A recent study in 2011 found that more than 50% of Americans do not have an estate plan. Furthermore, the study found that 92% of adults under 35 do not have one. A favorite saying among estate planning practitioners is, “Everyone has an estate plan. If you don’t create it yourself the State of California will create one for you.” This simply means that if you don’t create your own plan then the State of California will tell your family members where your assets will go upon your death. This is called intestate succession. To avoid this, everyone, young or old, should have a Last Will and Testament. A Durable Power of Attorney and Advance Health Care Directive are two additional necessary documents that every person should possess.
Last Will and Testament
This document outlines who you would like to inherit your assets at your death. You nominate an Executor to administer your estate and you can also nominate a guardian for any minor children you may have at the time of your passing. You can also nominate a pet guardian for any pets that you may leave behind as well. This is the most basic form of estate planning. Having a Last Will and Testament will allow you to have choose who will inherit your assets but it will necessitate a court proceeding called, “probate” in order for these assets to pass to your heirs.
Durable Power of Attorney
A Durable Power of Attorney allows you to choose an individual to act on your behalf regarding your finances. Usually you appoint your spouse and then a trusted friend or advisor to act in this role. This person generally has the ability to pay your bills, can make deposits or withdrawals from bank accounts and can otherwise help you manage your assets.