Many of the activities that investment advisors perform on your behalf have potential impact on your estate plan.  We believe it is vital that we are well-versed in estate planning strategies so we can offer the best possible financial options for you and your estate planning professional to consider.

 

We consider estate planning an essential part of our service to you.  If you already have an estate planning attorney, we will be happy to work with them.  If you need a referral, we have several attorneys we can suggest.  If you are not sure whether your estate planning documents are current and meet you needs, we can help have them reviewed and updated as necessary.

 

We find most people do not have an initial interest in estate planning.  Thoughts of death and dying can easily be left for another day.  The truth is that estate planning has a very important role to play in your finances while you are still alive.  Estate planning documents legally dictate who will takeover for you if you become incapacitated.  We want to be sure to cover two areas of concern regarding possible incapacitation.  One revolves around your health and the other your assets. 

 

 

In California, the California Medical Association (cmanet.org) has produced the Advance Health Care Directive Kit. It is now the legally recognized format for a living will.  It is an eight-page document that allows you to dictate your health care wishes if for any reason you are unable to speak for yourself in the future.  This is a very simple document to fill out and it can be done separately from all other estate planning.  This is a must for anyone who has a concern about being kept alive with life-sustaining treatments.  By making your wishes known in advance, you can relieve your family of a lot of second-guessing and grieving in a time of crisis. 

 

 

Another type of power of attorney is used for directing your assets (typically nontrust assets).  In general, if you are incapacitated, it is very difficult to direct assets titled in your name.  If you were unable to act on your own, you would probably not want just anyone acting on your behalf.  In the absence of a power of attorney, the courts could become the authority to make changes and decisions about buying or selling your assets.  Having the courts direct your assets is typically an expensive, very public and time-consuming affair for whomever is trying to help you through the process.  A simple power durable of attorney can dictate who you want to act on your behalf under  limitations you dictate.  This document can also be produced independently of other estate planning documents.  Most people do not realize that this form is no longer valid at your death.  That is where your will and trust come into play.

 

 

Most people think of a will as the main estate planning document.  For some people, a will could be better than nothing; howver, for most people, a will needs to be used in association with a trust as more of a “catch all” document.  A so-called "pour-over will" is used to catch any assets that is not covered by the trust or by beneficiary designations.  If used, the will pours over the asset(s) into the trust and is then distributed by the terms of the trust.  Depending on the type and amount of assets transferred by the will, your estate could be probated.  Generally, with simple planning, probate will not be necessary.  With some exceptions, a will usually becomes empowered only at your death.

 

 

Virtually all of our clients need a family trust.  In general, owning real estate is reason in itself to have a trust.  The size of the total estate is another reason.  Some important benefits for having a trust are avoiding probate, minimizing estate tax, naming a successor in case of death and/or disability and the orderly flow of assets upon death to beneficiaries.  In some cases, clients also set up irrevocable trusts for children (heirs) and charitable foundation(s). 

 

A well written trust will dictate who takes care of your trust assets if you become incapacitated and who is in charge upon your death.  A trust should help your estate avoid probate and depending on how the trust is written and the size of the estate, can reduce estate taxes especially for married couples.  Unless you go way out of your way to make a trust irrevocable, your trust can be changed (amended) anytime during your life.  Your trust generally becomes irrevocable upon your death or upon the death of the surviving spouse. 

 

A common misconception is a trust will limit your ability your control over your own funds.  Unless you limit you ability to control your assets, you have all the same options to manage your funds after they are placed into your trust.  One exception we have seen is in the case of refinancing a home.  Some loan companies will require your property be in your name.  If this is necessary, you can temporally transfer your property out of your trust, complete the refinance then transfer it back into the trust.  Make sure you get legal advice before you do this.

 

 

After you set up your trust, it is vital that you fund the trust.  This generally means changing the title of applicable assets to name your trust.  For instance, property, investment accounts and most  bank accounts should be titled in the name of your trust.  You will want to make sure that your statements shows the trust as the owner.  Simply listing an asset in the back pages of your trust in not the same as changing the title of the asset to the trust name.