The trope of a person who is sick and elderly, perhaps on their death bed, calling an attorney to make a will at the last possible second is best left to movies and TV. In reality, the best time to do all your estate planning is while you are young and healthy. A lot of younger adults do not consider estate planning a necessity for a variety of reasons, a big one being that they do not expect to die or become incapacitated for many years to come. However, over the past two years, it has become clear that life can be quite unpredictable. A complete estate plan, comprised of both incapacity planning documents like a living will and testamentary documents, like a regular will, can lend some predictability and stability to a potentially chaotic situation.

If I am Young and Healthy, Why Should I Have an Estate Plan?

It is not unreasonable that many younger adults find the entire subject a bit saddening. It can be particularly difficult for young people to consider their mortality, or to consider the possibility that they could become incapacitated. However, it is wise to do so. Reasons that young healthy people also need estate plans include:

• Temporary incapacity - We often think of age-related conditions, like dementia, in this area. However, temporary incapacity can happen to young people due to an injury or illness. In the event that you get hurt in a car accident, or sick with COVID, and cannot speak for yourself, you will be glad to have powers of attorney designating the person you would like to make decisions on your behalf and a living will. These documents may look different for young people, who may want more intensive forms of medical care than someone who has less chance of recovery.
• Family concerns - The unexpected death of a younger person can shake up a family in ways that the expected passing of an elderly relative would not. The lack of an estate plan can complicate the situation, leading to additional difficulties and sometimes conflict.
• Minor children - Young parents should always have an estate plan in place that protects their children. No parent wants to think of their child growing up without them, but it is better to know that your children would be well cared for.
• Conflict avoidance - When a person is incapacitated, they must rely on others to speak for them. When no one individual has been named in a power of attorney, families may have serious disagreements over how the situation should be addressed. Your parents or other relatives may have conflicting religious or moral beliefs regarding life-preserving treatment. Especially if you had not made your wishes well-known, this can lead to significant conflict and even litigation.

Even if you are young and healthy, things can change very quickly. Families and individuals alike are protected when everyone has an estate plan in place, regardless of age or health.

You may already know that there are multiple types of trusts you can use, such as revocable trusts or irrevocable trusts. In California, there are even more specialized types of trusts you can use for specific purposes. Whether you are mostly concerned with minimizing your tax liabilities or probate expenses, or worried about providing for a loved one with special needs, there is likely a type of California trust that will meet your need. A qualified estate planning attorney can discuss your options with you and determine what types of trusts are right for your estate plan.

Trusts That Meet Specific Needs

Many estate plans involve the use of more than one trust for a number of reasons. Separate trusts may be created for different beneficiaries, or to meet different needs. Some estate plans use both revocable and irrevocable trusts to pass different assets. For other needs, one of these types of trusts may fit nicely into your estate plan:

• Special needs trust - There are two types of special needs trusts, depending on who the intended beneficiary is. First-party SNTs are used to benefit the same person who initially funded it. These are often created when an incapacitated adult receives monies such as through a lawsuit settlement or inheritance but can be used as an incapacity planning tool. Third-party SNTs are a testamentary tool used to benefit another person, such as an adult child with disabilities. Either way, SNTs are used to provide for any needs a disabled person may have that are not covered by Medi-Cal or other public benefits, but without affecting the beneficiary’s eligibility for these assistance programs.
• Life insurance trusts - Irrevocable life insurance trusts are typically used to minimize an estate’s tax liabilities. By using an irrevocable trust to pass life insurance benefits, these proceeds are kept out of a decedent’s taxable estate. Additionally, the funds can then be managed by a trustee rather than being handed to the beneficiaries as a lump sum.
• Blind trust - Often used by estate planners who anticipate family conflict, blind trusts refer to trusts that are created without the knowledge of the trustee or beneficiaries.
• Charitable trusts - Charitable trusts can be used to distribute money to a nonprofit over time, with the remainder sometimes going to the nonprofit and sometimes going to an alternate beneficiary. These can reduce your estate’s tax liability, serving both your beneficiaries’ interests and the community through charitable giving.

These are just a few of the types of specialized trusts available to California estate planners. There are more options available depending on your unique needs.

Nowadays, trusts, rather than wills, are the predominant way posthumous transfers are made. Trusts offer a number of benefits, but avoiding probate is often at the top of the list. There are pitfalls to living trusts, however. One is that the trust can only control property that it owns, so any assets that have not been transferred to the trust at the time of the grantor’s death may be out of its reach. Pour-over wills can be used as a sort of failsafe on a trust by posthumously transferring the grantor’s remaining assets into the trust. If you are unsure whether your estate plan needs a pour-over will, you should consult with a local attorney.

How Do Pour-Over Wills Work?

Pour-over wills exist to back up a trust. When the grantor of a trust dies, any assets of his that have not made their way into a trust already cannot be governed by the trust. A pour-over will simply exist to gather up and control any assets that were left out of the trust for whatever reason. Using a pour-over will, the testator devises all his remaining non-trust property to the trust.

This can be extraordinarily useful when it is discovered after death that the decedent owned property he had forgotten about, or never became aware of in the first place. It is more common than one might think for assets to be inadvertently omitted from a trust. People may forget about an old bank account or own estate property from a long-dead relative they never found out about. A pour-over will simply offers a bit of extra security in making sure that all the property a grantor wanted to be included in a trust will be included.

A living will, which you may also hear called an “advance directive,” is one legal document that everyone should have. In the event that you are not able to express your wishes due to injury or illness, a living will can be used to govern what types of medical care you will receive. It is important to make a living will, because it is the best way you can make your wishes known in advance. This document generally covers things like whether you would want to be resuscitated, or receive life-prolonging care if you are terminally ill. An attorney can help you decide what provisions to include in your living will and other healthcare planning documents.

What Does a Living Will Include?

A living will makes your wishes known regarding the types of medical treatment you do or do not want in the event that you become incapacitated and can no longer make decisions. It may include provisions related to:

• Power of Attorney - A living will can include a Healthcare Power of Attorney, or a Healthcare Power of Attorney can be made separately. A Healthcare Power of Attorney allows you to designate a person who you would want to make medical decisions for you if you are unable. You can limit your designated person’s powers, and they will still have to respect your other choices outlined in your living will.
• Life-Prolonging Treatment - Many people would not want to receive treatment that would prolong their life should they become terminally ill, preferring instead to experience a natural death.
• Pain Management - You can choose to include provisions specifying what types of pain management and other comfort measures you would like to receive.
• Organ Donation - If you would like to make an anatomical gift (donate organs) after you have passed away, you can indicate this in a living will. You have choices about what types of anatomical gifts you would like to make, and how they should be used. For example, you may declare that you are willing to have your organs used for transplants, but not for research purposes.
• Designating Healthcare Professionals - In a living will, you can name the physician you would prefer to have treat you if possible.

Not all provisions will be enforceable in all cases, but advance directives help your healthcare team and your loved ones alike understand your wishes.

Every July 1st, there are usually a handful of new laws that California lawmakers have passed that go into effect. Included in the list this year were several real estate laws. The following is a brief overview of each of these new statutes. If you have questions about how any of these new laws may affect your situation, a California real estate attorney can help.

New Buyer Fire Notice

AB 38 was passed to protect new home buyers from purchasing a property without being aware the home is located in a high fire risk area. It requires a seller to provide a list of all items that are not fire-resistant and that could be at risk in the event of a wildfire. This specific document must now be part of the closing package that a buyer must sign to confirm they have been informed of the risk. The form also provides information on how a buyer can prepare their home for wildfires. This is referred to as fire hardening.

Homeowner Association Rentals

AB 3182 requires homeowner associations (HOAs) to allow a minimum of 25 percent of their property to be rented. Prior to the law’s passage, an association could severely limit the number of rentals or prevent them entirely. This new law also prevents an HOA rule that an owner must live in a property for at least one year before they can rent it out; however, it does not stop an HOA from having a rule blocking short-term rentals.

According to national statistics, approximately 31 million Americans move each year. Some move across town, while others move across the state. However, about four million move to a different state. Out-of-state moves can be stressful to coordinate, especially if you have a family and an entire household to move. There are also all of the things you need to do when you arrive in your new state – including finding out about your children’s new schools, finding new doctors, dentists, hair salons, grocery stores – the list goes on. But what many people never think about is that by moving to a new state, they also need to update their estate plans.    

Estate Laws

If you have had a qualified estate planning attorney help you with your estate plan, it likely contains a variety of documents that stipulate how you want your assets and property to be distributed upon your death. Estate plans can contain a will, living trust, advance directive (living will), and power of attorney, along with other documents, depending on your own personal situation.

Every person’s estate plan is developed based on the laws of the state they live in. And just like many other laws, estate planning laws vary from state to state. This not only includes estate planning laws, but also laws regarding marital property, inheritance tax, income taxes, and state estate taxes.

One of the benefits of creating an estate plan is ensuring that your wishes are honored throughout the rest of your life and after your death. Through your will, trusts, powers of attorney, and other estate planning instruments, you can lay out a clear plan for your assets and your end-of-life care. However, you will need people to help you carry out the terms of your estate plan when you are no longer able to do so on your own. An important part of estate planning is choosing the right people to fill a variety of roles.

Naming Your Chosen Representatives

As you work on your estate plan, here are some of the roles that you may need to appoint:

• Estate executor - After your death, your estate executor will be your representative throughout the probate process and the administration of your will. The executor will be responsible for safeguarding your assets, resolving outstanding obligations to creditors, and distributing your assets to your named beneficiaries. You can designate your executor in your will, and it may be a good idea to name an alternative in case your first choice is unable to perform their duties.
• Guardian for minor children - If you are creating an estate plan while you have children under the age of 18, it is important to nominate a person to serve as their guardian if you unexpectedly die or become incapacitated. This helps to ensure that they will be in the care of someone you trust.
• Trustee - Establishing a trust for some of your assets allows you to distribute them to your chosen beneficiaries outside of the probate process. When you fund a trust, you will need to name a trustee who will be responsible for managing the assets and distributing them according to your wishes.
• Agent or attorney-in-fact - Your estate plan may include powers of attorney, which grant the authority to make decisions on your behalf regarding your assets and healthcare if you become incapacitated. The person to whom you grant authority is known as your attorney-in-fact, or your agent.

While the State of California has certain requirements regarding who may serve in each of these roles, you have significant freedom to choose the people whom you believe are best suited to fill them. You may choose to name your spouse, an adult child, or a sibling in one or more of these roles, especially those of a more personal nature. For roles that have greater financial responsibilities, like a trustee or an estate executor, you may want to choose someone with a special set of financial skills that prepare them for their duties.