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.

“What about going to www.SuzeOrman.com and clicking “will and trust kit” on the left side of the screen. She said on a recent show to use the password “peoplefirst” to get the documents for free.  I bought this package at a KPBS fundraiser a few years ago and it’s the one my family is using. ”

After a certain knee-jerk emotional reaction, I decided that I’d better check out the Suze Orman package before I criticized it.  After all, she’s strongly in favor of estate planning (a position I certainly agree with), and I’ve quoted her admonitions for years to clients.  I certainly would select Suze Orman over, say, legalzoom.

So I went online to check out her program.  I spent about 20 minutes on her site, enough to complete her Advance Directive and Durable Power of Attorney for Health Care (part of any attorney’s basic estate planning package).  I used it as any person would, filling in the form with my personal information and printing out the final document at the end.

 Aside from inputting personal information (address, phone, etc), the program only asked me to make a single decision: (1) to forbid organ donation or (2) to let my agent decide whether or not to donate organs.

 Here are my issues with the document I printed out: 

 1.  Organ Donation – the only choices were ‘no’ or ‘let my agent decide’.  The majority of my clients want to permit donation, but restrict donation to live transplants – otherwise you could end up used for scientific research or education.  Don’t you want a say as to whether you end up as an object for UCSD med students?

2.  No ability to input social instructions.

3.  No instructions regarding nursing care.

4.  No religious instructions.

5.  No burial/cremation instructions.

6.  No specific authority for your agent to select a primary care physician (and what will happen when your health coverage changes?)

7.  Most importantly, only two possible texts for end-of-life decisions (the ‘keep me alive at all costs’ text and the ‘let me die if the burdens of treatment outweigh the benefits of treatment’ text).  I provide my clients with an initial range of five choices, and then modify the texts to personally suit their wishes.

 Someday I’ll go back and do the living trust portion of the kit.  But if there are such large holes in a relatively simple document like a health care directive, what exists in a revocable living trust?  How about distribution to the children?  Do you want them to inherit at age 18?  Can you insert a Spendthrift Provision so they can’t pledge their inheritance as collateral against a loan?  What if you want to treat the children differently from each other?  Can you make sure your brother Egbert with the marijuana plantation isn’t named as the children’s guardian?

 I’ll leave you with Ms. Orman’s own words on the subject, from her disclaimers:

 ”NOTHING HEREIN IS OR SHOULD BE DEEMED TO BE LEGAL ADVICE, TAX ADVICE, ESTATE PLANNING ADVICE, OR ADVICE OF ANY TYPE REQUIRING LICENSING OR AUTHORIZATION UNDER ANY STATE OR FEDERAL LAW OR REGULATION.”  (Capital letters by Suze Orman)

… and …

“No book or form of other published material is a substitute for personalized advice from a knowledgeable lawyer licensed to practice law in your state. THEREFORE, CONSULT YOUR ATTORNEY.” (Capital letters by Suze Orman)

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%

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.

Your Trust can be changed through an Amendment, a legal document that must be drafted and executed with the same procedure that applies to Trusts. Do not change your documents by writing on them or by crossing out words or sentences.

You should review your plan when:

• You get married or divorced
• There are major changes in your family (births or deaths)
• Your children come of age
• You receive a windfall or significant loss of assets
• You no longer find your choice of guardian or executor appropriate
• It has been 3 years since your last review

You should strongly consider a revocable living trust if any of the following are true:

1.    You own real property

2.    You have over $100,000 in gross assets

3.    You want to maintain your privacy

4.    You want to protect your children from squandering their inheritance

How does a revocable living trust accomplish these goals?  It avoid probate by keeping all of your trust assets outside the reach of the probate court. It protects your children against squandering their assets by permitting distribution over time. For example, you can instruct that your children will receive their inheritance 1/3 at age 21, 1/3 at age 25 and 1/3 at age 30.  Finally, the revocable living trust protects against incapacity by providing a technique for a successor trustee to immediately take management control of your property if you are ever unable to manage your financial affairs.

Call us today for a no-cost conversation about revocable living trusts.