What is Estate Planning?

Pleasanton Estate Planning Attorney Makes it Simple

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Babysitter Instructions for Your Property and Loved Ones

An attorney I learned from early in my career described it this way: Estate planning is like designing a set of babysitter instructions on how we want things handled if we become incapacitated or die.


If you’ve ever written or seen a set of babysitter instructions, you know they’re pretty specific. They
account for all of the parent’s concerns and the particular needs of the child or children.


Similarly, your estate plan and the relevant documents should address your concerns and the needs of your loved ones.

Three Rules for a Comprehensive Estate Plan

1. Allow you to keep control your property while you are alive and well.


This one sounds pretty intuitive. If an attorney suggests a course of action for your estate plan that makes you feel uncomfortable or that you are losing control, that probably is not a great estate plan for you.




2. Authorize someone you trust to act on your behalf if you become incapacitated.


Without the needed legal documents, it’s likely that the court would have to appoint a conservator to act on your behalf if you were unable do so due to mental or physical incapacity. Conservatorship proceedings are public, costly, and time-consuming processes where every transaction taken on your behalf is scrutinized by the court. It’s the last place your loved ones want to be.




3. Give your property to who, when and how you want (with as little legal fees and taxes paid as possible).


Without a will or living trust, state law will typically determine who inherits your property. This may not be who you would want. Moreover, the mere fact that you probably don’t even know the outcome as you read this should be a cause for concern in and of itself.
Besides having no control over who receives your property, you also give up any ability to dictate how they can use it or who they are able to give it to down the line. That can be concerning for several reasons, such as a spouse who is worried about a surviving spouse’s potential remarriage, or a parent who is unsure about their children’s ability to handle property or money left behind for them.





A great estate plan should accomplish three things:

The Four Key Estate Planning Documents

Please keep in mind, although the following are the key documents, simply having the piece of paper isn’t enough. After all, you can get a form document just about anywhere these days.


For example, it is entirely possible to have a will that says what you want to happen to your property, but for none of your property to be controlled by your will due to how your property is owned and who you’ve named as beneficiary of your accounts. Or, it is entirely possible to have a living trust that has no assets, due to a failure to transfer property to the trust.


The above is why it is essential to work with an experienced estate planning attorney to be sure all these documents are properly integrated with your assets.


That said, here are the key documents:

Wills

Your last will and testament is just one part of a comprehensive estate plan. If a person dies without a will they are said to have died “intestate” and state laws will determine how and to whom the person’s assets will be distributed. Some things you should know about wills:

 

  • A will has no legal authority until after death. So, a will does not help manage a person’s affairs when they are incapacitated, whether by illness or injury. That is why living trusts and/or powers of attorney are essential for dealing with incapacity (see below).
     

  • A will does not help an estate avoid probate. A will is the legal document submitted to the probate court, so it is basically an “admission ticket” to probate.
     

  • A will is the appropriate place to legally nominate the guardians (backup parents) for minor 
    children. All parents of minor children should document their choice of guardians. If you leave this to chance, your children could end up with the wrong guardians.

Trusts

A trust is a legal relationship with respect to property. It has three parties involved: The trustmaker (also referred to as the settlor, grantor, or trustor), the trustee (the manager or “purse strings holder”), and the beneficiary (the person entitled to use and benefit from the property).


Oftentimes, it is the same person or couple occupying all three of the above roles. In the case of a revocable living trust, for example, a person may create a trust (the trustmaker) and name themselves the current trustees (trust managers) who manage the trust assets for their own benefit (trust beneficiary). Then, the trust document goes on to provide instructions on who will become trustee if the trustmaker becomes incapacitated or dies, as well as who becomes a beneficiary of the trust property after the death of the trustmaker. This is all done privately and outside of probate court, which keeps your affairs private and greatly reduces the time and cost involved following a death.

Because a properly funded revocable living trust avoids probate, it is very popular as a will substitute. That being said, even with a revocable living trust, it is still important to have a short will with a “pour over” provision (directing any miscellaneous assets into your trust) and designated guardians for any minor children.

Powers of Attorney

A power of attorney is a legal document giving another person (referred to as an “agent” or “attorney-in-fact”) the legal right to act on your behalf with respect to your property and money if you become mentally or physically incapacitated. For example, your agent can access your money in the bank to pay your bills, or even sell property on your behalf if it is in your best interest to do so.

Advance Healthcare Directives

An advance healthcare directive is a document that:
 

  1. Specifies the type of medical and personal care you would want should you lose the ability to communicate your own decisions; and
     

  2. Authorizes an agent to speak on your behalf about what type of treatment you would or would not want in the case of an end-of-life scenario.
     

Anyone over the age of 18 may execute an advance directive, and this document is legally binding in California. Your advance directive can set out the circumstances under which you would not like your life to be prolonged if, for example, you were in an irreversible coma with no reasonable chance of recovery, or had advanced stage Alzheimer’s. This helps remove some of the guilt from the agent of having to make that decision entirely on their own.

The Importance of Working with an Estate Planning Attorney

Proper estate planning is a process that is best accomplished by working with an experienced estate planning attorney. The stakes are too high to risk trying to do-it-yourself or take shortcuts of any kind. Problems with an estate plan do not surface until someone becomes incapacitated or dies (and by that time, it is usually too late to fix those problems).


I’ve helped hundreds of families make the process of estate planning simple and easy. With options to plan online or reserve a complimentary consultation (in most cases), there is no excuse not to take the next step towards a completed estate plan to protect your loved ones.

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