What is estate planning?

Estate planning is the process of preparing for how a person’s assets will be distributed to successors after he or she dies. It’s meant to reduce the uncertainties and questions about the distribution, as well as mitigate any foreseeable arguments among survivors. A good estate plan will not only administer one’s property upon his or her death, it will also address the management of health care and financial needs if the person becomes incapable of doing so. Wills, trusts, powers of attorney and health care directives are all useful tools that are a part of estate planning. To learn more, visit our Estate Planning page or give us a call at (619) 656-8848.

Who should have an estate plan?

Anyone over the age of 18 can benefit from having a comprehensive estate plan, regardless of the size of their estate. This is especially true for parents with minor-age children, individuals who want to control the disposition of their assets upon their death and individuals who want to avoid the court system regarding healthcare and financial decisions if they become incapacitated. A well-written estate plan can contain a power of attorney, which is a legal document that grants someone of your choosing the power to act in your stead regarding medical care and finances. Similarly, health care directives are legally-binding documents that inform others of your wishes regarding medical care, and can also name a person to speak for you if you are unable to.

When should I establish my estate plan?

The only time that you can implement an estate plan is while you are alive and have legal capacity to enter into a contract. In other words, the sooner the better. If you pass away without one, your assets will have to go through the court process known as probate, which is a public, court-supervised proceeding. This is expensive and time-consuming for family that will then have to handle probate. It can also tie up your assets for a long period of time, making it impossible for your beneficiaries to receive them until the process is finished. Many people don’t think they need an estate plan because they don’t have much, but in reality everyone has something they want to protect and pass on. Beginning your estate plan early will only help to serve you and your family in the future. Call the Law Offices of Daniel M. Little today to get started.

What are some common estate planning mistakes?

Because drafting a comprehensive estate plan can be delicate work, there are a lot of areas for error. Some of the most common mistakes people make are:

  • Using generic estate planning documents (such as those found on the Internet)
  • Choosing the wrong successor trustee or co-successor trustees
  • Giving an otherwise excluded beneficiary a minimal bequest
  • Giving low or no value to personal property bequests within the trust document
  • Failing to name contingent beneficiaries for every distribution
  • Naming minors as primary or contingent beneficiaries for IRAs, 401Ks, 403Bs, life insurance or annuities
  • Failing to include provisions for incapacity
  • Including mandatory split clauses upon the first death in a joint living trust
  • Including adult children on the title of bank accounts, investments and real property
  • Having an inexperienced attorney or non-attorney (paralegals) draft the plan

Because there are so many details that have to be taken into account when completing a plan that will hold up to the courts, it’s imperative you consult an experienced California estate planning attorney when you’re ready to start one. He or she can help tailor a plan that will meet your every need, no matter how simple or complex your assets are.

What are some post-drafting estate planning mistakes?

Once an estate plan is completed, there are some steps you may have to take to follow through. These missed steps could invalidate your plan, making it difficult for your beneficiaries to claim what they are owed. Some of the most common mistakes people tend to make following the drafting of their estate plan are:

  • Failing to properly transfer all non-retirement assets to the trust
  • Failing to take title to newly-acquired assets in the name of the trust
  • Failing to keep the schedule of trust assets up-to-date
  • Failing to periodically review and update the estate plan to reflect changes in law or personal circumstances
  • Making pen and ink changes (interlineations) to the estate plan
  • Failing to include “No Contest” provisions in all amendments and codicils
  • Failing to revise or replace the estate plan upon marriage, divorce or remarriage
  • Failing to keep the estate plan in a safe place that is accessible to the successor trustee

These mistakes are easily preventable, and following the required steps after your estate plan is complete will ensure you have all your bases covered for whatever may lie in the future. An estate plan is a living document that grows and changes with you. Once you’ve had it established, keep in contact with your lawyer to make sure you are up to date on everything.

Should I beware of “promoters” of financial and estate planning services?

Yes. There are many people who call themselves “true specialists,” “certified planners” or other titles that suggest the person has received advanced training in the field of estate planning. However, this is often not the case, and putting your legal documents in their hands can have catastrophic results.

California is experiencing an explosion of such promotions by unqualified individuals and entities that only have one goal – to gain access to your finances in order to sell insurance and commission-based products, such as annuities. There are steps you can take to protect yourself, however. Below is advice given by the State Bar of California.

First, before you consider a living trust or any other estate or financial planning document or service, consult with a licensed lawyer or other financial advisor who is knowledgeable in estate planning and won’t try to sell you unnecessary products. Ask for time to consider and reflect upon your decision. Do not allow yourself to be pressured into purchasing an estate plan or financial planning product. A good lawyer will respect your wishes.

Know your cancellation rights. California law requires that sellers who come to your home to sell goods and services (not including insurance and annuities) that cost more than $25 must give you until midnight three business days after to cancel. For insurance and annuity transactions, you have 30 days to cancel.

Be wary of offices or organizations that are staffed by non-lawyer personnel and promote one-size-fits-all living trusts or kits. An estate plan should be tailored to the specific needs of you, your family and your estate. Don’t allow yourself to be pressured into a quick purchase, as this can have enormous and costly consequences.

Be wary of home solicitors who insist on obtaining confidential and detailed information about your assets. Insist on seeing the person’s identification and a description of his or her qualifications, education, training and experience in estate planning. Find out if complaints have been filed against the person or company by calling local and state consumer protection offices or the Better Business Bureau.

Keep in mind that legal documents assistants are not allowed to give legal advice. Paralegals must work under the supervision of an attorney. As an added precaution, ask to speak directly to the supervising attorney if you are not given the opportunity to do so.

No matter where you choose to purchase an estate plan, always ask for a copy of all the documents you sign at the time they are signed. Immediately report high-pressure tactics, fraud or misrepresentations to the police or the district attorney.

What are the duties of a successor trustee?

On numerous occasions we have heard successor trustees tell us that mom, dad, grandma or grandpa “put me in charge and I’ll do things my own way and when I decide to do them.” This sort of attitude will more than likely bring on a lawsuit from one or more of the beneficiaries who have their own idea of how things should be handled.

Every successor trustee has specific duties that are spelled out directly in the trust document and the probate code. He or she owes a fiduciary duty to the original settlor or settlors, or the person who initially established the trust, above any other person. The successor trustee must place the interests of the other beneficiaries above his or her own. This principle must always be kept in mind when making trustee decisions.

Few people have experience in trust administration, and anyone can benefit from the counsel and direction of a skilled estate planning attorney to help reduce personal liability. If you’ve been appointed as a successor trustee and have questions about your duties, feel free to speak with the lawyers at the Law Offices of Daniel M. Little.

What is the difference between Medicare and Medi-Cal?

There is often widespread confusion about what the difference between Medicare and Medi-Cal is. Each has its own benefits, drawbacks and purposes, and your situation may require one over the other. Below is a short description of each.

Medicare is a federal insurance program paid out of your paycheck throughout your working career. All individuals over 65 are entitled to Medicare benefits, provided they have made Social Security contributions. Disabled workers who have been eligible for Social Security disability benefits for at least two years also qualify for Medicare. It is not based on financial need – rather, anyone who meets the age and/or disability coverage requirements is eligible.

Medi-Cal is a combined federal and California state program designed to help pay for medical care for individuals who receive public assistance and other low-income persons. Although Medi-Cal recipients may also receive Medicare, the two programs are not related. Medi-Cal is a need-based program funded jointly with state and federal Medicaid funds. The rules of Medi-Cal can be complicated and are always changing, but you can take specific steps now to plan for the possibility of becoming eligible. Medi-Cal strategic planning involves different consequences and objectives than regular estate planning, and must be carefully considered.

Whether you’re looking to receive either Medicare or Medi-Cal benefits, it’s important to work with a knowledgeable attorney when preparing your estate plan that will include such benefits. All plans should be tailored to fit your specific needs, so be sure to keep this in mind when choosing an attorney to assist you.

What happens to my estate plan after a divorce or legal separation?

If you have a will or trust that names your former spouse as a beneficiary, you may wish to nominate other beneficiaries in his or her place. In addition, many assets such as IRAs, 401Ks, annuities and life insurance policies have specific beneficiary designations. Unless it’s contrary to the spousal settlement agreement or court order following your separation, you can change your beneficiaries for your estate. Once your divorce or legal separation is complete, it’s recommended that you immediately meet with an experienced estate planning attorney as soon as possible to ensure the right beneficiaries and agents of your estate are in place.

What happens to a trust administration upon the death of a spouse?

It’s of paramount importance that each spouse know where the original estate plan is located and understands the wishes that are expressed in the plan. The original plan is required for the administration of the deceased spouse’s affairs. Additional actions must be taken, including lodging the deceased spouse’s will, preparing an Affidavit of Death of Trustee for each piece of real property, sending notices to the appropriate state agencies, notifying the deceased spouse’s life insurance and retirement plans, notifying his or her Social Security and pension provider, splitting the trust (if required to avoid state tax), changing beneficiaries on the surviving spouse’s life insurance policies and insurance plans, removing the deceased’s name from assets (bank accounts, securities, etc.), and ensuring that all appropriate assets are titled in the name of the trust. With proper planning and the assistance of experienced estate planning attorneys, the necessary administration can be handled with a minimum amount of stress.

For all of your California estate planning questions, contact the knowledgeable attorneys at the Law Offices of Daniel M. Little at (619) 656-8848. We have offices in Chula Vista and North County and have been serving all of San Diego County for more than 25 years.