At the Setterquist Law Firm, I can work with you to set up an Estate Plan that is customized to you and your family’s situation. I will help you determine what is best for your situation, from a simple Will to a more elaborate Trust that can protect considerable assets from the cost and burden of Probate and taxes.
What is an estate plan?
Estate Planning ensures that your property passes to the chosen beneficiaries quickly and efficiently. An estate plan includes a package of documents – Trust, Will, Power of Attorney, Advance Health Care Directive, and any other documents that states your final wishes. The contents of those documents vary based on your family situation, assets, and goals.
However, Estate Planning is more than choosing who receives what when you pass away. A comprehensive Estate Plan also includes planning on how you want to live your life. An important part of Estate Planning is naming the person or entity that will care for you should you ever become mentally or physically incapable of caring for yourself or others. If you fail to nominate someone, then the court will appoint someone to care for you through a process called Conservatorship. Estate planning can avoid this public, expensive, and time-consuming process.
Every estate plan I create is custom tailored to address your specific family situation. Communication is key with regard to Estate Planning, not just between yourself and your attorney but also with your family members or intended beneficiaries. It can be helpful to discuss your intentions with your family or intended beneficiaries. That way potential ill will or Will contests from a family member can be avoided and you can make more of a sound decision. I like to focus on discussing your unique situation with you. Once I understand your situation and intentions, I can draft an Estate Plan that can avoid future issues with family members or intended beneficiaries.
You do not have to have all of your assets accounted for prior to drafting an Estate Plan. However, it is a good idea to have a general sense of where you wish to have your assets distributed after you pass away. It also helps to have an idea of who you would like to entrust with the power to conduct your wishes. If you are unsure on who to nominate, we can discuss different options such as nominating the trust department of a bank (corporate fiduciary) or a professional private fiduciary (state licensed) to function as Trustee for unrelated beneficiaries.
What is a will?
A Will is a legal document that is not effective until you pass away. It is an instrument that is used to name an Executor (person who will execute your estate), give your family and/or friends post-death instructions, and to direct and distribute your assets. You can also name a Guardian if you have minor children, should anything happen to you.
For some people, a Will may be sufficient to accomplish their goals. However, if you have a large estate, own real estate, or have disabled beneficiaries, then perhaps a Will may not be the best Estate Planning instrument for you.
In California, a Will must be in writing and must go through a public probate process. The probate process is a court supervised procedure that proves the authenticity of the Will. This is often a complex process and can be expensive.
A Will is not apart of a Trust; however, if you created a Trust, then you still need a “Pour-over Will,” which “pours” any assets left outside of your Trust into your Trust at death
what is a trust?
Trusts are adaptable instruments that can be customized to meet your specific needs and goals. They can accomplish crucial roles both during your lifetime and after you pass away. A Trust will allow you to protect your assets, provide for your loved ones after you pass, and create a legacy.
Depending on the individual’s intentions, a Trust can take effect during his/her lifetime (Living Trust), or it can take effect at the time of his/her death (Testamentary Trust). A Living Trust is a legal document created during an individual’s lifetime, where the individual (Settlor) designates a person (Trustee) to be responsible for the management of the Settlor’s assets for the benefit of eventual beneficiaries. After the Settlor’s death, the Trustee takes legal possession and/or title of the deceased Settlor’s assets and distributes these to the Settlor’s intended beneficiaries. A Testamentary Trust is a Trust that is established in accordance with the instructions contained in a Last Will and Testament. An individual’s Will may contain instructions to establish a Testamentary Trust so that the Trustee can distribute the deceased individual’s assets in accordance with the provisions outlined in the Will. A Testamentary Trust, however, is not created until after the individual passes away.
A Living Trust, which takes effect during the individual’s lifetime, is designed to allow for the easy transfer of the individual’s assets while bypassing probate, which as noted above, can be a complex and expensive process. On the other hand, a Testamentary Trust, which is not created until after the individual’s death, is established in the provisions of the individual’s Will. As a consequence, the Testamentary Trust will not be created until after the Will has completed the probate process.
In addition, a Trust may be Revocable or Irrevocable. You (the Settlor) may modify or revoke your Trust during your lifetime. The moment you pass away, the Trust becomes irrevocable. Irrevocable Trust is a Trust that may not be modified or revoked once it has been signed.
What additional documents should i include in my estate plan?
In addition to the Trust and/or Will, most estate plans include Financial Powers of Attorney, Advance Health Care Directive, Advance Dementia Directive, a HIPAA Waiver, a Pour-Over Will (if you create a Trust), Final Disposition and Authorization Instructions, and perhaps for married individuals, a Marital Agreement. For clients with young children, Nominations of Guardians Appointment of Power of Attorney and Health Care Powers are also part of a complete plan.
Financial Power of Attorney
Advance Health Care Directive
Financial Powers of Attorney is an important legal document that grants a trusted agent the authority to act on behalf of the individual (principal) in financial matters. And if a conservatorship is deemed necessary, this document also nominates the conservator.
An Advance Health Care Directive is also an important legal document, which grants powers of attorney for the personal care of the principal. This document designates the physician, nominates a conservator, includes end-of-life health care wishes, disposition of the principal’s remains, and whether the principal wishes to donate his/her organs and tissue, among other important instructions and provisions.
Marital Agreements are used when a married couple wants to change the character of an asset, a written marital agreement (Transmutation) is required (if you were married after January 1, 1985). If an asset was acquired before the couple got married, by gift, or by inheritance, then that asset is that person’s Separate Property. If an asset was acquired while the couple is married, and the asset was acquired in California, then that asset is characterized as Community Property. Both spouses equally own the entire asset. If an asset was acquired during marriage but is dearer to the wife than to the husband (i.e., diamond earrings, China set), then the couple can create this document to change the character of the asset from Community Property to the wife’s Separate Property. That way, the wife may dispose of the asset as she sees fit, without worry that the husband may claim the asset is Community Property.
A pour-over Will is a legal document that ensures an individual’s remaining assets will automatically transfer to a previously established trust upon their death.
A pour-over Will works in conjunction with a Trust. A pour-over Will covers assets that you have not funded into the Trust at the time of your death. Absent explicit directions provided via a Will; remaining assets would instead be subject to California laws of intestate succession.
Pour-over Wills function as a backstop against issues that could frustrate the smooth management of a Living Trust. They ensure any assets you may neglect to add to a Trust, whether accidentally or intentionally, will end up in the Trust after execution of the Will. The Will can also provide extra protection against legal issues with a Trust by stipulating that the assets intended for the Trust be distributed to the Trust’s beneficiaries should it become invalid or, in the case of an unfunded Trust, should it become legally difficult or impossible to fund at the time of your death.
Advanced Dementia Directive
HIPAA Authorization and Waiver
The Voluntary Advance Directive for Oral Feeding and Fluids in the Event of Dementia sets forth your wishes regarding the administration of food and hydration in the event you are suffering from an advanced stage of Alzheimer’s or another incurable, advanced dementing disease.
The HIPAA Authorization and Waiver is a “stand-alone” document to authorize your health care providers to release information concerning your otherwise confidential medical information to the individuals you have designated to act on your behalf in the event of disability and to any other individuals who you would also want to have such access.
Final Disposition and Authorization Instructions
Nomination of Guardian
The Final Disposition and Authorization Instructions give you the opportunity to specify how you wish to have your remains be dealt with (i.e., cremation or burial); to provide details of any prior arrangements and to designate the persons to carry out your wishes.
Nominations of Guardian is a document that sets out who you want to care for your minor children in the event that you and the children’s other parent passes away. In this document, you instruct the court who you want to care for your children and leave any special instructions for the care of your children. Also, because children cannot make important financial decisions, you may also nominate a person to mange the minor children’s property until they become legal age of majority.
Appointment of a Power of Attorney and Health Care Power for Minors
Although there is no statutory authority, the Power of Attorney and a Health Care Power for your minor children will help cover the situations where you are not available.