Northern California, Sacramento & Foothills Area Estate Planning Attorney

Estate Planning: Make Incapacity or End of Life Choices Today!

Meta: Estate planning is an essential aspect of everyone’s legal disposition. Here’s why it’s so important to ensure you’ve got a solid plan in place now.

No one in Sacramento, Olivehurst, Truckee, or Woodland likes to think about the uncertainty of life, death, and everything else. If there’s one sure thing, it’s that you never know what’s going to happen. You could live to the ripe old age of 102 and die peacefully in your sleep in El Dorado Hills, Elk Grove, or Folsom, or you could end up hit by a bus crossing the street tomorrow in Vallejo, Davis or Ione — there’s just no knowing. So, what are you supposed to do? Do you just blithely go about your business in Auburn, Citrus Heights, Stockton, and elsewhere? If you feel that, well, when your time’s up, it’s up, there’s nothing anyone can do about it, is there?

You could do just that — as long as you don’t mind leaving a complete nightmare of unresolved legal issues for your loved ones to iron out on their own. We’ve got an alternative, though: you could do the responsible thing and put some structures in place for the day, hopefully somewhere far off in the future, that your life comes to an end. We’re talking, of course, about using estate planning to ensure that when you come to the end of your road, you don’t leave a huge mess behind for those who you leave behind in communities like Tracy, Roseville, and Ione. Here’s what you need to know about how estate planning can help you make those “incapacity” or “end of life” choices today while you still can.

Estate Planning in a Nutshell

Before we get into the nitty-gritty of what estate planning does for you and your loved ones, let’s start with a working definition of what it means correctly. In a nutshell, estate planning is a collection of tasks that prepare your asset base, or estate, for management in the event of your incapacitation or death. This explanation is a simplistic answer, though; estate planning encompasses several different concepts, all of which are equally important. Estate Planning covers such topics of the disposition of your real estate, like homes located in Markleeville, South Lake Tahoe or Arden Arcade and personal property after death, the settlement of any outstanding debts, and naming an executor to handle the entire process.

In the event of your incapacitation (such as being ill or becoming injured to the point of not being capable of making your own decisions), estate planning also covers topics related to your medical care in such a situation. Health care planning includes whether you wish to be resuscitated if your heart stops or if you want medical personnel, like those who work in Rocklin, Davis, to take any other so-called “heroic measures” in such an event. It also sets forth to whom you grant the authority to make decisions regarding medical care in your stead.

The Specifics of Estate Planning

When it comes down to it, there are many legal documents that you can have drafted that describe the specifics of your estate planning efforts. Whether it’s a trust, a will, a durable power of attorney document, a health care directive, a living will, or anything similar, they all serve different specific purposes towards the same goal. Here are a few of the most common types of estate planning documents and what they mean.

Wills

Most people, like those living in Lincoln, Sacramento, and Grass Valley, think “last will and testament” when they think estate planning. They’re not wrong, but there are many different types of Estate Planning documents. Attorneys, who work in communities such as Linda, West Sacramento, and Cameron Park, can counsel you on and prepare documents for you reflecting your choices and circumstances. Besides the well-known list of documents that describe the disposition of your personal and real property, there are other tools to make sure your wishes are carried out. Here are a few of the different types of tools:

• Living will: it’s called a will. Still, a living will is more about specifying the emergency or end-of-life medical treatment in hospitals located in areas like Fairfield, Jackson, and Vacaville, that you wish to receive if you’re unable to express yourself at the time. The benefit of a living will is removing the uncertainty and burden from your final moments, as your family members, like those living in Granite Bay, Citrus Heights, and Marysville, no longer need to guess what you wanted for your last moments.

• Holographic will: a last will that is prepared by hand by the deceased. Highly uncommon today but not entirely unheard of, a holographic will is most used by individuals who are caught in life-threatening situations and make a hastily-penned declaration. California is one of the few jurisdictions that will honor a holographic will.

• Pour-over will: a specialized will that has specific consequences for the deceased’s assets; a pour-over will ensure that any assets that remain after being disposed of are then “poured over” into an awaiting trust.  A pour-over will prevents assets that aren’t explicitly granted to a beneficiary from being settled in expensive and lengthy probate proceedings.  Instead, those assets will flow into an existing trust.

Trusts

Speaking of a trust, it is often a significant part of the estate planning process. A trust is a legal method in which a third party, or trustee, inventories, liquidates and distributes assets of the deceased for an inheritor or beneficiary. Just like with wills, there are several different types of trusts, including the following:

• A/B trust: An A/B trust functions similarly to a tax-bypass trust (see below). An A/B trust is a joint trust created for a married couple, in communities such as Davis, Auburn, Antelope, and Rancho Cordova, to minimize the amount of estate tax for which their estate will be responsible. This trust splits into two different trusts when the first spouse dies — trust A is the survivor’s trust, which is not subject to estate taxes as it’s assigned to a surviving spouse, and trust B is the deceased’s trust, which essentially becomes a tax-bypass trust.

• Asset protection trust: This type of trust provides some protection to assets against future creditor claims. An asset protection trust insulates assets from creditor attack. It is usually structured so that it is irrevocable for a set term and that the current beneficiary and the trustmaker are different entities. The trustmaker can then regain control of their assets once the risk of creditor attack is passed.

• Charitable trust: trusts that name a specific charity, like those in Sutter Creek, Mesa Vista, Lodi, and Sacramento, as a beneficiary, or that name the general public as beneficiary, is called a charitable trust. They are often used to lower liability for estate and gift taxes (or, in some cases, avoid them altogether) while also establishing the trustmaker as a philanthropist to cement their legacy after they’re gone.

• Constructive trust: also known as an “implied trust,” a constructive trust is established by a court, like the courts in Rancho Calaveras, Vacaville, Roseville, and Folsom. Facts and circumstances presented in court determine whether a constructive trust is in place, even if a formal trust declaration does not exist. As long as the court finds the deceased had the intention to establish a trust, the court, in locations such as Arnold, Winters, Alta Sierra, and Loomis, can declare a constructive trust.

• Irrevocable trust: the opposite of a revocable trust, an irrevocable trust is one that, once put in place, cannot be changed, modified, or revoked after it is active. Property, like homes located in Stockton, Elk Grove, Plumas Lake, and Dixon, transferred to an irrevocable trust, cannot be taken out of trust, no matter what. This inability extends even the original trustmaker.

• Revocable trust: sometimes called a “living trust,” a revocable trust is usually created during the lifetime of a trustmaker and can be changed, altered, or revoked in its entirety. Revocable trusts are excellent tools to avoid probate, as assets, such as homes or property in areas like Tulare, Mariposa, or Placer, transferred to a trust before death aren’t subject to probate laws.

• Totten trust: a specific type of revocable trust, a Totten trust, is created during the lifetime of the trustmaker. It’s used almost exclusively for financial assets such as certificates of deposit, savings accounts, and other types of bank accounts. Totten trusts are easy and inexpensive to set up compared to other revocable trusts, leading to them being referred to as “poor man’s trusts” in some cases.

• Tax by-pass trust: a tax by-lass trust does what it says on the tin: limit the amount of federal estate tax that would be payable on the death of someone that a spouse leaves to them if they precede them in death. This trust can result in significant tax savings for the children of this second spouse, who then receive more of their parents’ inheritance as a result.

• Special needs trust: perfect for a beneficiary that receives government benefits due to disability or something similar, a special needs trust ensures that a beneficiary doesn’t become disqualified for government benefits as a result of receiving a trust. A special needs trust needs to have stringent rules, such as being irrevocable and the beneficiary having no input on payment frequency, to qualify for this status.

• Spendthrift trust: This trust will typically protect a trustee from themselves. A spendthrift trust prevents a trustee from selling or otherwise pledging away interests in the trust. Spendthrift trusts protect assets from creditors of a beneficiary until after the trust property is distributed to the beneficiary.

How to Decide What Your Estate Plan Needs

So, you’ve decided now is the best time to get your estate planning underway. Sure, you’re happy and healthy today, but there’s no knowing what the future holds, and it’s a lot better to have all these things worked out far in advance than not have them at all. But now you’ve got a different problem: what type of documents should your estate planning include? The answer, as it is with almost all legal matters, is that it depends! A typical estate plan will consist of several documents. You will likely want to include a pour-over will, a trust, a power of attorney for financial matters, a power of attorney for medical issues or a living will, and a HIPAA release as well.

If it sounds like this is more focused on your medical care circumstances than your financial ones, you would be right. At the same time, it’s essential to ensure your assets are distributed carefully and correctly after your death. The truth is that the more personally important issues, and the ones you are unlikely (or unable) to think about dispassionately, are the ones concerning your medical care. No one wants to think about being in a situation where their wishes can’t be expressed because they’re incapacitated or otherwise unresponsive. This reluctance is why making a clear and straightforward establishment of what you want to happen in such a situation, and who you want to be responsible for making any ultimate critical decisions, is crucial.

Turn to Us for the Ultimate in Estate Planning Guidelines

That said, the world of estate planning can be Byzantine for those without specialized knowledge. You can rely on do-it-yourself trusts and wills available over the internet, but there’s a much better way to protect your legacy and ensure those who come after you are provided for as you desire. The answer, of course, is to enlist the aid of a qualified estate attorney.

Not every estate lawyer is created equal, of course. The best estate planning attorney will sit down with you, listen to your fears and desires, review your assets, and come up with a plan together to ensure your assets are all accounted for and that your wishes are honored. That’s the value of a good estate planning lawyer — and that’s why you need to turn to us when you’re ready to draw up your estate plan. We’ll work with you to make sure your wishes are known, that you get the most from your healthcare, and that the beneficiaries you name receive precisely what you want them to in the most appropriate manner.

There’s never a wrong time to begin thinking about your estate plan. Act today and rely on us to help you through the process and make it as painless and ironclad as possible. 

If you’re concerned about an impending health crisis; or are a business owner who wants a succession plan; or find that your approaching retirement incents you to create an estate plan now; or you want to ensure your children and grandchildren are cared for after you’re gone, please contact us to learn how we can help your estate planning process!