San Diego Elder Law
Estate Plans & Trusts
Helping You Plan
Overview of Estate Plans & Trusts
An estate plan is essential; if you do not have an estate plan things you would probably prefer to decide for yourself will be decided for you by others.
- Who would manage your finances if you become unable to do so yourself?
- Who would make health care decisions for you if you are unable to do so yourself?
- Would you prefer to die a natural death or be kept artificially alive?
- Who would be the guardian of your minor children?
- Who would administer your estate after your death?
- Who would inherit your property upon your death?
These are just a few of the many matters you can control with the right estate planning documents. Without an estate plan, these and other important decisions will be made by courts, legal statutes, or individuals who may not be the people you would have selected. These may be some of the most important decisions in your life. They can affect you significantly if you become disabled, and affect your loved ones after your death.
If a family member has chronic care or special needs issues, public benefits planning can be an important part of an estate plan. In such cases, a plan with specialized language is important to assure both the appropriate care and asset preservation. Unfortunately, we often find that the language allowing you to do such planning is missing, or worse; we find language that makes it impossible. Two examples among many:
- No authority in powers of attorney for “Medi-Cal” or VA planning. Contrary to popular belief, a general durable power of attorney is not enough. These powers must be spelled out.
- “A/B” trust provisions requiring division of assets upon death of first spouse. Such language usually serves no useful purpose under existing tax law, but it can block any effective benefits planning for the funds transferred under the “A/B” provisions.
Estate Plans & Trusts Questions
Estate Planning is a specialty of San Diego Elder Law Center. We can help assure you have appropriate documents, including trusts, wills, health care directives and powers of attorney for financial affairs. When these documents are all working together to insure full coverage, we call this an “integrated” estate plan.
For those who are lacking an integrated estate plan, we can see if you would benefit from one. If you would, we can draft the appropriate documents. If all you needs is a will and powers of attorney, we can take care of that too. For those who have estate plans, we can review them to see if they still address your current needs.
At San Diego Elder Law Center you will see an attorney, not a paralegal, who will spend the time to understand your goals and needs. Together you will decide on your estate plan’s provisions. You will be quoted a flat fee before any work is done.
At San Diego Elder Law Center, we are particularly well known and respected for estate planning when public benefits eligibility or special needs planning is a desired option. The language needed in such situations can be very different than a traditional estate plan.
To get started, please call us and arrange for a review of your situation and any existing planning documents. These initial meetings are with an attorney, and are very thorough and informative. If you desire further services, you would be quoted a flat fee based on your needs and wishes.
The Power of Attorney you have may be inadequate when you need it most.
A Power of Attorney is a document granting someone the ability to speak or act for another in matters like finances, medical or legal issues. Depending on the agreement, the “Principal” may grant the “Agent” power to access bank and brokerage accounts, sell property, or make important medical decisions. Financial powers can be as limited or as broad as the Principal desires.
If these documents are not in place while the individual still has the ability to create them with the access and authority the agent will need, your family may face critical problems and costly lost planning opportunities.
In our practice, the majority of people we see with powers of attorney for finances think their existing documents provide all the authority they need. Unfortunately, this is usually not the case. Under California law, there are at least seven special powers that must be specifically stated beyond a general grant of “all powers.” Few of the documents we see provide these important “special powers.” These “special powers” are not always appropriate but, depending on your situation, they can be indispensable for public benefits eligibility planning and Medi-Cal Recovery Avoidance.
For our estate planning or life care planning clients, San Diego Elder Law Center can draft a financial power of attorney with these “expanded” powers. If a power of attorney is needed for Long-Term Care Medi-Cal/VA benefits and Life-Care planning, we understand when and how to include the “special powers” and language for Medi-Cal and public benefits planning, and how to effectively integrate the powers of attorney with your other planning documents to achieve the desired result.
Most people have heard that a living trust can help people “avoid probate.” For those whose estates have at least $166,250 in probate assets, this is indeed true. This can make a trust a very wise investment as probate fees can become expensive, and the entire probate process can be stressful and time-consuming. At San Diego Elder Law Center, the revocable (or “living”) trust is usually the cornerstone of an integrated estate plan.
For some people, there are other good reasons for a trust beyond probate avoidance:
- Desire for public benefits planning options
- Desire to specify how you will be cared for if disabled
- “Blended” families
- Problem children or in-laws
- Special needs or disabled family member
- Desire to appoint non-family member to manage assets
These are just a few of many reasons a trust may be a beneficial cornerstone of your estate plan.
A will allows you to direct who will inherit your property upon your death, and can simplify the probate process. It is a fairly simple document, though in most cases it must be signed and witnessed with appropriate legal formalities. There is a “Statutory Will” in the State of California that is a “fill-in-the-blanks” document that may be appropriate for small estates. A Statutory Will may be a good solution or a dangerous over-simplification of your estate planning needs. We recommend you have an estate planning or Certified Elder Law Attorney review your situation to see if this informal method is good for you. Most people would benefit from having an attorney draft their will as part of an integrated estate plan.
If you don’t need a trust, the will is the document that determines where your property will go upon your death. If a trust is the cornerstone of your plan, the will is known as a “Pour-Over Will”, in which case it will direct that any assets left out of the trust will be transferred, or “poured over” into the trust upon your death. An estate planning or elder law attorney can help you determine which is the better option for you.
The term “integrated” plan refers to a group of interrelated estate planning documents that work together to cover a full range of needs. A typical integrated plan will have a family “living” trust, a will, a financial power of attorney, a health care power of attorney and various ancillary documents. They will refer to each other to give the full effect required by law. With these documents working together, you will have provided for:
- How your property is managed during your life, both within and outside of any trust
- How your property is distributed after your death
- What you want regarding life support and other health care matters, and who will be making medical decisions for you
People who have an estate plan have taken an important step in seeing that their wishes are carried out, both in disability matters and upon their death. They certainly earned the right to assume that their plan will, at a minimum, not make things more difficult for their family. Unfortunately, when you factor in the possibility of Public Benefits Planning, we often see plans that are either inadequate or outright obstructions to asset preservation. This usually is found in older estate plans, or ones done by non-attorneys or attorneys not familiar with elder law or special needs issues. The most common problems we see are lack of Medi-Cal and VA planning authority in trusts and powers of attorney, and “AB” trusts with mandatory funding formulas. These mandatory “AB” trusts are usually artifacts of old regulations regarding Federal Estate Tax that apply to almost no one anymore. The exemption from Federal Estate Tax these days is north of $5,000,000 for an individual, $10,000,000 for a couple. This doesn’t describe many of our clients. For the rest of us, instead of helping save money, these clauses can cost families time and administrative expenses, and a lack of flexibility for a surviving spouse. If public benefits planning is desirable, these clauses can thwart the use of beneficial planning techniques, and cost many thousands of dollars in lost benefits.
“AB” formulas can still be useful in certain “blended family” scenarios, or with non-mandatory formulas for very high asset families that might still need to be concerned about Federal Estate Taxes. Unfortunately, we frequently see trusts with these provisions without such reasons or need.
If you have an older estate plan, or a chronic health issue that makes Public Benefits Planning sensible, you might want to have your plan reviewed by a Certified Elder Law Attorney, or an attorney otherwise experienced with public benefits issues.
There is a difference between an Estate Planning Attorney and various “trust drafters” marketing their “skills”. A trust is an important document with far-reaching effects. We do not recommend you place this responsibility in the hands of a paralegal, a “trust advisor”, a website, or anyone else who is practicing law without being a lawyer. They are in the business of selling “one size fits all” documents. You may be told that the documents they offer have been “reviewed by an attorney”. That is probably so, but beside the point. There are hundreds, if not thousands, of potential provisions for an estate plan. The skill and knowledge come in knowing which trust and what provisions are appropriate for your situation. That entails judgments only an attorney who has met with and interviewed you is qualified to make. This is particularly critical in Public Benefit or Special Needs Planning situations, where applicable rules are many and detailed. A non-attorney drafted plan may work just fine, and many times does, but many also fail at a critical juncture where it’s too late to add new language or do anything to correct the problems.
This advice is not included as “lawyers trying to get more business”. We probably earn more fees in a year fixing problems, or trying to, than we do drafting the right plan at the outset.