Estate Planning

At its core, estate planning is deciding who will get your belongings after you die and choosing how your things will be transferred when you die. Estate planning can also mean making some important personal decisions, like who will take care of your children if you can’t and who should make medical and financial decisions for you if you can’t do it yourself. Estate planning can also minimize taxes and reduce the likelihood of fighting about what you would want.

Well, the short answer is: anyone who owns things that matter to them, anyone concerned that they might become incapacitated, and anyone with a child under 18 years old. Estate planning isn’t just for the rich, nor are there any minimum property requirements, like owning a home. Anything you care about – from jewelry and art to things with little or no value like family photos or a blanket your great-grandmother made – is enough to make it worthwhile to do some basic estate planning. If you own anything that you want to go to a specific person or organization when you die, then you need to do some estate planning. If you care about who would make medical or financial decisions for you if you can’t make them yourself, then you need to do some estate planning. If you have a kid(s) that are under 18 years old and you want someone specific to take care of the kid(s) should something happen to you, you need to do some estate planning. Here are a couple of examples:

Example 1: Tom doesn’t think he needs to do any estate planning because he and his partner don’t have much. But, Tom is a construction worker whose tools are worth more that $20,000. He also has a collection of motocross jerseys that isn’t worth much, but means a lot to him. Tom wants his tools and jersey collection to go to his best friend when he dies. Tom’s best friend knows that Tom wants him to have these things. But, after doing a little research, Tom learns that if he dies without doing some estate planning, the State of California will give everything to his family who he hasn’t talked to in years. And, Tom finds out that if he were to have an accident and not be able to handle his money or make medical decisions for himself, his partner won’t have any legal right to act on his behalf. So, Tom decides to do some basic estate planning to take care of these problems by hiring an attorney to prepare: (1) a simple will that gives everything he owns to the people he wants to have it (like his tools and jerseys to his best friend); (2) a financial power of attorney that gives his partner the power to make decisions about money for him if he can’t; and (3) a health care power of attorney and advanced health care directive that gives his partner the power to make medical decisions for him and also lays out what he would do if he could make his own decisions.

Example 2: Sarah and Joe are married and have 2 young kids who are 1 and 3. They know that is one of them should die, the other will take care of the kids. But what if they both die and the kids are still under 18 years old? Who will take care of the kids? They talk about it and decide that Joe’s sister Jessica would be the best person for the job. Jessica loves and raises her kids in a way that Sarah and Joe would want their kids to be loved and raised. Sarah and Joe talk to Jessica about it and Jessica agrees to take care of the kids should Sarah and Joe not be able to. But, if this decision is not written down in a legal document, the kids would go to the state. So Sarah and Joe hire an attorney to prepare their wills which not only say who will get the things they own when they die, but the wills also say that Jessica will take care of the kids should Sarah and Joe not be able to.

The court (probate court) will give everything you own to people according to what the state law says (this is called “intestate succession laws”). Probate takes a lot of time and money, and is stressful. If you have kids under 18 years old and both parents are gone, a judge will decide who will take care of them. Learn more about Probate here  add button to probate page.

Probate happens when there is no estate plan or no trust (just a will) and the court supervises how, where and to who your stuff goes to when you pass away.

Probate can often be avoided by using trusts, joint ownership of your belongings and beneficiary designations.

The key documents include a will, a trust (if applicable), a power of attorney for finances and a power of attorney for health care/advanced healthcare directive.

In this situation, a court will decide who will manage your money and state law will tell the court who will make medical decisions for you. And the person who makes medical decisions for you will not know 100% what you would do if you were able to make the decisions yourself which can cause your loved ones to argue about what the right decisions are. For example, if the doctors caring for you say you need a feeding tube or you will not survive, what would you choose? Would the person making medical decisions for you make the same choice?

In California, incapacity is regulated by California Probate Code § 810-13 and defined as “a judicial determination that a person is totally without understanding, or is of unsound mind, or suffers from one or more mental deficits so substantial that, under the circumstances, the person should be deemed to lack the legal capacity to perform a specific act….” Someone may be considered incapacitated if: they are unable to understand or communicate with others; they no longer recognize people or things that were once familiar to them; they are unable to make logical decisions; if they are experiencing delusional thoughts or having hallucinations; f they are unable to control their moods and are acting inappropriately in the context of the situation; or if they are unable to understand the consequences of their actions. Examples are: if someone is unconscious, is someone has dementia or someone us so sick they don’t understand what is going on around them.

Beneficiaries or heirs are the people and organizations that you leave your belongings to.

A will is a document that leaves some or all of your belongings to people you choose. You also use a will to name the person who will take care of your kids if you can’t. The main drawback of a will is that it most go through probate, a complicated and expensive court process.

A living trust is a document similar to a will, except you don’t need to go to court. Because of this, living trusts are popular for avoiding probate. A living trust can only distribute property that is owned by the trust, so you have to legally transfer property to your trust.

Although pets are part of the family, legally, pets are property. This means you can’t leave money or any of your stuff directly to your pet because they can’t own anything. But you can try to make sure that your pet will continue to have a good life after you are gone. If, in your will or living trust, you leave your pet to someone along with money that will be needed to care for your pet, there’s no guarantee that that person will actually care for your pet. Under the eyes of the law, that person doesn’t need to care for your pet, nor do they need to use that money for the pet. To legally make a person take care of your pet, you can use a special trust called a “pet trust.” Pet trusts describe the legal requirements for how your pet will be cared for and how some money will be used for that care. The pet trust also names someone who will have the legal obligation to care for the pet as described in the trust.

To disinherit someone is to make sure that person doesn’t get any of your stuff when you’re gone. Except for your kids, you don’t have to expressly disinherit anyone. If a person or organization is not mentioned in your will or trust, that person or organization has no right to any of your stuff. If you want to disinherit one (or more) of your kids your will or trust must clearly say that.

A court will only invalidate a will or living trust is it finds that the person who made it was mentally incompetent or that the document was made under fraud or duress. An example of fraud is giving someone a paper to sign that the signer thinks is a letter, but its actually a will. “Duress” means convincing someone to sign a will or trust by pressuring or coercing them. Fraud or duress is hard to prove, even if it actually happened. They are almost impossible to prove if they didn’t happen. Of course, under our legal system, its not hard to file a lawsuit for just about any reason. But if the lawsuit is bogus, there shouldn’t be any worry beyond it being a hassle for your loved ones. If you think a lawsuit will happen, an attorney can take extra steps to further lessen the chances that a lawsuit would be successful.

Strategies to minimize estate taxes include gifting your belongings and/or money when you are alive, creating trusts and using applicable tax exemptions and deductions.

You may choose anyone you want (even a professional person whose sole job is to serve as executor and trustee for various people), but it would be smart to choose someone trustworthy, organized and familiar with your financial and family situation.

Beneficiary designations are often found on bank accounts and insurance policies that override the instructions in your will. It is crucial to keep these up-to-date.

A special needs trust is a particular trust specifically used for this situation. It makes sure that family member received proper care without jeopardizing their ability to qualify for government benefits. (add link to CANHR here as a source)

Yes, certain trust and legal strategies can shield assets from creditors, but these require careful planning and are very case specific. If you would like to learn more, contact us or check out our blog.

You should review your estate plan every few years or after significant life events like marriage, divorce, having a child, family estrangement or changes in your financial situation.

Life insurance can provide money to cover estate taxes, debts, funeral and other expenses, ensuring that your beneficiaries get their inheritance without additional financial burdens.

A digital estate plan manages your online presence and digital assets including social media accounts, email accounts and cryptocurrencies.

While some aspects of estate planning can be done without an attorney, professional guidance ensures that your plan is legally sound and tailored to your specific needs and goals.

A “DNR” aka a “Do Not Resuscitate” order tells emergency medical personnel (like paramedics) that you don’t want CPR (cardiopulmonary resuscitation). You may want to consider having a DNR prepared if you: have a terminal illness, are at a greater risk for cardiac or respiratory arrest, or if you just have strong feelings about receiving CPR under any circumstances. If you have a DNR that means you will NOT be given: chest compressions, electric shock treatments to the check, tubes placed in the airway to help with breathing; artificial ventilation; or cardiac drugs. A doctor’s signature is required to make a DNR valid.

A “POLST” aka a “Physician Orders for Life Sustaining Treatment” is similar to a DNR. It is often used to ensure that healthcare service providers (including paramedics) understand a patient’s wishes. Unlike a DNR, a POLST includes directions about life-sustaining treatment – like intubation, antibiotic use, and feeding tubes – in addition to CPR. A POLST must be signed by a doctor or other approved health care professional to be valid. A POLST is not a substitute for a thorough and properly prepared advance health care directive.