You may not have the net worth of Warren Buffett but if you have children, if you have not already you should definitely consider estate planning. Kern Singh of the Singh Law Firm was kind enough to share some information with us at the March F.U.N. Mothers’ Club Meeting and here’s a brief summary of what we learned.
You may not have the net worth of Warren Buffett but if you have children, you should definitely consider estate planning. Kern Singh of the Singh Law Firm was kind enough to share some information with us at the March F.U.N. Mothers’ Club Meeting and here’s a brief summary of what we learned.
First, it may be helpful to define a few key terms:
Estate Plan – a set of documents designed to “manage your assets and make health care and personal care decisions if you ever become unable to do so yourself.”
Probate – “A court-supervised process for transferring a deceased person’s assets to the beneficiaries listed in his or her will.”
Fiduciary – “From the Latin fiducia, meaning “trust,” a person who has the power and obligation to act for another (often called the beneficiary) under circumstances which require total trust, good faith and honesty.” Legal Dictionary
Trustee – A person who manages a trust and the assets within it for the benefit of the beneficiaries of the trust.
Guardian – A person who has been appointed to take care of a child, and in the case of the death of the child’s parents, will act as the child’s parents.
Goals and Elements of Estate Planning
The goal of estate planning is to avoid probate because probate is costly, takes a long time and is not private. A deceased person’s assets will become a matter of public record and the court will determine how long the process will take and how much it will cost.
A good estate plan will include four important documents: (1) Living Trust; (2) Pour-Over Will; (3) Durable Power of Attorney; and (4) Advanced Health Care Directive (also called Health Care Power of Attorney). What follows is a brief description of each document and how it works.
1. Living Trust
“A living trust is a legal document that contains instructions for what you want to happen to your assets when you die.” While you are alive, you are the trustee of your living trust. When you pass away, the person you named as a successive trustee will become the trustee. A living trust allows you to bypass probate and by avoiding probate, the trustee can pay your debts and distribute your assets in a private and timely manner.
The assets within the trust will typically include real estate, life insurance and other accounts and property. To place the assets within the trust you just need to change the property deeds and financial accounts to name the trust as the owner. You will continue to file the same tax returns.
2. Pour-Over Will
When you having a living trust in place, your will is called “pour-over will” and has two major functions: (1) it designates the trust as your desired way to distribute assets; and (2) if you have children under the age of 18, you can designate guardians for them.
3. Durable Power of Attorney
Before you may become incapacitated due to health or age, it is important to designate someone you trust to manage your financial affairs in the event you are not able to do so.
4. Health Care Power of Attorney
In the event you are terminally ill or in an accident, your Health Care Power of Attorney will designate someone to make medical decisions for you. The document will also list your preferences for accepting or denying medical treatment such as whether you would want to be kept alive on a respirator.
Choosing an Attorney
Creating an estate plan is of the utmost importance if you have property or children under 18. Though creating the four documents may seem overwhelming if you visit an attorney they will do all of the work for you. It’s best to find an attorney specializing in estate planning and someone who you feel comfortable with to get the best results.
Estimated Cost of an Estate Plan
So how much will this cost you? I know that’s the next question because that was mine! I can only speak to what The Singh Law Firm charges but feel free to shop around. The cost for a married couple is $1600 and the fee includes creating a living trust, pour-over will, durable power of attorney and health care power of attorney. The fee covers all updates to the documents in the future. If you own more than one piece of property, or a business, then the fee will go up accordingly. F.U.N. Mothers’ Club members receive 10% off their fees so don’t forget to mention F.U.N.
You can learn more at SinghLawFirm.com. If you are out of state or not in the Bay Area, you’ll need to use an attorney in the state that you are located as estate laws are different state-to-state.
Unless otherwise noted, all quoted material comes from The Singh Law Firm pamphlet.
*I am not a practicing lawyer and the article is provided for informational purposes only and does not constitute legal advice. Please see an attorney for legal advice.
You can learn more at SinghLawFirm.com. F.U.N. Mothers’ Club members receive 10% off their fees so don’t forget to mention F.U.N.