An estate plan is a combination of legal instruments that sets out instructions for handling property after the owner passes away or becomes incapacitated. Estate plans address important tax implications of property transfers, how property is distributed, and how it should be used.

In understanding what an estate plan is, it’s helpful to address what happens if someone dies with no estate plan. If there’s no estate plan in place, the person is said to have died “intestate.” That means, that if the person owned significant property that isn’t “community property” that they own with a spouse or isn’t owned in a legal status like “joint tenancy” with someone who is still living, a probate court is going to have to sort out that person’s estate before anyone can get anything. The court will figure out what that person owned, whether they owed money to any creditors, and what heirs have a claim to the property once the creditors are paid. Then the Court uses a default distribution scheme found in Probate Code section 240 for divide up the property among relatives. Probate is a long process, and it also makes everything that happens with your estate public record. Having an attorney probate an estate can cost tens of thousands of dollars depending on the value of the estate. That’s money that should have been a gift to loved ones, but instead it gets diverted to legal fees for settling up your affairs after you die.

There’s generally three main categories of benefits that people can achieve by creating an estate plan. The first is control. An estate plan lets you stay in control of wrapping up your affairs after you die instead of putting the government in charge. You get to pick an executor who is generally a close friend or family member, and they will be the one to handle your business and carry out your wishes. They will divide up your property and give it to whoever you specified, however you specified. Estate plans can even set up systems where your property gets distributed however you want for years after your death. And perhaps the most important aspect is that if you were to tragically leave behind young children when you die, your estate plan names the person you want to take over as the guardian of your kids.

Estate plans also save money. As previously mentioned, if all your property has to go through probate after you die, attorney fees will likely be tens of thousands of dollars. The probate code sets maximum percentages that an attorney can charge based on the value of an estate, and that’s what most attorneys charge. So for example, let’s say you die and leave behind a house here in California that’s valued at a million dollars. Based on the percentages set out by law, your estate will likely incur about $23,000 in attorney fees to probate the estate. The goal of a good estate plan is usually to make sure your property stays out of probate so it doesn’t run up a huge bill at the lawyer’s office.

And finally, a good estate plan keeps as much of your business private as possible after you die. Courts are part of the government, and they are paid for with taxpayer dollars. With some exceptions, anything that happens in court is public record. That means that if your property has to go through probate, there will be a public record of how your property was split up, and maybe even the people who were fighting over your stuff after you died.