The estate planning area can be broken into sections based on the documents most of us will need: a WILL, DURABLE POWER OF ATTORNEY FOR ASSETS (DPA), ADVANCE HEALTH CARE DIRECTIVE (AHCD) and a LIVING TRUST.

Under BASIC ESTATE PLANNING topics discussed are the Will, a Probate Estate and most important how title is held since this will tell us what document will give us the “legal authority” to act for another.

Estate Planning is often thought about as planning for your death and how you want your assets distributed to your family, friends and charity.  It is our believe that the most important part of estate planning is to plan for your possible “INCAPACITY” because of a stroke, dementia, Parkinson Disease, etc.  The concern is who is going to be there for you in the event of your incapacity? Who will tell the doctor your wishes or make a decision based on the available medical information? Who will write the checks to maintain the house and utilities and the gardener, who will call the tax preparer? Or call the insurance company about the medical bills that have to be paid?

Under DURABLE POWER OF ATTORNEY FOR ASSETS (DPA) this most important document gives another person the legal authority to make legal decisions such as talking to the IRS for another person, or to change their IRA or other retirement plan.

Under the ADVANCE HEALTH CARE DIRECTIVE (AHCD) it gives legal authority to another person to make medical decisions for you if you cannot make them yourself.  We highly recommend you communicate with your agent for your health care by completing  booklet “YOUR WAY” which is available through HELP, and available for free although we highly recommend you make a donation and get two booklets.

The best way to hold title to assets is as a trustee under a LIVING TRUST.  Most folks understand the living trust as being beneficial to avoid a probate upon death.  While this is true we believe the greater value is during your life.  In the event you become disabled or suffer from some type of dementia and need someone to step in to help you the Living Trust is perfect.  You have chosen a Successor Trustee that you trust implicitly to help you pay your bills, make sure you live in a proper setting, etc. and it’s so very easy for this trusted individual to step in and help you!

We have covered the estate planning documents you need.  In addition, you need to select individuals and give them the legal authority to act on your behalf when you cannot.

These positions are:

  • Executor for your Will
  • Attorney in Fact or Agent for your Durable Power of Attorney for Finances
  • Health Care Agent for your Advance Health Care Directive
  • Trustee or Successor Trustee for your Living Trust

The person you select has a “Fiduciary” obligation to you.  The fiduciary obligations/rules are specifically spelled out in the probate code.  In essence it means the person MUST do what is in your best interest and carries the highest level of duty under the law.  PFS fiduciaries serve in all capacities and help manage financial assets, real estate, healthcare and distribute your trust assets.

Taxes are always a subject to keep in mind, however, a Living Trust will have no impact on your income taxes.  California constitution forbids the state from imposing an inheritance tax.  Less than 1% of the American public will be subject to the federal estate and gift tax.  If you have a large IRA or an Annuity, we recommend you seek out a competent professional to minimize the income tax to the beneficiary (s) you have designated.