For those individuals considering an estate plan and the necessary instruments used to create a complete and effective estate plan, below is a brief overview of the most common legal documents used to effectuate your intentions at the time of incapacity or death.
First, for individuals with modest estates, there may not be a need for more advanced planning techniques such as trusts or even a will. Under California law, estates with a cumulative value of $150,000 or less are exempt from probate proceedings and the associated expenses. However, in the event your estate exceeds this threshold, The Law Offices of Casey O'Connell strongly recommends executing a will and trust to effectuate your testamentary intent and avoid the costly and protracted probate process.
Revocable Living Trust: A trust is a legal entity created to hold your property. The trust documents name a trustee who is charged with the care of the property. Usually, the trustee is the same person as the settlor (creator) of the trust. Upon the settlor's death, the trust documents name a successor trustee who is responsible for carrying out the intent of the trust and distributing the trust property according to the terms of the trust. A living trust is unique in that the settlor maintains control over the trust property during his or her lifetime, hence the revocability. The most significant advantage to establishing a trust is that upon death, the trust is not subject to probate proceedings. The costs and statutory fees associated with probate court, along with the protracted nature of the proceedings are avoided saving the beneficiary or beneficiaries of the trust time, money, and energy and allowing for efficient distribution of the trust property.
Last Will and Testament: Assuming you have a trust, a will is also needed for any assets that are not directly transferred to the trust during the settlor's lifetime. This form of a will is commonly referred to as a "pour over will." The moniker is derived from the fact that any assets not in the trust, over flow assets acquired after establishing the trust or simply not transferred to the trust, spill over into the trust upon the death of the settlor. Unlike the trust, however, a pour over will is subject to probate court and must be found valid to be effective. The pour over will is usually much shorter because most of the settlor's assets will have been transferred to the trust before death, thus, the time to probate the will is noticeably less than it is without a trust. A will also nominates guardians for minor children of the deceased.
Certificate of Trust: This document is given to banks, investment companies, brokerage houses, and other custodians of financial assets to establish the validity of the trust and to prove that title to those assets has been transferred to the trust.
Durable Power of Attorney for Finances: In an effort to avoid a court appointed conservatorship over the assets of an incapacitated individual, a durable power of attorney designates a third party to manage your financial assets in the event you cannot. Nominating a competent, trustworthy individual is imperative to protect your assets if you were to suffer a serious injury or medical condition.
Advanced Health Care Directives: Similar to the durable power of attorney, an advanced health care directive designates an individual to carry out your health care wishes in the event you are incapacitated. This includes the ability to avoid or be taken off life support, to ensure health care professionals do not resuscitate ("DNR") you if the time comes, and to prevent a court imposed conservatorship over your health care decisions.
Overall: Of course, each individual client requires an estate plan tailored to his or her specific circumstances and desires. The above is meant to be a general description of a typical estate plan. If you have questions or would like to discuss your estate planning needs in more detail, contact The Law Offices of Casey O'Connell for a free consultation.