Three Estate Planning Items Everyone Needs

We all own assets in one form or another. When we die, we want to make sure that the assets are properly going to those we love. We also want to minimize any confusion, unnecessary legal fees and stress for our loved ones. There are three essential items that everyone needs to have in place to ensure their wishes are carried out after their death.


1)  A Will or a Trust:

The simplest estate planning document is a Will. You can create your own Will by simply writing out the Will in your own handwriting, signing and dating it. This type of Will is called a holographic Will. California Probate Code 6110 sets forth the basic requirements of a valid Will. If you type your Will then, it must have the signatures of two disinterested  witnesses. However, the problem with a Will is that if the gross value of the estate is more than $150,000 then a probate will be required. In California, if someone owns a home, the gross value of that home is certain to be over $150,000, therefore, if someone has a Will and owns a home, then a probate is required upon his or her death.

The other commonly used estate planning document is a living trust. A living trust allows one to put all of his or her assets into the trust, administer the trust for his or her benefit during the lifetime and transferring the assets to their beneficiaries upon death — no probate is needed. The other great benefit of a trust is that if one becomes incapacitated, the trust would name a conservator to care for one’s needs. This conservator could be your spouse, your children or whomever you choose but the main benefit is that it avoids having the court appoint a conservator.  California Probate Code 15400 provides that unless otherwise stated, a living trust is revocable; meaning, once the living trust is set up, one can change their mind at anytime and terminate the trust. A living trust is a popular estate planning tool that is a convenient and efficient means to distribute one’s assets at death.


2)  A Durable Power of Attorney:

A “power of attorney” is a legal document that names another person to step into your shoes and make decisions on your behalf. It gives that person the right and authority to act on your behalf. However, the power of attorney is ineffective if you become incapacitated — unless you have a durable power of attorney. If one were to become incapacitated, hospitalized, or disabled and unable to handle one’s own affairs then the durable power of attorney will remain in effect and the one whom you named as your attorney-in-fact can carry out your affairs for you. Not all power of attorneys are created equal. A regular power of attorney will terminate at your incapacity or at a fixed date. It is important to have a durable power of attorney because when you need it most your durable power of attorney will endure your incapacity and allow your loved one to take care of you. The laws governing power of attorney are set forth in California Probate Code 4000 to 4545.


3)  Updated Beneficiary Designation Forms:

In most cases, the designated beneficiaries named in 401(k) plan, IRA or life insurance will override one’s will, so it is imperative to take the time to update these forms when one has major changes in one’s life such as a birth, death, marriage or divorce. It is important to check and update these forms on a regular basis.