Sacramento Estate Planning Blog

Many people were shocked to hear the news that celebrity travel guru and chef Anthony Bourdain passed away recently. The man, who was open and honest about having to live paycheck-to-paycheck well into his 40s, became famous by exposing the secrets of the kitchen and cultures, thereby allowing many to expand their cultural literacy. While there are certainly lessons to be learned from Bourdain's passing and his legacy, one interesting aspect of his life is the way in which he drafted his estate plan.

On its face, Bourdain's will seems pretty simple. The vast majority of his $1.2 million dollar estate will go to his daughter. Yet, even this provision is missed by some, as up to 60 percent of Americans don't have an estate plan at all. Nearly 80 percent of millennials don't have a plan for how their assets will be distributed upon their passing, which could put them at risk of unintended outcomes.

When most Californians think about estate planning, they think about how money is going to be passed down to their family and friends upon their death. While this is true to a certain extent, estate planning has a much broader reach. For example, estate planning can include how important financial and health care decisions will be made in the event that an individual becomes incapacitated and, as a result, unable to make those decisions on their own.

This is why one important estate planning tool is the health care directive. This document can spell out how one wants his or health to be treated when he or she becomes unable to make those decisions. But they can raise an important question: to what extent do medical professionals have to follow a health care directive?

Those in California who engage in estate planning usually do so for the sole purpose of ensuring that their hard-earned assets are protected and preserved for those who they identify as their heirs and beneficiaries. As we have discussed at length on this blog, there are a number of ways to ensure that one's estate plan is thorough, legally valid and created in a way that allows for distribution of assets in accordance with one's wishes.

However, there are certain circumstances that can threaten an estate plan as initially drafted. One of these scenarios is when an adult child decides to get married. While a marriage may be something to celebrate, it does mean that divorce could loom in the future. Therefore, some parents try to talk their children into entering into prenuptial agreements.

When an individual in Sacramento passes away, the directions that he or she laid out in his or her estate plan kick into effect. Whether a will, trust or some combination of both is used in an estate plan, the administration of the estate and its trusts can be challenging. After all, trusts and other estate matters that are mishandled can result in the imposition of personal liability.

One key area to pay attention to is the payment of debts and distribution of trust assets. Generally speaking, an estate's debts should be paid before any money is paid out of the trust. This is because a trust administrator may have to personally pay for debts that the estate is unable to cover if beneficiaries and heirs have already received assets from the estate. Also, trusts typically allow for the payment of income, which is money earned through the investment of trust assets, to be paid at one time, while the principal of a trust is to be paid at another time with, perhaps, strict qualifications in place. This means that a trust administrator needs to be careful about how and when to pay out assets, as well as how to invest those assets.