Our Costa Mesa office often gets inquiries from people that have already been to a lawyer regarding their will or estate. Sometimes, they already have something in place, but want to review it. And, often as not, it turns out that their previous plan no longer works for their current situation. Although all estate plans should be reviewed regularly, some of the following concepts might help to understand how you should move forward with your own situation, whether you have a plan in place, or are looking to make a plan.
All estate plans have two goals: asset protection and estate planning. Depending on your particular situation and desires, one of these might be more important than the other, but all plans will take care of both concerns. The issue is that these goals are often at odds.
Asset protection is primarily about protecting your estate from taxes, so that the maximum value is passed on to your loved ones. In some cases, however, you can use similar techniques to protect your property from future creditors.
Estate planning is about moving your estate quickly and easily to the people you want it to go to. While a Will does direct your property to the right people, it will put your estate into Probate Court, which has some cost and some delay. In some cases, a lot of cost and a lot of delay.
In an ideal plan, your estate will pass automatically upon your death to the right people without court, taxes or costs. If your estate is $5 million ($10 million for married couples) or less, this is accomplished with a living trust.
But if your estate is larger than that, or you wish to protect some of your property from future creditors, more complicated tools will have to be used. Almost all of these tools involve giving away your property now, before you pass. Often, you will retain some interest or control over the property for a while, but with restrictions. Depending on the particular tool used, the property may pass from your hands at a predesignated time, or at your death. But, unlike a living trust, you cannot change your beneficiary and you will be limited in your use of the property.
These are the things to think about when you review or make your estate plan. A knowledgeable lawyer can help you design the best plan for you.