What is estate planning?

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Estate planning is the process of arranging to have your affairs managed should you become incapacitated during life or how your property should be distributed after death.

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Who should have an estate plan?

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Regardless of age, occupation, the scope of your assets, whether you are a homeowner or parent, everyone can benefit from making some important decisions that affect your life. Estate planning is more than just distribution of assets or wealth. It also covers arrangements such as who will help manage your business affairs if you become incapacitated or ill, and who will make important decisions about your health treatments on the event you cannot.

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Is estate planning expensive?

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Every estate plan is custom tailored to fit your budget. An estate plan can be created in phases, starting first with important documents you need right away, or can include a basic portfolio with just the fundamentals. Estate plans can be scaled over time to build in additional protections for changing circumstances. There is no one size fits all approach to estate planning and we can work you to find affordable solutions for you and your family.

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What does an estate plan include?

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Like the people who create them, estate plans are unique. Depending on your specific circumstances, an estate plan can be as comprehensive or basic as you want and may include different types of trusts, last wills, powers of attorney, advanced healthcare directives, and other devices.

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Do I need estate planning if I don't have a lot of money?

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A misconception is that you need wealth to have an estate plan but this simply isn't true. If you do have significant assets, an estate plan is an important consideration, but many people do not have extensive assets. Even if you own a car or have a bank account in your name and some personal belongings, an estate plan is an excellent idea since you can exercise your right to decide what happens to your property rather than leaving it up to the state to decide.

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Am I too young to do estate planning?

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No, you are never too young to benefit from estate planning. In fact, the focus of estate planning often includes decision-making that has nothing to do with distribution of wealth, such as designating someone to help make decisions for you when you can't, giving access to your family members to speak to your doctors, making sure someone you trust can access your bank account on your behalf, or deciding on guardians for your children.

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Should I talk to my parents about estate planning?

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If you are an adult child and your aging parents do not have an estate plan, you should definitely have a family discussion about making arrangements. Many people feel uncomfortable about bringing up the subject, but a few simple pointers can help: 1) Explain to your parents that this is the best way to ensure that their wishes are carried out as they would want rather than leaving their right to make choices about their life, finances and property up to the default rules of the state and the courts; 2) An estate plan ensures that family members are not prevented from important decision making processes when it comes to medical treatment, and other important considerations; and 3) Without estate planning, adult children won't have access to family financial resources which may be critical for taking care of necessary expenses. Consider a common scenario where a parent unexpectedly suffers a stroke, loses capacity and there is no power of attorney which would give a son or daughter the authority to step in and help. Estate planning avoids this!

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Can I do my own will?

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It is not advisable to have a DIY will since there are certain requirements that must be met to make your will valid. Consulting a qualified attorney to assist you in creating a will can ensure that there are no unintended and negative legal consequences. While there are plenty of self help options available in today's marketplace, it is especially important to understand that self help options are most often a basic template and too generalized to apply to your specific circumstances. If the generic template you find online using a document service doesn't address your particular needs and an important life event occurs, it may be too late to fix when you find out the hard way that it was never sufficient to handle your estate matters. If this happens, it's as if you never had a will and your assets may fall into the wrong hands or decision-making power may be left to the courts or persons you wouldn't want to be in charge. Since a will is a legal document that can affect your life and that of your family, it's best to work with an attorney to make sure that your will is not only validly created but accurately and thoroughly reflects your wishes. 

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Do I have to pay estate tax?

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This is a very common question that comes up often within the context of estate planning. What's important for you to know is that under the Tax Cuts and Jobs Act, the estate and gift tax exemption is $11.7 million for single individuals for the tax year 2021. To find out how this affects you, it's a good idea to talk to an attorney, certified accountant or other licensed financial advisor to learn more about your specific tax liability and other options available to you.

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What is an advance healthcare directive?

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An advance healthcare directive is a document that describes not only your preferences for who may make medical decisions on your behalf if you become incapacitated but also allows you to provide consent for the scope and nature of medical treatments you wish to receive, where you will reside, who may access your private records, and more. Since it is one of the estate planning tools that actually applies to your life and not your death, it is an important component to any estate plan or as a standalone instrument.

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What is a power of attorney?

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A power of attorney allows a person, known as a principal, to designate an agent (also called an "attorney-in-fact") to handle financial and other matters on behalf of the principal. Powers of attorney may be limited for specific purposes, such as specific transactions. Unlike a limited specific financial power of attorney, which terminates if the principal becomes incapacitated, a durable power of attorney is not affected by incapacity. A qualified attorney can help create powers of attorney documents to include specific applicable terms to suit your needs.

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Do I lose any decision making control if I give another person a power of attorney?

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No. As the "principal" who authorizes an agent to act on your behalf, you are still in charge of the decisions that your agent makes which must be in your best interests. The power of attorney must be specified in the document and can be revoked or modified. An attorney can help you outline exactly what the powers include, the purpose for which they may be exercised, when they may be exercised, and any other important provisions or limitations that you require.

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I don't get along with my children. Can I leave my estate to a non-relative?

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Sometimes, families suffer conflict. An attorney can work with you to determine your estate planning objectives, educate you about available options as to beneficiaries whether they are family members, friends or charitable organizations, provide advice and help prepare an estate plan that best meets your goals.

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I want to set up a trust for my children and grandchildren but am nervous that they aren't financially responsible. What can I do?

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There are many types of trusts that may be suitable to fit your needs. An attorney can help you to understand which trust instruments and provisions will protect against waste or spoliage by a beneficiary or beneficiaries to whom you leave or transfer your assets.

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What is intestacy and how does it affect my family?

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Intestacy is death without a will. In California, when a person dies without a will, it is said that they died intestate. The intestacy laws of the state are default rules that a court will apply to distribute a decedent's assets according to the intestacy scheme in that state. California is a community property law state, so it's a good idea to check with an attorney to learn more about how intestacy law is affected by the community property law, which has its own set of rules for how property is distributed at death and at divorce.

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What does it mean to "fund" a trust?

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Together with the assistance of an attorney, a trust is created by a person, the Trustor or Grantor, who transfers property to a Trustee, an individual or entity, who manages the trust property for a beneficiary or beneficiaries. Once a trust is created, the Trustor's property must be added to the trust, or else the trust provisions and protections may not be effective. An example of a failure to fund a trust is seen when a Trustor wishes to create trust fund for his daughter to be used for her college education. If he never transfers the money into the trust account, such as a bank account set up specifically to be distributed to her when she turns 18 years of age, her trust was never funded and thus it does not really exist.

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After death, will all my money and property automatically go to my family?

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Unless you have a trust, will or other beneficiary designation or transfer on death deed, there is no automatic distribution of your assets to your family members. If you pass away with an estate plan that includes a trust and will, depending on certain aspects of your estate plan, your assets can be quickly distributed to your intended beneficiaries fairly quickly. If you have no trust, but you do have a will that names an Executor to carry out your wishes, the probate court must first certify the Executor before your will can be read and assets distributed. If you die intestate (without a will), a court will apply the intestacy laws of the state and make default distributions, usually to your next of kin. In order to avoid a lengthy and impersonal probate process, you can speak with a licensed attorney to assist you to create an estate plan that ensures that your property is distributed the way you intend, and not according to an impersonal court based on default state rules. 

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What is capacity and how does it affect estate planning?

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Capacity in the context of estate planning means that you are at least 18 years of age, and are of sound mind and body, you are aware that you're creating a will or trust and that you intend to distribute your property and assets to the beneficiaries you select. A person must have capacity in order to validly create a trust or will. A common problem that occurs is when a person loses capacity as a result of an illness or medical event like a devastating stroke, and suffers an extended temporary or permanent brain injury as a result. If this happens and there is no estate planning document such as a durable power of attorney that enables either a family member or trusted representative to access your financial accounts for your own benefit, anyone who steps in to help you will have to pay for your care out of their own pocket and/or petition a court to be appointed conservator in order to gain access to your finances. Seeking a conservator is itself a lengthy and expensive process, which in the end diminishes your assets with court fees instead of using those valuable resources for your treatment, care and accommodations. By getting the help of an attorney to create a durable power of attorney, you will save yourself and your family a great deal of heartache, devastation and money.

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