Creating an effective estate plan that carries out your wishes years into the future is challenging.  Over time, laws, legal strategies, and the circumstances of beneficiaries can dramatically change.  Typically, an estate plan centered upon a living trust will remain revocable by the trust-maker as long as the trust-maker is living and has mental capacity.  As such, it is important to review your estate plan on a regular basis with a competent attorney to make sure that your plan is still effective.  

However, what happens when you are no longer able to keep your estate plan current by making adjustments to it due to your incapacity or death?  Is there any way to ensure that your estate plan can navigate unforeseen change in the future?

The Trust Protector Concept:

One of the most effective mechanisms for ensuring that your estate plan stays current and navigates changes in law, changes in legal strategies, and changes in the circumstances of beneficiaries is to include provisions for a “Trust Protector.

It has taken you a lifetime to figure out your financial strategy.  You have finally reached a point where you feel confident about your approach to saving, investing, and spending your hard-earned assets.  You think about all the wasted years where you either did not make any effort to be deliberate with your finances or where you made mistakes through trial and error.  You want your children or other loved ones to be able to avoid making your mistakes and to begin where you ended up.  A comprehensive estate plan can help you achieve this goal for the next generation in a variety of ways.

On a recent family trip, we happened pass through the neighborhood of my law school alma mater, UC Davis School of Law. It was the first time I was able to show my seven-year-old son where I spent three dedicated years that served as the foundation for my professional career. My son was very impressed and he said that if he is not able to become a professional hockey player, he’ll probably become a lawyer.  (That was my plan as well!) 

As most professionals will acknowledge, learning does not end with formal education. Even after earning a law degree and passing the Bar Exam, lawyers must periodically take continuing legal education courses in order to improve the breadth and depth of their knowledge as well as stay current on changing law and legal strategies.

Most people think of an estate plan as a singular document.  On the surface, it might seem simple.  However, there are many nuances to directing the disposition of assets upon death that can become difficult to navigate.  The reality is that most people have multiple estate plans that control various assets depending upon how they are titled and whether or not beneficiaries are designated.  It is important to understand how these different estate plans work.

Traditional estate planning typically involves the use of a revocable living trust for the purpose of an efficient management and distribution of assets in the event of incapacity or death.  During the trust-maker’s lifetime, the trust is revocable by the trust-maker and simply acts as a manner of holding title to assets.  However, in the event of the trust-maker’s incapacity, the successor trustee chosen by the trust-maker will have immediate authority to manage the assets for the benefit of the trust-maker.  Similarly, upon the death of the trust-maker, the successor trustee will have immediate authority to settle the estate and distribute the assets to the beneficiaries of the trust.  In both cases, the necessity of going to court is avoided.

Inheritances are often compared to winning a lottery: suddenly, without any work or effort on your part, you are handed a check or title to assets and your net worth instantly increases.  However, being entitled to an inheritance is not always akin to hitting the jack pot.  There might be times when you would before to say “no thank you” to an inheritance.

One common situation might be where you are entitled to assets with liabilities.  If a parcel of real property has environmental contamination, for example, and the owner is legally and financially responsible for the clean-up, you might prefer to decline that inheritance.

Each year the Rotary Club of Pacific Grove hosts “Job Shadow Day.”  Rotarians volunteer to take one or two high school students with them to work for half a day.  At noon, the Rotarians bring the students to the club for lunch and they are further introduced to other professionals in the community.  For students, it is an opportunity to have a deeper understanding of various occupations at a time when they are beginning to think about life after school.  For Rotarians, it is an opportunity to take a fresh, bird’s eye view of their vocations to reflect upon and appreciate their accomplishments and skills.

Estate planning generally focuses on two key elements.  First, in the event of your mental incapacity, having an Advance Health Care Directive, a HIPAA Waiver, and other related health care documents will ensure that your wishes with regard to your health care and your personal comfort and well-being will be carried out by the person of your choice in accordance with your own specific guidelines.  Second, in the event of your mental incapacity and upon your death, having a well-drafted revocable living trust, financial power of attorney, and other related documents will ensure that your monetary assets are managed by the person of your choice and distributed to your selected beneficiaries under any conditions that you provide.

While these two elements are crucial, there is a third element that is often overlooked: your legacy.  After you pass away, how will you be remembered? What “life lessons,” observations, and values do you want future generations to understand and appreciate?  What family history do you have stored in your mind that will be lost with your death if you don’t make a record of it?  Indeed, these are your most valuable assets and yet traditional estate planning avoids addressing their preservation.

Legal terms can be confusing.  Often, terms can sound similar to a non-attorney but have very different meanings.  Below are some of the most common legal terms related to Estate Planning that sound similar but have important distinctions.  

Will v. Trust 

Both a Will and a Trust are documents that are used to direct the disposition of your assets upon your death.

The Republican Tax Cuts and Jobs Act is now law. It overhauls much of the federal tax code, including the Estate Tax, often referred to as the “Death Tax.”

What is the Death Tax? 

The Death Tax is a tax on inheritance. However, the Death Tax does not apply to every estate.  Decedents who leave inheritances to their spouses who are U.