Estate Planning vs. Will: What is the Difference in California?

“Nothing is certain except death and taxes.” That famous quote has been attributed to Benjamin Franklin and still rings true. We plan for our taxes every year by filling out forms, keeping receipts, and filing our returns. So why is it that many of us don’t plan our estates? 

Most people are familiar with a “Last Will and Testament” or “will” in the context of estate planning. But a will is truly just the tip of the iceberg. A will can accomplish some of what you need, but it cannot accomplish all of what you might need.

This article will describe the differences between a will and comprehensive estate planning in California and why a comprehensive estate plan is important for everyone — not just the super-wealthy.

In some ways an estate plan is like a tool box: it may contain different tools for different jobs.

A very basic set of tools may include a screwdriver and a hammer - that may be all you need to cover the basics. In a sense, a will is like a screwdriver: basic and effective for what it is designed to do.

However, that will not be enough if you become incapacitated during life or you want to keep assets in trust for your descendants without distributing those assets outright and making them available to the creditors of your beneficiaries. For those tasks (and many others) one would need a more comprehensive estate plan consisting of different documents designed to perform different functions.

Estate planning in California is focused on preserving the preferences and desires of the person when that person is alive but unable to manage his own affairs or when that person has died. 

Without estate planning, someone with legal standing must petition the probate court to take legal actions for a person who has not planned her estate. Resorting to court intervention is expensive, public, and takes a very long time. For these reasons (and others) a well-planned estate, including a will, is very important.

What Is a Will?

A will is a legal document communicating the wishes of the person signing it (known as the “testator”) clearly and precisely. It often specifies who shall serve as the “personal representative” of the estate (sometimes called an “executor”).

In a will, a testator can nominate guardians for minor children and specify to whom the testator’s property should be distributed as part of a probate proceeding in court. 

Without a will, the law of intestate succession governs who gets the testator’s property and certain sections of the California Probate Code determine who has priority to be appointed as the testator’s personal representative in charge of administering the estate.

Those who are entitled to receive your property by intestate succession, however, may not be the same people you would choose as beneficiaries if you planned your estate. Further, intestate succession does not provide a way to leave particular items of property to particular people or to ensure that certain recipients receive a different share than those of the same class (such as children). Intestate succession is a last resort; it is not a plan. 

To avoid this, most people will execute a simple will that accomplishes these goals. A comprehensive estate plan will usually include a revocable living trust and a pour-over will which directs that any valued assets owned outside of the testator’s trust are to be distributed to that trust upon the testator’s death. 

Understanding Comprehensive Estate Planning

While a will should be an essential part of everyone’s estate plan, many more components are involved. Along with a pour-over will, that plan usually includes a revocable living trust, a power of attorney for financial matters, and an advance health care directive combined in one document with a power of attorney for health care. 

• A trust is the main estate planning vehicle that holds most of the person’s property.  While the revocable living trust serves many purposes, one of the most important is the avoidance of a probate. Another is the ability to hold property for the benefit of others for many years to come, while giving the trustee the power to make distributions as needed. A testamentary trust can also be included as part of a will such that the trust is created after the death of the testator, but this provides no benefits to the person during life. 
• A power of attorney for financial matters permits a trusted friend, family member or another person to make financial decisions for you if you are incapacitated but alive. For example, if you are unable to sign your tax returns or pay your bills, the agent authorized under your power of attorney can do this for you. If you don’t have a power of attorney for financial matters, your loved ones need to resort to a court action known as a conservatorship in order to be granted the power to do this for you. Signing the power of attorney grants these rights and saves a great deal of time and money.
• A power of attorney for health care permits someone you trust to make medical decisions for you if you are unable to do so for yourself. Without this document, a court-ordered conservatorship would be required to grant someone the power to make these choices for you. In addition, many powers of attorney for health care contain advance health care directives or instructions that allow the client to express preferences about life support, organ donation, disposition of remains, and other matters. In a sense, the client gets to continue to direct his own health care even when he is unable to make those choices for himself. It is a directive regarding health care in advance of the need or, an “advance directive.”

The Many Reasons Why Estate Planning Is Important

In California we have the legal right to direct who should be in charge of our assets when we die and where those assets should go. Without estate planning, we are agreeing that the law of intestate succession will govern where our property goes.

In doing so, we are missing a valuable opportunity to ensure that our wishes during life are carried out after our deaths. 

Let the Experts Help You With Your Estate Planning

Estate planning is not just for the wealthy; everyone needs an estate plan.

You can do your own estate planning. You can also do your own dental work but neither is advisable.

Failing to enlist the help of competent counsel is dangerous because after death, what’s done is done. Changes can’t be made and errors often can’t be corrected.

The attorneys at Cage & Miles can help you learn more about estate planning and how easy it can be to create a comprehensive estate plan that meets your needs.