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How to create an estate plan

Having an estate plan is important for every California adult. It protects people’s assets if they become ill or die, and it can provide protection for minor children. An estate plan also may affect how beneficiaries are taxed.

Many people put off estate planning, or they create an estate plan and do not go back to it. Estate plans should be reviewed after any major changes in a person’s assets or after marriages, divorce, births and deaths. The first step for a person in creating or reviewing an estate plan should be to write down all assets and debts and their value. People should then think about their goals for the estate plan, including taking care of minors, determining which beneficiaries will receive their assets and making a plan in case of becoming incapacitated. Those who already have an estate plan should review all documentation, including the will, powers of attorney and beneficiary designations. These should be updated if necessary.

Some people may also want to create a trust as part of the estate plan. A trust can have a number of advantages. It allows assets to bypass probate and go straight to beneficiaries. Depending on a person’s objectives, a revocable or irrevocable trust may be appropriate. The former can be changed or withdrawn while the latter usually cannot.

People who are creating an estate plan may want to work with an attorney. While there are do-it-yourself plans available, they may not cover all situations, and it can be easy to make an error that leaves the plan more vulnerable to challenges. People should also be aware of common errors, such as creating a trust but failing to fund it. Assets may need to be retitled to be placed in the trust. A “pour-over will” can place remaining assets in a trust after a person’s death.

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