Elements of a Comprehensive Estate Plan

Executing and maintaining a comprehensive estate plan is critical in order to maintain control of your personal and financial wishes in the event of your incapacity or death.  A thorough estate plan consists of several different documents that address specific nuances to accomplish a common goal.  Below is a summary of the various documents that should be part of any estate plan.    

Revocable Living Trust

A Revocable Living Trust allows you to address many aspects of your planning including the management of most of your assets in the event of your incapacity and the distribution of your assets upon death.  Furthermore, your Revocable Living Trust allows you to also address other issues that you might feel are important such as the management of inheritances for minor beneficiaries, divorce protection for your beneficiaries, asset protection for your beneficiaries and, in some cases, asset protection for your surviving spouse, if any, tax planning and Medi-Cal planning. A properly executed and funded Revocable Living Trust will avoid conservatorship in the event of your incapacity and avoid probate upon death.

Trust Funding

A trust does nothing to avoid probate or conservatorship if your assets are not properly titled to the trust. Some attorneys will help you with your Trust Funding while others will provide only partial help while placing the majority of this responsibility on you as the client.  I have generally found that no matter how sophisticated you are, placing this burden on clients seldom goes well. In my practice, we assist you with the Trust Funding process.  We typically prepare letters of instruction for all of your assets to make sure that they are either properly titled to your trust or that they have proper beneficiary designations. We also help you follow-up with the financial institutions and coordinate in any way we can.  Finally, if the financial institutions ask you to fill out their own forms, we will fill them out for you.  This is a critical component that too often is overlooked.

Pour-Over Wills

In the event that you accidentally leave an asset outside of the trust, the Pour-Over Will names your Revocable Living Trust as the beneficiary. However, if the value of the assets outside of your Revocable Living Trust at the time of your death exceeds a specified value, then a probate might be required in order to transfer such assets to your Revocable Living Trust.  This is why Trust Funding is paramount.  

The Pour-Over Will also designates permanent guardians for minor children upon your death.

Temporary Guardianship Designations

Another often overlooked aspect of planning, it always takes time for the Court to appoint a Permanent Guardian in the event of your incapacity or death. Until such time for the Court to act, without naming Temporary Guardians, minor children likely would be placed with Child Protective Services rather than with family members or close friends. Appointing Temporary Guardians helps to solve this problem.

Financial Power of Attorney Documents

In the event of your incapacity, your Trustee can handle most financial transactions. However, some such transactions will be outside the scope of the trustee’s powers.  This includes managing your retirement plans, filing your personal tax returns, dealing with Social Security and Medicare, getting your mail, etc. The Financial Power of Attorney will appoint an Agent (probably the same person as your Successor Trustee) to have power over such matters.  

The Financial Power of Attorney also names Permanent Guardians for minor children in the event of your incapacity.

Healthcare Documents

In the event of your incapacity, it is important to express your wishes as to how you would like your medical decisions handled (sometimes referred to as a “Living Will”), and to appoint a Health Care Agent to carry out your wishes (sometimes referred to as a “Health Care Power of Attorney”).  Both issues are addressed in an Advance Health Care Directive.

Your Health Care Agent will need to be able to have access to your health information in order to carry out his/her duties.  However, there are medical privacy laws as part of the Health Insurance Portability and Accountability Act (“HIPAA”) that often prevent your Agents from gaining access to your health information.  This is why it is important for you to sign a HIPAA Waiver that allows your agents to access your health information so that they can make informed decisions about your care.

KRASA LAW, Inc. is located at 704-D Forest Avenue, Pacific Grove, California and Kyle may be reached at 831-920-0205.

Disclaimer: This article is for general information only.  Reading this article does not establish an attorney-client relationship.  Before acting on any of the information presented in this article, it is important that you consult a competent attorney who is licensed to practice law in your community.