PME Estate Planning, Trust, and Probate Blog

Welcome to the PME LAW Blogs. In this blog, we will focus on PME Estate Planning, Trust, and Probate Blog developments, particularly within the state of California. Nothing in this blog should be construed as legal advice. PMELAW.com is a public website, so communications are not privileged. Copyright Perkins, Mann & Everett (PME LAW) © 2015. All rights reserved.

Basic Documents for an Estate Plan

Written by Curtis D. Rindlisbacher, Esq.

Every individual should have basic estate planning documents to avoid having the state’s default rules determine what will happen at disability and death.

Many people have no idea what documents should be included in their estate plan. Most people assume that they will need to have a will prepared. But the basic documents that should be included in an estate plan will address more issues than post-death distribution of assets. The following is a list of documents that are commonly prepared in an estate plan with an explanation of the issues addressed by each document. In the absence of these basic documents, then state law will dictate how each of these issues is addressed. These laws often requiring court proceedings.

DISABILITY PLANNING DOCUMENTS

Durable General Power of Attorney (Springing or Immediately Effective)

This is a legal document naming the person who will have legal authority to manage financial affairs and deal with all legal issues on behalf of another individual. The document can be immediately effective meaning that the person named as the agent can act even before the person signing the document is disabled. The document can instead be drawn to become effective only when the person signing the document becomes disabled. This is known as a springing durable power of attorney.

Advance Health Care Directive or Individual Health Care Instruction

An Advance Health Care Directive is a power of attorney for health care decisions. It designates those who will have legal authority to make health care decisions for an individual who has lost the ability to make meaningful, informed decisions about their own health care.

An Individual Heath Care Instruction can be made orally by the patient. However, it can also be made in writing and it may be limited to take effect only if a specified condition exists. These are often referred to as “Living Wills” in many states.

Nomination of Conservator

This is a legal document that identifies the person or persons who an individual nominates to serve as a court supervised conservator to care for the person and/or property of a disabled adult.

Nomination of Guardian for Minor Children

If an individual has minor children, it is advisable to have a Nomination of Guardian identifying the person or persons the parent desires to be appointed to care for the person and/or property of their minor children if they are disabled or pass away.

Revocable Living Trust

A revocable living trust is a legal document created by an individual or couple while living. The document names a Trustee (typically the person creating the document) and gives instructions for the management of any property titled in the name of the trustee of the trust during the creator’s lifetime and following the creator’s death. Assets held in the revocable trust are managed by the Trustee for a disabled person who created the trust. The agent under the Durable General Power of Attorney does not manage these assets.

POST DEATH PLANNING DOCUMENTS

Will

A will designates the person nominated to serve as the representative of the deceased and names those to whom the deceased person’s probate estate is to be distributed after payment of all taxes, unpaid bills and other liabilities, and administrative expenses. A will can also include provisions for the creation of trusts for the benefit of beneficiaries. It can also include provisions to minimize the impact of taxes. In California if the probate estate exceeds $150,000 in gross value, then a formal probate administration of the deceased person’s estate is required. In other states different rules will apply.

Revocable Living Trust

The revocable living trust discussed above will also typically include instructions identifying beneficiaries to whom the Trustee is directed to distribute the trust property following the death of the person creating the trust after payment of all unpaid taxes, unpaid bills and other liabilities of the deceased creator of the trust, and after payment of administrative expenses. The instructions contained in the trust may include instructions to hold property in an ongoing trust for the benefit of a beneficiary. In addition, provisions can be included to minimize the impact of taxes. Unlike wills, no court supervision is required no matter how large the estate.

If an individual or couple chooses to use a revocable living trust as part of their estate plan, then additional legal documents required to change the title to property into the name of the trustee of the revocable trust will also need to be prepared. Examples of these documents include deeds for real property, new account agreements with financial institutions and brokerage houses, and reissuance of stock and bond certificates.

Nomination of Guardian

The Nomination of Guardian discussed above will also address the issue of who will be responsible for caring for the person and/or property of the minor children of a deceased parent.

Beneficiary Designations

Upon the death of an individual, many assets are controlled by a beneficiary designation. Common examples are life insurance policies, annuity policies, pension plans, 401(k) accounts, 403(b) accounts, individual retirement accounts. Each beneficiary designation should be reviewed and changed to coordinate with the client’s desired plans for his or her estate.

Bank accounts often name a beneficiary to whom the monies remaining in the account are to be distributed upon the death of the account owner. Each of these beneficiary designations also needs to be reviewed and any necessary changes made as part of a complete estate plan.