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Frequently Asked Questions - Estate Planning

FAQs - Estate Planning
 
An estate plan must include documents that 1) establish who is in control during your lifetime if you are not able or willing to manage your property or health care; and 2) establish who receives your property upon your death, or your spouse's death; and 3) funds the various mechanisms so that they have the intended effect. Typically, this means that powers of attorney, health care directives, pour-over wills, revocable trusts, and trust transfer deeds are all put into place in order to cover these areas. Please contact us with questions, as there are many forms which these documents can take.
A revocable trust is a document that establishes an entity to own your assets and manager your funds, but which puts you in complete control. By establishing the entity and transferring assets to it during your lifetime, you maintain control during your lifetime, but upon your death the trust remains in existence to distribute the assets according to your wishes. A revocable trust avoids probate, usually saving thousands in overall administration costs, and keeping the distribution of assets private and out of the court system. It is also an tax planning tool for those estates large enough to trigger estate taxation.
Probate is the process by which a court determines how property transfers from a decedent to their heirs. Probate is therefore a court process, and is public in nature. It applies when a decedent left a will, but also when a person dies "intestate," or with no will or other instructions on how to distribute property. The costs of a probate are significant, especially for property owners. The gross estate is charged with the fees, not the net, so even if an estate has a zero net value, if it is large on a gross basis, it will incur large probate fees, usually in the multiple thousand dollar range.
If someone dies without a will or any other directions on how to divide their estate, then their estate is "intestate." At that point, the probate court is summoned for the purpose of identifying the assets and debts and then determining who should be entitled to them. Intestate success is very rigid, as it is driven by statute. If you would rather identify who gets what, and maybe even save on administrative costs, then please contact us to learn more.
A power of attorney is a document that identifies who is "in charge" in the event a person remains alive but is unable or unwilling to tend to their financial affairs. The document can be (and should be) highly customized to meet the principal's needs as well as provide adequate direction to the appointed person in regard to his or her duties and the principal's intentions and desires. A power of attorney is a key estate planning document and are usually drafted to be "durable," meaning they outlast the principal's incapacity.
An advanced health care directive appoints an individual or group of individuals to make health care decisions in the event the principal is incapacitated and cannot do so on his or her own behalf. The options here are as varied as there are opinions in regard to these types of decisions, and the document should definitely read like a customized document, not a form. The document also addresses issues like organ donation, last rights, burial or cremation instructions and several other related issues. A family can be put through a great deal of pain if faced with these sorts of decisions without guidance. Please contact us to discuss the options.
A will is a document that identifies how a decedent's property is to be divided. In California, it can be "holographic," or hand-written, under certain circumstances, but relying upon an informal document for such significant decisions is never a good idea. Rather, a proper will is a detailed document that addresses many issues, including the person in charge of administering the estate, who the property goes to, and many other important details. The will is customizable, and could address issues that go well-beyond "equal to my children." Details that bring out the sentimentality of your family can be integrated to make the document speak to future generations and create a legacy.
A pour-over will is used in conjunction with a revocable trust for the purpose of "pouring over" all assets not formally in the trust's ownership into the trust so that they can all be administered under the terms of the trust versus having to probate some assets and administer others privately.
Usually an estate plan can be created during the course of three meetings. The first is to assess client needs and desires, as well as answer questions. The second meeting is to go over drafts of the estate plan and explain the provisions section-by-section. These documents total well-over 100 pages, and while it is okay to "leave it to the attorney," it is also important that all of a client's questions are answered and that they have more than a passing knowledge of what the documents say and how they work. The last meeting is to sign finalized documents. This process takes at least two weeks, but often about one month.