Wills, Trusts, and Estate Planning

Warning: The information provided herein is for general background purposes only. You should consult an attorney for advice concerning your circumstances.

  • Administration of Trusts
  • Preparation of Trusts
  • Powers of Attorney
  • Wills
  • Advance Health Care Directives

Why Should I Create A Trust?

A trust is a written instrument by which the settlor declares that upon a certain event, such as his disability of death, another person known as the trustee, is placed in charge of administering the assets and financial affairs of the settlor. Trusts are usually declared by a single person or jointly by a married couple. Typically, a trust will provide that upon the mental incapacity or death of one spouse, then the other spouse will act as trustee, and after the mental incapacity or death of both spouses, then some other person, typically an adult child, family member, or trusted friend will act either jointly or singularly as successor trustee. The trust can describe the duties of the trustee to provide for the management of financial affairs and the care of the settlor during his lifetime and provide for the disposition of assets, such as real property and financial accounts, after the death of the settlor(s), e.g. distributions to children, charities, and other beneficiaries.

The drafting of trusts requires that attention be given to the specific needs and instructions of the settlor. Provisions in the California Probate Code establish statutes that govern the duties of trustees and the rules pertaining to the administration of trusts. For example, a trustee has a fiduciary duty (a duty of honesty, loyalty, and full disclosure) while acting in the capacity of a trustee, and he cannot misuse his position for his own personal benefit.

What is a Will?

A Will is a document that must be executed with certain legal formalities, and it sets forth the beneficiaries of a decedent’s estate. A Will takes effect at death. Wills are the subject of a court supervised probate court proceeding.

Upon the death of a testator, any person may lodge the testator’s last Will with the clerk of the court. A Will is administered by a probate proceeding. The advantage of using a trust over a Will is that a trust does not require any action before the court and may be administered by the trustee and the trustee’s attorney.

Typically, when a settlor declares a trust, he also declares a pour-over will. A pour-over will simply states that if the settlor owns any property at death that he forgot to title in the name of his trust, then he directs the executor of his Will to distribute that property to the trustee of his trust, so as to be administered by the terms of the trust.

What is Estate Planning?

Estate Planning is the practice of planning for the disability or death of the client and the succession of property and business interests. Estate Planning includes the preparation of documents such as a trust, Power of Attorney, and an Advance Health Care Directive. Estate Planning also concerns the disposition of retirement assets, such as IRA and pension plan accounts. Estate Planning addresses the issue of minimizing the Federal Estate Tax. Estate Planning can protect the surviving spouse and the children of the parties, including children by prior relationships of each party. Careful drafting is required to meet the requirements of each client. There is not an all-purpose estate plan or all-purpose trust for all persons.

What is an Advance Health Care Directive?

An Advance Health Care Directive allows a person, known as the agent, to make healthcare decisions for another person, known as the principal, if the principal is unable to do so due to illness or incapacity. An Advance Health Care Directive can describe the type and manner of medical care the principal wishes if he/she cannot make decisions for himself/herself.

What is a power of attorney?

A power of attorney is a document by which one person, known as the principal, grants to another person, referred to as the agent, the power to make decisions and enter contracts on behalf of the principal. A power of attorney can include provisions that make the power of attorney durable. In other words, the power of attorney will continue to be effective even if the principal becomes mentally incompetent. An advantage of a durable power of attorney is that it may avoid the necessity of a conservatorship for a person who has become mentally incompetent. A power of attorney can be drafted so that it is either narrow or broad in scope. For example, the power of attorney may only give the agent a power to deal with a particular business or a particular transaction, or it may be limited to contracts concerning a particular parcel of real property or particular items of personal property. The power of attorney can be drafted with broad provisions allowing the agent to buy and sell securities, to purchase or sell real estate, or engage in almost any other transaction on behalf of the principal. There are other statutes governing the creation of a power of attorney for healthcare decisions.

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