Have you established your California estate plan?
Have you updated your existing California estate plan?

All individuals, couples and families are distinct and their estate plans require special attention.  Many of my clients tell me the hardest part of creating an estate plan is just getting started.  In an effort to simplify the process, we have put together this to-do list of basic California estate planning documents you can use to get started.  Having these documents in place is important so you can be sure your finances and healthcare needs are handled the way you want in the event of your incapacity and upon your passing away.

Advance Health Care Directive

One of the most essential documents that should be on everyone’s California estate planning to-do list is an advance health care directive. Your health care directive allows you to name an agent to manage your health care (if you are unable to do so yourself) and direct doctors and medical personnel as to what to do in your final days.  Your agent will make medical decisions on your behalf in the event you become incapacitated.  Your health care directive also instructs on your end-of-life wishes, such as your choice whether or not to prolong life, whether to donate organs and whether to be buried or cremated.

Durable Power of Attorney for Finances (POA)

Another essential document that should be on your California estate planning to-do list is a durable power of attorney (POA) for finances.  A financial power of attorney allows you to select someone to manage your finances should you become unable to manage your own finances, including paying your bills.  Having a POA in place before you become incapacitated is extremely important to avoid the need for court intervention.  Without a POA in place before you become incapacitated, a loved one will have to be named conservator by the court in order to handle your financial affairs.  A conservatorship takes time, costs additional expenses, and causes stress – which can be avoided with a POA.

Last Will & Testament

Your California estate planning to-do list should also include your last will & testament, a document that instructs how you want your property distributed after you pass away and appoints an executor to carry out your wishes.  If you have minor children, your will can include instructions as to who will be their legal guardian(s) if you pass away before they reach eighteen years old.  If you have a revocable living trust (see below), your California estate planning to-do list will include creating a pourover will, which is used in combination with your revocable living trust.

Revocable Living Trust

Not everyone needs a revocable living trust.  However, if you own real property in California, a revocable living trust can be the most important document on your California estate planning to-do list.  By placing your real property into your revocable living trust, the property is now owned by you as trustee of your revocable living trust.  By holding title to real property in your name as trustee of your revocable living trust, should you pass away before you sell your property (you can still sell your property even if it is in your revocable living trust), your property can be transferred to whomever you designate without going through probate.  One very important benefit (there are others) to having a revocable living trust, and transferring your assets into your revocable living trust, is that any assets transferred and titled in the name of your revocable living trust avoid probate.

California Estate Planning Case Study (Jane Smith)

Here is a case study of a typical California estate plan to help you:
This case study involves a single client, Jane Smith, who owns a home, a bank account, and an IRA.  How should Jane set up her California estate planning to-do list so she can be sure her wishes are covered for each asset?  This California estate planning to-do list contains four (4) essential documents to cover Jane’s interests during her life (in case of incapacity) and to ensure she avoids probate upon her passing.

  • Home
    Jane should establish the Jane Smith revocable living trust. By transferring title of her home into her revocable living trust, Jane will avoid the necessity that her home go through probate and allow her to designate her wishes as to who will receive her property when she passes away (or the property can be sold when she passes away and the proceeds divided among her beneficiaries).
  • IRA
    The best way for Jane to make sure the funds in her IRA go to her loved ones is by beneficiary designation. Jane should contact her financial advisor to ensure the beneficiary is correctly stated on beneficiary designation form (or updated if she is changing her beneficiary designation).  Jane can name her loved ones or name her revocable living trust as the beneficiary of her IRA account.  There are pros and cons to both and Jane should discuss these with her estate planning attorney and financial advisor.
  • Bank Account
    Jane has the option of putting her bank account into the name of the revocable living trust. Doing this ensures that the bank account will be distributed in accordance with her overall plan as set forth in her revocable living trust.  Jane needs to be sure that the titling of her bank account is not at odds with her revocable living trust.  If Jane has named a pay-on-death (POD) beneficiary on the account, the account will pass according to the beneficiary designation, despite what her revocable living trust provides.

To avoid any potential conflicts on death, or the need to probate her estate, Jane should create a revocable living trust (with a pourover will) to avoid probate of her real property and any accounts she chooses to transfer into her revocable living trust.  Her IRA will go by beneficiary designation (not by trust).  And should Jane become incapacitated, she will have a health care directive and durable power of attorney which will name loved ones to make medical decisions and manage her finances.

By working with an experienced estate planning attorney, Jane has taken care of preparing all the necessary estate planning documents on her estate planning to-do list.  Now Jane has a revocable living trust, a pourover will, a durable power of attorney and an advance health care directive.  She has protected her assets, she has avoided probate and she has ensured should she become incapacitated, loved one are designated to make medical decisions and mange her finances.

For more information on preparing the estate planning documents on Jane’s to-do list (and hopefully on your to-do list) please contact The Law Offices of Eric A. Rudolph P.C. at (760) 673-7600.