CA Estate Planning

ESTATE PLANNING / POWER OF ATTORNEY

When someone asks you to serve as their agent, giving you power of attorney, you may feel quite honored or flattered at first. But after the weight of that responsibility sinks in, you may (and should) have some serious questions. Having power of attorney over another can be an awesome responsibility and may be too great a burden for just one person. For this reason, an individual may choose to select more than one agent to act in their place should they become incapacitated. But two heads are not always better than one.

What do you do if you are one of these agents and, for whatever reason, you and your co-agent(s) just cannot agree? Worse yet, what if you suspect one of your co-agents is not acting in the best interest of your loved one? Conflicts can arise in your attempts to act as “attorney-in-fact.” ElderLawAnswers.com recently updated a short article on the problem with a list of potential solutions.

• First check the wording of the power of attorney document to see if it sets up a procedure for resolving disputes.
• If the power of attorney does not help, contact an elder law attorney, who can tell if your state’s power of attorney laws offer any guidance. There may be a state statute that deals with disputes.

Your final step may be to file a petition in probate court to let the court decide.  The court can arbitrate or, if necessary, find one agent to not be acting in the best interest of the individual in question and so strip them of their power of attorney

For more information on powers of attorney visit our website.

GET YOUR HEALTH CARE DOCUMENTS PREPARED BEFORE APRIL 16th!

National Health Care Decisions Day is set for this coming Saturday, April 16. Preparing your Health Care Documents is one of the most important decisions you need to make, whatever your age. If you were unable to make health care decisions for yourself, who would make them for you?  How would they know what decisions you want them to make for them?

 Get a Health Care Documents, and appoint the people you want to make such important decisions for you!  Let them know what decisions you would make if you were able to yourself!

You can learn more about Health Care Documents –known in California as advance directives --– on our website.

According to their website, this initiative is a collaborative effort of national, state and community organizations committed to ensuring that all adults with decision-making capacity in the United States to document their healthcare decisions.

You also can learn more on their Facebook Page.

BOOMMERS, BEWARE HOW YOU HANDLE THAT INHERITANCE!

According to recent research from The Center for Retirement Research at Boston College, 70% of baby-boomer households will receive inheritances worth a total of $8.4 Trillion. With an average of $300,000 for most inheriting households, and an average of $1.5 million for the wealthiest inheritors, the better part of a generation is expected to see a nice bump in their assets.

 

The question, then, is what to do about it.

 

Ashlea Ebeling of Forbes recently approached the topic with a number of considerations, from warnings to ideas.

 

Consider keeping it Separate. The first thing to take stock of is how your state handles inheritances. California considers an inheritance the separate property of the person who received it, as long as it is kept separate. So think carefully before you put the money into a joint account – or use it to make major improvements on a jointly owned home, for example. Keeping an inheritance separate also can provide a level of asset protection – it can shield it from loss due to your spouse’s debts and/or lawsuits.  If you don’t have a revocable (“Living”) Trust, now may be the time to set one up so as to avoid probate. 

 

Remember, you can usually transfer your inherited separate assets into an existing revocable trust jointly held with your spouse (or with a registered domestic partner in California) or any other person, as long as it is identified as your separate property.  You can also designate in the trust who is to receive the separate property on your death.  It does not have to be your spouse or partner; it could be a child from a former marriage, for example.  To transfer separate property into an existing joint trust, it is advisable to consult an estate-planning attorney to ensure the transfer is done correctly. It is also a good time to review your estate plan, if you have one.

 

Special Treatment for Retirement Assets. If the inheritance is an IRA then you can use it to stretch out the withdrawals over your own life expectancy and in this way maximize the tax benefit on those funds. Don’t try to take the money out and redeposit in your own IRA. That’s not allowed. Instead, the IRA should be renamed. If you want to move it from one custodian to another, do so in a “trustee-to-trustee” transfer. In certain circumstances, you may even want to “disclaim” the account and give it to your children if you don’t need it.

 

Review Your Own Estate Plan. Whatever the inheritance, it is now part of your estate. A sizable inheritance could push you into estate tax territory. Even if you aren’t in danger of estate taxes, you will still want to review your current plan to account for the inheritance assets.

 

In the final analysis, receipt of an inheritance is one of those lifetime events that calls for proper assessment and planning. You can learn more about estate planning on our website. You also can review a checklist of other life events that may alter your estate planning needs on Page 3 of this month’s issue of our estate planning e-newsletter.

 

ESTATE PLANNING: WHY YOU SHOUDN’T AVOID IT

It certainly is understandable that no one enjoys a conversation about death – especially their own! And, with the estate tax exemption now set at $5 million for an individual and $10 million for a couple, many people may believe they have no reason to consult an attorney about their estate planning. But avoiding the topic of estate planning can mean unnecessary expense, confusion and conflict.

SmartBusiness last week highlighted the fundamentals of a “well-thought-out estate plan,” with topics that everyone should consider – whether prince or pauper.

• Why do you need an estate plan? A comprehensive estate plan ensures that when you die your estate is distributed according to your wishes, it protects you in the event of your own disability, and allows you to plan for minor children, pets, and charitable causes.
• What are the basics everyone should have? SmartBusiness (should be hyperlink as above) recommends at a minimum a power of attorney for healthcare and a living will.  In California where I practice law these documents are combined in an Advance Health Care Directive. This Directive is critical should you become ill and unable to make your health care wishes known.   Your appointed health care agent can make sure your wishes are followed.  Also strongly recommended is a Power of Attorney for Finances and Personal Affairs.  This allows whoever you appoint to pay the mortgage, utilities and take care of your cat if you are unable to do so for yourself.  In my experience, people in hospital without such a Power, are often more worried about such matters than their illness! 
• What about a will? Absolutely, you should have one, otherwise the State where you live will distribute your estate according to its probate rules, which may not reflect your wishes.  You certainly can write your own will and there are many online sites to help you do so! However, as in most things of life, you do get what you pay for. Improperly drafted or last-minute, hand-written wills are frequently contested and invalidated in court. If you don’t know what you’re doing, the outcome could be much different than you expect.
• What about trusts? Many people choose to create trusts to help their heirs avoid the time, expense and lack of privacy in probate proceedings.  A trust can help reduce estate taxes if applicable to you,  Trusts also can help shield assets from spendthrift children, divorce, children of a second spouses, and other unforeseen circumstances, such as lawsuits against your heirs.
• What mistakes to people tend to make in estate planning? The writer points out two common mistakes: failure to plan for their personal effects which can lead to more family disputes than the distribution of money, and failure to review and update estate plans over time.

You can learn more about comprehensive estate planning in the Grain Law FAQ's section of our site.