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Sacramento Estate Planning Blog

How to choose a health care agent

While much of estate planning is focused on the distribution of assets upon one's passing, it really encompasses much more than that. Estate planning should also delve into important health care and financial decisions, especially in the event that an individual becomes incapacitated. After all, these matters are inextricably linked to the distribution of assets because these health-related and financial decisions can have a profound impact on the remaining value of an estate.

Choosing an individual to make those critical decisions in the event of incapacitation can be daunting. This is why individuals who are selecting a health care agent or an individual to hold power of attorney should consider a number of factors.

Divorcing? Don't forget to modify your estate plan

Getting divorced can be emotional. After all, two individuals who were once in love have to come to terms with the fact that they are no longer right for each other. While this process can leave individuals feeling upset, distrusting, and sad, it also provides them with an opportunity to secure a fresh start. While many individuals consider this new beginning to pertain to the way one lives life, it should also affect how one plans to dispose of his or her assets after death.

An individual's estate plan may need to be overhauled in the event of divorce. To start, an ex-spouse should be removed from a health care directive so that he or she is not responsible for making important health care-related decisions in the event that an individual is injured and unable to communicate. Then, any power of attorney naming the ex-spouse should be revoked and a new power of attorney should be created. This will protect one's financial interests.

Utilizing trusts to care for children with special needs

Raising children can be a challenging endeavor. This is especially true when a child has special needs. Depending on the condition at hand, a child with special needs may require extensive medical care and social support. These needs can be long-term in nature, which is why these considerations need to be taken into account when engaging in estate planning.

There are a number of ways to provide for a child with special needs through an estate plan. If an individual has enough money to provide for the child's long-term care, then that significant amount of money can be placed in a trust with directions to make periodic payments to the child, who is named as the trust's beneficiary. However, doing so will likely disqualify a child from receiving government benefits.

Poor estate planning can leave estate milked dry

Should estate planning focus on leaving children as well off financially as possible? While some see no problem with doing this, others think that it could cause children to be spoiled and unappreciative of hard work.

Those in the latter category point to a number of cases involving problematic estates. Previous posts here have discussed the trouble with Stan Lee's estate plan, but there are other wealthy individuals who found themselves being taken advantage of by their loved ones. One woman, worth more than $100 million, lived in squalor while her son bilked her of her assets. He was later convicted of fraud and other crimes, but he still wound up inheriting more than $14 million from his mother's estate.

Luke Perry's death shows importance of estate plan upkeep

Actor Luke Perry, best known for his work on "Beverly Hills 90210," recently passed away at the young age of 52. Nobody expects to suddenly pass away so young, which makes Perry's death all the more tragic. It is usually in these circumstances that families find themselves struggling to figure out what to do with their lost loved one's estate. In the absence of an estate plan, matters can get messy, the distribution of assets can be costly and time-consuming and family members may vie over wanted property.

It looks like Perry may have had at least a minimal estate plan in place to avoid this outcome. Reports indicate that someone in his family likely had a power of attorney, which allowed that person to decide to take Perry off of life support. Others who utilize this estate planning tool can ensure that critical financial and healthcare decisions are left in the hands of trusted individuals should such a need arise. Failing to have this document in place could lead to the matter being argued over in court by family members who may have differing opinions about how the matter should be addressed.

Important trust basics Sacramento residents need to know

Understanding the basics of trusts as estate planning tools can be crucial for California residents. Trusts are essentially agreements that dictate how assets will be managed and distributed to named beneficiaries. The creator, or grantor, of a trust can name a trustee to manage the trust. This trustee has a fiduciary duty, meaning that he or she must make decisions regarding the trust and trust assets that further the best interests of the trust's beneficiary.

There are many reasons why creating a trust can be beneficial. To start, trusts, unlike wills, allow assets to bypass the probate process. This can reduce the amount of time needed to distribute estate assets and it can save beneficiaries money. Since the probate process can be bypassed, those who utilize trusts can protect the privacy of their estate. Also, trusts are a viable way to financially provide for those a grantor cares about while allowing restrictions to be placed on the distribution of those assets.

Incompetence can lead to the invalidation of a will or trust

The creation of a will or trust should leave an individual feeling comfortable with how his or her estate will be distributed upon death. Sometimes, however, squabbles arise over the validity of these estate planning documents when individuals challenge the creator's competence at the time of the creation of those documents. This can lead to a multitude of issues, including the invalidation of a will or trust which, in turn, can lead to distribution of an estate that is counter to a person's intentions.

Under California law, an individual can only be found incompetent for the purposes of executing a will or trust if there is evidence that shows a deficiency and that deficiency can be shown to affect the execution of the document in question. This evidence must pertain to at least one of a number of statutorily identified characteristics, including deficiencies in an individual's consciousness, orientation to time and space, shortcomings in memory and an inability to understand and appropriately communicate.

Fashion icon may have utilized pet trust for beloved cat

Fashion icon Karl Lagerfeld recently passed away, leaving many wondering what will become of his estate. Lagerfeld, who was 85 at the time of his passing, had a pet cat, Choupette. The feline has even become famous in his own right, with an Instagram account and followers, table book and career modeling. Because this pet was so well cared for during Lagerfeld's life, many think that he may have left his estate in a way that ensures that Choupette is taken care of for a long time to come.

There are a few ways this could be accomplished, but the most likely way is through the utilization of a pet trust. Although people used to leave pets to loved ones, as if the pet was a piece of property, trusts have become more common because people are more frequently viewing their pets as beloved family members. Through a pet trust, an individual names someone to manage the trust assets and make dispersals. An individual who provides care and maintenance for the pet is then tasked with utilizing those assets in furtherance of the pet's best interests.

Do you need an estate plan if you don't have kids?

The vast majority of people who find estate planning imperative are those who have children. These individuals often want to make sure that their assets are left to their kids and their spouse in a way that protects their financial future and maintains the estate's financial viability. While these individuals certainly should consider how best to plan for the distribution of their estate upon death, even those without children should consider engaging in estate planning to ensure asset distribution that fits their desires.

When you pass away, someone will inherit your assets, even if you don't have children. Absent an estate plan dictating how those assets are to be distributed, state law will determine which individuals will inherit your estate. This may mean that a relative you barely know could inherit everything. By utilizing a will or trust you may avoid state-mandated distribution and utilize a distribution plan that benefits those you find deserving. Creating trusts can help you avoid the probate process, which may otherwise allow lesser known relatives the ability to intervene and try to lay claim to estate assets.

Unique situations that require adept estate planning

No two families are the same. Some families may appear "traditional," with two spouses remaining married for the long-term and raising children, while others are "untraditional." These latter families can involve step-parents and step-children, unmarried couples, families with adopted children and even children conceived through artificial means. Regardless of the dynamics of a family, estate planning is crucial.

Yet, those who have a complex family structure may need to give their estate plan more care. Failing to address what may seem like minor details may lead to loved ones missing out on intended inheritances. For example, a step-parent may need to be abundantly clear in their will and trust documents whether they are leaving assets to their step-children. The law otherwise doesn't necessarily allow for those children to inherit from a step-parent.

My Sacramento law practice, Michael A. Sawamura, Attorney at Law, focuses on wills, trusts and estate planning law in addition to business law and corporate defense services. My clients include professionals, government employees, small businesses, blue-collar workers and national corporations.

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