ESTATE PLANNING

A well designed estate plan provides you with the peace of mind of knowing that your financial affairs are in order for your lifetime and beyond.  At Farallon Law Group, we have experience working with a diverse array of individuals, couples and families.  We take the time to understand your unique personal and financial profile and will tailor an estate plan that respects your needs and wishes at a very reasonable rate. 

IMPORTANT ISSUES IN ESTATE PLANNING

What Happens If You Die Without An Estate Plan?
In California, if you do not have an estate plan, your assets will be disposed in accordance with intestacy laws, which are default rules established under California law. The administration and disposition of your assets would likely be supervised by the probate court in an estate administration proceeding. Such a distribution of your estate, however, would not necessarily be according to your wishes and involves substantial cost and time. Intestacy laws pose special problems for non-traditional families. A will (possibly used together with a living trust), therefore, is preferable to relying on intestacy laws for the proper distribution of your estate.

Goals Of An Estate Plan
A good estate plan has three primary goals:
• To plan for the needs of your loved ones and to prevent others from interfering with your decisions
• To reduce the costs and delay associated with the transfer of your property
• To plan for possible incapacity

Domestic Partnerships
Domestic Partnerships (registered or unregistered) have special estate planning needs because domestic partners are not afforded all the legal protections as married couples.

A good estate plan is especially necessary for unregistered domestic partners to:
• Override the legal presumption that your partner’s family members would have the right to act on your partner’s behalf
• Prevent family members from inheriting all of your partner’s assets under intestacy laws
• Allow you to make health care and funeral decisions on your partner’s behalf
• Authorize you to manage your partner’s assets in the event of his or her incapacity

A good estate plan is also necessary for domestic partners registered in California in order to accomplish all of the goals for which estate planning is important for straight couples. As discussed above, these include being able to direct specific assets to certain loved ones; reducing the taxes, expenses and time associated with transferring your property; and planning for possible incapacity.

Special Needs Trusts
A special needs trust holds assets for the benefit of a loved one with a physical or mental disability while still permitting the individual to be eligible for government benefit programs such as SSI or Medi-Cal. Most government benefits have strict limits regarding the amount of assets a recipient may possess, and such limits are typically quite low. Leaving an outright gift to a disabled person often renders the individual ineligible for government benefits.

A special needs trust provides money for the “special needs” of a person as a supplement to the benefits received from government programs. Such “special needs” can include education, training, transportation, insurance, vacations, electronic equipment, rehabilitation, medical equipment and other expenses.

Special needs trusts are typically established by parents who want to provide care for their disabled child or by children who want to provide care for their elderly parents. In addition, a disabled person who expects to receive an inheritance, gift, proceeds from litigation or another large sum of money may form a special needs trust for himself or herself in order to avoid losing government assistance once such funds are received.

If several relatives seek to make gifts to a disabled person, it is often advisable that the relatives make sure that their estate planning documents provide that any gifts to the disabled individual shall be made to the special needs trust formed for him or her.

A special needs trust must be irrevocable and the beneficiary of the trust cannot control the amount of or the frequency of distributions from the trust.

Pets
Many clients are concerned about providing for their pets (or companion animals) following their death. One way to provide for a pet is to designate someone in your will to take care of your pet and allocate a sum of money for the pet’s expenses, such as veterinary bills, food and toys. If the designated person cannot care for your pet, then your pet and the money are given to the successor person designated in your estate planning documents.

Another option is to establish a trust in your will for your pet. You can leave a sum of money in the trust for your pet’s care and name a family member or friend to act as trustee of the trust.

TOOLS OF ESTATE PLANNING

Wills
A will is the basic device used to direct the distribution of your estate after your death. Typically, wills are shorter and simpler than living trusts and, thus, less costly to prepare. However, depending on the size of your estate, it may be advisable to use a living trust in order to avoid probate. Probate has the following disadvantages: increased court costs, a longer delay in your loved ones receiving your assets, and a public accounting of your estate.

A will allows you to, among other things:
• Name individuals or charitable organizations to receive your assets upon your death
• Appoint an executor to manage your estate, pay debts and expenses, pay taxes, and distribute your estate in accordance with your will
• Provide for your minor children by appointing guardians of the person and estate of your minor children

Revocable Trusts (or Living Trusts)
A revocable trust, also called a living trust, is a common estate planning device. With a revocable trust, you retain control over the trust assets during your lifetime. The primary advantage of using a revocable trust is that assets transferred to the trust during your lifetime are not subject to the costly and time-consuming process of probate administration.

With a revocable trust, you transfer the title of any of your assets (such as your home) from yourself as an individual, to yourself as trustee of the trust. During your lifetime, you, as the trustee, manage the assets of the trust and keep complete control over the assets.

After you pass away, your successor trustee (appointed by you in the trust document) takes over the management of the assets for the benefit of your beneficiaries. Your assets are not subject to probate administration, since the assets are no longer held in your name as an individual but are now held by the trust. This enables your assets to be transferred directly to your beneficiaries without the costs or delays associated with probate proceedings.

Durable Powers of Attorney
A durable power of attorney for property matters allows you to appoint another individual as your agent and authorize him or her to represent you, including engaging in all types of transactions with respect to your property. A durable power of attorney is frequently used along with other estate planning instruments.

A durable power of attorney remains valid even if you become incapacitated. Be aware that if you do not specify that you want your power of attorney to be durable, it will automatically terminate in the event of your incapacity.

A durable power of attorney can become effective as soon as you sign it. Or, you can specify that the durable power of attorney does not become effective unless and until a doctor certifies that you have become incapacitated. This kind of “springing” durable power of attorney allows you to keep control over your affairs unless and until you become incapacitated.

Advance Health Care Directives (or Living Wills)
An advance health care directive allows you to, among other things, direct your physician to withhold or withdraw life-sustaining medical treatment in the event a terminal illness or other physical condition prevents you from communicating your wishes. You can also direct an agent to make health care decisions for you if you are unable to make them, including the authority to make post-death decisions regarding organ donation.

ESTATE PLANNING NEWSLETTERS

LIVING TRUSTS PDF
LEAVING PROPERTY TO CHILDREN PDF