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Estate Planning

The office is in North County San Diego. It is easily accessible to the surrounding communities of Encinitas, Solana Beach, Cardiff-by-the-Sea, Leucadia, Carlsbad, Oceanside, Vista, San Marcos, Escondido and San Diego.

TRUST

What is a Trust?

A Trust, sometimes referred to as a Family Trust or Living Trust, is a document primarily used in an Estate Plan to help distribute a person’s Assets to their designated Beneficiaries, avoid Probate, minimize potential tax burdens and possibly delay an Estate Tax. In most Estate Plans the Trust is a key component. A Trust is created by a Trustor or Settlor (who funds or creates the Trust), names a Trustee (who manages or operates the Trust), and identifies the Beneficiaries(who benefit from the Trust).The Trustor and Trustee can be the same person, but there must be a Beneficiary other than the Trustor.

Can you Avoid Probate with a Trust?

When utilizing a Trust to distribute an Estate, you can avoid Probate so long as the Trust is properly funded with your Assets. In addition to the original corpus (property) used to fund the Trust, a person’s Assets must be placed into the Trust by titling the Assets in the name of the Trust. If a person’s Trust is not properly funded with their Assets, the Assets will remain outside the Trust and likely become subject to Probate. After executing your Trust it is critical to fund it in order for the Trust to provide its benefits.

Is a Trust Private?

Unlike Wills, Trusts are much more private. By avoiding Probate, a Trust avoids becoming a public record. It is possible that a Pour Over Will in your Estate Plan designating your Trust as Beneficiary to all Assets not already in Trust will be filed with the Court, but it contains limited information compared to a Will designed to administer an entire Estate. Upon death, notice must be provided to all those named in your Trust and the Trustee must furnish a copy to any named party who received notice and requests a copy of the Trust. On the contrary, if using a Will to administer your Estate, any member of the public can go to the Probate Division of the Superior Court and request to view the file containing your will and make copies if they please.

Do I avoid taxes with a Trust?

A common misconception is that creating a Trust shields a person from all tax liability. This is not true. With many Trusts, no special tax identification number is required. Tax returns are filed using the person’s Social Security Number, as if they were filing as an individual. There are some potential tax savings that can occur through the use of a Trust and other instruments in a personalized Estate Plan. Some people are under the impression that an offshore Trust will allow them to avoid taxes. Again, U.S. citizens are required to pay taxes on their income regardless of where they or their funds are located. Although the Court may not have jurisdiction over the contents of the offshore Trust, if the person resides in the United States, the Court will have personal jurisdiction over the individual who is usually the Trustee of the offshore Trust. The person may be ordered to pay taxes and held in contempt of Court for failure to comply.

Are Assets protected from Creditors once they are placed into a Trust?

Another common misconception is that once Assets are placed into a Trust they are immune from the claims of creditors. This is simply not true. You can’t avoid your creditors by putting your Assets into a Trust. However, it may be wise to include a Spendthrift provision in your Trust to help protect your Beneficiaries from their creditors. A Special Needs Trust can also help avoid spend down to qualify for public benefits.

Once I put an Asset into my Trust can I get it back?

There is a presumption in California that a Trust is Revocable(changeable)unless stated otherwise. Most Trusts designed to distribute a person’s estate are revocable. This means yes, you can take the Assets out of the Trust. Some Trusts for married couples are revocable until the first spouse dies. After the first spouse dies the Trust may split, with the deceased spouse’s share becoming an Irrevocable Trust (unchangeable) and the living spouse’s share remaining a separate Revocable Trust. One of the functions of this type of split is to help ensure the deceased spouse’s share will reach their designated Beneficiaries.

Can I change the terms of my Trust?

Like above, this depends on whether the Trust is revocable (changeable) or irrevocable (unchangeable).Trusts are presumed revocable. If that is the case, then yes terms in the Trust may be altered by Amending the Trust.

Are there disadvantages to having a Trust?

There are possible disadvantages to having a Trust. Because a Trust operates outside of Probate there is no Judicial supervision to ensure the ultimate administration of the estate. The only responsible party for carrying out your instructions is the Trustee you appointed. The beneficiaries may end up in litigation if the Trustee does not understand how to do their job correctly or refuses to do their job correctly.

If I have a Trust do I still need a Will?

A Will is still a valuable part of an Estate Plan even with a Trust. With a Pour Over Will it is important to transfer Assets into the Trust that do not traditionally have Title, such as jewelry or furniture. If minor children are involved, naming Guardians in the Will should also occur.

What is a Living Trust?

A Living Trust is one created while the Trustor is still living; it is also referred to as an Inter Vivos Trust. Are Trusts expensive? Trusts are typically more expensive to create than a Will. However, the initially less expensive Will tends to cost much more in Probate Fees than a Trust Administration. The more complex a client's Estate, the more expensive the Trust or Trusts will likely be to draft because of the additional planning opportunities. There should be a correlation between increased Estate plan costs and long term overall savings or control for the client.

Are there different types of Trusts?

Yes, there are different kinds of Trusts. For example, Trusts can be drafted for single individuals, married individuals, married couples, individuals with special needs (disabilities), for life insurance and for charities. The use of different Trusts depends on your personal circumstances together with your Estate Planning goals

WILLS

What is a Will?

A Will, sometimes referred to as a Last Will and Testament or Pour Over Will, is an instrument used to designate an Executor to your Estate and designate your Beneficiaries. The main types of Wills are: Holographic Wills, which must be drafted in the Testator’s (creator’s) handwriting and signed; and typed or printed Wills which require the signatures of two disinterested witnesses in addition to the Testator’s.

Can a person make their own Will?

Yes. There are no laws that prohibit a person from making their own Will so long as they are competent adults. However, there are rules in the Probate Code that require Wills be executed with specific formalities in order to be valid.If these formalities are not followed the Will may be found invalid at which point the rules of Intestacy will be followed instead of the intent expressed in the improperly executed Will. Dying Intestate, or Intestacy, is the term usually reserved for Estates with no Will in their Estate Plan. With Intestacy, the Probate Code has already designated who will receive your assets if you fail to create a valid Will or fail to properly execute your Will.

Does a Will become a Public Record?

If your will is filed with the Probate Court, which the holder of the original Willis required to do under the Probate Code, it will become a public record. The Will is also required to be filed with the Probate Court with a Petition for Probate.

If a person has a Will, do they avoid Probate?

With a Traditional or Holographic Will, Probate will not be avoided. However, a Pour Over Will may be used as a component of an Estate Plan designed in part to avoid Probate. The Probate Code has an exception that exempts Estates of up to $150,000 from having to go through a formal Probate. If the principal assets of a person’s Estate
have already been transferred into their Trust, a Pour Over Will may be utilized to gather the remaining assets that have not been put into trust (so long as their total does not exceed $150,000).

Is there a Will Amendment procedure?

A Will Amendment, more appropriately referred to as a Codicil, is available for the Will's creator so long as they have capacity.

Does a person need a Will if they have a Trust?

A Will is still a valuable tool in an Estate Plan. As discussed above, if used in conjunction with a Trust, a Pour Over Will can pour over assets not yet transferred to your Trust and avoid Probate if the total value of the Assets does not exceed $150,000.A Will can also be useful to designate Guardians if you have minor children

FINANCIAL POWER OF ATTORNEY

What is a Financial Power of Attorney?

A Financial Power of Attorney is an instrument that allows you to designate Agents to act on your behalf concerning financial affairs. They are typically used if you are incapacitated and can no longer make those choices or decisions. It is only possible to designate a Financial Power of Attorney while you still have capacity.

Do I give up control over my Finances?

There are different types of Financial Powers of Attorney. A Financial Power of Attorney can take effect immediately or can take effect upon a person’s incapacity. A Financial Power of Attorney that takes effect upon a person’s incapacity is referred to as a Springing Power of Attorney. This means your Agent only gains control over your finances once you are deemed incapacitated. If your Financial Power of Attorney is not springing, your designated Agent can act concurrently with you even when you still have capacity.

Revoking a Power of Attorney

Whether a Financial Power of Attorney is a Springing Power of Attorney or not, the creator can always revoke or create a new Financial Power of Attorney if they are still competent.

What if I already have an Advance Health Care Directive?

An Advance Health Care Directive only addresses issues concerning Health Care and Personal Care decisions. A Financial Power of Attorney is designed to assist with your finances and Assets.

Do I need a Financial Power of Attorney if I have a Trust?

In the event of incapacity, a Financial Power of Attorney can become an extremely useful part of one’s Estate Plan to assist with the management and utilization of Assets or accounts that have not been placed into your Trust. Ideally, a Co-Trustee or Successor Trustee can handle your finances, but this is only true so long as they are all inside your Trust. If an Asset or account has not been retitled to your Trust, they have no power to act. A Financial Power of Attorney may also be useful to work with assets that are typically non-trust assets such as IRAs and 401ks

ADVANCE HEALTH CARE DIRECTIVE

What is an Advance Health Care Directive (AHCD)?

An Advance Health Care Directive, sometimes referred to as a Health Directive or Advance Medical Directive, provides instructions for what to do in situations where a person needs medical treatment or personal care but is incapacitated (mentally or physically) and is no longer able to communicate those choices or decisions for themselves. When creating an Advance Health Care Directive people will also appoint Health Care Agents (typically family members or close friends) to assist them with carrying out their Health Care and Personal Care wishes.

Why do I need an Advance Health Care Directive?

An Advance Health Care Directive is an essential piece of any Estate Plan. An Advance Health Care Directive lets you take control of what happens to you when you are no longer able to communicate your wishes. Without an Advance Health Care Directive prolonged suffering could occur because of the receipt of unwanted treatment, or on the contrary, desired treatment may be withheld. The indecision, guessing, stress and potential conflict between remaining family can be eliminated or significantly reduced if you have provided instructions. The well-known Terri Schiavo case from Florida illustrates how a bad situation can get worse when an incapacitated woman’s parents and surviving spouse had competing beliefs about what Mrs. Schiavo would have wanted.

What if I already have a Living Will?

Having a Living Will is much better than having nothing at all, but an Advance Health Care Directive is more comprehensive than most Living Wills. Typically, a Living Will provides instructions for health care providers for when you are no longer able to do so yourself but does not appoint Health Care Agents to carry out those instructions. Living Wills tend to focus on a narrow set of circumstances, primarily end of life decisions.

Are there advantages of having an Advance Health Care Directive?

Some Advance Health Care Directives can provide instructions beyond end of life decisions. For example, Personal Care issues may be addressed such as a person's wish to remain in their own home as long as it is safe and financially feasible. Most Living Wills do not address this issue. Also, the Advance Health Care Directive provides the opportunity to appoint Health Care Agents. Appointing Health Care Agents helps you ensure there will be somebody to assist you in carrying out your wishes. You will not have to hope for the best and rely on a hospital or whoever’s care you are in to follow your wishes.

By creating an Advance Health Care Directive am I giving up control over my life?

No. A competent adult cannot be forced against his or her will to accept or reject medical treatment. Also, an Advance Health Care Directive can be amended or revoked at any time, so long as its creator is still competent.

Will the Doctors follow my instructions?

Doctors should follow your Advance Health Care Directive if your instructions do not request the violation of any laws and you have Health Care Agents in place to assist with the carrying out of your wishes. Your Health Care Agents can be given the authority to transfer you to a different health care provider that will honor your wishes and even sue noncompliant providers. One of the few reasons a Doctor may be justified in not honoring an Advance Health Care Directive is if there was not a HIPAA Release in place. A key function of HIPAA (Health Insurance Portability Authorization Act) is to protect the privacy of patients. It forbids Doctors from disclosing patient information. It is critical to have an executed HIPAA Release to allow Doctors to work with the Health Care Agents you designate in your Advance Health Care Directive

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