Posts Tagged ‘estate planning’
Recently Sarah wrote about choosing a guardian for minor children in the unlikely event that both parents have died, but what happens when one or both parents are alive but are not able to care for their child? This can happen when the parents have a serious illness or injury, or if the court determines that it is detrimental for the child to remain in their care. It is also possible for a non parent to become a guardian if the parents have left the child in their care for a long period of time. In this case, the child may have bonded with the person and come to view that person as a mother or father, making it in the child’s best interest to remain in their care.
All guardians must be approved by the court (even when nominated by the parent). A court must approve the guardianship in order for the person nominated to obtain legal authority to do things, such as, talk to the child’s doctor or enroll them in school. The court process ensures that the named guardian is qualified to safely and effectively care for the minor child.
Sometimes, there may be alternatives to a formal guardianship that would solve the problems presented in a particular case, and guardianship may not be necessary or appropriate. An attorney who specializes in guardianships can help determine the best way to handle each individual situation.
An Advance Health Care Directive (AHCD) is always part of the estate plans I create for clients, regardless of the individual’s age or health status. An AHCD lets you name another person (a health care agent) to make health care decisions for you if you are unable to make them for yourself. It also allows you to give specific instructions regarding your health care and end of life decisions, specify organ donation wishes and provide burial instructions.
A Living Will (not to be confused with a regular will or a living trust, which serve completely different purposes) is a type of health care directive. It is a legal document that allows you to indicate which treatments you do or do not want in the event that you are suffering from a terminal illness or are in a permanent vegetative state. This type of health care directive does not include naming an agent to make health care decisions for you.
Five Wishes is a health care directive that addresses your personal, emotional and spiritual needs as well as your medical wishes. It includes the following sections:
1. The person I want to make care decisions when I can’t
Next week I’ll discuss Physicians Orders for Life Sustaining Treatments (POLST) and Do Not Resuscitate Orders (DNR).
There are many signs that a parent needs help. Financial indicators include overdue utility bills or disruption in utility services. Bounced checks or undeposited income checks laying around the house also show a lack of financial engagement that may indicate financial danger. Engagement in scams or lack of awareness around charitable giving can both show a decline in capacity and may mean your parent has already becomes a target of financial elder abuse.
Personal care indicators are most significantly marked by falls or other critical health events, but there are often earlier, more subtle signs that help with personal care i needed. A lack of unexpired, edible food in the refrigerator and cabinets will prevent proper nutrition, which leads to physical decline. While elders often eat less as they age, excuses such as I’m not hungry, I really only want canned food, etc. often indicate that food preparation is an issue. Hygiene changes may indicate unaddressed incontinence or difficulty bathing, laundering clothes and toileting.
Imagine that you are about to take a road trip to somewhere you have never been before. You may have a general idea of where you going but you don’t have a map. Now imagine that you have to drive the car while you are grieving, overwhelmed or confused. You may have family members along for the ride who are also dealing with strong emotions and they all want to go in different directions. It sounds like a recipe for disaster.
Now think about how much easier that road trip would be if you had been given a map. Creating an estate plan is like leaving a road map for your loved ones. They will still have to make a difficult journey, but think of how much smoother it will be if they have directions.
The decision to keep assets separate may be guided by a number of personal values. Common reasons to maintain separate property include a desire to protect assets from possible loss in divorce, maintain financial independence from a spouse, control the flow of inheritance, or to have general autonomy in relation to assets that belonged to one spouse prior to marriage or were inherited or gifted family assets.
If those considerations are not important to you, the single biggest advantage of “commingling” or turning assets into community property is the double step up in basis for capital gains purposes. Assets are commingled by putting both names on the title to the asset, and/or merging bank or brokerage accounts into joint community property accounts.
These community property assets will receive a full step up in basis at the death of the first spouse. This allows the surviving spouse to liquidate real estate or securities following the death of the spouse without paying capital gains.
Property that is kept separate, but is inherited by the surviving spouse through a trust or pay on death designation will also receive a step up in basis. However, those assets held as the separate property of the surviving spouse maintain their cost basis without any adjustment due to the death of the deceased spouse. Gains tax will be owed if an appreciated asset is sold by the surviving spouse from his or her separate property.
I’m all for a good do it yourself project. I recently refinished a coffee table and attempted to make a slipcover for the chair my cat destroyed. But I wouldn’t recommend doing your estate plan yourself.
I might be a tad biased considering I am an estate planning attorney, but the chances of making a mistake are high and the consequences of those mistakes could be huge. Most DIY estate planning resources are one-size-fits-all, and you may recall me saying, estate plans are not.
When it comes to estate planning, details matter. If you make a drafting error or if your will is not witnessed properly, your documents could be invalid. If you have drafted a trust but the trust has not been funded, it will not work the way it was designed to work.
Add to that, common complications associated with a second marriage or a child with special needs, and the possibilities for error increase. The decisions you make in an estate plan can have unforeseen and unintended consequences. An experienced estate planning attorney can help avoid those pitfalls and achieve your goals in thoughtful manner.
The California Probate Code imposes on a trustee the duty to “keep the beneficiaries of the trust reasonably informed of the trust and its administration.” While the Probate Code specifically requires a trustee to provide certain types of information to the beneficiaries at certain times, it does not include any definition of the phrase “reasonably informed of the trust and its administration.”
In many cases, the more information a trustee provides the better. A trustee is likely to encounter problems with beneficiaries who feel like they are being kept in the dark. The best way to avoid that is to be as open and forthcoming with information as possible. Even where the Probate Code does not require it, the beneficiaries will likely appreciate being informed of any significant actions the trustee plans to take, such as selling or distributing any trust property of significant monetary or sentimental value. On the other hand, it may be more efficient for a trustee to inform the beneficiaries of more routine actions through periodic updates, rather than individual notifications of each and every action taken. The important thing for a trustee to remember is that the beneficiaries have a right to request “information”; therefore, answering questions from beneficiaries is an important trustee responsibility under current California law.
Conservatorships involve a number of steps that can be difficult to manage without experience. There are many different forms that must be completed and filed with the Court to request appointment of a conservator, as well as deadlines that must be met and procedural steps to follow. There are state laws that apply in conservatorship proceedings, contained in the California Probate Code, and there are also local rules which vary from county to county. Many local rules dictate the procedural steps and timeline that must be followed. A conservatorship attorney will be able to help you navigate the process and people involved, such as the Court Investigations Unit, Probate Examiner and ultimately the Superior Court Judge who hears your case. It is his or her job to make sure that you do everything in the correct manner to achieve the best possible outcome.
If you are seeking to have yourself appointed as the conservator, the conservatorship attorney will also help you understand the responsibilities that you will have as a conservator and the rules that you will be required to follow once appointed. Conservators have ongoing requirements to provide information to the Court and to certain individuals. A conservatorship attorney is in the best position to help you keep track of and fulfill these requirements.
The conservatorship attorney can also help you address any concerns of family members, friends or others who might disagree with your decisions or actions. Sometimes the role of conservator can feel like it has a public relations aspect. When communication is planned thoughtfully with the help of your attorney, it can go a long way to keeping all family members, case coordinators, Court Investigators and other interested parties happy with your efforts.
Our estate plans do so much more than handle inheritance these days. The wonders of modern medicine cure or safely monitor our illnesses, and we often live many decades beyond our own expectations. An estate plan allows us to delegate tasks for a very specific purpose, or over long periods of time.
Together, a trust, power of attorney and health directive allow us to turn to our support system when we need help. A financial durable power of attorney can be used by a spouse, relative or friend, to pay bills, transfer money, file an extension on a tax return that is due, and generally keep our financial lives from disaster when we’re busy recovering from a car accident or receiving a course of treatment for a few months. A trust can be used to manage real estate and investments in the same way.
In my work, I see so many happy people late in life. They often tell me that they’ve lived longer than they ever imagined. The happiest people are those who know the strengths and weaknesses of their social network, and plan accordingly. They feel entitled to give responsibilities to others, knowing that they have contributed in many complex and wonderful ways to the lives of those to whom they turn when sick or in need of support.
We all understand that “we can’t take it with us” but determining the best way to leave our things behind can be confusing.
Both a will and a trust allow you to choose who receives your assets after you die. A will also allows you to nominate a guardian for your minor children. For most of us, the main benefit of a revocable living trust is that it avoids the expensive and time consuming process called probate (I’ll talk more about probate in my next post). For the very wealthy a trust can also avoid or minimize estate taxes. A trust also allows you to plan for your incapacity and to provide for a child with special needs after you are gone. A will can be used as a stand alone document without a trust. However, a trust is used in combination with a will. In this situation the will is sometimes referred to as a pour over will and it serves as a back up plan in the event that some or all of your assets have not been placed in your trust.
If your estate is small (under $150,000) you might not benefit form a trust, because small estates are exempt from probate, but money isn’t the only consideration that’s why it’s so important to consult with an estate planning attorney to determine which type of plan is best for you.
“The only thing you take with you when you’re gone is what you leave behind” –John Allston