Wills, Trusts, and Estate Planning

Living Trust and Wills

Every family needs some form of estate planning.  Your family’s individual circumstances will determine the extent of the estate planning you need.  Your Tailored Legal estate planning attorney will consider the following factors when developing your custom estate plan:

• Marital status;
• Previous marriages;
• Children;
• Assets;
• Liabilities;
• Real estate assets.

Living Trusts

A living trust is a main component of any basic estate plan.  Living trusts have many different names:

• Revocable living trust;
• Family trust;
• Inter vivos trust.

No matter what you call it, a living trust is a very useful tool for most people, including those who are:

• Married;
• Have a child;
• Own real estate, or
• Otherwise own assets with a value greater than $150,000.

Living Trust Attorney in San Diego

A living trust is an entity which you create during your lifetime by executing a legal document called a declaration of trust or trust agreement.  The purpose of a living trust is to hold title to your assets.  After a living trust is properly formed the person creating the trust (the Trustor) transfers title to his or her assets to the trust.  The process of transferring title to your assets to the trust is called funding the trust.  Once your trust is properly formed and funded, the Trustee of the trust (you or a person you designate) manages the trust and the trust property for the benefit of the Trustor.  Upon the death of the Trustor, your property will continue to be held in the trust and managed by the Successor Trustee you designated until the time you established in the trust for distribution of the trust property to your beneficiaries.

A living trust offers many benefits, including:

Avoids Probate

Property held in a trust does not need to be transferred to your beneficiaries through the probate process.  Instead, the Successor Trustee you choose has the authority to transfer your property according to your wishes without any involvement of the court.

Keeps Your Affairs Private

One of the major disadvantages of probate is that all probate cases are matters of public record.  This means that all of your personal affairs are made public.  Because a living trust allows you to avoid probate, your personal affairs and the transfer of your property to your beneficiaries will be handled privately.

Decreases the Time and Expense of Administering Your Estate

Whether the beneficiaries of your estate are your children, your spouse, your grandchildren, or a charity you support, they will appreciate the savings of time and money that a living trust provides over a will that must be probated.  Private trust administration is handled outside of the court and can be completed much more efficiently than the formal probate process.  The time and cost savings means a greater portion of your estate will go to your beneficiaries instead of to the court and the attorneys.

Reduces Estate Tax Liability

The estate tax, or “death tax” as it is commonly referred to, is a tax imposed by the federal government upon the estate of a person who dies.  Laws regarding estate taxes are constantly changing.   In the past, estate taxes have been as high as 50%.  A properly drafted living trust can help you account for the uncertain nature of estate tax laws while also protecting your beneficiaries from estate tax liability.

Orderly Administration of Your Estate

A living trust also provides you with an orderly way to make gifts, transfer your assets, and provide instructions for the care of your children in the event something happens to you or your spouse.  It enables you to name a person who you trust to manage your affairs in the event you are unable to manage them yourself.

There are many benefits to a living trust.  They can help you protect your family in the wake of an unforeseen event, whether it is your death, or your incapacity due to accident or illness.

At Tailored Legal, our estate planning attorney can help you decide whether a will or a living trust is right for your family.   During an initial consultation, we will assess your family’s individual circumstances to help you develop an estate plan that is tailored to your needs.  All of our wills, trusts, and estate planning services are offered on a fixed fee basis so you know exactly how much your custom estate plan will cost before you hire us.  Contact Tailored Legal today to schedule a consultation with our wills and trusts attorney.

Wills

At the very minimum, every individual should have a will.  Though a will alone is not the ideal form of estate planning, it does allow you to designate a person you trust called an executor to manage your affairs upon your death or incapacity.  The key functions of a will include:

• Designates an executor of your estate;
• Transfers your property upon your death to the persons you choose;
• Designates a guardian for your minor children.

A Will Does Not Avoid Probate

The main drawback of a will is that it does not avoid probate.  Probate is the legal process for administering a person’s estate upon their death.  The probate court is also responsible for administering guardianships of a deceased person’s minor children and conservatorships over persons who are unable to manage their own affairs due to illness, injury or incapacity.  Like any superior court action, probate is a matter of public record and it can be a very costly and time consuming process.  It can be a significant burden to your executor, heirs, and beneficiaries, and any other person who is responsible for managing your affairs.  For these reasons, many people seek to avoid probate through the use of a living trust.  While a will can be a helpful tool, standing alone, it should be reserved for use by persons with very small estates.

Power of Attorney

A Durable Power of Attorney (DPOA) is an important document that should be included in any estate plan.  The DPOA is a document by which one person authorizes another to act as his or her agent.  The person who gives authority is referred to as the “Principal” and the agent is referred to as the “Attorney in Fact.”  The key is the “durable” nature of the power of attorney – this means that the power of attorney remains valid even if the principal becomes incapacitated.  If a power of attorney is nondurable, the authority of the agent to act on behalf of the principal terminates upon the principal’s incapacity.  While the power of attorney is valid, the agent can act on behalf of the principal with respect to matters set forth in the power of attorney and the principal is bound by the agent’s acts.

For the purpose of comprehensive estate planning, there are two main types of powers of attorney:

Financial Matters Power of Attorney

A financial DPOA gives the agent/attorney-in-fact the authority to make financial decisions on behalf of the principal.  It can be customized to meet the principal’s own individual needs, but a typical financial power of attorney authorizes the agent to act with respect to matters concerning:

• Real estate transactions;
• Personal property transactions;
• Stock and bond transactions;
• Banking and other financial institution transactions;
• Business operations;
• Insurance and annuities;
• Estate, trust, wills, and other beneficiary transactions;
• Claims and litigation;
• Personal and family maintenance;
• Social Security, Medicare, Medicaid, Medi-Cal, and other government benefits;
• Retirement plans;
• Tax matters;
• Civil or military benefits.

Generally, a person will designate someone they trust (e.g., a spouse, family member, or close friend) to serve as their agent in the event the person becomes incapacitated.  Often, a married person will create a financial power of attorney and make it valid immediately to allow their spouse to sign financial documents on the person’s behalf.  This tends to simplify the family’s financial planning if one of the spouse’s is travelling or otherwise away from home and cannot sign a document related to a financial transaction, such as a home loan agreement or vehicle purchase.  The same financial power of attorney can designate alternate agents in the event both the person making the financial power of attorney and their spouse become incapacitated.  A properly executed financial power of attorney should be acknowledged by a notary to ensure third parties will accept the document.

If you haven’t executed a financial power of attorney, or it has been years since you have reviewed your current power of attorney, contact Tailored Legal today to schedule an initial consultation with an estate planning attorney at no cost to you.  During this consultation, you can also discuss your other estate planning needs, including Wills and Living Trusts.

Health Care Power of Attorney

A Health Care Power of Attorney (HCPOA), also known as an Advance Health Care Directive, gives the agent/attorney-in-fact the authority to make health care decisions on behalf of the principal.  Many people often make the mistake of believing their spouse or a family member automatically has the authority to make health decisions on the person’s behalf.  This is a myth.  Without a properly executed health care power of attorney, a doctor, hospital or other health care provider may fail to carry out your medical wishes.  Moreover, it may be impossible to carry out your wishes if you never communicated those wishes to another person.  By creating a health care power of attorney, you can ensure that the person you want making medical decisions on your behalf has the authority to do so.  It will also make known your expectations and desires for medical treatment.    A thorough health care power of attorney will address matters such as:

• Extension of life treatment;
• Life sustaining procedures;
• Pain and comfort;
• Release of health information under HIPAA and other laws;
• Waivers for treatment refusal and to leave hospital against medical advice;
• Autopsies;
• Organ donor;
• Disposition of remains through cremation or burial.

A HCPOA is an important part of any comprehensive estate plan and should be addressed simultaneously with your needs for a Will or Living Trust.  At Tailored Legal, our estate planning attorney is experienced in drafting health care and financial powers of attorney to fit the needs of our clients.  Contact us today to schedule a consultation at no cost to you.