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The thought of planning your estate can seem daunting.  You might wonder where to start or what you should ask your attorney.  In preparing yourself for your first meeting with our us, you should give some thought to the following:

  • What assets do I have and what are they worth?
  • Who do I want to give those assets to — and when?
  • Who should manage those assets if I cannot, either during my lifetime or after my death?
  • If I have minor children, who should have the responsibility to care for them if I become incapacitated or die?
  • If I cannot take care of myself, who should make decisions on my behalf concerning my care and welfare?

With tentative answers to these questions - which are expanded on further in this handout - we will be ready to discuss with you the various documents which can comprise your estate plan. 

1.      What assets do I have and what are they worth?
Your estate consists of all property or interests in property which you own. The simplest examples are those assets which are in your name alone, such as a bank account, real estate, stocks and bonds, and furniture, furnishings and jewelry.
You may also hold property in many forms of title other than in your name alone. Joint tenancy is a common form of ownership which takes assets away from control by will or living trust. Beneficiary designations on securities accounts and bank accounts are alternatives which must be carefully considered as well. Finally, assets which have beneficiary designations, such as life insurance, IRAs, qualified retirement plans and some annuities are very important parts of your estate which require careful coordination with your other assets in developing your estate plan.
The value of your estate is equal to the "fair market value" of each asset that you own, minus your debts including a mortgage on your home or a loan on your car.  It will also determine if, and to what extent, your estate will be subject to estate and income taxes upon your death.
At the back of the questionnaire which you have been provided with is a checklist of assets which would be included in your estate. 

2.      Who do I want to give those assets to — and when?
Once you have determined who should receive your assets at your death, your attorney can help you clarify and appropriately identify your beneficiaries.  If the total GROSS value of your assets is worth more than $150,000, the distribution of most of those assets – your home, vacation property, bank and investment accounts – which be handled through a revocable living trust.  Other major assets such as retirement plans, insurance policies are usually handled outside of the trust.
A revocable living trust is the “centerpiece” of your estate plan.  It is a written agreement between the individual(s) creating the trust (called the “Settlor” or “Trustor”) and the person or institution named to manage the assets held in the trust (the "Trustee.") to hold, manage and/or distribution assets held in the trust for the benefit of the “beneficiaries.”  The terms of the trust become irrevocable upon your death. Because the trust contains provisions which provide for the distribution of your assets on and after your death, the trust acts as a substitute for your will, and eliminates the need for the probate of your will with respect to those assets which were held in your living trust at your death.  

NOTE: Even if you have a trust in which you can put the bulk of your assets, you still need what's known as a “pour-over will.” In addition to letting you name a guardian for your minor children, a pour-over will ensures that all the assets you intended to put into the trust are put there even if you fail to retitle some of them before your death.  Any assets that are not retitled in the name of the trust are considered subject to probate. As a result, if you haven't specified in a will who should get those assets, a court may decide to distribute them to heirs whom you may not have chosen.
In your trust, the person(s) who will receive your assets is/are known as a “beneficiary:”

Questions to be discussed in deciding who will receive your assets in your estate:

  • Who should receive my assets when I die?  (Some married couples say it is fine if my spouse receives all of my interest in our property.  Others – especially those in blended family marriages – wish to kept their share of the marital property separate when they did.  If so, what access to income and principal of the dead person’s share of the marital property will the surviving spouse have?)
  • If we leave our assets to our children, are they old/mature/responsible enough to handle the money if given to them outright?  Perhaps they should receive their share in staggered stages instead e.g. 1/3 at 21; 1/3rd at 25 and the rest at 30. 
  • Do we want to bequeath any specific items of personal property to specific individuals?
  • Do we wish to leave any cash gifts to an individual or charity when we die?
  • Is there anyone we do not want to be a beneficiary of any of our property?
  • Do we plan to make any bequests to any nonprofit organizations – university, church, charity, or other organization?  (There can be immediate tax advantages to leaving bequests to charities).
  • Is there anyone who may want to “contest” the trust?
  • Do any of our children have “special needs” or need to be “protected” (substance abuse etc)?  (if so, how much should be left to the child with special needs?)
  • Do you have pets whom you wish to protect after you pass?
  • Should we plan for our trust to avoid estate taxes?  A trust can avoid estate i.e. death taxes.  If your net estate is worth $5.34m (in 2014) or more, significant estate taxes can be saved by proper estate planning, usually before death and, in the case of married couples, before the death of the first spouse.  Estate planning for taxation purposes must take into account not only estate taxes, but also income, gift, property and generation-skipping taxes as well.
  • Do we have a family business?  How will you plan for the succession of that business? Will someone in the family take over and run the business? Will other family members be involved in the business?  If not, how will you “equalize” the share of your estate between the business-owning family member and the other children?

Questions to be discussed about who will receive your non-trust assets:

  • Who is – or should be – the designated beneficiary (“DB”) of my retirement plan?  Who should be my alternate DB if my first DB predeceases me? IRAs/Retirement Plans are usually left to heirs by way of a “beneficiary designation” form which is filled out by the plan participant during his/her lifetime.  Under California law, a non-participant spouse is entitled to ½ of the participant spouse’s retirement plan. 
  • Can I “stretch out” the benefits for the DB instead of him/her taking the entire benefits at one time (and paying a chunk of income taxes)  .  It may be possible to “stretch-out” the benefits under the pension plan over the lifetime of my beneficiary rather than my lifetime?

 Should I try and protect the periodic payments to my DB?  If the DB is a minor or have addiction/spendthrift issues, it is possible to have the payments paid into a protective trust for their benefit instead of them receiving the benefits outright.

  • Who should receive benefits under my life insurance policy? 

 3.      Who should manage those assets if I cannot, either during my lifetime or after my death? - Part 1
The person who will manage the assets in your trust is known as the trustee.  Usually the same person is named as executor of your will so that there is consistency between the person who will handle both your trust and your non-trust assets.
Questions to be discussed about my Trustee:

  • Who will be the initial trustees i.e. managers of your trust.  (99% of the time, you are the trustees of your trust).  The trustee is the person you designate who will manage the assets in the trust.  S/he may be a spouse, adult children, other relatives, family friends, business associates or a professional fiduciary such as a bank.  99% of the time, you are the joint co-trustees of your trust, with the survivor becoming the sole trustee upon the death or incapacity of one of you.  Upon the death or incapacity of the second spouse, your trust should designate an individual or bank or trust company to act in your place.
  • Who will be the successor trustees if we become incapacitated or die?  (Usually you should name at least 1 back up successor trustee in case the first successor trustee cannot act)
  • Is our designated trustee willing to take on the responsibility as trustee? A trustee owes a “fiduciary duty” to the trust beneficiaries i.e. s/he can be sued!  (for which s/he will be entitled to earn compensation)?
  • Will the person named as successor trustee have the time, organizational ability, and experience to do the job effectively?
  • Should any trustee be bonded?  A trustee will have total control of your assets when you die and can be in a position to liquidate all assets and take an early vacation to Hawaii without any of the beneficiaries being aware of it.  Should the trustee be “bonded” by an insurance company in case the trustee absconds with the trust funds?
  • Should any successor trustee file accounts?  Our recommendation is yes!
  • Who has the power to revoke our joint trust?  Either of us unilaterally?  Should notice be given to the other spouse of such revocation?

4.      If I have minor children, who should have the responsibility to care for them if I become incapacitated or die?

  • How should I provide for the care, education and needs of my minor children?  Under California law, a minor child is a child under 18 years of age. If both parents are deceased, a minor child is not legally qualified under California law to care for himself or herself.  In your will, therefore, you should nominate a guardian of the person of your minor children to supervise that child and be responsible for his or her care until the child is 18 years old.  Such a nomination can avoid a "tug of war" between well-meaning family members and others if a guardian is required.
  • How should I provide financially for minor children?  A minor is also not legally qualified to manage his or her own property.  Assets transferred outright to a minor must be held for the minor's benefit by a guardian of the child's estate, until the child attains 18 years of age.  In providing for minor children in your estate plan, you should consider the use of a trust for the child's benefit, to be held, administered and distributed for the child's benefit until the child is at least 18 years old or of some other age as you may decide.

5.      Who should manage those assets if I cannot, either during my lifetime or after my death? - Part 2
For those assets which are NOT in your trust, the person who will make financial decisions regarding those assets is known as your attorney-in-fact.  Those decisions will be made in a document known as a Durable Power of Attorney for Finances.  S/he is the person who will sign your tax returns, deal with payments from social security, handle accounts which are not in the name of your trust e.g. small bank accounts. 
Questions to be discussed concerning my Financial Attorney-In-Fact:

  • Who shall be my primary “attorney-in-fact”?  If you become incapacitated, your "attorney in fact" is the person who  will manage your financial affairs if you are unable to do so.  NOTE: S/he will manage your non-trust assets; the trustee of your trust will manage your trust assets if you become incapacitated.  Take care in choosing your agent. That person should be competent, trustworthy, willing to take on the burden of your affairs and financially secure.
  • Will my DPAF be “springing” or “immediate”?  A “springing” attorney which only goes into effect under circumstances that you specify, the most typical being when a doctor says that you become incapacitated.  While most folks like the idea of a “springing” attorney, sometimes it is difficult to find a doctor you will sign off you being incapacitated for fear of being sued by the heirs later on if the attorney absconds with the money. 
  • Who shall make the determination that I am incapacitated in order to “trigger” the “spring”?  There are numerous options:  You can say that I am only to be determined to be incapacitated if my principal doctor says that I am incapacitated.  If it could be if two doctors can that I am incapacitated? Or even one doctor and one family member.
  • Will my attorney be paid?
  • Will my attorney be obliged to render accounts while I am incapacitated?  If so, to whom?

6.      If I cannot take care of myself, who should make decisions on my behalf concerning my care and welfare?
The person who will make health care decisions for you if you become incapacitated is known as your “health care agent.”  S/he will exercise his/her power to make those decisions in a document known as an Advance Health Care Directive.
Questions to be discussed about your Advance Health Care Directive:

  • Who shall be my primary health care agent?  Normally married couples will name the other spouse as their primary agent.  You should also name a backup.  Choose your health-care agent carefully. That person should be able to do three key things: understand important medical information regarding your treatment, handle the stress of making tough decisions, and keep your best interests and wishes in mind when making those decisions.
  • Will my Directive be “springing” or “immediate”?  Who shall make the determination that I am incapacitated in order to “trigger” the “spring”? See discussion above under No. 5 above
  • End of Life Decisions aka Pull-the-Plug?  If I am in an “end-of-life” situation, should I be kept alive using life sustaining treatments such as a ventilator? Dialysis?  What is an “end-of-life” situation?

7.      Other important matters to consider?
Disposition of Remains.

  • Anatomical Gifts. Regardless of the final resting place of your remains, you should provide some written instruction to your family as to your desire to be an organ donor or not to be one. In California and several other states, the statutory Advance Health Care Directive provides places to make these instructions. Remember that it is not just vital organs which are worthy of transplantation that can be harvested from a human body; there are bone, artery/vein, skin, cornea and other banks, which will preserve these body parts for further use, whether in transplantation or research.  Leaving this decision to your survivors may create arguments and division, and even if you merely designate the person to make such decision, your written expression of your own directions in this regard is much more persuasive and less open for debate.
  • Burial and Cremation. Some religions have strict burial rituals and timing, but some folks may wish to bypass such restrictions notwithstanding their religious affiliations, and they need to say so, in writing.  For example, traditional Judaism calls for burial in the ground very soon after death.  In fact, most Jewish cemeteries have no connection to a crematorium, and many secular mortuaries offering cremation of remains require a written instruction from the deceased, or an Advance Health Care Directive expressly dealing with cremation of remains, in order to take on such a task.

In addition, some of us have very specific desires for burial, such as what should go into the casket with us, what clothing we should be in, and many other seemingly very personal wishes about this process, all of which may be missed without written instructions.  But, most important, even if you have no unusual wishes, writing down any particulars will spare your family from some, if not all, of the division caused by differing memories of what their dearly departed loved one expressed to each of them during his or her lifetime.

  • Memorial Service.  As we get older, we attend more and more memorial services for our friends and family, and many of us get a fairly good idea as to how we’d like our survivors to bid us farewell.  Some may want a non-traditional memorial service, such as an invitation to the deceased’s favorite restaurant where family can share stories about the deceased during the meal. 

Unfortunately, without written instructions from us, our families will be left to their own consensus-building ability in order to arrive at accepted plans.  While the decision-making may seem daunting, it is nevertheless yours to make, and written instructions will make things easier for your family.

  • Obituary and Other Notices. Some cemeteries will publish a one-line obituary as part of burial services, but normally, if a public notice of our demise is desired, it is often the family who provides it and pays for it.  Those of us with significant pride in authorship may want to provide an outline, or even a finished work, for our own obituary, because different members of our family may have differing ideas as to what should or should not be said, and this can lead to squabbles about whether to include the names of surviving children and/or grandchildren, what accomplishments of the deceased to describe etc.

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