just for the Rich

Many people are under the impression that estate planning is only necessary for those with substantial wealth.  The very term “estate” seems to  imply just this.  For this reason, many people ignore the crucial importance of estate planning for those with even modest assets.  The reality is that nearly everyone can benefit from a well-crafted estate plan, and one need not enjoy vast wealth to benefit from this important tool.  Whether you have a family, own a home, have a bank account, or just want to ensure that your healthcare wishes are fulfilled, a basic estate plan is central to accomplishing your goals.

An estate plan is essentially a roadmap with directions that explain how you would like your assets and property to be distributed or cared for after your passing.  Several important documents are typically included in an estate plan.  While not exclusive, the following are basic estate planning documents everyone should consider:

Last Wills and Testaments

This document is often referred to simply as a “will.”   A will describes your wishes of how you intend to dispose of your property upon passing.   A will is typically the centerpiece of any basic estate plan, whether or not a living trust is used in addition to the will (more information on living trusts is found below).   A properly drafted will enables you to control much of what transpires with your assets and property after your passing.  A will typically appoints a trusted person to act as your personal representative for handling the affairs of your estate.

A will serves another important function for parents with minor children.  Typically in a will, parents with minor children will appoint a guardian to care for their children in the event one or both parents die untimely.  Parents can nominate guardians for their children’s financial matters (known as “Guardian of the Estate”), and for their children’s personal matters, such as healthcare decisions, and where to send them to school (known as “Guardian of the Person”).  While it’s something that parents don’t want to think about, every parent should have such a plan in place to protect their children.

A will can be used to describe other matters, such as funeral wishes, burial instructions, or other similar types of directives. Some people use their wills as an opportunity to send a message from beyond the grave, sending a last message to relatives or giving away something fun or unusual to remember them by.  Harry Houdini left his wife a secret code — ten words chosen at random — that he would use to contact her from the afterlife. His wife held annual séances on Halloween for ten years after his death, but Houdini never appeared.  Hunter S. Thompson directed that his remains be shot out of a 150 foot canon.  Both Gene Roddenberry and James Doohan, the Star Trek legend who played Scotty, had their remains shot into space aboard a Pegasus rocket.  Animal lover, Jonathan Jackson, left his money for the creation of a cat house – an oasis where cats could enjoy their own bedrooms, a dining hall, live music, an exercise room, and a specially designed roof for climbing without risking any of their nine lives.  Singer Janis Joplin changed her will just two days before her death. She set aside $2,500 to pay for an all-night party for 200 guests at a bar in San Anselmo, California, “so my friends can get blasted after I’m gone.”

Some people believe a will requires special legal language and formalities.  In fact, a will can be entirely handwritten, and in such a case does not even need witnesses.  (If, however, any part of a will is typed or printed, at least two witnesses are needed.)  Another misconception is that a will must be notarized.  Rarely is this true.  Wills are generally witnessed by two or three individuals who sign the will attesting to the fact that the maker of the will executed it in front of them.

Many of us have seen dramatic movie and television depictions of people who have left their last will and testament in the form of a video.  This is an example of what is called a “nuncupative” will.  But be careful, they are not considered valid here in California and will not be enforced.  Other states, though, except video wills, but there are very stringent standards attached to them.  Video wills can be used as a backup to a written will and can also include explanations of the reasoning behind bequests, such as why someone was left out of a will.

While a will does require certain legal formalities to be properly executed, it allows for flexibility as your wishes change.  A will can be revised or revoked at any time prior to death or incapacity to properly reflect your changing wishes.

When a person dies without a will, it can result in unnecessary confusion, costs and delays in distributing the assets of the estate.  California has rules in place listing who would get your assets if you die without a will.  However, this process, known as “intestacy” can be expensive, incredibly time-consuming, and may not properly reflect your wishes.  For example, Holocaust survivor, Roman Blum, died without a will in 2012, leaving an estate worth nearly $40 million dollars.  Mr. Blum was divorced and had no children, grandchildren, or other surviving relatives.  Since he had no surviving relatives, the State of New York stands to inherit his entire fortune.  While this result is incredibly rare and extreme, it does highlight the importance of creating a proper estate plan which reflects your wishes.  This scenario can be avoided by creating a will.