Make Sure You Have These 4 Key California Estate Planning Documents

Many people mistakenly believe that estate planning just means getting a Will, but it’s actually much more than that.

Of course, there’s the actual “planning” part of estate planning—pulling together all the details about your circumstances and creating a customized plan. But there are also other key documents that you need to ensure your estate plan functions without a hitch. This post summarizes four of the most important components of any California estate plan.

  1. Will

When most people think of estate planning, they immediately think of a Will. A Will is a legal document you can use to direct how your property will be divided when you die. Without a Will, your property is divided according to California’s rules of intestate succession, which might be different from how you would divide it.

However, a Will must be admitted to probate to be effective. Probate in California is a lengthy, expensive process. Most Californians prefer to avoid it entirely, and so they combine a simple Will with the next key estate planning component, a living trust.

  1. Living Trust

A living trust is a legal arrangement in which the trustee owns property for the benefit of named beneficiaries. Typically, as the person who creates the living trust, you would serve as the initial trustee. Your trust agreement will specify how the trust property is to be divided when you die and who should take over as trustee at that time or when you become incapacitated.

The benefit of a living trust is that those changes all occur without having to go to court. You can think of it as a simplified, private probate process. Living trusts are often used in tandem with a Will, which catches any left-over property that, for whatever reason, you didn’t transfer to the trust.

A living trust is formally known as a “revocable trust,” because it can be changed or completely revoked at any time. That power enables you to avoid a lengthy probate administration without giving up control over your property while you’re still alive.

You could instead create an irrevocable trust, and for particularly wealthy Californians, there are good reasons to do so. But irrevocable trusts come with a disadvantage—they can’t be changed or revoked, meaning that you must give up at least some power over the trust property while you’re alive.

  1. General Durable Power of Attorney

A general power of attorney is a document that grants someone else authority over your property and financial transactions. What makes a durable power of attorney special is that it remains effective (or only becomes effective, depending on how you structure it) if you become incapacitated, unable to make those decisions for yourself.

You should have a general durable power of attorney in place so that those kinds of decisions can continue to be made on your behalf if you become incapacitated. However, you should think carefully about who you want to appoint to make those decisions, since you won’t be in a condition to oversee their actions.

  1. Advance Health Care Directive

The California Legislature has enacted a statutory advance health care directive form that you can use to appoint someone under a power of attorney for health care and give specific directions about your care.

Part 1 of the statutory form is a power of attorney for health care. This is like the general durable power of attorney, but it grants authority over medical decisions instead of financial decisions. This is another powerful document, and you should read the form’s instructions carefully and speak with an attorney about what they mean before choosing someone to exercise that power.

Part 2 allows you to give specific instructions for health care that your doctors—and the person appointed under Part 1—must follow. One of the most important instructions you can give in this part is whether you should be given life-sustaining treatment in the following circumstances:

  • You have an incurable and irreversible condition that will result in your death within a relatively short time;
  • You become unconscious and, to a reasonable degree of medical certainty, you will not regain consciousness; or
  • The likely risks and burdens of treatment would outweigh the expected benefits.

In parts 3 and 4, you can specify whether your organs should be donated when you die and designate a primary physician. If you don’t complete these parts, the person you appoint under part 1 will be able to make those decisions for you.

Completing an advance health care directive is important, because it tells your doctors who to look to for your health care decisions when you are unable to make them. In addition, by providing specific instructions about some of the hard questions that person will have to make, you can relieve him or her of some of the burden of having to choose for you.

Do You Have All Four?

Having a Will is important. But so is having all the other documents described above. If you don’t have all four of the key components of a California estate plan, call me today so I can help you fill in the gaps!