Be Prepared Even CPAs need to Consider Estate planning.

• Author: Brooks, Jannette

many of us only think of estate planning for our time of death and wealth transfer. However, your estate planning documents may spring into action when a triggering event, such as disability, death or divorce occurs. Planning for these events along with preparing essential estate planning documents is a sign that shows love to those you leave behind or who may be impacted financially.

When creating a will or trust, you need to discern which assets you need to plan for. In California and many-community property states, all assets acquired during marriage are considered to be owned by both spouses. Specifically, California law says those assets can be owned 50 percent of each item (item theory) or 50 percent of the total (aggregate theory). Title to assets doesn't always reflect the true ownership, but should. Assets acquired before marriage are separate property along with assets received by gift or inheritance. If someone wants them to stay separate, they need to title them as separate. Assets tided jointly are often treated as community property in divorce and owned 50 percent each for estate purposes.

Probate is the process used to transfer the tide of assets at death from the decedent to the beneficiaries. This is a court proceeding that can be relatively simple if all property is field as community property or are very low in value. People avoid probate by holding property in some form of joint ownership or transferring properly to a trust. A probate proceeding could take one to two years and the administrator, attorney and appraiser are compensated based on the value of assets. As a result, many want to avoid the process.

Asset Listing & Considerations

Create a complete list of assets and estimated values to include bank accounts (checking/savings and money market, CDs, brokerage accounts and investments held outside of a brokerage account, such as stocks owned individually, private investments, real estate assets and business interest). Estates are valued based on the Gross Market Value of all your assets without deducting your debts/liabilities; having a complete list will support your executor and trustee in assessing what work needs to be done to settle your affairs and transition your wealth.

Primary Residence

Many individuals do not consider creating a living trust until they acquire a primary residence. Determine if your primary home will need to be sold or if funds will need to be set aside to maintain the home upon your death...