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What Are Estate Planning Fundamentals?

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There are many legal strategies involved in estate planning, including wills, revocable living trusts, irrevocable trusts, durable powers of attorney, and health care documents.  New clients often say that they do not have an estate plan.  However, most people are surprised to learn that they actually do have a plan.  Because In the absence of legal planning, a person's estate will be distributed after death according to California's laws of intestacy.  The State's plan may not be the plan they would have chosen to distribute their assets to their heirs.  A properly drafted estate plan will replace the terms of the State's plan with one designed by you and which reflects your wishes.

Your Last Will and Testament

A last will and testament is just one part of a comprehensive estate plan.  If a person dies without a Will they are said to have died “intestate” and state laws will determine how and to whom the person's assets will be distributed.  Some things you should know about wills:

  • A will has no legal authority until after death. So, a will does not help manage a person's affairs when they are incapacitated, whether by illness or injury.
  • A will does not help an estate avoid probate. A will is a legal document submitted to the probate court, so it is basically an “admission ticket” to the probate court.
  • A will is a good place to nominate the guardians (or back-up parents) of your minor children if they are orphaned.  All parents of minor children should document their choice of guardians.  If you leave this to chance, you could be setting up a family battle royal, and your children could end up with the wrong guardians.

Trusts: Revocable Living Trusts, Irrevocable Trusts, Testamentary Trusts, Special Needs Trusts, etc.

Trusts come in many “flavors,” they can be simple or complex, and serve a variety of legal, personal, investment or tax planning purposes. At its most basic level, a trust is a legal entity that takes over ownership of your assets.  All trusts typically name at least three parties: the trust-maker, the trustee (trust manager), and the trust beneficiary.  Oftentimes, all three parties are represented by one person or a married couple.  In the case of a revocable living trust, for example, a person may create a trust (the trust-maker) and name themselves the current trustees (trust managers), who manage the trust assets for their own benefit (trust beneficiary).

Depending on the situation, there may be many advantages to establishing a trust, including avoiding probate court.  In most cases, assets owned in a revocable living trust will pass to the trust beneficiaries (or heirs) immediately upon the death of the trust-maker(s) with no probate required.  Certain trusts also may result in tax advantages both for the trust-maker and the beneficiary.  A trust may be used to protect property from creditors, or simply to provide for someone else to manage and invest property for the trust-maker(s) and the named beneficiaries.  A well-drafted trust can ensure that the effectiveness of the estate plan you set up is carried out in accordance with your wishes, even if you, as the trust maker, become incapacitated or die suddenly.

Power of Attorney

A power of attorney is a legal document giving another person (the attorney-in-fact) the legal right (powers) to act on your behalf.  What those powers are depends on the terms of the document.  A power of attorney may be very broad or very limited and specific.  It is important to remember that a power of attorney is valid at the time of signing and can be used by your agent at any time.  They are particularly useful if/when the person granting the power of attorney (principal) becomes disabled or incapacitate and is unable to act.

All powers of attorney terminate upon the death of the maker.

Health Care Documents (or Advance Directives)

An advance directive is a document that specifies the type of medical and personal care you would want should you lose the ability to make and communicate your own decisions.  Anyone over the age of 18 may execute an advance directive, and this document is legally binding in California.  Your advance directive can specify who will make and communicate decisions on your behalf, and it can set out the circumstances under which you would not like your life to be prolonged; if, for example, you were in a coma with no reasonable chance of recovery.

A document that goes hand-in-hand with your advance directive is an authorization, given to your medical providers, allowing specified individuals to access your medical information.  Without this authorization, your doctor may refuse to communicate with your hand-picked decision maker.

DISCLAIMER: This site and any information contained herein are intended for informational purpose only and should not be construed as legal advice.  Seek competent legal counsel for advice on any legal matter.


Family First Estate Planning Law Center is committed to answering your questions about Asset Protection, Elder Law, Medicaid, Special Needs Planning, Trusts & Wills and Probate law issues in California.

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