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What Are the Basic Estate Planning Documents in California?
While it can be difficult and distressing to plan for a world beyond your lifetime, comprehensive estate planning is an essential process for those who want to protect their life’s work and their family’s future. Estate planning is a multi-faceted process that involves careful consideration and strategic planning to ensure that your assets are protected, and your wishes are carried out to the letter, no matter what the future holds.
Estate plans can become very intricate, especially when high value estates, unique assets, or complicated inheritance situations are involved, and, as such, may involve the preparation and deployment of many different legal instruments and documents. All of the different options and implications can quickly become overwhelming for someone without the proper legal training and estate planning experience.
California Estate Planning: The Four Major Documents
It’s important to note that not every estate plan will use all four of these tools, and others will use multiple implementations of the same type of tool–multiple trusts for different types of assets. The tools you use in your estate plan and to what extent will be a matter for you and your attorney to decide based on your unique circ*mstances.
- Wills – When most people think about estate planning, the first thing they think about is their . Commonly referred to as simply a “will”, this document allows you to express your final wishes in terms of distributing your assets, appointing a guardian for any minor children you leave behind, as well as the task of naming the executor to manage your final affairs and execute your will. While your will is indeed a fundamental cornerstone of any estate plan and can even constitute someone’s entire estate plan in very simple, straightforward situations, a comprehensive estate planning strategy will often consist of much more than just a will.
- Trusts – A trust is a powerful tool that offers greater flexibility and control over your assets while you remain alive and even beyond the end of your lifetime. A trust is a powerful instrument that exists at the intersection of law and finance, and it allows the seamless transfer of assets according to your exact criteria. A trust can hold several different types of assets and can be used to distribute assets over time. For example, assets could be distributed annually until depleted or only when certain criteria are met, such as a beneficiary graduating high school. A commonly used type of trust for estate planning purposes is called a revocable living trust. By having trusts in place, your estate can avoid the lengthy probate process in California, getting your assets exactly where you want them on the fastest possible timeline. Much like a will has a named executor, you will also name a trustee to carry out the terms of your trust and distribute assets to your beneficiaries.
- Advance Directive – Not every part of an estate plan is all about money and assets, however. A special legal tool called an Advance Care Directive can also be part of your estate plan. This allows you to pre-make legally binding decisions about your own health care, including end-of-life healthcare and care when you are incapacitated. Rather than planning out specific decisions for every possible contingency, this tool also allows you to name a trusted party, such as a spouse or family doctor, to make healthcare decisions on your behalf in accordance with your overall wishes. This can also address things like organ donation and other end-of-life issues that you don’t want your loved ones to be burdened with deciding. An advance healthcare directive is sometimes known as a healthcare proxy and is quite similar in function and purpose to a medical power of attorney.
- Power of Attorney – A power of attorney is a powerful document that can be used for a variety of purposes. When we’re looking at comprehensive estate planning, we often run into a version called Financial Power of Attorney. This is a document that allows you to grant a trusted individual, known as your agent or attorney-in-fact, the full authority to manage your financial affairs in the event that you become incapacitated and cannot handle your own business. A power of attorney can be highly customized so that you only hand over control of specific assets in certain circ*mstances. You can also use multiple powers of attorney. For example, you might assign a business partner to handle your commercial interests while assigning a family member authority over the household taxes and bills.
FAQs
Estate planning can be a very complicated topic, even when we narrow the scope of the conversation to just four fundamental documents. Here are some more common questions Californians have about estate planning:
Q: What Are the Four Foundational Documents of an Estate Plan?
A: While there are many different ways to approach estate planning, the four foundational documents we’re focusing on here are wills, trusts, advance directives, and powers of attorney. Using these four types of powerful legal tools, your attorney can help you design and implement a fully customized and legally binding estate plan to safeguard your legacy and see to the needs of the loved ones you leave behind.
Q: How Do You Organize an Estate?
A: The act of “organizing” an estate will mean different things to different people, depending on their assets, their life situation, and their estate planning goals. Some people may hold all of their wealth in their own primary residence plus a few bank accounts, making it simple to catalog the estate. Other individuals have much more complicated estates. Every situation is unique, so a highly qualified estate planning attorney should be your go-to resource for figuring out exactly how to handle your own situation.
Q: What Are the Six Basic Steps of the Estate Planning Process?
A: Once again, there are many different frameworks and philosophies when it comes to understanding the estate planning process. Breaking it down into a simple, six-step process might look something like this:
- Define your goals – What do you want your estate plan to accomplish?
- Take inventory of all meaningful assets (as well as your debts and liabilities).
- Consult with a reputable estate planning attorney who has experience working with estates like yours.
- Work with your attorney to develop a comprehensive estate plan that meets your needs.
- Review and update the plan regularly–most types of wills and trusts can be changed as needed during your lifetime.
- Communicate and coordinate with your loved ones and anyone named to any role (executor, beneficiary, etc.) in your estate plan (because nobody likes to be hit with a difficult surprise when they’re already mourning the loss of a loved one).
Q: What Is the First Step in the Estate Planning Process?
A: If we stick to the six-step framework we came up with for the previous question, our first step in any estate planning venture will be to define our goals. What exactly do you need an estate plan for? Are you merely worried about making sure the right people inherit your wealth? Do you have healthcare concerns and want to make sure your wishes are followed if you become medically incapacitated? A solid estate plan can do many things, so if you’re unsure of the limits, consult with your attorney.
Fishman, Larsen & Callister – Your Trusted California Estate Planning Team
If you need help developing or implementing a robust estate plan in the State of California, contact the team at Fishman, Larsen & Callister. Working out of our main offices in Fresno, we’re proud to use our deep knowledge of the legal system to help people protect their legacies and secure a stable financial future for their families through the power of comprehensive estate planning services.
