Newman Law Group

Tustin Estate Planning Law Blog

Trust preparation: Don't make these mistakes

Those people who are looking toward the end of their lives are already one step ahead of the game. By laying down plans for an estate, a person is able to ensure that specific wishes for the distribution of assets are honored after death. Unfortunately, a person who makes certain estate planning mistakes may not get the desired outcome. Careful trust preparation can help one achieve one's goals. Luckily, informed California residents can be better prepared to make certain estate planning choices. 

When planning a trust, one should ensure first that documents are kept up-to-date, accessible and that the relevant individuals such as successors are aware of the documents. Also important is funding the trust. A trust is only as good as the assets contained within it, so a person who has created such a document should ensure that the assets are transferred into the structure. Some individuals choose a pour-over clause, which says that any of the trustee's assets not held within the trust are transferred into it upon death.

Medical power of attorney can offer help in time of need

Many individuals believe that estate planning is only for rich people. This is typically not the case, as certain aspects of an estate plan can ensure that individuals live the lives they envision for themselves until death. A medical power of attorney can be a helpful tool in any person's estate plan, and a person in California may wish to review the roles and responsibilities of such a person as part of creating an estate plan. 

During the time that a person may become incapacitated, a medical power of attorney can step in and relay the wishes of that person so they will be honored. A religious person who has strong views on blood transfusions may wish to choose a trusted individual to represent him or her in the event of a complication in which he or she cannot advocate for him or herself. The person chosen is considered the health care representative of the other person. 

Estate planning: not just for the wealthy

A good plan never hurt, and indeed it has helped many individuals go through a challenging situation more easily. Estate planning may sound like overkill to those who don't have millions to distribute after their deaths, but in fact, a good estate plan can make everything crystal clear and also reduce the amount of your assets that are lost to court costs and confusion. California residents have the ability to estate plan at any age, and they may find some good reasons for doing so. 

An estate plan, such as a will, can help the individual to name names and decide who will benefit from their accumulated assets upon death. A will can be challenged, however, so many individuals choose to begin giving away some of the assets before death. Tax laws enumerate the amounts that can be given without taxation, so a person may be inclined to research the law before giving too much away. 

Wills help those who wish to leave a legacy

Thinking about estate planning doesn't have to be a grim reminder of the inevitability of death. Reframe this idea, and it turns into a way to diminish the stress on family and loved ones at the time of one's passing -- a time likely to send those closest to you into a challenging time of grief. Individuals in California can look at estate planning in this light and possibly have some of their concerns alleviated. By learning more about wills, people may be more at ease when the time comes to plan their own will. 

In the event that one dies intestate, or without a will, the process will be presided over by a judge. The judge will choose the administrator of the estate, and the assets will be divided by state law. An intestate status may mean that the division of assets will not be in line with one's wishes, and that the process can be lengthy and potentially more costly. 

Early planning can make for easier estate administration

Starting planning early can ensure heirs have an easier time upon one's passing. Estate administration comes with work and responsibility, and the more time and planning that one invests in the process now, the less confusion and suffering will result for the ones left behind. In California, there are benefits to early estate planning. 

Early planning allows the individual to thoroughly review the assets. It gives time to collect account information, deeds, titles and other important documents all in one safe place, and allows the individual to make a comprehensive plan for administration. When the time comes, the executor, or the successor trustee, will have an established plan in place to follow to ensure that loved ones are protected and final debts are paid off. 

Power of attorney accused of theft

Choosing an individual who will manage one's affairs can be an important decision. A recent news story highlights a potential problem when the power of attorney is given to the wrong person. A woman hired by the previous power of attorney was able to have the authority transferred to her, which she then allegedly used to pilfer funds from a bank account. People in California contemplating their choice for this role may learn more about why having a trusted person working for them can be vital. 

The role of a power of attorney is to handle the financial affairs of a person who is no longer capable of doing so alone. Often, the person who is given the responsibility is a younger relative or trusted counsel. Many individuals who are older find themselves in need of this type of assistance, such as the 101-year-old woman in the recently reported case. 

Estate tax changes may affect estate planning

Many individuals like to have a plan for anticipated major changes in life. For some, estate planning is important for the inevitable event of someone's passing. When creating a plan, many folks in California wonder about how estate taxes could affect them and whether proposed changes could alter existing plans.

The estate tax only affects a small number of wealthy individuals. Less than one percent of estates will be affected by this tax since the current threshold is $5.6 million. Two plans are circulating, one in the House and the other in the Senate, that will either double the limit or eliminate it altogether. Some experts worry that the elimination of this tax could affect charitable giving in the United States. Typically, wealthier individuals use charitable giving to avoid paying the estate tax.

A trust can be a measured way to transfer assets

When it comes time to plan the gifts of inheritance, some individuals may find themselves a bit uneasy. If a person has accumulated a tidy little sum of wealth, he or she may have various reasons for apprehension when it comes time to transfer assets. One may be concerned about the heirs' ability to handle large sums of cash without harming themselves, or there may be concerns about how the money will be spent. In California, individuals with these types of concerns about their heirs may choose to use a trust to bequeath their estate. 

A trust allows the planner to put a structure around the gift of the inheritance. The estate, instead of being given as one lump sum, can be invested into accounts that pay out quarterly, monthly or annually. This gives the planner the peace of mind that the lump sum will not overwhelm the heirs. 

Evolving technology can change how wills are honored

A recent court case shows that attitudes about technology and legal documents are shifting. Not every jurisdiction will share the same interpretation of the law, and in fact, this particular court case did not happen within the United States it serves as an important reminder of how technological updates can affect estate planning. Before individuals start text messaging their wills, though, they should consider the benefits of formal estate planning in California.

The international case involved a man's unsent text message. In the message, he gave his wishes that the wife be left out of the will, indicated where stored money was kept and revealed his wishes for spreading his ashes. Even though the text was never sent, the court ruled that the text served as the man's last will and testament.

The right executor can mean a seamless probate

Those in California who take the time to plan their estates often have to make difficult decisions. Among those delicate choices may be the naming of an executor. This is not a decision to be made lightly or hastily, for example, simply naming the oldest child to the position. Because an executor is responsible for completing many vital tasks to carry an estate through probate, it is important that the testator chose a person with certain qualities.

In most states, an executor must be bonded so that heirs are protected against someone who might try to misappropriate assets from the estate. Someone with poor credit or delinquent debt may not be able to obtain this bonding. In addition, the testator will want to choose an executor who is younger to reduce the possibility of the executor passing away before the testator. One way to circumvent this is to make a general appointment, such as naming any children who have reached a certain age.