Newman Law Group

Tustin Estate Planning Law Blog

Trust preparation includes funding the trust

Some individuals have questions about what assets should be included in their trusts. Certain financial accounts such as CDs and money market accounts can be placed into the trust or left separate. While, sometimes, there may be a good reason for leaving certain accounts out of the trust, it is usually good practice to fund the trust with all of one's financial accounts. In California, doing so can be a part of trust preparation. 

A trust can only control the assets that have been titled in its name. However, most people include a pour-over provision in their wills that will funnel any probate assets into the trust eventually. However, usually an individual's goal in creating a trust is to avoid probate and also to allow another person to have administrative abilities if they become incapacitated as well. 

A medical power of attorney can help you in times of need

Most people think of estate planning and wills, but there are other elements that can assist the individual during times of need while still living. A medical power of attorney is one such element of a complete estate plan that an individual in California can utilize to assist him or her while alive and in need of extra support. The medical POA enables the individual to assign a person to make medical decisions on his or her behalf if he or she is incapacitated. 

A medical power of attorney differs from a living will in that the medical POA may act on the person's behalf any time the person is incapacitated instead of just at the end of life. By appointing a medical POA, the individual can prevent family members from having to make difficult decisions and disagreeing about treatments. The individual will tell the designated person about his or her wishes, and then the POA will take action when the right time arrives. 

Estate administration can be eased with planning

After a death in the family, someone will likely be chosen to handle the bulk of the person's estate. When the individual has a comprehensive estate plan with an allocated executor, estate administration can be less stressful for the person doing the work, especially in the area of resolving finances. Some experts have gathered other information that can be helpful to California residents during the estate administration process. 

First of all, a person should not try to make major decisions while emotions are high. Don't feel rushed, because that is when a person is likely to overlook important details. Secondly, a person should not feel that he or she has to go it alone. Probate attorneys and financial adviser can provide guidance to the person settling the estate. 

Protecting assets easier with generation-skipping trust

Changes in the estate and gift tax have made transferring wealth easier than before. New but temporary higher exemptions allow individuals and couples to gift, bequeath or give to the next generation greater sums of money than ever before. In California, there is less worry about estate taxes, but the concern still exists for some, and certain strategies can help those who worry about protecting assets

From now until 2025, the new tax law allows an individual to gift $11.2 million tax-free. The amount is doubled for couples. Any gifts surpassing that number are subject to a 40 percent estate tax. A generation-skipping transfer is also subject to an additional 40 percent tax, per current tax law. 

How does probate affect an estate plan?

Hopefully, when a person dies he or she has left behind a set of instructions for the survivors to disburse and distribute the assets. Unfortunately, some individuals die intestate, or without a will, and those assets are distributed according to California state law and not according to the individual's wishes. The estates of those who take the step to create a last will and testament will go into probate, a process designed to establish that the will is true and accurate. Others use methods to try to avoid probate. By keeping in mind the fact that wills can enter into a lengthy and challenging court process, individuals planning their estates can take steps to make the process easier. 

Probate is the official proving of a will -- certifying in a court of law that the will of the decedent is the true last testament of that person. Experts recommend that everyone have a will, even if he or she intends to pass assets along using methods that can help one avoid the court process. A will can help set guidelines for property that was overlooked or acquired after the will was drafted. 

A power of attorney can help aging parents

Some children watch their parents get older and wonder how they will handle the needs of their parents as they age. If the parent becomes ill or otherwise unable to manage his or her finances and health care decisions, who can help? In California, a parent may choose to assign a power of attorney to one of his or her children so that the individual can help the parent in the event of illness or emergency. 

There are two main types of powers of attorney: durable power of attorney and medical power of attorney. As expected, the medical POA can step in to help make decisions about health care needs for someone who is sick or incapacitated. The medical POA can also access medical records and speak to doctors for the principal party. 

Estate planning can foster asset protection

Many individuals will enter the estate planning process at some point in their lives. By using good strategies and avoiding common pitfalls, an individual can feel confident in asset protection. California residents may choose to transfer assets to their heirs in several ways, but if there is an oversight, the people left behind may face costly and inconvenient legal barriers. 

One of the most common mistakes is for the person to die without a will in place. When an individual dies intestate, the surviving family members must adhere to state laws about who will inherit, and the family may have to spend a significant amount of time and money proving that they are related to the deceased person. If there are disabled adults or minor children involved, the lack of a will may cause them to forfeit needed supports and services. 

How can I transfer assets to Fido?

Some people cannot imagine their lives without the companionship and affection provided by the family pet. In order to show their love and appreciation for the pet, many people choose to include the pet in their estate planning. In California, it is possible -- with a little planning -- to transfer assets to provide for a pet's needs after one's own passing. 

First, many people will want to choose a beneficiary who will later become the pet's caretaker. This can be a trusted family friend or an organization that will provide for the pet's needs. A person may select the beneficiary in his or her will and provide money for the care of the pet, but this provision is not always enforceable. 

Power of attorney lets individuals give authority to a helper

There may come a time in life when individuals become incapacitated and unable to care for their own affairs. At the time of such an event, it is beneficial to have a trusted person already in place who is authorized to help you by managing your financial and medical affairs. The power of attorney is the name of this type of authorization, and it is commonly used as part of an estate plan in California. 

In the absence of a power of attorney, the court will appoint one. The person appointed by the court may not be the one the principal would have chosen, but that person has whatever powers are granted to them by the court, and not necessarily the powers that would have been selected by the individual. Even if the person is a family member, there could be differences of opinion between the agent and the principal. 

Transfer assets with a special needs trust

A disabled individual faces certain unique struggles in saving money for his or her needs. For the disabled individual who has been disabled for his or her entire life, a parent may wish to transfer assets to that person upon death and ensure that he or she will have all needs provided for in the future. In some cases, however, a large pool of assets can jeopardize the disabled person's benefits and may not be worth the risk. California residents have several options when choosing to save for the benefit of disabled individuals. 

One way to support a disabled person with financial gifts is to set up a special needs trust. This type of trust allows the person to receive financial resources while holding the assets in trust. Since the assets are not in the disabled person's name, benefits programs are not affected. Distributions from the trust can be used for financial needs that are in his or her best interests, that aren't covered by other benefits programs, are for his or her sole benefit and are fiscally prudent.