Estate Planning is Not for You

It’s for them—your loved ones, for those you care about.

When you are either deceased or incapacitated you obviously won’t be available to participate in the execution of your estate plan. Your estate plan is all that remains to assist in caring or providing for your loved ones or causes that you care about.

To that end, the most important aspect of an estate plan is the personal information and guidance that you provide to those who step in to execute your plan. Without that information and guidance, it could be a wild goose chase trying to piece together all the loose ends surrounding your life. The more loose ends, the more time and effort will be required to carry out your wishes.

Do your trusted agents have access to your passwords and credentials?

Our lives no longer consist solely of tangible assets. Sure, for most of us our homes are our most valuable assets. But more and more, our lives are becoming more digital and intangible–online financial accounts, cloud storage, digital photographs, social media accounts, cryptocurrency, etc. To access these digital assets, your trusted agents will need your passwords. Without them, federal privacy laws require a court order to access them. Your trusted agents require adequate time and evidence to obtain a court order. If it takes your agents too long to obtain the order, or if they lack the requisite evidence to persuade a judge to issue an order, the digital accounts may be terminated, blocked, and in some cases deleted. Even providing the PIN to your mobile device could save your agents time, expense, and a lot of expended energy.

Do your trusted agents have clear guidance on your wishes?

An estate plan allows you to document your wishes–how to handle your financial affairs, how to provide for your loved ones. But it’s only as good and thorough as the information you provide. Be sure to keep current documentation of your assets, your debts, and any specific instructions. A great place to keep this information is in your estate planning binder containing your legal documents.

Is your list of trusted agents current?

Our lives are ever changing. And so are the relationships we have with our loved ones. It’s critical that you revisit your estate planning documents to confirm that you have the most current list of trusted agents to step in when a crisis arises.

A current, detailed estate plan will allow your loved ones to step in and execute your wishes in that time of crisis. Chances are that you will be unavailable to provide any guidance or assistance when that time comes. Be sure the appropriate information is readily available for your trusted agents to minimize delays and confusion.

Funding Your Trust

Once you have created a trust, it’s important that you “fund” it. Funding the trust essentially means that you transfer ownership of your assets into the name of the trust. Instead of your name being on the account, it’s your name as trustee of the trust on the account. 

For example: the checking account of Joan Johnson becomes the checking account of Joan Johnson, trustee of the Johnson Living Trust, dated March 3, 2020. 

It is critical to fund your trust to avoid the time, expense, and public nature of probate. And to have a plan in place if an unexpected crisis arises. Having a trust unto itself doesn’t help you achieve that end; you have to get your assets into the name of the trust for the trust to be effective. Ideally, everything you own, besides your retirement accounts, is typically transferred into a living trust. If you don’t put your assets (like your house) into your trust, then your estate may still go through probate!

When we set up a trust for you, we provide you with complete funding instruction to address each type of asset and how to move it into the name of the trust. And if any questions arise, we welcome our clients to call us with any questions.

An Ambiguous Disposition: Right of Survivorship on Bank Accounts

Late in 2019, the California Court of Appeal issued a decision (Placencia v Strazicich) which impacts people with beneficiaries on bank accounts. 

In the case, Ralph Placencia had a joint bank account that had an express right of survivorship in favor of one of his daughters. However, before he died, Ralph left a will stating that he wanted the proceeds of the bank account to go to all three of his daughters (not just the one whose name was jointly on his account). 

The conflict between the beneficiary designation and Ralph’s will lead to litigation. After analyzing the law, the court determined that a will, in and of itself, cannot render a beneficiary designation ineffective. However, the court did allow for a very limited circumstance where a decedent’s intent, shown by “clear and convincing” evidence, may invalidate a beneficiary designation. Even if that evidence is contained in statements made in a will. 

In other words: if you have a joint account with another person (e.g. a parent), the right of survivorship on the joint account is not absolute. Even though this court decision is very limited in scope, it does reinforce the principle that the right of survivorship will be determined by the decedent’s intent—which can be supported by statements made in a will, among other forms of evidence. 

Make your intentions clear. Almost every case dealing with an ambiguous gift will come down to the decedent’s intent.

Shafae Law COVID-19 Protocol

Our thoughts are with those affected by the virus, particularly those who are sick. We wish them a speedy recovery, and we remain inspired by our healthcare workers, supply chain workers, retail workers, and others who are tirelessly caring for people around the world.

The following is an update on our role in preventing the spread of the virus, and our protocol until the worst passes.

• Both of our offices are remaining open to assist clients with their estate planning documents, but closed to in-person visits.

• We are limiting our interactions to phone/video conference/email only. 

• We are implementing an unusual, temporary protocol to deliver and execute your documents. Our chief focus is to get legal instruments in place and in effect, and we will revisit/amend/revise them once things have returned back to normal, if need be, free of charge.

• Both courts and recorders' offices are limiting their own exposure and implementing their own COVID-19 protocols. Therefore, we may be limited and/or delayed when it comes to probate and real property transfers. Your patience is appreciated.

If you know someone who is in need of estate planning documents (wills, trusts, powers of attorney, etc.), or needs to make a change to existing documents, ask them to contact us for a free video conference/phone consultation. It is precisely in these times of uncertainty where a detailed, comprehensive estate plan—especially medical and financial powers of attorney—is critical. Follow us on Facebook, Twitter, and Instagram for further updates.

We've Moved!

We are excited to announce that we have moved from our Redwood City office to a new space in Belmont. Our new address is 1500 Old County Road, Belmont, California 94002. We’re officially moved in since the start of 2020. 

Call us to meet with us and see our new home!

What's In A Name? - Vesting Title

“What's in a name? That which we call a rose

By any other name would smell as sweet”

This quote, from William Shakespeare’s play Romeo and Juliet, has become somewhat of a cliche when we discuss form over substance.  Sometimes a name doesn’t impact the underlying substance of something. (If you call a rose “monkey,” it’s still going to smell sweet.) However, in a legal context, where words carry significant weight, a name may make all the difference.

The name on a parcel of real estate, or “title”, declares who owns a piece of property, and how those owners own the property. The following are some examples of different ways to hold title in California.

1. Property can be solely owned.

Individual or Entity

If all you see on title is an individual’s name (e.g., “Jane Smith”), or an entity’s name (e.g., “123 Main St., LLC” or “Owner, Inc.”) then that individual or entity holds complete title. There are no co-owners. Note that married individuals may own property individually (e.g., “Jane Smith, a married woman, as her sole and separate property”).

2. Property can have multiple owners, or co-owners.

Tenants in Common

If you see more than one person or entity on title (e.g., “Jane Smith and Cecilia Perez” or “Partners, LLC and Owner, Inc.”) and either a percentage ownership (“as to an undivided 25%”) or no other words, then that is referred to as “tenants in common”. This is the default method for co-ownership in California. It means that all owners have an undivided interest (meaning, there’s no boundary splitting the parcel of property) and that they’re all individually and jointly liable as owners. Each owner has the right to lease or sell their share, and when they die (if it is a person) then the property passes to their heirs.

Joint Tenants

If you see more than one person on title followed by the words “joint tenants” (e.g., “Jane Smith and Cecilia Perez as Joint Tenants”) then that means that all owners have an undivided interest (meaning, there’s no boundary splitting the parcel of property) and that they’re all individually and jointly liable as owners. However, different from Tenants in Common, the co-owners can only own equal interests in the property. A joint tenant may not have a disproportionate interest than any other joint tenant. For example, if two joint tenants own one parcel of property, then they each effectively own half. If three joint tenants, then a third, and so on. The largest benefit to this form of ownership is what is called a “right of survivorship”. This means that when one joint tenant dies, the leftover joint tenants automatically share a proportional interest in the property. For example, if “Jane Smith and Cecilia Perez as Joint Tenants” own a parcel of property, and Jane Smith dies, then Cecilia Perez is the sole owner of the entire parcel, automatically as a matter of law. If three joint tenants, then the remaining two own the property in equal shares. This form of title is only available to individuals and not to entities, since entities do not live a natural life and that right of survivorship could not apply.

Community Property

Anytime you see two names followed by the words “community property” (e.g., “Jane Smith and Cecilia Perez, spouses, as Community Property” or “Jane Smith and Rodrigo Perez, wife and husband, as Community Property”) then that means the owners are married to each other, and they are holding this property as community property. Community property is only available to married couples who reside in community property states (California, and many of the West Coast and Southwestern states) and the property is located in one of those states. Community property can also carry a right of survivorship but the words “right of survivorship” must follow the words “community property” in the title. A married person may hold title as “separate property”. If so, you will see the words “...a married person, as his/her/their separate property” following their name.

Trustee(s) of a Trust

If one or more people own property in the name of a trust, then you will see the trustee name or names, followed by the words “trustee of the [trust name] dated [trust date]”. This means that the property is held in trust and subject to the terms of that trust. (Note: The trustee of a trust can be an individual or multiple people.)

If you have any questions about title to your home with respect to your own estate plan, please contact us.

What is... a Power of Attorney?

This is part of an on-going series of blog posts titled the "What Is..." series, where we attempt to explain, in simple terms, common estate planning terms and concepts. To read other posts in this series, click here.

At its core, a power of attorney is the legal authority to act for another person. It allows someone to “step into the shoes” of another person.

There are generally two types of powers of attorney relevant to estate planning: medical and financial. A financial power of attorney is sometimes called “durable power of attorney for financial management,” or just “durable power of attorney.” The medical power of attorney is sometimes called the “advance healthcare directive”, “healthcare directive”, or “living will”.

A power of attorney gives someone the power to make decisions on your behalf when you either can’t do so yourself or don’t want to do so. This may arise when you are incapacitated or elderly; it may also arise if you are out of the country and need someone to call your bank for you, or sign a check for a contractor, or something similar.

The key is to ensure that you have given someone the power of attorney in advance of when you need them to act. Once you are deemed incapacitated, it’s too late to sign a power of attorney. Without the necessary powers of attorney in place, someone will need to go to court to obtain the legal authority to act on your behalf in a time of crisis. Going to court always involves time, expense, and the public nature of court can sometimes be humiliating for the person incapacitated.

So when should you have a power of attorney? Now.

Contact us for a free consultation.

Why Hire an Attorney Instead of an Online Provider?

Most estate planning attorneys frequently hear some form of this question: can’t I just do this myself online?

You certainly can create your estate plan yourself. And it’s pretty simple and affordable online.

In our experience, though, the most frequent response we get during a consultation is “I hadn’t thought of that!” To us, that’s what an attorney brings to the proverbial table. Attorneys ask questions to learn the nuances of your particular family dynamics, your goals, and any situations that you may not have thought about. Also, attorneys have the benefit of experience dealing with many other estates, and bringing that experience into planning your estate. This is not about the value of your assets, it’s about understanding goals, making sure you have documents in place that reflect what you want, applying current law, and avoiding potential pitfalls.

Some clients ask us to do a “trust review,” which means looking at the will or trust they already created because they want to modify some aspect of it. Clients are often surprised to see that the will or trust they created online isn’t going to do what they intended it would do. With estate planning documents, wording is the key to everything. With computer generated trusts and estate planning documents, a word or phrase in the wrong place can make the difference between your child being able to use her inheritance toward college education and having to go to court to “unlock” her inheritance because there was a badly worded restriction placed on it. There’s no such thing as a cut and paste estate plan; your life and your family are unique and your estate plan should reflect that.

We’ve also been on the other side of estate planning—the trust administration and probate side that takes place after someone has passed away. We know that you and your loved ones should have the space to grieve instead of trying to interpret the terms of a trust or navigating the probate process. We are here to ensure that you have the peace of mind that an expert is here to assist you through this tough time.

And we’ve been in the in-between—incapacity. We know what it’s like to walk into a bank or call the insurance company with your loved one’s estate planning documents to try to assist your loved one. We know the reality of what the bank or insurance company is going to say to let you get that done. An attorney ensures you have what you need so you can avoid frustration and don’t need to go to court.

Which gets us to one of the main components of hiring an attorney—the attorney-client relationship. When you retain an attorney, that attorney owes you certain duties. Some are the duty of confidentiality, the duty of loyalty, the duty of competent representation, and the duty of zealous advocacy. If a lawyer breaches any of its duties to a client, the lawyer can be held accountable. Lawyers are required to uphold very high standards when it comes to representing clients and their interests. When you use an online service, no attorney-client relationship is formed. No duties are owed to you. You (or your loved ones) cannot hold anyone accountable if things do not turn out how you wanted them to. All you have is a document that you drafted.

That’s the key: hiring an attorney gives you peace of mind through expertise and experience. An attorney will be there in times of crises, when an online provider will not.

We think that we would be those attorneys to give you peace of mind in your estate planning; and if you’d like to find out more, contact us for a free consultation.

Are Holiday Gifts Subject to the Gift Tax?

The short answer: yup! But the more nuanced answer is that if you are giving a gift or receiving a gift in California, you probably won’t end up paying any gift taxes on holiday gifts.

Let’s take a look at the mechanics of a holiday gift. Without getting overly complicated, a holiday gift is a donative transfer of an asset from one person (donor) to another (donee). A “donative transfer” simply means that no one traded you or paid you anything for it (as in, it’s a true gift). Just like the government taxes your income (income taxes), certain goods sold (sales tax), and also real estate that you own (property taxes), it also taxes the donative transfer of assets. So the gift tax is a transfer tax.

A couple of details: the gift tax is only imposed by the federal government--so only the IRS will tax you, not the state of California--and it’s only imposed on the donor (the person giving the gift). If you receive a gift, and you live in California, you’re not on the hook for transfer taxes.

There are two types of gifts: those you give during life (intervivos) and those you make after you die (like through a will or trust). We’re going to focus on intervivos gifts since most holiday gifts are given during life.

Here’s why most of you will not owe any gift taxes on your holiday gifts. The federal government has this nifty rule called the “annual exclusion”. What that means is that each of you can make a gift up to $15,000, per year, per recipient, and not owe any taxes on that gift. In fact, the IRS doesn’t even want to know about it! You don’t have to report it. Married couples can combine that exclusion amount to $30,000 to one recipient, per year, and still fall within the same rule. So put another way, you’d have to be awfully generous this holiday season to have to deal with gift taxes.

Well, what if you are that generous? What happens if you make a gift that exceeds the annual exclusion?

Now we get to the “unified credit” or estate tax exemption amount. The unified credit is an amount the federal government allows you to gift during your entire lifetime, and combine that amount with whatever you own when you die, and not pay any transfer taxes if you are below the unified credit amount. It’s an amount set by law, and it increases every year based on inflation. The credit amount in the year that you die is what is applied. The exemption level for 2018 is $11.18 million. For example, let’s say you die in 2018 (sorry to bum you out!)--if the total of what you gifted during your life, and what you owned at death is less than $11.18 million then you would pay ZERO transfer taxes. For 2019, that number increases to $11.4 million.

Let’s recap: if you make a gift to someone that’s valued at $15,000 or less, per person, you don’t have to report it, and no transfer taxes are owed, and there’s no reduction in your unified credit amount. If you make a gift in excess of $15,000 but less than the unified credit (currently $11.18 million), you won’t owe any transfer taxes, but you’ll need to report it to the IRS. They’ll walk over to your file, and deduct the amount of the gift from your unified credit amount. For example, if you gift $20,000 to your favorite niece this year, you would report a $5,000 gift ($20,000 - $15,000 exclusion amount) and the IRS would walk over to your file and deduct $5,000 from your $11.18 million unified credit. Only $11.175 million left to give before you pay transfer taxes!

Happy Holidays! And don’t forget to send those ‘thank you’ cards!

Married: You Either Are or You Aren't.

Have you heard that story about the couple who lived together for seven years, and then they accidentally became married? Or what about the one where your friends were in a “common law” marriage?

Well… they’re both bogus concepts. At least in California. We don’t even know where the “seven year” part came from.

In California, you’re either married with a state license and certificate from the county clerk (and a few other requirements) or you’re not married. Period. There’s no intermediary status. There’s no “common law” marriage. You can’t accidentally find yourself in a marriage. The law doesn’t care how long it took your significant other to propose, or the size of the ring… or whether there was a ring at all! There are a dozen or so states that recognize “common law” marriage, but we’re not one of them.

So how does the law view your live-in significant other? You know, the person you’ve been living with romantically for years?

To put it simply: short of marriage, the law views your significant other as a roommate. It doesn’t matter how long you’ve lived together, whether you have children together, or whether you share ownership of property. You need that marriage license in order to be considered lawfully married.

Married couples enjoy benefits that unmarried people do not. Married couples are legally considered family (for example: when visiting one another in a hospital, or for inheritance purposes, or for health care benefits). Unmarried couples cannot own community property. That’s only for married couples, too. Also, tax treatment for married couples is dramatically different than for an unmarried couple.

You may have heard of “Registered Domestic Partners”. Or just “domestic partners”. But that has its own set of requirements, and is governed by state law. It doesn’t happen accidentally or automatically. And it’s only recognized in a few states (including California), but not by the federal government, like marriage is.

A couple’s decision not to marry does not detract from the love, trust, support or any of the interpersonal relationship benefits married couples can share. However, it is important for an unmarried couple to know that the law treats couples in vastly different ways based solely on marital status. A marriage certificate may literally be “just a piece of paper” but that piece of paper has important legal ramifications.

If you would like to discuss how your situation would be affected by getting married (or not), please contact us for a free consultation.

Why Would A Married Couple Need an Estate Plan?

A friend of ours recently contacted us with a question that comes up frequently enough that we wanted to share it with you:

We are married and everything that we own is held jointly/as community property. We own a house, but we don’t have any kids and we don’t have debt. Do we need a will? Do we need a trust? Why?”

To the first question: Yes. You need a will whether you have a trust or not. (Click here to read our post explaining what a will does. And click here to read about intestacy.)

To the second question: Yes. Because….

1. Incapacity. Incapacity doesn’t just mean “coma,” (although that counts too). It could be that you went into surgery and had a bad reaction to the anesthesia so you can’t quite function as you ordinarily would. Or, it could be dementia. It could be temporary, it could be permanent. But a will doesn’t let you address incapacity situations. A trust allows you to plan for incapacity. It allows you to plan for who will take care of your assets and use your assets for your benefit when you are still living. Just because your spouse is on title doesn’t mean your spouse has all the necessary authority to care for you in the event of your incapacity. (Click here to read our previous post explaining incapacity.)

2. Contingency planning. Wills do not address all contingencies. But trusts allow for lapses and contingency planning. What if your spouse becomes incapacitated after you do? What if your intended beneficiary is still a minor (younger than 18 years old)? What if your intended beneficiary has a substance abuse or gambling issue later on? What if your intended beneficiary has special needs and requires means-tested government assistance? What if your beneficiary predeceases you? These issues can be planned for in a trust in advance.

3. Probate. You’ve probably heard the term “probate” with some negative connotation. (Click here to read our previous post explaining probate.) If you have a trust, you avoid probate. Probate takes about 18-24 months; it’s a public proceeding; and it’s expensive.

So even if you are married and hold everything jointly, that may only ensure that your spouse receives your assets upon your death. But so many other scenarios can occur. We might recommend you consider a trust given your situation and desires. All of our recommendations depend on your specific family and estate planning goals. To ascertain what is best for you we would need to meet with you, in a free consultation, to understand your goals, assess and explain your options, and provide you with a recommendation tailored to your situation. Call or email us today.

What Does Shafae Law Do?

After we posted about the opening of our new Los Angeles office last week, we received a lot of questions about what we actually do. So here’s a list of what we do and what we don’t do.

We do:

• Establish trusts that protect your assets from the probate process and help ensure you benefit from current tax laws

• Transfer your home into your trust

• Help guide you on how to move your other assets into your trust

• Draft wills that name guardians for children and give away your things (or to make sure your things end up in your trust)

• Create documents (called Powers of Attorney) that give someone the right to act in your shoes in case you get sick, can’t do it yourself, or don’t want to do it yourself (e.g. call the bank or your health insurance company to find out what kind of coverage you need)

SIDE NOTE: A forthcoming blog post will explain this in more detail, but even your spouse needs a power of attorney to be able to do these things on your behalf; being married isn’t enough to give your spouse the legal authority to act on your behalf

• Create documents that give someone the right to determine health care decisions when you are unable to do so (e.g. if you are in a coma and there’s a decision to be made about whether to proceed to surgery or not)

• Review and update existing estate planning documents

• Advise on tax implications that impact your estate planning wishes

• Administer a trust for someone who has passed away

• Facilitate the probate process for someone who has passed away

We don’t do:

• Financial planning, like telling you where to invest your money

• Real estate transactions, like helping advise on the housing market or conducting a purchase/sales transaction

• Tax controversies (disputing the IRS) or file tax paperwork for you

• Litigation. We do not handle legal disputes

Not sure if we do or don’t do what you need? We offer free consultations. Contact us today!

Announcing the Launch of our Los Angeles Office!

Shafae Law is proud to announce that we have officially opened a Los Angeles office (12100 Wilshire Blvd., Suite 800, Los Angeles, CA 90025). Led by Natasha L. Carroll-Ferrary, the main office is located in West Los Angeles; and we have access to satellite offices all throughout the Southern California region. Our Los Angeles location will be providing the same breadth and depth of estate planning and estate administration services as our Northern California office.

Shafae Law specializes in all aspects of estate and tax planning, as well as post-mortem and estate administration. We guide you and your loved ones through the estate planning process to meet your needs and achieve your goals. We provide trust and estate administration services that carry out the terms of a trust expeditiously, or ensure a timely probate process is completed. We want you and your family to have the peace of mind that you are in good hands.

Equally as important, we are transparent about our fees, and charge clients on a flat-fee basis only. We do not have an hourly rate, and we do not charge for communications, emails, or in-person consultations. We do not want our clients looking at a clock; we want you to take your time with us so you feel comfortable and confident.

Please contact us to set up a free consultation and find out whether our services are right for you.

What is... Intestacy?

This is part of an on-going series of blog posts titled the "What Is..." series, where we attempt to explain, in simple terms, common estate planning terms and concepts. To read other posts in this series, click here.

Simply put, intestacy is the word to describe what happens to your property when you die without a will. Intestacy is the state’s default method of determining your beneficiaries. This default is determined by the state in which you reside at the time you die (not the location of your death, say, if you die on vacation). If you reside in California when you die, and you don’t have a will, then the State of California has decided that your property goes to your surviving spouse (if you have one), if not, then to your children (if you have any), if not, then to your parents (if they’re still alive), if not, then to your siblings, then to your nieces/nephews, then to your uncles/aunts, then to your cousins, and on and on and on until someone in your family receives your property.

What if you literally have no other family by the time you die? Well, in that case, if you have no living relatives, the State of California will become the beneficiary.

Some people might look at the above and think,  “Yes! That’s what I would want anyway! So why do I need a will?” A will is more than just how you are giving away your things. It’s used for selecting a guardian for your minor children. It’s also where you would nominate the person who would handle closing all of your final affairs. This person is called an executor. Think of  the person paying for final bills (like an outstanding credit card bill or electric bill), who determines what to do with all of your knick-knacks, and other affairs of a personal nature. If you have a living trust, a will is necessary to ensure that all of the assets you never got around to transferring into your trust end up in your trust (called a “pour over will”).

If you die intestate (remember, that means without a will), none of your friends, girlfriend or boyfriend, or favorite charities will receive anything. Those people aren’t considered your relatives in the default scenario. Also, once your property passes on to someone else, you have no control what happens to it after that. Your property is now a part of that person’s estate and not yours. So, for example, if you wanted your things to go to your nieces/nephews but not to your siblings, you don’t get to control that if you die intestate. Intestacy goes in the order described above only.

The good news is that intestacy is a completely preventable situation! During your life you can create an estate plan (definitely a will and maybe a trust, depending on your situation) that will ensure that your assets go to the people or organizations you want them to go to. You also get to choose who gets to handle all of your final affairs, and to provide to them clear instructions.  

To determine what kind of estate plan you and your family needs, please contact us for a free initial consultation.

Everyone Needs an Estate Plan (Example 4)

Estate planning is much more than just death planning and giving away your stuff after you die. It’s also about planning for circumstances that you may not have anticipated. 

This post is the third installment in our "Everyone Needs and Estate Plan" series. If you missed Examples 2 & 3, click here to read it.

Example 4: You’re young (but over 18), single, and healthy. You decide that since you don’t have kids, and you haven’t made your first million--yet--that you don’t need an estate plan. On your way to work, someone is texting while driving, doesn't see you, and rams right into you. You're severely injured, and the paramedics are called to the scene. You’re taken to the hospital, and you lay there incapacitated. You're still alive, but you lack the ability to make your own decisions or to handle your own affairs. We’re essentially in Example 1, except that you don’t have a spouse here. Your parents and siblings fly in from out of town, and they want to be involved with your care, they want to alert your boss as to what happened, and they also want to sue the negligent driver who caused your injuries. Unfortunately, all they are given is the bad news that they have to go to court to obtain the appropriate legal authority to handle any of your affairs on your behalf.

You're an adult. No one can make decisions for you... except you. Even though your relatives are here--your parents, at that--and they likely have your best interests in mind, no one has the legal authority to handle your affairs for you absent your permission (power of attorney) or court order (conservatorship).

Hyperbole aside, estate planning is about crisis planning before there is a crisis. Once a crisis occurs--be it a bad reaction to medication, or plain bad luck--it’s often too late to have the proper tools in place to face that crisis head-on. In all likelihood you’ll need to spend a great deal of time and money acquiring the right tools to deal with the crisis. It means more stress on top of an already stressful situation for your loved ones.

As you can see, estate planning has little to do with your net worth or your age. It is important for everyone at any age. If you’re over 18 years of age, you absolutely need an estate plan. If you have a family, especially minor children, that need for an estate plan merely increases. To determine what kind of estate plan you and your family needs, please contact us for a free initial consultation.

Everyone Needs an Estate Plan (Examples 2 & 3)

Estate planning is much more than just death planning and giving away your stuff after you die. It’s also about planning for circumstances that you may not have anticipated. 

This post is the second installment in our "Everyone Needs and Estate Plan" series. If you missed Example 1, click here to read it.

Example 2: You are married, and you have a couple of children. Now imagine that you and your spouse divorce. Neither of you have done any estate planning. If you or your now ex-spouse remarry and die before his or her new spouse, you could have unintentionally just cut your kids out of his or her inheritance. Without proper planning, by default, your estate goes to your surviving spouse, the person you were married to when you died. In this example, the surviving spouse happened to be someone who is not the parent of your children. At least some of the assets you may have intended on going to your children are now in the hands of someone unrelated to your children.

Example 3: Same facts as Example 2, except neither of you remarry, and instead you both tragically die. Your children are still minors (under the age of 18) and lack the legal authority to make legally-binding decisions on their own (enrolling them in school, going on field trips, renting an apartment, making financial transactions, etc.). Because you did zero estate planning, we now have two orphans who need legal guardians. Well, you never got around to telling the world who that should be in a legal document. So whoever thinks they should be your children’s parents goes off to court, and hopefully the court makes a good decision. That's probably not the way you want it to play out.

Check back next week for another example of why everyone needs an estate plan. If you would like a free one-hour consultation to discuss your estate planning goals, do not hesitate to contact us.

Everyone Needs an Estate Plan (Example 1)

Estate planning is much more than just death planning and giving away your stuff after you die. It’s really about choosing decision makers for those moments when you cannot make your own decisions. Sure, you cannot make your own decisions after you have died. But there are several other times when you can end up incapacitated (meaning, you cannot legally make your own decisions) and yet still be very much alive. Without proper planning, you may leave your loved ones stuck in a tough place if you ever become incapacitated.

Over the next few weeks, we're going to walk through a few examples.

Example 1: Imagine that you and your spouse have decided to take your young kids skiing. As you’re taking photos of the little ones having a blast, you don’t realize that you’re headed right for a tree. Before you know it, you collide with the tree, you’re out cold, and you’re rushed to the hospital.

The good news is that you’re still alive. The bad news is that you’re now incapacitated. You’re unable to make your own medical and financial decisions. This could last for hours (medication), days (coma), or a lifetime (permanent brain damage). It’s now up to someone else to make those decisions for you.

Your spouse decides that he or she is going to step in and make decisions for you, including handling your finances, dealing with the insurance company, dealing with your boss, and maybe suing the ski resort. Unfortunately, you didn’t do any estate planning, so your spouse now has to go to court and have a judge issue an order that allows your spouse to make those decisions for you. This is the key: Your spouse can’t do any of the above without the appropriate authority.

You see, just because you’re married doesn’t give your spouse the legal authority to make decisions on your behalf. You have to give your spouse (or someone else) that power before you become incapacitated. This is commonly done in a power of attorney.

The same principle applies if you have children over the age of 18. Unless your child has given you the legal authority to make decisions on his or her behalf (for example, via a power of attorney), you need a court order to have that legal authority. And getting a court order when your child or loved one is incapacitated can be stressful and overwhelming, not to mention expensive. This is why it’s important to plan ahead.

Check back next week for another example of why everyone needs an estate plan. If you would like a free one-hour consultation to discuss your estate planning goals, do not hesitate to contact us.