Newman Law Group

Tustin Estate Planning Law Blog

Power of attorney vital in establishing end-of-life care

People frequently know the expiration dates on food in the refrigerator, a driver's license, medication and even a passport. One expiration date no one can know, in California or anywhere, is one's own. Coy Luther Perry III, better known as Luke Perry, the actor, died March 9 after suffering two strokes. He was just 52 years old. He had had a cancer scare in 2015 and established an estate plan at that time, most likely including a medical power of attorney.

The first stroke was severe and left the actor surviving by means of life support. Five days following the first stroke the family decided to terminate life support as it had become apparent he had probably suffered a second stroke and would not recover. The fact that the family was able to make the decision and have that decision respected indicates a medical power of attorney probably existed. Without it, especially if the family had not been able to agree, the decision would have been left to a probate court and a possibly a long, drawn out and public process.

Trust administration critical to the plan's success

In creating an estate plan for a sizable estate that will eventually be left to one's children, people frequently make use of trusts that enable them to control the distribution of the estate after one's death. This is frequently done to ensure that children are old enough and responsible enough to manage the assets received. For a trust to be carried out successfully in California, close attention should be paid to the trust administration.

Questions posed by the trust beneficiaries frequently involve what assets are being distributed and when they will be distributed. The plan may specify that a portion of an heir's trust is to be distributed at the age of 30 with the balance coming at the age of 40. In the case of multiple children, the value of the estate may be equally split but not dispersed at the same time as the children are of different ages.

Wills can protect both heirs and assets

Few things in life are certain. An old adage states that there are only two things in life one can be sure of, death and taxes. That statement is certainly true and one more that can be added is that one's wealth and property cannot accompany one to whatever an afterlife brings in California. Having a will or a trust can protect one's wealth and property left behind from undue taxes and ensure that one's heirs receive bequests as stipulated.

Wills can serve to protect both property and people. When property is bequeathed to a person or entity in a will, probate allows the property to be transferred as intended by the deceased. In some instances, particularly where children are concerned, assets and property may be held in a trust until a child is older. These trusts are put in the charge of a trustee until the child reaches the age specified in the trust at which point he or she receives the proceeds.

A trust can be used to transfer assets

Wills and trusts are common terms when discussing estate planning in California. The differences are not always clearly understood. Where a will can transfer assets only after one's passing, a trust can do more.

A will allows one to designate the disbursement of assets in one's own name after one passes. A trust goes further and can allow for control of one's affairs while one is still living in the event of physical or mental incapacity. Having a trust can eliminate the need for a will as instructions in a trust can be very detailed as to one's final wishes where property and asset distribution are concerned. A trust can also eliminate the need for probate, which can be very expensive. Avoiding probate can also keep the proceedings private as probate is a public process.

Estate planning vs. estate documents

It's almost mid-February, and perhaps one is sitting back and reflecting on a year that he or she believes is off to a good start in California. The often delayed task of estate planning has been completed. But has it? Has an estate plan actually been created or are there now estate documents where before there were none? And what is the difference?

Some people have a will, maybe a health care directive and even a medical power of attorney. These are estate documents, but they do not comprise a comprehensive estate plan. While many contingencies may be provided for in the existing documents, others may not be.

Wills are beneficial even if a couple has no children

So the New Year has passed, the parties are over and planning for all of those resolutions are well under way. One resolution many people make in California is to review their wills or to create one if it does not already exist. Life changes, such as the birth of a child, can cause a person to create a will. But what about the couple without children? Is a will really needed in that instance?

Regardless of whether or not a couple has children, they should have a will. Without a will, if a spouse dies, the surviving spouse may inherit some of the deceased's assets. Accounts that are not set up as survivorship accounts might not be payable to a surviving spouse without estate documents in place.

Estate planning: U.S. Senate bill seeks to change estate tax

Preparing one's estate can be a complicated process for many families here in California. An estate owner may have to decide what to do with a family home, certain heirlooms or the savings he or she has accumulated. Others may have to consider the process of how to manage passing down a family business or farm. A recent bill introduced in the senate may change the percentage of estate tax, and supporters claim that it will have a positive effect on those who want to leave their company to their children as part of the estate planning process.

Three U.S. senators from out of state introduced a bill called the "Estate Tax Rate Reduction Act." If passed, it would reduce the percentage of estate tax from the current rate of 40 percent to 20 percent. This would bring the rate in line with the current rate for the capital gains tax. The senators say that the new rate will make the preservation of a family's legacy much more easy.

Estate planning can be a positive experience

January is coming to an end and it's a time when many people turn their attention from the festivities of the holiday season to the far more serious issue of tax season in California. While tax season and estate planning may not, at first glance, seem closely related, a change in the tax law impacts how one may structure one's estate plan. The estate tax exemption increased dramatically, which affects how much money can be gifted. The new exemption amount is $11.18 million per person.

Avoiding taxes and protecting assets used to be one of the prime motivators people used to create an estate plan. With the increased exemption, people can focus more on what they want their money to do in the long term and who they want it to benefit. A couple revisiting their plan 18 years after it was initially created found they could focus less on tax issues and more on avoiding probate, privacy for their family and planning for the long term use of their assets.

Stepfamilies and their implications on existing wills

Family structure has changed over the years in California. Divorces and second marriages have made stepfamilies commonplace. Multiple divorces can add complications to the situation where estate planning is concerned. Subsequent divorces can create a scenario where former stepchildren are now involved. Wills need to be periodically reviewed and amended to reflect family changes and clarify bequests.

One interesting scenario involves the parents of a stepparent naming the child of the stepparent as a beneficiary instead of their own child. If their child the stepparent, were to divorce, what would be the impact on the step-grandchild as far as inheriting property from the step-grandparents, or a former stepparent? California law states that an ex-spouse is treated as having predeceased the testator of a will or trust as long as the document or documents were finalized and the divorce was finalized prior to the testator's death.  However no such laws exist concerning gifts to stepchildren from stepparents or step-grandparents.

Is having a will enough to protect estate assets?

The new year has begun and it is a time that people often take a measure of their lives and make goals for the coming year. Estate planning can figure into some of these goals. Life changes such as getting married, the birth of a child or starting a new job can inspire a person to write a will in California. But is having a will in place enough to protect one's estate assets?

A will is a good first step in protecting one's heirs and determining how one's affairs are to be handled after one's death. But it is just a first step. A more detailed estate plan can help to avoid family squabbles, clarify health care directives and clarify the what, why and who of one's final wishes.