California Probate - Law Offices of Janet Brewer Blog

Are People Avoiding Estate Planning in the Pandemic?

“We found that Covid-19 had a significant impact on Americans' sense of personal readiness, with 65% saying that coronavirus made them realize the importance of sharing important information with family. Around the same amount of people (64%) noted that planning for the future was more important than ever and half (50%) said the pandemic made them realize how unprepared they were for a serious emergency.”

A survey by Quest Research Group in the wake of COVID-19 wanted to see how prepared people would be, if something were to happen to them. They asked 1,000 people how much planning they’d done in the past, and if the pandemic encouraged them to start planning now.

Forbes’ June article entitled “The Three Reasons People Avoid Estate Planning” says that with all the uncertainty in the world, the study reveals that people are taking action, even though it’s something people typically try to avoid. Why do people avoid it? The article narrows it down to the three most common excuses:

• I’m much too busy. I can barely keep up with my life as it is.
• It’s complicated and/or expensive.
• I’m just too superstitious. I’ll just jinx my life by thinking about death.

All of these excuses are followed by a sentiment such as “I know it’s something I should do” and “I’ll get around to it one day.” No matter how it’s said, people just don’t feel that it is urgent.

First, are those who are superstitious and think doing this somehow curse their life. However, people buy car seats for their children, and no one refuses to buy a car seat because they think it would make them more susceptible to an accident. Instead, you buy one because you’re a responsible adult who cares for your child.

The other two excuses are similar, because when people say that planning is a time consuming or expensive task, they’re automatically too busy or frugal to even consider taking on such a task. Then we do all that we can to procrastinate.

To address these excuses, here are some things you can do right now at little or no expense that can help your family, if there’s an emergency. It will also make you feel more responsible for your life, in the same way parents do when they purchase car seats.

Password Sharing. Passwords are the keys to modern estate planning. To have access to your accounts in the event of an emergency, someone you trust should have access to your passwords. There are password managers, like Dashlane or LastPass, which coordinate all your passwords, so you only have to remember one. You can later share it.

Draft a Medical Directive. This document instructs your family what you want done in a medical emergency (Living Will) and who should speak on your behalf, if you’re unable to communicate (Health Care Proxy). These make up an Advance Directive.

Create a Will and a Power of Attorney. A will is the document that instructs your executor how to distribute your assets. A will also names a guardian for any minor children. A Power of Attorney (POA) is like a Health Care Proxy for your money and lets an agent make financial and legal decisions on your behalf, when you are unable.

Ask an experienced estate planning attorney to help you create these to avoid any issues down the road. Contact our office today to schedule your consultation.

Reference: Forbes (June 24, 2020) “The Three Reasons People Avoid Estate Planning”

What Does My Estate Plan Look Like after Divorce?

“Some marriages end in noise and pain. Other marriages drift away quietly with the signing of documents and only a hint of acrimony.”

Planning an estate after a divorce involves adopting a different type of arithmetic. Without a spouse to anchor an estate plan, the executors, trustees, guardians or agents under a power of attorney and health care proxies will have to be chosen from a more diverse pool of those that are connected to you.

Wealth Advisor’s recent article entitled “How to Revise Your Estate Plan After Divorce” explains that beneficiary forms tied to an IRA, 401(k), 403(b) and life insurance will need to be updated to show the dissolution of the marriage.

There are usually estate planning terms that are included in agreements created during the separation and divorce. These may call for the removal of both spouses from each other’s estate planning documents and retirement accounts. For example, in New York, bequests to an ex-spouse in a will prepared during the marriage are voided after the divorce. Even though the old will is still valid, a new will has the benefit of realigning the estate assets with the intended recipients.

However, any trust created while married is treated differently. Revocable trusts can be revoked, and the assets held by those trusts can be part of the divorce. Irrevocable trusts involving marital property are less likely to be dissolved, and after the death of the grantor, distributions may be made to an ex-spouse as directed by the trust.

A big task in the post-divorce estate planning process is changing beneficiaries. Ask for a change of beneficiary forms for all retirement accounts. Without a stipulation in the divorce decree ending their interest, an ex-spouse still listed as beneficiary of an IRA or life insurance policy may still receive the proceeds at your death.   

Divorce makes children assume responsibility at an earlier age. Adult children in their 20s or early 30s typically assume the place of the ex-spouse as fiduciaries and health care proxies, as well as agents under powers of attorney, executors and trustees.

If the divorcing parents have minor children, they must choose a guardian in their wills to care for the children, in the event that both parents pass away.

Ask an experienced estate planning attorney to help you with the issues that are involved in estate planning after a divorce. If you have any questions about your current estate plan, please call or email us today.

Reference: Wealth Advisor (July 7, 2020) “How to Revise Your Estate Plan After Divorce”

How Does Social Security Benefits Work in My Estate Planning?

“Social Security benefits are one of the items that fall through the cracks in many estate plans.”

A financial power of attorney (POA) is a critical element of an estate plan. This document makes certain that a person you named takes care of your finances, when you are unable. Part of managing your finances is coordinating your Social Security benefits—whether you already are getting them or will apply for them down the road.

However, what many people don’t realize, is that the Social Security Administration (SSA) doesn’t recognize POAs. Instead, as part of your estate plan, you need to contact the SSA and make an advance designation of a representative payee, according to Forbes’ article entitled “The Surprising But Essential Estate Planning Step For Social Security Benefits.”

This feature lets an individual select one or more people to manage their Social Security benefits. The SSA then, in most situations, must work with the named individual or individuals. You can designate up to three people as advance designees and list them in order of priority. If the first one isn’t available or is unable to perform the role, the SSA will move to the next one on your list.

A person who’s already getting benefits may name an advance designee at any point. Someone claiming benefits can name the designee during the claiming process. You can also change the designees at any time.

When you name a designee, the SSA will evaluate him or her and determine the person’s suitability to act on your behalf. Once he or she is accepted, a designee becomes the representative payee for your benefits. They will get the benefits on your behalf and are required to use the money to pay for your current needs.

A representative payee typically is an individual. However, it can also be a social service agency, a nursing home, or one of several other organizations recognized by the SSA to serve in this capacity.

If you don’t name designated appointees, the SSA will designate a representative payee on your behalf, if it feels you need help managing your money. Relatives or friends can apply to be a representative payee, or the SSA can choose a person. When a person becomes a designated payee, he or she is required to file an annual report with SSA as to how the benefits were spent.

Being a designated representative doesn’t give that person any legal authority over any other aspect of your finances or personal life. You still need the financial POA, so they can manage the rest of your finances.

If you have any questions about your current estate plan, please call or email us today.

Reference: Forbes (April 17, 2020) “The Surprising But Essential Estate Planning Step For Social Security Benefits”

Don’t Get Caught Without an Estate Plan! Without One, Your State has a Plan for You…But It Won’t Be One You Like

We’ve all heard how crucial it is to have an estate plan in place before you need one. But the reality is that many people don’t think about creating an estate plan until later in life. In the case of tragic circumstances, this can be an incredibly costly mistake that can also be emotionally draining for your family and friends.

What Happens When There is No Estate Plan in Place?

All states have a legal process for determining the inheritance of property when someone has died intestate, or when there is no will or estate plan in place. If you happen to own assets in multiple states, each state law regarding intestacy inheritance will go into effect. Assets may include bank accounts, real estate securities, and other personal assets.

While these state laws vary slightly, they commonly follow the same pattern by awarding assets to a surviving spouse and children first. If you are unmarried and without children, assets will then likely go to parents. If your parents are also deceased, siblings would be awarded property, and if for some reason, there are no surviving siblings, the court would look at nieces and nephews or other extended family members. If no relatives can be found, then the entire estate usually goes to the state in which it is physically located.

The process can be complicated in scenarios where an individual is in a domestic partnership. Only some states recognize domestic partnerships. Without a will or estate plan in place, there is no guarantee that this individual will receive any of your assets or belongings. This fact is true even in instances where couples have resided together for decades. If you fit into this scenario, it is vital that you check to see how your state treats domestic partnerships. If they are not recognized, it’s even more crucial that you plan ahead and develop an estate plan that ensures the one you love will be considered a beneficiary upon your death.

Can I Just Draft a Last Will and Testament?

You could, but a will often still means that your property will go probate court before any terms of the will are fulfilled. The timeline to go through probate court commonly ranges from six months to several years, depending upon the size of your estate, your state laws, and how many beneficiaries are named in your will. If certain aspects of your will are contested by surviving loved ones, the process can take even longer.

It is best to avoid the probate process when possible since none of your loved ones will have access to any of your assets until the entire probate process is completed. Unfortunately, this commonly means that your assets would be unavailable for funerary services or to hire a probate attorney, which is common when a will goes to probate court. This scenario puts surviving loved ones in the position of paying for these expenses out-of-pocket, adding to their existing stress and grief.

How to Avoid the State’s Intestacy Process?

The process for determining intestacy inheritance or going through probate is clearly something everyone would like to avoid, if at all possible. It can be costly, time-consuming, and emotionally draining. Fortunately, getting an estate plan in place is usually much easier than people think. An experienced and skilled estate planner can discuss options for your assets that avoid probate, such as a revocable living trust. Having these financial tools in place ensures that your property will pass directly and immediately to your loved ones without minimal court and state involvement.

A trusted estate planner can also discuss a strategy for ensuring that you avoid some of the common pitfalls that undermine the legality of your plan for the transfer of your assets, including:

1. Ensuring that your trusts are funded.
2. Coordinating all assets, including trusts and retirement plans.
3. Discussing when it is necessary to update your beneficiaries (commonly required when there are births, deaths, marriages, or separations in your family).
4. Updating asset ownership when new assets are acquired, or older ones are sold.
5. Ensuring that you have updated powers of attorney.
6. Updating the overall plan on a regular basis.

Estate planners can help you easily create and update your estate plan to ensure that your beneficiaries don’t have to go through the complex and difficult process outlined by the state in the event that you don’t have an estate plan in place. No matter your age or health, if you own assets, it’s time to create an estate plan.

Incapacitated Relative with No Estate Plan? What to Do Next

If you have an incapacitated relative who has not made an estate plan, you might not know how to help. Your relative could be facing a host of problems, from getting adequate medical care to paying bills to worrying about the future.

What Is Incapacity?

Incapacity has different meanings legally and practically. Your relative may be stuck in the hospital for a long time, have trouble getting around physically, or be facing a significant mental decline. From a legal perspective, someone who has a mental or physical condition “may still be capable of contracting, conveying, marrying, making medical decisions, executing wills or trusts, and performing other actions.” A finding of true legal incapacity is usually based on a variety of factors, such as the person’s level of consciousness, memory, ability to think logically, and more.

From a practical perspective, physical incapacity might mean that your relative needs help with personal care, caring for a pet, maintaining a house or apartment, or getting around town. Mental incapacity might mean that your relative needs help paying bills, making decisions, or handling affairs.

Requesting a Conservatorship

If your relative truly has no estate plan (not even a simple power of attorney or will), you might need to step in and request a conservatorship. An incapacitated relative not having an estate plan can be very tough on family, who might not be able to access the relative’s finances or who may not be able to even visit the relative in the hospital until they receive legal permission.

A conservatorship provides the legal permission that family may need to access bank accounts and pay bills, provide input on medical decisions, or handle other affairs for an incapacitated relative. A judge must approve the conservatorship and appoint an appropriate person as conservator (often a family member, close friend, or someone associated with the court). The conservatorship may be limited to medical matters or financial matters only at the judge’s discretion.

If your relative is only incapacitated physically or can still make logical decisions on his or her own behalf, you might talk about signing a power of attorney. A medical or financial power of attorney can allow a chosen agent to make decisions for the relative. However, your relative must have legal capacity to sign the document creating the power of attorney. Talk to an estate planning attorney if you have concerns or questions about capacity and need a power of attorney prepared.

Planning your estate? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.

 

Changing Your Estate Plan When You Adopt a Child

When you adopt a child, you most likely need to make some major adjustments to your estate plan. Completing the adoption is a major life change that probably affects how you want your estate distributed and who you choose as your heirs.

Which Documents Need to Change?

Depending on the documents you originally signed when you made your estate plan, you may need to change:

• Your will
• Your trust
• Life insurance documents
• Retirement account beneficiary designations
• Your power of attorney
• Your advance health care directive
• Guardianship designation
• Business succession documents

Probably the most important document that many people need to change is the will. Sometimes, you can sign an addendum to the will, but more likely you will need a new will prepared, signed, and witnessed.

Why Do You Need to Change Your Will and Other Estate Planning Documents?

Your will currently does not include your adopted child as an heir. Since you probably want to leave part of your estate to your child, you need to change the document. The same is true of other estate planning documents. There is no guarantee that your child will receive anything from life insurance or a retirement account unless you specifically name the child in a beneficiary designation.

When you adopt a child after creating a will and forget to change the will, your child usually will still inherit part of your estate. He or she gets the portion of your estate that would have gone to him or her if you had not made a will at all. However, you may want to provide a different portion to your child or pass your estate on to your spouse first. In addition, you probably don’t want to take the chance that your child receives nothing.

Will Your Adopted Child Inherit Just Like Birth Children?

Yes, once you have officially adopted a child and received the court order granting the adoption, your child is treated just like birth children for purposes of inheritance laws.

Planning your estate? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.

What Parts of Estate Plan Should Be Reviewed in the Pandemic?

“Many people are taking this time at home during the COVID-19 crisis to update their estate plan. Here are six critical estate plan components you should focus on, in light of the current pandemic.”

Forbes’ April article entitled “6 Parts Of Your Estate Plan You Should Review Now” discusses several items in your plan that should be examined, in light of the coronavirus pandemic.

In this pandemic, who will make important financial and medical decisions for you, if you’re unable to make them for yourself?

Make certain that you’ve designated a person who is trustworthy and reliable. Don’t forget to name a back-up for your power of attorney and health care proxy.

Look at your will. Make sure the person you’ve named as the executor of your estate is current. This is the individual who’ll attend to your affairs after you die and take care of probating your will, if necessary. She will also file income and tax returns on behalf of the estate. If you have minor children, name a guardian for them in the will.

Review your trust. Your revocable living trust usually benefits you while you’re alive. It can also be used to benefit others, such as a spouse and children. Name those who will receive the assets at your death. If your beneficiaries are minors or not mature enough to handle a sizeable sum, you might hold assets for them in trust, until they’re old enough to handle the money themselves. Review your decision regarding your trustee and see that this is the right person to administer the trust, based on your wishes.

Be sure to fund the trust. This will avoid probate of the assets on your death and lets the successor trustee control the assets for your benefit, if you’re incapacitated. If you fail to do so, it will create a host of problems after you’re gone. Your heirs will need court authority to access your assets, which can be an expensive and time-consuming endeavor.

Update your beneficiary designations. This includes the beneficiary designations on your life insurance policies, retirement accounts and any brokerage accounts that are payable on death to a beneficiary.

Ask your estate planning attorney about taking advantage of estate tax opportunities. It is important to have everything in order in this pandemic. If you have any questions about your current estate plan, please call or email us today.

Reference: Forbes (April 15, 2020) “6 Parts Of Your Estate Plan You Should Review Now”

What Should I Keep in My Safety Deposit Box?

A safe deposit box isn’t a smart choice for everything. Kiplinger’s recent article entitled “9 Things You'll Regret Keeping in a Safe Deposit Box” advises that there are some items you might not want to lock up in your bank, which isn’t open nights, holidays, or weekends, especially considering that in this pandemic, hours of operation for many businesses are reduced. In fact, some financial institutions, like Bank of America, have temporarily closed some locations. There are other banks that require an appointment for in-branch services, like accessing your safe deposit box. This would create a headache for you in your attempt to retrieve important documents or items when you need them.

Here are some important items you should store elsewhere, because you’ll need to access more often or on short notice. Maybe they should be in a fireproof safe that’s secured to the floor in your home.

Cash. Keeping a wad of cash in a safe deposit box, isn’t a good idea because if you need it in a pinch and the bank is closed, you’re out of luck. In addition, that cash will lose its buying power over time because of inflation and some banks don’t allow cash in a safe deposit box. Finally, cash in a safe deposit box isn’t protected by the FDIC. To have FDIC insurance (covering up to $250,000 per depositor per insured bank), your cash needs to be deposited in a qualifying deposit account, such as a checking account, savings account, or CD.

Your Passport. OK, most of us don’t need your passport in hand at a moment’s notice. However, you may need to take an emergency trip, which will happen during non-banking hours. Without your passport handy, there’s not much you can do about those calls in the middle of the night requiring you to dash.

The Original Copy of Your Will. You may want to keep a copy of your own will, your spouse’s and any in which you’re named the executor in a safe deposit box. However, don’t store the original copy of your will there, particularly if you’re the only owner of the safe deposit box. That’s because after your death, the bank will seal the safe deposit box, until your executor can prove she has the legal right to access it. This could mean a long and potentially expensive delay before your will is executed and your assets can be disbursed to the intended heirs. Keep the original copy of your will with your estate planning attorney or in a location where your executor can get to it without any legal hassles.

Letters of Instruction. Many people write a letter of instruction to accompany their will. This letter can describe whether you want to be buried or cremated and the type of service you want. This letter can include details on specific bequests of sentimental items, but it’s no help if its’ locked in your safe deposit box.

Durable Power of Attorney (POA). This document gives a trusted friend, family member, or professional adviser the authority to financial make decisions on your behalf. However, if your POA is in a safe deposit box that no one can access, the person you’re depending on to protect you at your time of need could find her hands tied. Keep the original POA with the original copy of your will and give copies to those who may need it one day.

Advance Directives. A living will and a health care proxy are sometimes collectively known as advance directives, but each has a unique purpose. A living will states your wishes for end-of-life care, and a health care proxy (also known as a health care power of attorney) names a person to make medical decisions for you, if you can’t make them yourself. Neither is any good locked away in an inaccessible safe deposit box.

Uninsured Jewelry and Collectibles. Heirloom jewelry and your valuable stamp collection and rare coins are good candidates for a safe deposit box, but they must be properly insured. The FDIC doesn’t insure safe deposit box contents, and neither does the bank unless it’s stated in your agreement.

Any Illegal or Dangerous Items. Your bank should provide you with a list of items that are not permissible to keep in a safe deposit box. This will include things like firearms, illegal drugs, and hazardous materials.

Reference: Kiplinger (June 1, 2020) “9 Things You'll Regret Keeping in a Safe Deposit Box”

Can I Make My Retirement Plan My Estate Plan?

“People are worried about the possibility of a sudden death due to COVID-19, and they want to get their legal affairs in order. Exacerbating the situation are the stories we read in the media about patients who are unable to communicate with loved ones, and hospitals that, because of the exigent circumstances, are creating their own do-not-resuscitate (DNR) rules—even if they conflict with the patient’s wishes.”

If you’re in a situation where you must quickly create or update your estate plan, here are some suggestions that might help you. Every situation is different, Forbes’ article “Seven Tips For Converting Your Retirement Plan To Your Estate Plan,” says, but these some tips that may start the process.

1. Speak with an experienced estate planning attorney. An experienced estate planning attorney will help make certain that your documents make sense for your situation and are legally drafted. Contact our office today to schedule your consultation.

2. Create your will. You can only have one valid will, and it should be made under the state laws of your domicile with the help of an experienced estate planning attorney.

3. Draft Power(s) of Attorney. A Power of Attorney (POA) is a legal document through which you appoint the person you want (your “agent”) to act on your behalf if you are unable to do so, usually because of physical or mental incapacity. POAs are best created using the rules of the state in which you anticipate their use.

4. Complete your HIPAA releases. If you have designated an agent under your medical Power of Attorney, but she doesn’t have HIPPA authority to be informed of your medical condition, it will be a hassle. HIPAA is designed to protect a person’s health information privacy. Sign a HIPAA Release Form for your POA agent in advance, to avoid headaches for your family.

5. Draft a living will or advanced directive. This document states your preferences for life sustaining treatment. Living wills generally have provisions related to end-of-life care and require the maker's and witnesses' signatures to make them legally binding—but this varies in each state.

6. Understand the POLST process. A Physician Orders for Life-Sustaining Treatment (POLST) order is a medical order. The process improves communication of a person’s decisions to accept or decline medical intervention and to make certain that these decisions are honored. Advanced directives and POAs are important, and generally should be filed with your physician and hospital, but a POLST order is in many medical emergency situations the one form the doctor will see.

7. Create a document storage plan. Estate planning forms should be kept in places where they are easily accessed. Don’t place them in a safety deposit box, because of rules banks have about access after the box holder’s death.

Reference: Forbes (April 9, 2020) “Seven Tips For Converting Your Retirement Plan To Your Estate Plan”

What Should My Estate Plan Include?

“Though most people who contract COVID-19 experience mild symptoms, it doesn’t hurt to be prepared if you do need to be hospitalized. It can feel scary thinking about getting sick or not being able to make decisions for yourself, but an estate plan is meant to ease your fears. After all, wouldn’t you feel better knowing that the burden of making health and financial decisions will never fall on unprepared family members?”

The Huffington Post’s recent article entitled “A Guide To Estate Planning During The Coronavirus Pandemic” says that almost everyone should have an estate plan—even if there’s no major health threat. If you don’t have one, right now is a great time to put it together.

In the COVID-19 pandemic, the two most critical documents to have are medical and financial powers of attorney. You should name someone to do your banking or make your medical decisions, if you are quarantined in your home, admitted to the hospital, or become incapacitated. When you have those in place, you need to create a comprehensive estate plan. Let’s look at the documents you should have and what they mean.

1. A Financial Power of Attorney. This is a legal document that gives your agent authority to take care of your financial affairs and protect your assets by acting on your behalf. For example, your agent can pay bills, write checks, make deposits, sell or purchase assets, or file your tax returns. Without an FPOA, there’s no one who can act on your behalf. Family members will have to petition the probate court to appoint a guardian to have these powers, and this can be a time-consuming and expensive process.

2. A Health Care Power of Attorney. Like a financial power of attorney, this legal document gives an agent the power to make health care decisions on your behalf, if you become incompetent or incapacitated. If you’re over the age of 18 and don’t have an HCPOA, your family members will have to ask the probate court to again appoint a guardian with these powers.

3. A Living Will (Advance Health Care Directive). This allows you to legally determine the type of end-of-life treatment you want to receive, in the event you become terminally ill or permanently unconscious and cannot survive without life support. Without a living will, the decision to remove life support is thrust upon your health care agent or family members, and it can be an extremely stressful decision. If you draft a living will, you detail your wishes and take that decision out of their hands.

4. A HIPAA Waiver. An advance health care directive will likely contain language that allows your agent to access your medical records, but frequently hospitals will refuse access to medical information without a separate HIPAA waiver. This lets your agents and family members access your medical data so they can speak freely with your physicians, if there is a medical emergency or you become incapacitated.

5. A Will. A last will and testament is a legal document through which you direct how you want your assets disbursed when you pass away. It also allows you to name an executor to oversee the distribution of your assets. Without a will, the distribution of your assets will be dictated by state law, and the court will name someone to oversee the administration of your estate. A will also lets you name a guardian to take care of your minor children.

6. A Living Trust. A revocable living trust is a legal tool whereby you create an entity to hold title to your assets. You can change your trust at any time, and you can set it up to outlive you. In the event you become incapacitated or are unable to manage your estate, your trust will bypass a court-appointed conservatorship. A trust also gives you privacy concerning the details of your estate, because it avoids probate, which is a public process. A living trust can also help provide for the care, support, and education of your children, by releasing funds or assets to them at an age you set. A living trust can also leave your assets to your children in a way that will lessen the ability of their creditors or ex-spouses to take your children’s inheritance from them.

Contact our office today to schedule your consultation.

Reference: The Huffington Post (April 7, 2020) “A Guide To Estate Planning During The Coronavirus Pandemic”