LAW OFFICES OF MARLA A. PLEYTE
805.770.7080 1035 Santa Barbara St., Ste. 7, Santa Barbara
831.331.8864 535 Monterey St., Hollister
Most estate plans consist of four key documents: a revocable living trust, a will, a financial power of attorney, and an advanced healthcare directive. Some people do not need a revocable living trust, but almost everyone benefits from having a will, a financial power of attorney, and an advanced healthcare directive. Other people, who have more complicated situations, may benefit from establishing a revocable living trust or other type of trust specific to their personal and financial circumstances.
If any of the following apply to you, it is very likely that you would benefit financially and personally from establishing an estate plan:
• You wish to choose who makes financial or medical decisions on your behalf if you are unable to do so
• You have minor children
• You own real property
• You have assets in excess of $100,000
• You are married and have children from a prior marriage
Basic Estate Planning Has Four Main Goals:
Goal One: Designating Someone to Handle Your Personal and Financial Issues if You Can’t
Almost every individual can benefit from estate planning. Even people with few assets should have an advanced healthcare directive and a financial power of attorney. These documents allow a person of your choosing to make medical and financial decisions for you in the event you are unable to make them yourself. For example, if you are in a car accident and are unconscious or unable to communicate, having an advanced healthcare directive will allow the person of your choice access to your medical records and to make health-related decisions on your behalf. Similarly, the person you designate to have your financial power of attorney will be able to manage your accounts and financial affairs if you are unable to do so. Without these documents, your loved ones may have difficulty accessing your medical and financial records and may not be able to handle your affairs the way you want.
For people with more assets or more complicated financial circumstances, a revocable living trust can greatly simplify the task of managing your affairs if you die or become incapacitated, even on a temporary basis. A revocable living trust allows you to place certain assets in trust and designate a person as trustee to have control over the trust assets. While you have capacity and are alive, you fulfill the role of trustee and the trust property is treated exactly the same way it was before being placed in trust. You may transfer such property in and out of trust, you may sell it, you may give it away, you may spend it. There are no positive or negative tax consequences and you do not have to file a separate tax return.
If you become unable to manage your affairs while still living, it is a simple process for a person of your choosing to take over the role of trustee and manage your trust assets on your behalf. This person still has a duty to manage your trust assets according to the terms of the trust document, meaning that they must manage and disburse trust assets only as you have specified.
Ms. Pleyte will work with you to draft only those documents that you need. She is equally happy to work with a client who only needs a financial power of attorney, advanced healthcare directive and simple will as a client who has complex estate planning needs.
Goal Two: Ensuring That Your Assets are Managed and Distributed According to Your Wishes After Death
As described above, almost everyone can benefit from having a will. A will allows you to specify who will manage the process of collecting and distributing your assets upon your death. For people with minimal assets, a will may be all that you need to ensure that your assets go to the loves ones of your choosing. However, if you have more substantial assets, own real property, or wish to have control over trust assets for a period of time after your death (e.g. to ensure for care of minor children or manage distribution of substantial amounts of money over time), you would probably benefit from establishing a trust.
Ms. Pleyte will spend the time necessary to fully understand your personal circumstances and goals to ensure that your assets go to who you want when you want them to. She believes that an important part of the estate planning process is educating you about all of your options so you can make an informed and well-considered decision about how to structure your estate plan. She personally handles all client interviews, document drafting, and review sessions to ensure continuity of communication and full understanding of client needs.
Goal Three: Avoiding Probate and Payment of Unnecessary Taxes
Comprehensive estate planning efforts are critical to avoiding probate and avoiding the payment of unnecessary taxes. In California, if you die with an estate worth more than $150,000 and have not placed these assets in trust or engaged in other probate-avoidance techniques, you will be required to have your estate probated by the court. Probate is a time-consuming and expensive process which many people wish to avoid. Probate usually takes a minimum of 6 months to a year and has statutory fees which are a percentage of the gross estate. A thoughtful estate plan, including consideration of placement of assets in trust, carefully considered titling of assets and payable or transfer on death designations, and beneficiary designations for retirement accounts and other assets can ensure your estate does not need to be needlessly probated.
Similarly, estate planning can avoid the payment of unnecessary taxes, including income taxes, estate taxes, and property taxes. Ensuring that assets are titled properly, placed into the proper type of trust, and distributed after death in a specific manner can substantially reduce taxes associated with the transfer or sale of such assets. Careful consideration of beneficiary designations for retirement accounts can also avoid unintended distribution and tax consequences.
Ms. Pleyte will consider the entirety of your financial circumstances in assisting you with developing a comprehensive estate plan that is tailored to your needs. Estate planning involves balancing the benefits of various types of estate planning against the cost and time required to administer such arrangements. Ms. Pleyte considers all available options to ensure that your plan reaches an appropriate balance.
Goal Four: Ensuring That A Plan is Place for Minor Children
If you die before your children reach adulthood, your primary concern is almost certainly that they are well-cared for by a person of your choosing and that your available assets are used optimally to ensure that your children’s living, medical, and educational expenses are met. One of the primary purposes of your will is to nominate a guardian or guardians of your choosing. While the Court will ultimately have to approve your choice of guardian, your nomination will carry substantial weight with the Court.
Ensuring that a well-designed trust is in place will also provide a mechanism to ensure that your assets are managed and ultimately distributed to maximally benefit your children, both as children and adults. For example, within your trust you can provide your trustee with the discretion to maintain or sell the family home to provide for continuity in living arrangements or liquidity to meet the children’s needs. You can establish dates of distribution for each child and instructions to your trustee about how you want funds spent on your children’s behalf. If you have a substantial estate, you can ensure that your children receive their inheritance in stages and at ages that will not deter them from carrying on a productive life or force them to manage large sums of money before they are ready.
Further, careful planning of your retirement assets may provide an unexpected source of college money or retirement funds for your children.
Ms. Pleyte can assist you in reviewing your personal and financial affairs to ensure that you have a thorough and thoughtful plan in place to ensure that your children are optimally cared for in the event of your death.
Guardianships and Conservatorships
A guardianship or conservatorship is a legal proceeding where the Court approves a person or persons to manage the affairs of another person who is unable to do so on his or her own behalf.
People under the age of 18 are unable to manage their own affairs by law, so a guardian of the person must be appointed to manage educational, medical and other personal decisions for the minor if neither parent is available to do so. In the event that the minor has inherited assets that have not been placed in trust or appropriate custodial accounts, the court will also need to appoint a guardian of the estate to manage and distribute assets on behalf of the minor. Guardianships of the estate are subject to regular accountings to the court which typically require the assistance of an attorney. Further, assets which are subject to a guardianship of the estate are fully distributed to the minor at age 18, increasing the risk that such assets will be spent unwisely or too soon.
Having a coordinated will and trust can minimize the need for the ongoing expense and hassle of court involvement in your child’s financial affairs and provide a robust means of managing those assets passing to your children well beyond the age of 18. This can ensure that assets are available for undergraduate or graduate education, medical needs, or other financial needs of the child until the age of your choosing. Further, ensuring that retirement beneficiaries are properly designated can avoid outright distribution of such benefits to your children at age 18, which results in large tax liabilities and loss of the opportunity for tax free gains over future years.
Ms. Pleyte can assist you in establishing a guardianship of the person and/or estate in the event it becomes necessary. She has experience navigating the paperwork, court proceedings, and ongoing court requirements associated with guardianship proceedings.
People over the age of 18 who are unable to manage their own personal and/or financial affairs may be subject to a conservatorship. A conservatorship of the person is required when a person does not have an advanced healthcare directive which authorizes a chosen person to make medical and other personal decisions on his or her behalf. A conservatorship of the estate is required when a person has not established a trust and financial power of attorney which authorize a chosen person to manage their financial affairs. Conservatorships of the person and estate are both public court proceedings which require ongoing court supervision. The accounting requirements for conservatorships of the estate are substantial and typically require the assistance of an attorney.
A comprehensive estate plan, including a trust, financial power of attorney, and advanced healthcare directive may preclude the need for a conservatorship of the person and/or estate in the event you become unable to effectively manage your own affairs. Many people prefer the privacy and ease of transition that a coordinated estate plan offers as compared to a court managed conservatorship proceeding. In the event a conservatorship does become necessary, your estate planning documents also allow you to nominate who you wish to serve as your conservator.
Ms. Pleyte can assist you in establishing a conservatorship of the person and/or estate in the event it becomes necessary. She has experience navigating the paperwork, court proceedings, and ongoing court requirements associated with conservatorship proceedings.