Everyone Should Have A Will and Estate Plan

Everyone Should Have A Will and Estate Plan

There are four personal estate documents that every business owner should have:  a will, a trust, a power of attorney, and a medical power of attorney/healthcare directive.  While there are more sophisticated documents that those with lots of assets or hordes of money may want to consider, these four are the basics.  And the current coronavirus pandemic has brought to the forefront the importance of reviewing and updating estate planning documents and implementing your estate plan.

Will:  A Will addresses distribution of your assets after death and can appoint guardians for minor children.  It is important because you direct what happens after your death.  If you have no Will (i.e. dying intestate), the government decides what to do with your assets and the result may not be what you prefer.  A Will allows you to designate who carries out the directives in the Will (an Executor), designates who inherits assets (Beneficiaries), instructs who and when Beneficiaries receive assets, and appoints custodians for minor children (Guardians).

Some assets that can pass outside of a probate, IRAs, 401(k)s and brokerage accounts, for example, allow you to name Beneficiaries of that specific account (with the authorization of your spouse, if your spouse is not the Beneficiary).  If there is confusion or some ineffective designation, stating the issue in the Will ensures who gets the account proceeds.

But, using only a Will ensures that the estate will have to go through the Courts under a Probate, which is a legal process to settle an estate (whether Intestate or via a Will).  While the Probate process varies by state, most have small estate expedited processes, but even that will likely require $25k – $50k in attorneys fees and costs.  It also subjects your information to the public, as a public court filing and can delay matters.

Revocable Living Trust:  A Revocable Living Trust can avoid some of the Probate issues and also allow the creator (Trustor – i.e. YOU) to change the terms throughout your lifetime, changing Beneficiaries, adding and subtracting assets, and all the while realizing the benefits of the trust for yourself until death.  But, in order to realize the benefits, the Trustor’s (your) assets must be transferred to the trust to ‘fund’ the trust.  A funded Revocable Living Trust allows your survivors to avoid a probate and the costs, red tape and delays associated with it.

Even before death a Revocable Living Trust can avoid the necessity for a conservatorship of your estate (for asset management) if, for some reason, you become incapacitated or incompetent, and save the costs (and potential embarrassment) associated with a court conservatorship action. While certain legal notices have to be given, tax reporting has to be done and assets must be conveyed to the trust beneficiaries in keeping with the terms of your trust, a Revocable Living Trust can provide a certain level of privacy from the public.  And, while it is not designed to avoid estate taxes, provisions in the trust and pre-planning can save estate taxes.  A Revocable Living Trust can also potentially allow you creditor protection during your lifetime and avoid the need for a formal court proceeding after your death.

Power of Attorney:  A Power of Attorney (“POA”) gives another person the legal right to do things you authorize, usually financial things.  The California legislature enacted Probate Code Section 4401 to provide a form.  Yes, you can use the form; we prefer you consult an attorney, but here it is:  http://file.lacounty.gov/SDSInter/dca/1021444_4.18.17_UniformStatutoryFormPowerofAttorney.pdf

You can revoke the Durable POA and you can change it any time you want.  You can change who you designate and make it someone else to have the powers you authorize.  You can also set a date for a Durable POA to lapse, but if you create a general POA and set no date for expiration, it will last until the moment of your death or you become incapacitated.  The form lets you strike the language about continuing to be effective even if you become incapacitated.  So, you have complete control.  In California, the document must be signed in front of a notary public and if the POA entitles your agent to dispose of your real estate, the documents must be recorded with the county recorder’s office in order to grant the power over real estate.

Medical Power of Attorney/ Healthcare Directive:  A Medical POA is used for you to name an agent to have authority to make tough medical decisions for you.  The Medical agent can only use the power of a medical POA if your doctor says that you are unable to make key decisions for yourself.  The American Bar Association has provided a Guide on this:  https://www.americanbar.org/content/dam/aba/administrative/law_aging/2020-multi-state-fillable-hcpa.pdf    There are circumstances where special requirements for execution of a Medical POA must be met.  So again, we recommend that you consult an attorney.

If you are in an incurable and irreversible condition, do you want to have your life prolonged as long as possible?  Make it your decision, not someone else’s.  Fortunately, the California legislature produced another form under the Probate Code that is very useful and frankly, everyone should have one:  https://www.courts.ca.gov/documents/Advanced-HealthCare-Directive-Form_031620.pdf    AARP provides one too:  https://www.aarp.org/caregiving/financial-legal/free-printable-advance-directives/   It is an Advance Health Care Directive under California Probate Code Section 4701.  These forms are a combination of the Medical POA and the Healthcare Directive.  Of course, the documents are not those of Epps & Coulson, LLP and therefore, we recommend you consult with your attorney on use of them.  Speaking of which, an experienced estate planning attorney can help you:

  • Ensure that your wishes are documented and you designate an appropriate person to carried out your care decisions for you if you become unable to act for yourself;
  • Assist you to designate a trusted person to act as your financial power of attorney;
  • Discuss your estate planning objectives and document how your assets are to be handled to meet your goals;
  • Help you analyze methods of wealth transfer and planning strategies for businesses assets;
  • Strategize on business succession planning;
  • Coordinate with your tax advisor on the most tax advantageous transfer upon your death and a plan to reduce or eliminate estate taxes;
  • Discuss current estate tax exemptions and alternatives upon their expiration in 2025;
  • Work with you on planned and charitable giving;
  • Ensure that assets are properly titled pursuant to your estate plan;
  • Examine and assist you with gifting and transfer on death (“TOD”) assets, payable on death assets and survivorship designations (and the effect of these designations on your estate plan);
  • Help you protect assets considering long-term care planning and creditor claims; and
  • Ensure that your funeral and burial wishes are properly carried out upon your death.

Without an estate plan, unintended things can happen; disputes can arise with the succession of your business, your estate may pay substantially more in estate taxes, unintended beneficiaries may receive a portion of your assets pursuant to state law or be distributed outright to a beneficiary at 18 years of age, someone who is unsuitable in your eyes may be appointed as guardian of your minor children.  More personal, a court guardianship may be necessary for you if you become incompetent and do not have a Financial and Health Care POA in place and a court-appointed guardian may not be someone you would have chosen as your guardian.

But, having these four basic documents in place will go a long way to ensure an orderly transfer of your assets after your demise, as well as provide appropriate management of your financial affairs during your lifetime in the event of your incapacity as well as guidance to your family with end of life decisions.

For more information feel free to contact Dawn:  dcoulson@eppscoulson.com.


Attorneys admitted to practice in

California, New York, Colorado, Texas, Oregon and Hawaii


Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.  While intended as informational and educational, it is considered advertising under various applicable laws of some states, and as such, Epps & Coulson, LLP encourages you to call us to discuss these matters as they apply to you or your business.