Overviewing Core Estate Planning Documents

As part of exploring the basics of estate planning in California, you’ll need to get a fundamental level of understanding on several things. Among them is an overall knowledge of key documents that make up a healthy estate planning portfolio. Bear in mind that as crucial as these documents may be, they are not necessarily the be all and end all – especially if you have a particularly unique situation. Realize they serve as the foundation that undergirds a solid portfolio.

Wills

In basic terms, a will is a written document that outlines your intent and desire for how you would like to disburse your estate and other assets. These documents designate the executor of your estate, specify particular gifts you wish to make, and outline distributions to your chosen heirs or beneficiaries.

While incredibly important, a will is not sufficient on its own to protect your assets. Why? Because it doesn’t provide asset protection or serve as a vehicle to avoid probate. All it does is reflect your intent and desires. This aside, they don’t do much.

Assuming you don’t have a will or trust, California courts would follow intestacy laws. These laws define the default path of distribution for assets from an estate. The predetermined hierarchy of beneficiaries these laws codify is as follows:

1. Surviving spouse;
2. Children;
3. Grandchildren;
4. Parents;
5. Siblings;
6. Nieces and nephews.

Even if you have a will in place, your estate will still be subject to probate. However, if your will names an executor, they will be appointed to administer the probate process. Additionally, if you have named beneficiaries, the executor will make asset distributions to those beneficiaries in line with what you’ve outlined in your will, as opposed to following the default distribution path.

Trusts

A trust is a vital tool in estate planning, offering various benefits depending on the specific type of trust established. By far, the most common type of trust we’ve found Californians use is the revocable trust. The next most common is the irrevocable trust, as well as a range of hybrid-type trusts in between, including the somewhat widely used A-B trust.

In addition to these, there are more specialized trusts that are typically only needed on a per-individual basis. We invite our clients to discuss them with us in person to see if creating one would make sense for them. Oftentimes, there are less restrictive ways to achieve the same level of protection.

Revocable Living Trusts

These are commonly employed to avoid probate, ensuring assets are distributed according to the trust’s terms without court intervention. They provide flexibility, control, and ease of asset management during the grantor’s lifetime, with the ability to move assets freely in and out of it with no consequences for the most part. The trade-off is that they do not offer asset protection from creditors since the assets are still considered part of the grantor’s estate. Roughly 90% of our clients find these trusts more than adequate for their needs.

A-B Trusts

We’ve found that A-B trusts serve the needs unique to blended families or situations where an estate needs to be divided into two separate trusts upon the death of one spouse. This arrangement can help ensure that assets are managed and distributed according to the deceased spouse’s wishes while providing ongoing support and flexibility for the surviving spouse.

Irrevocable Trusts

These trusts, on the other hand, cannot be easily amended or revoked without court approval. Even then, there are extremely limited exceptions that would allow for an amendment to actually be made. Although this type of trust restricts control over the assets, it provides significant asset protection from creditors and potential lawsuits.

This trade-off can be of particular benefit if you’re in a situation where you are looking to preserve assets for future generations, reduce estate taxes, or protect assets from being depleted for long-term care costs. When considering establishing a trust, it’s essential that you weigh the benefits and limitations of each type based on your specific needs, family dynamics, and financial circumstances.

Medical-Related Documents

Having proper medical-related documents in place is vital for ensuring that your wishes are respected and followed, especially in situations where you are unable to communicate or make decisions for yourself. An advanced healthcare directive is one such document, outlining your preferences for medical treatments and interventions in an array of different scenarios. We recommend including one as part of the medical-related section of your estate planning portfolio at a minimum.

Advanced healthcare directives allow you to specify whether you want life-sustaining treatments like artificial nutrition and hydration if you are in a vegetative state or if you prefer to be allowed to pass away naturally in certain situations. It also allows you to express your wishes regarding organ donation and autopsies, among other things.

Over and above an advanced healthcare directive, you’ll do well having a conservator nomination in place. These documents are essential when designating someone you trust to manage your financial and personal affairs if you become incapacitated. They help avoid potential disputes and ensure that your affairs are handled by someone you trust who understands your wishes and best interests.

We also typically prepare a standalone HIPAA waiver as part of building out the medical-related section of the estate planning portfolio for our clients. These documents authorize specific individuals to access your medical records on your behalf, ensuring that they can make informed decisions about your care when necessary.

Finally, we also include a final disposition document. The goal with these is to specify your wishes regarding burial, cremation, or other arrangements after your passing. Clearly stating your preferences can significantly help prevent disagreements among family members and ensure that your wishes are respected and followed.

It’s important to have these documents prepared and updated regularly to reflect any changes in your wishes or circumstances. Doing so not only helps reduce ambiguity and potential disputes but also ensures that your legacy is preserved in a way that honors your wishes and avoids unnecessary conflict among your loved ones during already difficult times.

One of the worst things we come across is fights between family members after a client of ours has died. It’s truly heartbreaking to see the last memory your family has of you resorting to this sort of situation. Is this what you want? Clarity in your estate planning portfolio is key to minimizing the likelihood of issues that would cause this to arise.

Attorneys Taylor and Sophia Preston are estate planning lawyers based in Irvine, CA, with an diverse background that gives them a unique edge when leading clients through the estate planning. Their deep understanding of California law and the complexities surrounding wills, trusts, and vital documents for minor children will greatly assist you craft a comprehensive estate plan that addresses your unique needs and circumstances. From guiding families through guardianship nominations to establishing trusts for asset protection, Taylor and Sophia have successfully helped clients safeguard their legacies and ensure the well-being of their loved ones.

Ready to secure your family's future? Contact them today to schedule a consultation and get started.

Vital Documents For Protecting Minor Children

We refer to documents vital to protecting minor children as minors’ documents. Having these documents is critical in maintaining an estate plan in California that is intended to ensure your children’s long-term care and well-being, especially if you’re no longer able to care for them yourself.

Perhaps the first document we guide our clients to is a guardianship nomination. In essence, this document allows parents to designate a guardian for their minor children in the event of their incapacity or death.

Technically speaking, guardianship nominations are just that — nominations. The court ultimately decides on guardianship, but the parents’ guardianship nomination is given substantial consideration throughout the process of reaching its conclusion. Clearly stating your wishes can help prevent family disputes and provide stability and security for your children during challenging times.

We have had several cases where multiple family members fought over who was to take care of their children. Having a guardianship nomination designated and clearly communicated to your family will do a lot to prevent these family fights from breaking out. More than this, they will provide your children with certainty and stability — two immensely important things during an otherwise incredibly unstable time for them.

We also frequently recommend minor’s power of attorney documents. These grant a designated individual the authority to make decisions in your place on behalf of your children in specific situations, such as medical emergencies or educational matters.

There are two primary types of power of attorney for minors:

Financial And Legal Management

This allows the appointed person to manage children’s financial affairs and legal matters, including signing school documents, managing bank accounts, and handling other financial responsibilities.

Let us break this down a little bit with an example. Say you and your spouse are traveling abroad without your children — who are staying with your parents — and you want your parents to be able to make medical decisions or sign school-related paperwork for your kids while you are gone. Having one of these documents in place would allow them to act on your behalf for your children in such situations. You can likely imagine how this would be even more important in emergency situations!

Medical Power Of Attorney

These documents grant designated individuals the authority to make medical decisions for minor children, including consent to medical treatments, surgeries, or other healthcare interventions if the parents are unavailable or incapacitated. Having both a power of attorney and an advanced healthcare directive ensures comprehensive coverage, similar to what an individual client would have.

We highly recommend having these documents in place for children as long as they’re under 18 years of age. Once they turn 18, they are legally recognized as an adult, meaning any documents or powers you have over them as their parents cease.

Structured Financial Planning For Minors

Many parents are concerned about their children’s ability to responsibly manage an inheritance, especially if they’re still relatively young. This is a perfectly reasonable concern to have. What would you have done inheriting $100,000 at the age of 18? With a comprehensive estate plan, you can implement protective provisions via a trust that brings structure, ensuring your beneficiaries receive their inheritance in a manner that promotes financial responsibility and maturity. This can take several different forms, including:

Trustee Management

Parents can establish a trust to hold and manage assets on behalf of their children until they reach a certain age, such as 25.

Gradual Distributions

This approach adopts a tiered distribution schedule (for instance, one-third at 25, one-third at 28, and the final third at 30). This allows beneficiaries multiple opportunities to manage their inheritance and learn from any financial mistakes they may have made at a younger age without necessarily sacrificing the opportunity to leave them with an inheritance altogether.

HEMS Provision

The Health, Education, Maintenance, and Support provision allows trustees to use trust funds to cover essential expenses like healthcare, education, living costs, and reasonable support until the beneficiary reaches a predetermined age when they can receive their inheritance.

This structure doesn’t leave them high and dry, so to speak, nor does it leave them with a one-time lump sum until they’ve reached an age where they’re likely to have the maturity to handle finances relatively well.

And More

As a child nears legal adulthood, establishing their own estate plan becomes increasingly important, regardless of their financial status or living arrangements. Even just a basic will, along with a power of attorney and medical directive, will serve them well. These documents typically designate parents as agents, allowing them to make financial or medical decisions if the child is incapacitated.

Upon turning 18, parental authority over children legally ends. Without these documents, parents cannot make decisions for their children, even in situations where it would seem natural that they should be able to. Hoping for the best, it’s wise to always be prepared for the worst. We’ve seen situations where these documents make a significant difference and recommend you consider setting them up with your young adult child.

For more information on The Basics Of Estate Planning In California, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (949) 993-0639 today.