1. Revocable Living Trust

A living trust, also known as a Revocable Living Trust or a Family Trust, is a legal document that holds title or ownership to your real property and assets. In the event of your death or incapacity, a successor trustee is named to immediately step in and handle the assets in accordance with your instructions.

2. Pour-Over Will(s)

A pour-over will (1) is where you nominate Guardians for your minor children and (2) will direct any property left out of the trust to go into the trust for disbursement. This must go through probate if over $100,000!

3.  Assignment of Personal Property

This one-page document transfers your personal property into the trust – this is an optional document especially useful for single people who don’t anticipate transferring property to a spouse on their death.

4.  Quitclaim Deed

This document, recorded in the County Recorder where the property is, transfers your real property from you to you as trustee of the trust. Most attorneys will handle the primary residence without additional charge.

5.  Advance Health Care Directive

This document names an agent (also called an attorney-in-fact) to make your health care and living decisions should you be incapable of making them yourself. This document replaces the previous “living will” and “durable power of attorney for health care” documents.

6.  Durable Power of Attorney for Property Management

This Power of Attorney names an agent to make your property decisions and handle property matters should you become incapable of handling them yourself. This includes such powers as: filing lawsuits on your behalf; filing your taxes; and, applying for government benefits.

7.  Certificate of Trust

This is like an ‘abstract’ of your revocable living trust. It specifies the trustees and their powers without including all of the private provisions of the trust. You can use this Certificate of Trust to show account holders like banks and portfolio managers that you have the power to deal on behalf of the trust, without revealing the personal details of your estate plan.

Additional Resources:  If you’d like more information, call the Law Office of Daniel K. Printz right now at (858) 740-4370.

In my practice, I try to patiently walk  clients through the maze of choices they need to make as responsible parents.  Here are some of the topics every new parent should consider:

NOMINATING A GUARDIAN: Guardians are persons appointed by a court to care for minors too young to care for themselves. In a guardianship, the court appoints a “guardian of the person”, to make decisions about personal care, such as where the child will live and what kind of care they will receive. The court also appoints a “guardian of the estate” to handle the child’s financial affairs until he or she comes of age.

Choosing a person to nominate as guardian is rarely easy.  The place to nominate a guardian for your child is in your Will. You can use a Simple Will, Husband and Wife Wills, or a Pour-over Will attached to a Revocable Living Trust. The best choice for you will depend on your family and financial situation. We’ll provide you with the help you need to make the choice, and craft a nomination that can survive challenges by surviving relatives who might disagree with your choices.

INCAPACITY DOCUMENTS:  These days, estate planning is not just about your property; it’s also about you.  You may wish to consider signing an advance health care directive, formerly called a “living will”, which specifies your wishes about life-prolonging treatment should you become severely ill. There are also other documents, called durable powers of attorney, which can be used to give those you trust the power to look after your financial affairs while you cannot.  Without these documents, your spouse may not be able to handle all of your affairs!

If you don’t have Incapacity Documents, a court-overseen Conservatorship may be necessary, costing time, money, and invading your personal privacy. By crafting these documents while you are competent you may be saving your family from heartache and grief in the future.

PREVENT SQUANDERING OF ASSETS: Without a Will, or even with a Simple Will or Husband & Wife Wills, your children will be entitled to their whole inheritance when they reach the age of majority. Can you imagine having a windfall when you’re 18?

Sudden wealth and eighteen year-olds rarely go well together. They rarely have the maturity to resist temptation, and some are susceptible to swindlers. Left to his own devices, an eighteen year-old and his money will soon be parted.

Select a Testamentary Trust or Revocable Living Trust to delay the distribution of your assets until your children will be more mature. Also ask your attorney about Spendthrift Provisions, which will prevent your child from pledging his or her inheritance as collateral for a loan!

PRESERVE YOUR PROPERTY FOR YOUR CHILDREN: It’s important to minimize costs of administering your estate. There are many different costs associated with the passing of property on death. Doing nothing is the most inefficient way of going about things: a sizable portion of your estate may go to the government or lawyers, rather than to those you love.

With proper planning, some of these costs (such as probate fees) are completely avoidable. Others (such as federal estate tax) can be minimized. Without estate planning, though, you will leave less for your family.

Probate Fees are set by law in California and are based on your GROSS estate, without taking into account mortgages or other debts! Here is a chart that illustrates why you need to ask the Law Office of Daniel K. Printz to help you avoid probate:

Fair Market Value        Probate Fees                         Percent of Estate Lost

$200,000                        $14,000                                                     7%

$600,000                        $30,000                                                     6%

$1,000,000                     $46,000                                                     5%

$4,000,000                     $66,000                                                     3%

Which brings me to today’s subject:  As a senior, what documents do I need to prepare in case I become incapacitated and can’t make my own financial or health care decisions?  Of course, everyone should have these documents, not just seniors – incapacity can strike at any age for a multitude of reasons: accident; illness, etc.

DURABLE POWER OF ATTORNEY

The Durable Power of Attorney (Probate Code §4022) is a document you can sign while you still have capacity, which will grant powers to another person (your agent) to handle your financial affairs.  We call it “Durable” because it can still be used if you become incapacitated (Probate Code §4124).  It “survives” the incapacity of the grantor of the powers.  A normal power of attorney will cease acting if you become incapacitated – that’s a built-in safeguard, since you wouldn’t be able to revoke the power yourself. 

So with a Durable Power of Attorney, someone you trust (someone you really  trust) can handle your affairs for you: pay your mortgage; file your taxes; re-finance your home; apply for disability benefits; etc.  Your agent won’t be able to take anything of yours as a gift with your your specific written authorization (Probate Code §4128).  If you pass away, the powers cease – at that time your Executor (under a Will) or Successor Trustee (under a Trust) would handle financial affairs of your estate.

Be absolutely certain that your named agent is both competent and trustworthy!  Seniors have lost their savings to unscrupulous agents – even to agents who are family members.

ADVANCE HEALTH CARE DIRECTIVE

With an Advance Health Care Directive, you name someone to make medical decisions for you if your primary care physician certifies that you can no longer make decisions for yourself.  Why would that happen?  It could be due to an injury or dementia (whether due to a chronic condition like Alzheimer’s or a temporary condition such as the result of medications).

Additionally, you can provide detailed instructions regarding medical care, including: life support treatment; convalescent care; organ donation; etc. 

Either of these documents can be revoked at any time, as long as you are still competent.   Give copies to your designated agents, doctor, nursing home, and family.  And if you’re admitted to a hospital, bring a copy of your advance health care directive with you.

If you don’t complete these documents, it may be necessary to appoint a Conservator to care for you in the future.  Consult an experienced attorney with any questions!

Let’s take a typical example: Donna and Ken (not their real names!).

Donna and Ken are both approximately 30 years of age. They have been married for four years, and are pregnant with their first child (this is second trimester planning). They own a home that’s currently underwater but expect to have equity soon as the market rebounds. All told, their combined estate has approximately $250,000 in total assets, not including life insurance.

Their primary concern, especially as the pregnancy progresses, is nominating a guardian of the person and a guardian of the estate, for their child.

I have four possible plans to offer this couple, depending on their current financial liquidity and their concerns for their child.

First, I could provide them with Simple Wills containing guardianship provisions. They leave everything to their spouse, or to their children equally at age 18 if their spouse pre-deceases them.

Second, I could provide them with the Simple Wills along with incapacity documents (advance health care directive and durable prower of attorney for property management).

Third, I could provide them with a testamentary trust: They leave everything to their spouse outright, but if their spouse predeceases them to a testamentary trust (either a pot trust or a separate share trust) until their youngest child becomes 25. This plan comes with the AHCD and DPA for no extra charge.

Fourth, I could provide a complete estate plan, including a revocable living trust, incapacity documents, funding the trust with their personal residence, etc.

Based on their ability to pay (plans range from $300 for the simple will through $2,000 for the complete estate plan for a couple under $5M) and their willingness to involve themselves in trust funding, my clients will be served to varying degrees with any of these plans.