Estate Planning in Southern California

Most people understand the need for a will when they pass away. Most don’t realize that it’s better to create a will sooner rather than later. If you die without a will (called “dying intestate”), any assets going through a probate process will pass according to intestate succession. In California, the order of heirs in intestate succession is as follows:

• Children inheriting everything if you aren’t married
• Spouse inheriting everything if you have no other blood relatives
• Parents inheriting everything if you have no children, spouse, or siblings
• Siblings inheriting everything if you have no children, spouse, or parents
• Spouse inheriting all community property and half of your separate property if you have one child or grandchild
• Spouse inheriting all community property and one-third of your separate property, while multiple children inherit two-thirds of your separate property to share
• Etc.

Intestate succession can make it difficult for children to inherit if you remarry and don’t put specific terms in a will before you pass away. Additionally, even having a will does not necessarily avoid going through probate, which means the state will use your assets to repay your creditors, taxes, and final expenses before allowing your loved ones to inherit. Wills that go through probate become part of the public record.

If you want to bypass probate and keep your assets private, consider putting assets like your home, investment real estate, and other assets into a trust.

The gold standard method to bypass probate is by setting up a revocable living trust. Your trustee (the trust manager and administrator) will be able to administer the trust and distribute any assets stored in the trust to the named beneficiaries shortly after your death.

When you set up a revocable living trust, you are typically fully in control of the trust while you are alive. You can manage any assets you have in the trust, sell assets, and amend the trust to update or change beneficiaries. Typically there will be very little difference in how you manage your assets while you are alive. The major benefit is allowing your loved ones to manage everything easily after you pass, without having to wait to go through probate.

Because trusts bypass probate, information regarding your assets and what each beneficiary receives stays private. Privacy could prevent fights between loved ones over inheritances after you pass away.

In the event of incapacitation, you need representatives with durable power of attorney over your assets and medical decisions. In this context, durability means your representatives’ powers of attorney remain in effect when you become incapacitated. If your representatives’ powers of attorney aren’t durable, they terminate when you become incapacitated.

You will need a financial power of attorney to manage your assets while incapacitated and a healthcare power of attorney to make medical decisions on your behalf. While you can name the same person as a general power of attorney to manage both, many people often entrust different individuals to manage each set of decisions and coordinate paying for necessary medical care.

Living wills, also called advance healthcare directives, describe your wishes for care if you become incapacitated and can’t communicate your medical decisions. This can include pain management, intravenous fluids, intubation or invasive procedures, and whether to keep you sustained on life support.

If you don’t have a durable power of attorney named in your estate planning tools, any interested party may file a nomination of guardian to become your legal guardian or conservator. This can lead to disagreements between family members about who is best suited to become your legal guardian.

If you have minor children, do you have a plan to care for them if you pass away suddenly? You can nominate a guardian for your children in the event you become incapacitated or die unexpectedly. You should also plan a trust to protect your children’s inheritance until they are of legal age to inherit after you pass away.

There are several options for guardianship of a minor child, including:

• Guardianship of the estate. Guardianship of the estate includes managing a child’s finances or assets until they come of age to inherit. This could include income from a job, inheritance assets, or life insurance distribution.
• Guardianship of the person. A guardian of the person makes lifestyle decisions for the child, including where the child lives, what school they attend, what church they attend, medical decisions, and more.
• Temporary guardianship. If a child suddenly needs a guardian, the probate court might appoint a temporary guardian until it can name a permanent guardian.
• Permanent legal guardianship. A permanent guardian is the full-time legal guardian of the child until they come of legal age.

Several legal documents make up an effective estate plan. Estate planning documents you might need include: