Some people think they do not need an estate plan unless they are married, own a home, have children, and own significant assets. But that is not always the case. A young, single person could have a devastating accident or illness. Without a power of attorney for healthcare decisions, the family might have to go to court for an order allowing them to make medical decisions while the person is incapacitated. This process could waste precious weeks or months, cause a rift in the family, and cost thousands of dollars. Alternatively, a person who dies without a will or trust may force his survivors to go to court after he’s gone, to sort out his estate over a year or more, while a well-crafted estate plan might have avoided court altogether.
A California estate planning attorney can evaluate your situation and explain which documents you need.
The Benefits of a Will or Living Trust
Wills and living trusts may each tell your survivors what you want to be done with your assets and who will handle the administrative steps after you’re gone. The person you select to be the executor of your will or the trustee of your trust can hire a professional, like a lawyer, to do the actual work while the executor or trustee supervises that work.
A living trust has many advantages over a will. A will has to go through court, once you’ve died, so there is less privacy about the terms of the will. A trust generally does not have to go through the probate court, so there is more privacy. If you decide to execute a living trust, make sure that you retitle all of the property into the name of the trust if you want those things to pass by means of the trust.
Trusts give more options and greater flexibility than wills. For example:
- A special needs trust can provide assets for the benefit of a loved one with a disability without making the person ineligible for government assistance programs.
- A Medicaid trust can help an individual qualify for Medicaid benefits to help pay nursing home bills without leaving the spouse who still lives at home destitute.
- A spendthrift trust lets you provide assets with protections to a loved one who is still young and attending school, or who might otherwise spend all the money quickly.
These are just a few examples of the many types of living trusts that could be a part of your estate plan.
A General Power of Attorney
Although the name sounds intimidating, a power of attorney merely gives someone else permission to act on your behalf under certain circumstances. A power of attorney (POA) does not give someone the legal right to take over against your will or to steal your assets.
Many POAs are general in nature and open-ended in duration. For example, you might name someone to pay your bills and manage your investment accounts if you become unable to do so for yourself. It is essential to make a general power of attorney “durable.” In other words, the POA is still valid if you become incapacitated.
A power of attorney might also be specific, like authorizing someone to sign papers for you at a real estate closing that you cannot attend. This type of POA is usually limited in time as well as scope; in other words, it will expire shortly after the real estate closing date.
All POAs are revocable as long as you have the legal capacity to create a POA. If you change your mind about the person you named as your “attorney in fact,” you can revoke the POA and create a new one naming someone else.
A Medical Power of Attorney or Advance Health Care Directive
A medical power of attorney, or Advance Health Care Directive (“AHCD”), as it is called in California, lets you decide who will make medical decisions on your behalf if you become incapacitated temporarily or long-term. You can revoke an AHCD at any time before you become incapacitated. As stated earlier, this document spares your loved ones from having to get a legal guardian appointed who can make healthcare decisions for you.
Depending on your situation and goals, you might need other documents in your estate plan in addition to the ones mentioned in this article. Contact our office today. Our California estate planning attorneys can recommend and prepare the documents that will best serve your needs.