What happens if I don’t have an estate plan in California?
If you don’t have an estate plan in California, then there are three periods of time that we are concerned about:
While you are alive and have capacity: During this period of time, you’re alive and you have capacity and everything is fine. If you don’t have an estate plan here, that’s probably fine because you’re fine and healthy and have capacity. It’s #2 and #3 that are problematic.
While you are alive and do not have capacity (incapacity): Incapacity is a period of time when you are unable to make decisions for yourself. This can be temporary (car accident, under anesthesia); it can be longer term (dementia; Alzheimers). In both of those circumstances, if you haven’t done any planning in advance, your loved one will have to go to probate court to get the right to make financial and healthcare decisions on your behalf. Yes, even a spouse. Planning that would be helpful:
Financial Power of Attorney (also called a durable power of attorney): Gives someone the right to make financial decisions on your behalf if you are ever incapacitated.
Healthcare Power of Attorney (also called advance healthcare directive): Gives someone the right to make healthcare decisions on your behalf if you are ever incapacitated.
HIPAA release: Gives someone the right to talk to your doctor about aforementioned healthcare decisions.
Living Trust: Holds assets for you so that they can be managed for you during incapacity under your own direction that you set up in advance of incapacity. Allows you to name a successor trustee (generally the same person who has the financial power of attorney) to manage these trust assets for you.
When you die: At this time, you’re not here to make any decisions — so the hope is that you’ve put everything in place so that your loved ones are protected and your assets get where you want them to go when you want them to get there. Planning that would be helpful:
Living Trust: Determines what happens with trust assets when you die: who gets them, when they get them, and how they get them. (E.g. do you want it to be held in trust for your child until they are 25?)
Will: Along with a living trust, this will is called a pour over will and ensures that non-trust assets get to your trust beneficiaries. It’s also where you guardians for minor children are named to ensure that your children are cared for.
What about the powers of attorney? No, those are no longer effective once you die. Those are about incapacity planning.
During these periods of time, we want to be sure that you have the proper tools in place so that your family is not left wondering what to do, how to do it, and — worst of all — having to go to court to figure it all out. A comprehensive estate plan includes a living trust, a will, financial power of attorney, healthcare power of attorney, and HIPAA release. Contact us for a consultation.