The Importance of an Estate Plan

Join CSC and Ken and learn some Estate Planning Basics, Wednesday, August 14, 6:30 – 8:00 pm. Click here to Register Today

Having an estate plan is essential to assure that you and your loved ones will be taken care of in the event if your incapacity or death.  While most people think of estate planning as death planning, a proper estate plan ensures that your wishes with respect to your person and property will be implemented not only after your death, but also in the event that an injury, illness, or disease prevents you from taking care of your own finances or health. 

Unless you put your desires in writing in a legally effective manner, you may not be taken care of in the way you wish, under the supervision and management of the person you would want to take charge of your affairs if you are unable to do so; nor will your assets be distributed after your death in the manner of your choosing.  Properly drafted documents may avoid probate, and reduce or eliminate estate taxes.

You are entitled to prepare a trust or will which will distribute your assets in the manner you consider most appropriate.  Likewise, you are entitled to set forth your health care directives and appoint representatives who will make sure your needs and instructions are followed.  If you are a parent to young children, you can ensure that a guardian is appointed in the event of your untimely death (though both parents of young children rarely die, it can happen and should be addressed). 

In addition, if you are a pet owner, California law now allows you to provide a place for your pet to live, appoint a caretaker for your pet, give directions about your pet’s care and routines, and provide a source of funds for your pet’s care.  Make sure your estate planning documents reflect your desires and family dynamics – what is good for your neighbor is not necessarily appropriate for your family.

Your estate plan also should address safeguarding your assets if you or your spouse has a catastrophic illness, or has an immediate or future need for long-term care.  Most families are shocked to learn that Medicare does not pay for long-term nursing home costs.  Our approach is to advise you how to manage your assets wisely in order to keep you or your loved one at home, if possible, or in a private pay facility.  However, if you do not have sufficient assets to pay for long-term care, you will have to negotiate the maze of Medi-Cal for long term care, which can be very tough without professional assistance.  The rules for Medi-Cal eligibility for long-term care are complex; planning is essential to protect assets, including the family home. 

As you plan for the future, ask your attorney about the importance and use of the following documents:

Power of Attorney:  This document gives a person the opportunity to authorize an agent – usually a spouse, trusted family member, or friend – to make legal and financial decisions when the person is no longer competent. 

Power of Attorney for Health Care (Advance Healthcare Directive):  This document gives a person the opportunity to authorize an agent to make all decisions regarding the person’s health care, including choices regarding doctors and other medical providers, medical treatments, and, in the later stages of an illness or disease, end-of-life decisions.

Trust: This document enables an appointed Trustee to manage the property of a person called a grantor during the grantor’s cognitive impairment.  It is of vital importance that the elder law attorney draft the proper type of trust for you or your loved one, based on specific financial, asset protection, or health care needs.  For instance, a Revocable Living Trust does not offer protection from Medi-Cal recovery, except possibly for the Medi-Cal beneficiary’s primary residence, and is not a legally appropriate vehicle for Medi-Cal planning purposes.  An Irrevocable Asset Protection Trust does provide asset protection for advance Medi-Cal planning, but it may not be advisable in multiple situations.  A Special Needs Trust provides financial resources to a person who is receiving needs-based government benefits, but such a trust could prove potentially disastrous for an individual not on needs-based government aid.

Will:   This document bestows a person’s property after death to other individuals called beneficiaries based on the person’s wishes.

Without comprehensive legal documents, court intervention in the form of Conservatorship proceedings may be needed.  In a Conservatorship, the conservator is given legal authority to make decisions and carry out financial transactions for the incapacitated conservatee.  Unfortunately, the conservatee’s wishes regarding financial matters and health care decisions may not be followed at all.  Court rules and procedures must be strictly adhered to regardless of the conservatee’s desires.  After the conservatee’s death, the Probate Court may be required to handle estate assets despite the donative wishes of the decedent.  It is always better for individuals to plan ahead for their future financial and health care needs and for the disposition of their property after death.        

Join CSC and Ken and learn some Estate Planning Basics, Wednesday, August 14, 6:30 – 8:00 pm. Click here to Register Today