Newman Law Group

Tustin Estate Planning Law Blog

Wills, other planning documents can benefit loved ones

It is common for people to think that they have plenty of time to get certain affairs in order. Unfortunately, too many individuals in California and elsewhere end up in difficult situations without having made the needed plans to handle certain details. In particular, many parties do not create wills or advance health directives that could help their loved ones handle financial matters and other important affairs after a loved one's incapacitation or passing.

Though numerous people think of estate planning as something for themselves, creating a plan can benefit loved ones just as much as the person making the plans. It can be immensely overwhelming and stressful for loved ones who do not know what to do in a potentially dire situation. Having instructions can bring a considerable amount of relief. 

Probate begins with filing and validating the decedent's will

Being in the position to handle a person's final affairs can be rewarding and challenging. Some California residents may be happy to act as a loved one's executor in order to close the estate and ensure that the person's final wishes are carried out. Of course, the probate process also involves taking various legal steps, starting with filing the will with the court.

Filing the will and having it validated by the court begins the legal process of settling the estate. The executor will need to locate the document, take it to the appropriate court and file a petition to open probate. The court may also need a death certificate or other documentation before starting the process. A hearing will likely take place to ensure that the will is valid, and this step can include allowing heirs and beneficiaries to review the document and raise any concerns they may have about its validity.

Follow instructions to see a loved one's estate through probate

Handling a loved one's final affairs can be a bittersweet time. Many California residents undoubtedly feel grief over a family member's passing but may also remember the loving time they spent together as they assess the final estate. Of course, if a person is an executor and must see the estate through probate, it can be a confusing and stressful time as well.

Understanding probate is not always easy, and in some cases, formal legal proceedings may not be necessary. However, if a person left behind a will, that document will need to be probated with the court. After filing it with the court and ensuring its validity, the executor will need to follow the instructions in the will as well as handle remaining bills, filing final tax returns and much more.

Should a college-bound child create a power of attorney document?

Many California parents will be sending their children off to college for the first time this year. Though it is an exciting time, it can also be emotional and, with the current state of the world, nerve-wracking. As a result, it is wise to take measures to ensure that parents have the ability to care for their children should anything happen, and those measures could include obtaining a power of attorney.

Some individuals may think it drastic or even silly to have a college-aged person create a power of attorney document. However, even if parents still consider their college-bound student a child, that child has likely reached the age of 18, meaning he or she is legally an adult. As a result, parents no longer have automatic control over their child's decisions or personal affairs, including if something puts their child in a medically compromising situation.

Deciding trustee fee is an important part of trust preparation

Deciding to use trusts as part of their estate plans can help numerous California residents more effectively express their management wishes for certain assets. Of course, trust preparation takes a lot of consideration, and one aspect to consider is how much to pay the trustee. Trustee fees are essentially the compensation paid to the person for managing the trust. How much should a trustee receive?

The grantor, or person creating the trust, has the opportunity to indicate how much a trustee will receive and how the fees will be distributed. For instance, a trust that generates a regular income and contains valuable assets may warrant an annual fee set as a percentage of the trust assets. If a percentage does not seem applicable, a flat fee could also apply.

Power of attorney agent may not have Medicare access

Because an incapacitating event could happen to anyone, it is important that California residents make arrangements to have someone handle their affairs. Often, parties utilize power of attorney documents to appoint agents to handle financial and health care matters. However, it is important to know that an agent may not have sweeping authority in all related matters.

If a person uses Medicare, he or she may assume that a power of attorney agent can access the needed information to continue using those benefits in the event of the person's incapacitation. This type of assumption could leave already struggling individuals in a difficult spot, as Medicare does not abide by power of attorney appointments. Instead, an authorized representative has to be set up with Medicare.

Creating their wills is a good starting point for estate planners

Trying to nail down solid plans may have never been a strong point for some California residents. As a result, they may have a go-with-the-flow attitude about many aspects of life. However, when it comes to planning for after-death matters, it is typically better to allow wills and other estate planning documents to play a role.

Even if people are not overly keen on starting the estate planning process, having at least a will in place could prove invaluable to loved ones in the event of a person's passing. This document can provide useful information, such as who should act as executor or take on the role of guardian for minor children, and can help with the property distribution process. Often, individuals use their will as the cornerstone of their estate plan.

Reducing estate taxes is worth considering at any income level

The idea of paying taxes is enough to make almost any California resident groan. Even after their passing, residents' estates could face taxation from the government. Of course, many individuals may think that they do not have to worry about reducing estate taxes because are not wealthy enough to face such taxation. However, it is still important to plan for that possibility because matters can change.

When it comes to taxes, the details and rules change almost on a yearly basis. As a result, it is easily possible for the government to change the exemption amount for estate taxes. In fact, changes to that exemption have occurred many times over the years. For example, even though today's exclusion limit is $11.58 million, it was only $675,000 in 2001. While it may seem as if the exclusion limit is only on the increase, it may not always stay that way.

Appointing separate power of attorney agents to multiple accounts

Deciding to appoint someone to handle important personal matters is a step in the right direction. Of course, even if California residents want to appoint power of attorney agents, they may feel uncertain about the best way to go about doing so. Additionally, they may wonder whether they can put more than one person in charge of different accounts.

Fortunately, if individuals do want to put separate people in charge of separate accounts, they can certainly do so. Many individuals choose to appoint someone to the role of the financial power of attorney agent and a different person as the health care power of attorney agent, but those are not the only two categories that can be separated. Interested parties could also appoint one person to handle certain financial accounts and another person to handle different financial accounts.

An IDGT could help with reducing estate taxes

Individuals who have accrued a considerable amount of wealth throughout their lives may have reason to be concerned about their taxable estate. Some California residents may exceed the exemption limit and their estate could face taxation after their passing. As a result, reducing estate taxes may be something that interests them, and trusts could help.

One trust to consider is an intentionally defective grantor trust. A grantor trust is commonly a revocable living trust that allows the grantor to act as the trustee. The grantor also handles the tax obligations resulting from the trust, including income and estate taxes. However, an IDGT is an irrevocable trust that allows the grantor to remain the owner of the assets as long as he or she meets certain requirements under the Internal Revenue Code.