Estate Planning Defined – What Is an “Estate Plan”? (Part 1 of 3)

| September 20, 2010 | 33 Comments

Hello! Welcome to the first blog post of Estate Planning Defined. I am James B. Creighton, attorney at law, and I am the author of this blog, which is intended to provide estate planning, probate, trust, and long term care planning information to the community. My firm is Creighton Law Offices and we are located in San Mateo, California. Check out our website at www.creightonlaw.com.

What is an Estate Plan? What does it mean to have an Estate Plan? Clients ask me these questions all the time. I’ve answered them so many times, I thought I’d start this blog to help readers understand the meaning and importance of estate planning. After all, just because I eat, drink, and live estate planning every day of my life doesn’t mean everyone else does. This is not easy stuff. We’re talking about death and dying, subjects that most of us push aside for many reasons. But, like a pink elephant in your bathroom, it’s not going away. So, let’s start from the beginning.

In general, an estate plan is nothing more than a set of instructions that clearly (we hope) spells out the manner in which your property should be managed and distributed (to you or to your loved ones) both during your lifetime and after your death. That’s all there is to it. An estate plan is a set of instructions. Whose instructions? Your instructions! Your estate plan must be about your life, not your attorney’s. Your attorney is just a glorified scribe channeling your wishes onto paper. OK, my role as an estate planning attorney is a little more involved than simply taking dictation. But we’ll get to how I can help later. For now, it’s just important that you understand that your estate plan should be a reflection of your life—your values and the choices your values helped you to make. Thus, you must fully participate in the creation of your own estate plan. Otherwise, you’ll be left with your attorney’s vision of what your estate plan should be like, rather than your vision.

Also, it’s usually the case that more than one document is necessary to make up your estate plan because a good estate plan deals with the management of your property and financial affairs not only after your death but also during your lifetime and especially if you have lost your mental capacity.

With that in mind, there are two main types of estate plans:

  • An Estate Plan that is built around a Last Will & Testament (LW&T); or
  • An Estate Plan that is built around a Revocable Living Trust (RLT).

There are pros and cons to each of these types of estate plans (which I discuss in Part 2 and 3 of this series) but you need to remember that—so long as you have your wits about you (i.e., so long as your retain your mental capacity)—you can always make changes to your estate plan if your own circumstances or estate planning preferences change. However, it is vitally important that you get an estate plan in place now because you don’t know when you will lose your mental capacity or die.

People tend to focus only on what happens to their property after their death (i.e., who should get what). But don’t overlook what happens if, for example, you’re in an accident and don’t die but become disabled. Or what if you live to a ripe old age, healthy as a Spartan physically but feeble as a wet noodle mentally? Life is not just made up of two (2) phases: (1) the time spent alive and (2) the moment that life ends (the moment of your death). Oftentimes, many of us experience a third, very difficult phase: the time spent alive but without sufficient mental capacity to manage our own affairs. Think about your own family: remember when you told your mother that Aunt Mary was “losing it,” and “getting goofy“? If Aunt Mary has indeed “lost it” and gotten “completely goofy,” who is going to make her medical decisions for her? Who is going to take care of her finances? Pay her bills? Keep her from being swindled by some door-to-door salesman selling fake lottery tickets? Hopefully your Aunt Mary thought about her future and put together an estate plan that included instructions for your cousin Tom to look after her and her finances if she “got goofy.” Thus, even the simplest estate plan should include documents that spell out not only “who gets what, and how” when you die but also “who do I want to care for me and my property, and how” if you should “lose it,” and follow your Aunt Mary down into the abyss. Keep this in mind when you read Parts 2 and 3 of this series.

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In our next post, we’ll discuss the specifics of an Estate Plan that is build around a Last Will & Testament (LW&T). In Part 3 of this series, we’ll explain an Estate Plan that is built around a Revocable Living Trust and then we’ll close with a comparison of these two main types of estate plans. Thanks for your time! JBC

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