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You are here: Home / Archives for probate	9. Other Documents You Need September 10, 2012 By Clark Allison This is part 9 in my series, Estate Planning – What You Need to Know.
Part 9 – Other Documents You Need.
This is where the pour-over will comes in The pour-over will instructs your personal representative to literally pour-over the omitted assets into the trust and distribute those assets as if they were part of your revocable living trust.
This is an effective tool for getting your assets to the right person. But I don’t recommend you rely on the pour-over will.
The better approach is to take the steps to formally transfer your assets to your trust. Assets distributed to your trust after your death via the pour-over will be subject to probate. And if your assets have to go through probate, you will have defeated one of your primary objectives of creating your revocable living trust, AVOIDING PROBATE.
The better approach is to consider the pour-over will as a safety net, which insures your assets get to the right person. But be diligent in funding your trust.
Your estate plan should include an Advance Health Care Directive, also referred to as a Power of Attorney for Health Care.
The Advance Health Care Directive accomplishes two objectives. First, it authorizes your spouse, children or close friend (referred to in the document as your “agent”) to make health care decisions on your behalf if you are unable to do so.
The Directive gives your health care agent the right to, among other matters:
Consent or refuse consent to medical care or services
Choose or reject your physician
Donate organs, authorize an autopsy and dispose of your body.
Second, the Advance Health Care Directive includes a provision for you to state your intent regarding life support if you are seriously ill.
We generally use the following provision by the California Medical Association:
I request that all treatments other than those needed to keep me comfortable be discontinued or withheld and my physician allows me to die as gently as possible.
Most of my clients are comfortable with this language and include it in their Advance Health Care Directive.
In addition to the Advance Health Care Directive is the HIPAA (medical privacy act authorization).
The HIPAA authorizes your doctors and hospital staff to talk to your health care agents about your medical condition. Without a HIPAA, hospital red tape could kick in and delay vital communications with your health care agents.
The Durable Power of Attorney authorizes the agent you name to manage your assets for you if you become incapacitated.
This is an important document if you have a revocable living trust, but a vital document if you don’t have a living trust.
If you become incapacitated and you don’t have a Durable Power of Attorney, no one will have the authority to get to your accounts or other assets. So your family would have to go to court to have a judge appoint someone as your conservator. This is not something you want. A conservatorship can be worse than a probate.
With a conservatorship, someone, hopefully someone that knows and cares about you, would be appointed by the court to manage your affairs.
A conservatorship is expensive and becomes a hardship on the person the court chooses to manage your affairs.
Bottom line. When you do your estate planning, make sure you get all the important documents.
Filed Under: Estate Planning Book, Uncategorized Tagged With: advance health care directive, certification of trust, durable power of attorney, estate plan, HIPAA, living trust, pour over will, probate 7. Funding Your Revocable Living Trust August 30, 2012 By Clark Allison This is part 7 in my series, Estate Planning – What You Need to Know.
Part 7 – Funding Your Revocable Living Trust
If the assets aren’t in the container, the instructions don’t apply. If you don’t fund your trust, your assets may still have to go through probate – and then you defeat the primary objective of establishing your trust.
How is property transferred to your trust?
As an example, when you establish a revocable living trust, you and your attorney will record a new deed, which will transfer title of your house from you and your spouse’s name to you and your spouse – as trustee of your trust.
You will also retitle your bank and investment accounts from your individual names to the name of your trust. All property that has title, such as bank and investment accounts, real property, and business interests must be retitled to your trust. Personal property such as furniture, jewelry and clothing has no formal title and can be transferred to the trust with a written statement.
When your trust is funded, the trust owns your property. Although as trustee, you still control everything.
For practical matters, nothing changes except the paperwork. The tax identification number for the trust is your social security number. Your tax returns are filed the same as before you created the trust.
The legal title to your assets is no longer in your name, but in your name as trustee of your trust.
Example: Your home is titled in the name of you and your spouse:
Jack Lee and Jill Lee, husband and wife, as joint tenants
After recording a deed transferring the house to your trust, the title will read:
Jack Lee and Jill Lee, Trustees of the Jack and Jill Lee Revocable Living Trust
Avoids Conservatorship
When your trust owns your property, there is no need for conservatorship hearings or probate. If you become disabled, the trust contains provisions naming a successor trustee (most often your spouse, parent, brother or sister, friend or adult children). The successor trustee is authorized to manage your property on your behalf. As a result, there is no need for a conservator. Likewise, when you pass away, your successor trustee is authorized by the trust to administer your trust property, so there is no need for probate.
When your assets have been transferred to your trust, the trust owns it. The trust continues to own it if you become incapacitated and when you die. Because the trust owns your assets, there is no need to get court approval to manage or distribute them.
With a trust everything remains in-house. Upon your disability and death, your successor trustee will follow the trust instructions without the need for court approval or interference.
Brief History – Perspective
Before Revocable Living Trusts became popular, probate attorneys would charge a marginal fee to prepare a basic will knowing that if they outlived their client, they would make big fees on the probate. Now that more people are choosing to create living rusts rather than wills, probate attorneys have either evolved into trust attorneys or have limited their practice to probating wills of clients who never got around to creating a trust.
Bottom Line. With a revocable living trust, your assets can avoid the delays, publicity and costs of probate, which is why a revocable trust is the best choice for most people.
Next up is Part 8: How to Protect Your Children’s Inheritance from Divorce and Lawsuits.
Filed Under: Estate Planning, Estate Planning Book Tagged With: conservatorship, deed, estate planning, joint tenants, probate, revocable living trust, transfer 6. Revocable Living Trust August 26, 2012 By Clark Allison This is part 6 in my series, Estate Planning – What You Need to Know.
Filed Under: Estate Planning, Estate Planning Book Tagged With: California, community property, estate plan, living trust, probate 5. What If I Only Have a Will? August 22, 2012 By Clark Allison This is part 5 in my series, Estate Planning – What You Need to Know.
Filed Under: Estate Planning, Estate Planning Book Tagged With: California, Executor, living trust, probate, Pulbic Record 4. Why You Need Guardians If You Have Young Children. August 11, 2012 By Clark Allison This is part 4 in my series, Estate Planning – What You Need to Know.
Why You Need Guardians if You Have Young Children.
If you have young children, the most important part of your estate plan is naming the guardians to raise your children if something happens to you and your spouse.
Typically, the guardians are named in the will. If the estate plan has a revocable living trust, the guardians are named in the pour-over will.
Naming guardians is not easy. But if you have young children, you have to do it. If you don’t name guardians and something happens to you and your spouse, the court will have to decide who will raise your children.
Some of my clients have an easy time naming guardians. They have parents or siblings who are well qualified.
But many of my clients aren’t so lucky. They have a hard time deciding on the right people.
Here’s what I tell my clients who can’t decide on a guardian.
First. No one will be as good as you. No one is perfect (except you of course). If you are gone, someone you choose is better than the court choosing.
Second. The only people you can really choose from are those already in your personal network. Your network consists of your family and close friends. Some good. Some bad. Be realistic. Make the best choice of those in your network. That’s all you can do.
Third. You can always change your mind later. Most of my clients change their guardians every few years as their situation changes. You may meet someone with similar nurturing skills or your relatives may have matured into better parents.
Just know your choice is not permanent. Every decision we make today can only be made based on what we know today. If tomorrow changes, you can change your plan.
Knowing you can change your choice of guardians should take the pressure off. Your choice doesn’t have to be perfect, but you do need to choose.
Next up – Part 5. What if You Only Have a Will?
Filed Under: Estate Planning, Estate Planning Book Tagged With: children, family, guardians, living trust, minor, probate, will Vacation Planning May 28, 2012 By Clark Allison School is out or almost out and you may have lined up a vacation or two.
Filed Under: Estate Planning, Family Tagged With: estate planning, guardians, living trust, probate, will Is Your Living Trust Funded? April 21, 2012 By Clark Allison Although most families have not done their estate planning, many have, and many have established living trusts. The objectives in establishing a living trust are to avoid the high costs and hassles of a California probate and to provide an easy administration of the estate assets. Living trusts are great and will accomplish these objectives – if they are maintained.
Your estate will still go through probate, even if you have a living trust, if you have not transferred your assets to your living trust. We tell our clients to consider their living trust like a container. The trust will only control the assets that have been transferred to the container. If when you die, you left significant assets (real property, bank and investment accounts) outside the container, your loved ones may have to take your estate through probate. Probate is unwelcome to most families because it is expensive and generally takes at least a year in court.
Ask yourself these questions to confirm your assets are in your living trust. [Read more...]
Filed Under: Estate Planning, Probate and Trust Administration Tagged With: funding, living trust, probate Get our free newsletter