No one wants to talk about death. But like it or not, it’s going to be the last thing to happen to each of us. Planning for your or a loved one’s passing is hard enough without the added stress of legalese. So we’ll start slow with a definition: Estate planning is the process by which an individual or family arranges the transfer of assets in anticipation of death. If you don’t have an estate plan, things may not go well. Estate planning is your opportunity to decide what will happen in the event of your death. If you do not make those decisions beforehand, you are left with what the legislature has decided to determine how your estate is distributed. This may not be to your liking.
We provide sound advice and guidance in matters related to estate planning and end-of-life issues. With more than 40 years of experience assisting clients with estate planning needs, we have come to understand the importance of tailoring our representation to each person’s individual goals. And with that experience comes knowledge, knowledge we want to share with you – Information like what is a durable power of attorney, why you might need an advance health care directive, and basics for preserving your estate for your heirs. When you are ready to put your plans into action, give us a call.
What is a will?
A will is a document that an individual creates and signs under the formalities of California law that directs how assets should be distributed after his or her death. A will provides the individual with control of how the assets are transferred and who will be in charge of the estate-taking the state’s generic plan out of play. There are certain requirements that must be met in order for a will to be valid in the eyes of the law. If the will is a printed or typewritten document, it has to be signed by the person making the will (called the testator), dated and signed in the presence of two disinterested witnesses who are of legal age. The document should clearly indicate that it is the testator’s will, and the testator has to be of sound mind. If the will is handwritten (called a holographic will), then the entirety of it has to be in the testator’s handwriting. It can’t be partially typed. The handwritten will must be dated and signed at the end of the document, and the testator has to be of sound mind. If it meets all of these tests, it does not need to be witnessed to be a valid will. If the will meets these requirements, in most cases the court will consider it a valid will. We recommend a more formal will prepared for you or a loved one in coordination with an attorney so that all your wishes are met, and nothing is left to chance or open to contest.
What is a Living Trust?
Like a will, a living trust will include your detailed instructions to your successor trustee (often a spouse or trusted relation) for handling your assets in the event of your death or disability. Through the trust, you can make provision for surviving spouses, children, charities, etc. A trust minimizes the prospect of a court controlling your assets.
A trust makes it possible, in a way that nothing else can, to set limits and terms for gifts you make to children. If you have concerns in the case of young children that they ought not to come into their inheritance too soon, the trust can hold their money and property back so the trustee can administer it for the benefit of the children.
When our lawyers prepare an estate plan and set up a living trust, we take advantage of the opportunity to minimize or completely avoid federal estate taxes through the use of proper sheltering mechanisms, including the marital deduction and portability. We often work as partners with your accountant, financial planner, and insurance agent, all of whom may be considered part of your estate-planning team. Our attorneys will make your estate plan flexible to anticipate changes in the law down the road.
Most of our clients find it desirable to have a revocable living trust as a part of their overall estate plan. When you create a living trust you are not relinquishing control of your assets and property. In all probability, you will be the initial trustee. For married couples, the surviving spouse is usually the successor trustee. You appoint the person who will succeed you, so you can have confidence that whoever is in charge will be somebody you trust.
When you create a living trust, you are doing the most you can to keep your financial affairs private. Unlike probate, which is public, the administration of the trust is a private matter. Ownership of the trust passes to the successor trustee at your death, so assets held in the trust do not have to go through the often costly and lengthy process of probate.
What can I do about estate taxes to preserve family wealth?
Sound estate planning must include careful tax planning. The greater your assets, the more critical this step becomes for protecting wealth. We can help you develop an effective, integrated plan that employs various kinds of trusts and other estate planning tools to minimize the impact of the “death tax,” while providing you with ongoing control over your own assets.
If you have a substantial estate, it is extremely important to periodically revisit the structure and currency of your estate plan. Knowledgeable tax planning can prevent the loss of up to forty percent of the value of your estate. As your trust accumulates value and laws evolve over time, careful estate tax planning can be essential to passing the greatest possible amount of wealth on to those you leave behind.
Some strategies we consider for clients include:
- Structuring of living trusts and other estate planning tools to avoid probate, provide for minor children and other heirs, and achieve other critical goals.
- Formation of a Family Limited Partnership (FLP) structured to suit specific needs and protect the interests of heirs.
- Managed family gifting, charitable donations and other ways to transfer wealth without incurring tax liability.
- Managing ownership and succession of real estate, business interests and other major assets to preserve value and avoid excessive taxation.
I own real property; does this affect how I handle my estate planning?
If you own real estate, unless you hold it in a living trust or a form of ownership in which it passes automatically to others on your death, it will become necessary to go through probate to pass the property to those to whom you wish to leave it. Even though federal estate tax laws now provide for “portability” to allow full use, the increased personal lifetime exemption from federal estate tax (approaching $11 million for a married couple) even without estate tax planning, there are many situations where traditional tax saving trusts are appropriate, as in the case of many second marriages.
What is power of attorney?
A power of attorney is used for one person to give another person the legal authority to act on that person’s behalf in all or specified matters in case of the person’s absence or disability. Powers of attorney may be general or special, and may be made effective upon execution or upon some future event.
Many of our clients choose to put a power of attorney in place, granting a person of their choosing the authority to make decisions about property management. We can assist you in establishing a durable power of attorney for financial needs that becomes effective immediately or at a time when you may become unable to competently handle your own affairs.
What is an advance health care directive?
As difficult as it may be to imagine, there may come a time when you will be unable to make medical decisions for yourself. An advance healthcare directive is a legal document that names a trusted family member or friend to act on your behalf as your health care agent to make medical decisions for you. For many of our clients, knowing that a representative of their choosing will be legally entrusted with caring out their specific health care wishes creates great piece of mind.
With the advancement of medical technology, it has become possible to prolong life, in many cases where there is no realistic hope of meaningful recovery. Under the law, in the absence of clear direction to the contrary, health care providers must make every effort to keep your body alive. Many people prefer to forego these measures rather than have their families face grief, disagreements and the real expense associated with long-term care where there is no hope of recovery.
We can help you prepare an advance health care directive, often called a living will, which provides detailed instructions to your doctors regarding end-of-life care, including organ donation. We routinely prepare these papers for our clients as part of their comprehensive estate plans.
I am in my 20/30s, why do I need an estate plan?
Think you are too young for an estate plan? Think again. As a person in your 20s or 30s, estate planning may not seem like a high priority. It is easy to put off thoughts of writing a will or developing a trust. After all, you are young and have plenty of time to take care of things later, right? Not necessarily. No one can predict the future. Anything could happen. Why not make certain you have a plan in place that protects your future and provides peace of mind for your loved ones should the unexpected occur?
You have different assets to protect and different concerns about the future of your young family. We can help you put a plan in place that makes your wishes known, but provides for adaptability as the years go by.
A majority of our younger clients are just entering the world of home ownership and parenthood. During these exciting times, it is critical to put a plan in place that provides direction in case the unforeseen occurs. Should you and/or your spouse unexpectedly pass away, protecting your home through a will or trust and providing for your children through naming a guardianship can ensure your final wishes are carried out and make things easier for those left behind.
It is also wise for those choosing to establish estate planning documents in their 20s and 30s to create an advance health care directive, or living will, stating their wishes pertaining to the use of artificial life support. Without an advance health care directive in place, choices about your quality of life are controlled by law and not by you or those you love.
While you consider creating your own estate plan, it may be a good time to discuss making sure your parents have their documents in place for their future. If they do not have a will or trust in place, you may experience delay and incur unnecessary expense to inherit their estate. Also, it is wise to review an established estate plan from time to time, making certain beneficiary information is current.
What about Fido and Fluffy?
For many animal owners, their dog, cat or other pet is a part of the family. We can assist you in creating a plan for a time when you may need to go into a long-term care facility or put directions in place for pet care after your passing. Through a variety of legal strategies, we can help ensure your beloved pet will have the home and financial support it needs for the remainder of its life.