Shafae Law
Shafae Law is a boutique law firm providing comprehensive estate planning, trust, estate, probate, and trust administration services located in the San Francisco Bay Area.
The seminar below was presented live on January 21, 2023, by Matt Shafae, at the reSolve Group offices in Palo Alto. We covered basic estate planning, how to review an existing estate plan, how to care for minor children, and a basic survey of the taxes involved in an estate plan.
The screen may be hard to view on the video. Click here for a copy of the slides to follow along.
For people who die without a will or trust, California law provides a default path (intestacy statute) for where your stuff goes after you die. The distribution path of the default law will sound pretty intuitive… for a conventional family. For example, it provides for your surviving spouse first, then your children, then your nearest family members. That sounds all well and good if families always consisted of a current spouse and joint children. But what if your children are from a previous relationship and you are currently in an unmarried relationship? Or what if you and your current spouse both have children from a previous relationship? Or what if you married someone who has children from a previous relationship, but her/his children are not legally or biologically yours? Welcome to the issues that surround being a member of what many call a “blended family”.
California law does not adequately provide a default for blended families. And for good reason. Because there isn’t a “typical” blended family. But if you do zero estate planning, that same default applies equally to everyone, whether or not you’re in a blended family situation. So it’s imperative that you state your desires— in a comprehensive estate plan— instead of relying on a default provision that may not adequately cover your family situation, or at best might create some unintended consequences.
With a comprehensive estate plan, you can specifically describe who you want to provide for after you die, and how. For example, without proper estate planning, all of your assets could be left to your spouse, who then leaves it all to her/his children, leaving your children out of the path of inheritance. Or, if you are in an unmarried relationship, if you don’t plan properly, your current partner could end up out in the cold with all of your assets going to your children or other family members and bypassing the person you most want to care for.
There are thousands of hypothetical situations we can describe. The critical message here is that if the default doesn’t address your family situation, then it’s important that you adequately describe your wishes in a comprehensive estate plan. Don’t leave your loved ones dealing with undesired— but avoidable— consequences.
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.
When people talk about “estate planning,” many times the focus is on death. However, there is another event that we recommend planning for: incapacity. The first thought people have about incapacity is that it means being in a coma. To many people’s unfortunate surprise, incapacity can and will happen under much broader circumstances.
Incapacity can be a temporary condition
If something happened while you were under anesthesia and someone needed to contact your health insurance company or withdraw money from your bank account, do you have any documents in place to allow someone to do that? Most people don’t. Or what if you had a bad reaction to prescribed medication? Who has the legal authority to act on your behalf? If you’re married, and you’re relying on your spouse to step in, being married does not automatically allow your spouse to do these things for you.
We had a client recently who had a bad reaction to medication. He had to go to the hospital and was not exactly coherent during that time. Additionally, he did not WANT to have to make financial and healthcare decisions during that time. He did not feel able to do that. And, frankly, he had more important things to focus on. He’s fine now! But during that time period, he was incapacitated. He was very happy to have documents in place to allow for someone else to handle those other issues on his behalf.
2. Incapacity can happen suddenly
Think of any car accident you saw on your way to work. The people involved did not plan for that accident to happen. One of the people may have been hospitalized either short term or longer term, during which they may have been incapacitated. They certainly didn’t plan on needing the use of their powers of attorney that day, but that’s why it’s important to plan ahead.
3. Incapacity can be longer term, or even permanent
Yes, incapacity can also involve a coma or dementia or any number of conditions that simply do not improve. Some of these conditions can be seen from a distance away (e.g. a slow onset of dementia), and sometimes they can’t be (e.g. a stroke, or catastrophic brain injury).
The problem with waiting to know that a future incapacity will occur (like dementia/Alzheimer’s disease) before executing estate planning documents is that the person must have capacity to execute documents. If there is any question about an individual’s capacity to execute documents, it may require a doctor’s confirmation and/or further legal proceedings. It’s a bit of a catch-22: when we have capacity, few people feel like they’ll ever lose capacity. When you’re already incapacitated, it’s too late. Your loved ones are stuck.
Bottom line: plan while you can. Once you have your plan in place you have the peace of mind in knowing that you and your loved ones will be taken care of properly. Contact us for a free consultation to help you construct the plan that’s best for you.
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.