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Why estate planning may be important for you

Physicians and other professionals in California may want to consider creating an estate plan that they review and modify over the years as there are changes in their families, their assets and the law. There are two elements to estate planning. One is about planning for becoming incapacitated and the other is about what happens to your assets.

Incapacity planning

There are two areas you need to consider when it comes to planning for someone to take over if you cannot make decisions or take necessary action. You may want to arrange for someone to take over financial and legal decisions, and you might need someone to make decisions about your health care. For the former, you could use a power of attorney unless you have a trust. To appoint someone to manage your health care, you might use a health care power of attorney. This document may also be referred to as a health care proxy. You may also want a living will, which details your preferred care.

Asset planning

You might use a will or a living trust to pass your assets. You can also combine the two, with the trust as your main document and a “pour-over” will that moves any remaining assets into the trust. You can also use your will to appoint a guardian for minor children.

It is important that your various estate planning documents are consistent with one another. For example, one common mistake people make is failing to update their beneficiary designations after a divorce or another major life change. These are used to pass such assets as retirement accounts and life insurance. Creating a trust and failing to fund it by retitling assets is another common error. Clarity in your documents may reduce the likelihood of family conflict over the estate.

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