A power of attorney (POA) is a document that gives a person the legal authority to make decisions for you. A durable financial power of attorney is an important part of a comprehensive estate plan. With a durable POA in place, you can ensure that someone you trust will be able to manage your finances if you become incapacitated.

What Is a Durable Financial Power of Attorney?

A financial power of attorney gives another person the authority to manage your finances. The person you designate as your agent may have the power to address multiple financial issues, including paying your bills, depositing or withdrawing money from your accounts, and buying or selling property on your behalf. When a POA is "durable," this means that it will remain in effect if you are ever incapacitated, which may include any situations where you cannot make decisions for yourself or express your wishes to others.

Why You Might Need a Durable Financial Power of Attorney

There are any number of reasons why you might need to appoint someone to manage your finances if you cannot do so on your own. Perhaps you are going through cancer treatment and want to be sure your bills are paid on time, including in cases where you may be too ill to handle financial issues. If you are at an advanced age, you may want to make sure your financial affairs will be handled correctly, that your medical care will be paid for, and that your ongoing needs will be met throughout the rest of your lifetime. Whatever the reason, a durable financial POA gives you peace of mind knowing that your finances are in good hands should something happen to you.

Estate planning most commonly considers the property left behind by a recently deceased individual and how it should be disposed of, in addition to potential end-of-life situations and the care desired by the planner in the event of future incapacity. These topics can be challenging to contemplate, as they force the planner to contemplate their own mortality. Often overlooked is planning of a practical nature for how the family is to proceed in the immediate aftermath of the estate planner’s passing.

In California, there are legal mechanisms by which a person can effectively make arrangements for their own funeral services and the disposition of their remains. These topics can be even more difficult to contemplate, let alone establish concrete plans for. However, planning for funerary arrangements can not only keep important decisions in your hands but also provide significant benefits to your surviving loved ones. If you are able, it is prudent to make such arrangements during your own lifetime.

What is an Irrevocable Life Insurance Trust?

An irrevocable life insurance trust (ILIT) is a commonly overlooked and underutilized tool for individuals to ensure that funds adequate to cover funerary expenses will be available to their loved ones. An ILIT is a trust, but one that is funded posthumously by the proceeds of a life insurance policy. Upon your death, benefits paid out by your life insurance company can be placed directly in this trust. Importantly, ILIT funds may not be subject to certain tax burdens or other liabilities.

Being forgotten is a common fear associated with death. Everyone wants to be remembered fondly long after they have passed away. Aside from the immediate financial benefits, a desire to be remembered can be a driving factor for those who have flocked to Los Angeles seeking stardom. Luckily, you do not need to make it as an actor or musician to leave a lasting legacy. You can use your estate plan to continue benefiting not only your descendants for generations to come, but the community as a whole. Charitable giving is a noble way to continue serving your community long after you have gone. Business owners may have additional opportunities. If you are interested in leaving your mark on your loved ones and Los Angeles alike, you should speak to an attorney about how you too can build a legacy using your estate plan.

Your Estate Plan Can Help You Leave a Lasting Legacy

No matter who you are in life, you can do real good in the world after death. Some ways that you can leave a lasting legacy in your estate plan include:

• Gift-giving occasions - You may not be around for some important events in your loved ones’ lives, like perhaps a grandchild’s wedding. Using either a will or a trust, there may be ways to earmark funds so that your presence will be felt at these important events.
• Charitable giving - You have multiple options for posthumous charitable giving. You may of course leave a lump sum to a specific charity. Or, you could create a charitable trust that supports a particular cause you are passionate about. You can then authorize your trustee to make reasonable distributions as needed.
• Memorial scholarships - A great way to help deserving individuals in your community is to establish a memorial scholarship that can help disadvantaged students obtain higher education.
• Business planning - When you have done the sheer amount of hard work it takes to build a business from the ground up, you want it to still be there when your great-great-grandchild is old enough to take it over. Planning for your company’s continued success can help keep your family financially secure for generations to come.
• Donating big items - Charitable organizations and community efforts are always in need of big-ticket items, like cars and furniture. Your belongings can be enjoyed by and used to serve members of your community in need as long as the items endure.

As you can see, it is possible to create an enduring name for yourself with a bit of careful estate planning.

If you are asking this question, you have probably heard quite a bit about what going through probate is like - or you have been forced to endure the process yourself to settle a loved one’s estate. So you know that going through full probate is an arduous process. The fees and costs involved can seem astronomical, especially if you have to hire appraisers, fend off a pointless contest, or handle any of the other hurdles that can pop up during probate. You may now be wondering if there is a way that you can avoid putting your loved ones through probate in your own estate plan. Fortunately, there is. By using a living trust, you can bypass the probate courts entirely. Your beneficiaries will appreciate it - and there may be benefits of using a trust during your own lifetime.

How Does Using a Trust Let My Beneficiaries Skip Probate?

A trust is an excellent alternative to a will. When you create a trust, you fund it by transferring ownership of some or all of your property to the trust.

Do not worry, this does not mean that you lose control of your money or property. You can declare yourself the trustee of your trust and authorize yourself to make distributions from the trust at your own discretion. Essentially, so long as you use a revocable trust, you can do whatever you please with the property you have funded your trust with.

As we mentioned in our last blog post, having an estate plan in place can go a long way toward protecting both you and your loved ones. It is also important to discuss what can happen if you pass away without an estate plan. While creating a trust leaves you - and later, your chosen trustee - in control, you will have no say in what happens to your estate should you pass away without a plan. Your family members will have no choice but to go through probate. Probate is long, complicated, and often costly. However, going through it is the only way to distribute a decedent’s assets in the absence of an estate plan. Avoiding intestate probate is perhaps one of the greatest benefits of estate planning.

Consequences of Dying Without an Estate Plan

Those who pass away without an estate plan are termed “intestate.” During intestate probate, your family members will likely need to hire an attorney to guide the process. Because you did not leave any instructions for how your property should be distributed, California state law will control who gets what. Our state’s intestacy laws favor immediate relatives - mainly your spouse and children, or sometimes your parents.

Your closest relatives may or may not be the ones you want to inherit your entire estate. Unfortunately, intestacy law does not care if you have not spoken to your adult son in over 20 years, or whether you are estranged from your spouse.