Given the ever-increasing values of our properties, people are likely worth much more than they realize, and when measured against the very low statutory limits it is imperative to act now to set up an estate plan. Property values in California have gone up every decade in the last 100 years. It is the single largest contributor to household wealth. For people who purchased their homes when having babies, if their kids are grown, their homes may have doubled in value. If their kids have kids, their houses may be worth three to four times the purchase value, particularly in hot real estate markets like the California Coast.
With easily accessible tools like Zillow at hand, many people have “peeked” to see what their homes are worth. Or they have looked at real estate flyers when a home down the street is on the market. However, how many of these individuals have acted when they realized that their home value had skyrocketed? Hopefully, serious appreciation would encourage you to take steps to plan your financial future and start your estate plan.
You Don’t Need a Mansion to Plan Your Estate
Whether you belong in the house-rich category is almost irrelevant. Modest holdings deserve planning, and in fact, will often grow faster as a result of an estate plan. Aside from the obvious benefits of risk management, the added attention will almost guarantee growth. If you own any real estate, even if fully encumbered, you owe it to yourself and your loved ones to make sure that your wishes are carried out and that the assets you own are distributed to the right people.
Protecting your assets through estate planning often includes setting up legal instruments such as a trust, a pour-over will, durable power of attorney, an advanced health care directive, and nomination of guardian and/or special needs trusts
How Can I Gauge My Financial Worth?
You can gauge your worth in many ways. The simplest way is to add up the total value of your assets and subtract your liabilities. Your assets include cash, personal property, and real estate. Your liabilities include credit card debt, loans, etc.
You may not need to get that detailed to make a simple decision like whether to engage in estate planning or not. As long as your net worth is positive, you should take preliminary steps to set up your estate plan. Some people compare themselves with their neighbors or family members. While that may not help your relationships, if it provides you motivation to get started with an estate plan, we are not going to judge!
Do You Know What You Have?
For people who have many assets or many illiquid assets, it may actually be difficult to know what you have. It may be important for you to inventory your assets, though if you’re in this situation, it is likely you have enough net worth to start planning your estate. It would still be important to know what you have through an inventory because it would provide a snapshot of your overall financial health.
Further, it would allow you to set goals and use metrics to manage your financial situation with informed decisions, savings, and debt management. If you have real estate holdings that you have held for more than a decade and they are not heavily encumbered it is almost ensured that your property values carry you into the category of people who need an estate plan.
It’s Not All About the Money
Money is essential to a healthy quality of life, but it is not everything. Estate planning can help you make sure that you have enough relative to your needs, which might include personal relationships, personal growth and development, physical and mental health, and community involvement. Further, estate planning can help those around you achieve their objectives by making it easier and more routine to set goals, create plans, and make intentional choices about your time, energy, and resources.
The more assets you have, the more complex – and necessary – estate planning is. Also, it is more important to work with an experienced, specialized attorney, not a newly minted lawyer who is running a general practice. If they make mistakes, it is up to the court to sort it out and your wishes may not be executed as you arranged and expected.
Prepare Your Posterity
Your posterity includes providing for and protecting your family, future generations, and your community. Preparing for posterity includes estate planning. This can entail having conversations with your beneficiaries and setting up the legal instruments mentioned above. Beneficiaries can include friends and family, and even non-profit organizations or other charities, such as environmental stewards. By taking steps to create an estate plan, you are taking steps to prepare for the future and help ensure that your posterity has the resources it needs to thrive.
Estate planning consultations are available virtually and in the office, and David is happy to help clients throughout California. He has helped thousands of families successfully design their estate plans and set up and fund their trusts. With property values still holding strong, now is a good time to embark upon your estate plan. David sees clients by appointment only to ensure that each has his undivided attention. Contact us to schedule a free consultation today at 805-374-8777 or dschneider@drs-law.com. We look forward to hearing from you and helping you set up your comprehensive estate plan, including a trust, a pour-over will, durable power of attorney, advanced health care directive and nomination of guardian and/or special needs trusts, where needed.
You can learn more about the Law Offices of David R. Schneider and read past blog posts here