Estate Planning

What is estate planning? At its most basic level, an estate plan is an expression of your wishes regarding distribution of your property after you pass away. A complete estate plan will also name someone to make financial and health care decisions for you if you are incapacitated. Estate planning is important for everyone, and is very important for gays, lesbians, and unmarried couples. Without an estate plan, your partner may not legally be able to make decisions for you and may not be able to inherit from you. All estate plans will start with either a will or a living trust.

Will

A will is a document in which you state what you want to happen to your property when you pass away. If you have more than $100,000 in assets (gross, not net, value) when you die, your will must be admitted to probate. In your will, you name someone to act as a personal representative to make sure that your wishes are carried out. A will does not have any effect while you are alive.

Living Trusts

For some people, a will is all that is necessary. If, however, you own assets worth more than $100,000, a living trust is appropriate. Like a will, a living trust expresses your desires regarding the distribution of your property when you pass away. You appoint one or more people as successor trustees to manage the trust when you are unable to do so, either through death or incapacity. When the trust is created, your home and other property is transferred to the trust. When you pass away, there is nothing in your individual name and, therefore, nothing to probate. Your successor trustee will step in and manage the trust estate, distributing your estate according to your wishes. This process is known as trust settlement or administration.

For married couples, another advantage to a living trust is the ability to use both spouses' credit against estate taxes. Currently, an individual is able to shelter $1,000,000 from estate taxes. Through the use of a disclaimer or an A-B trust, the $1,000,000 exemption of the deceased spouse can be used in addition to the surviving spouse's exemption. Without the use of such a trust, the exemption of the deceased spouse is lost upon his or her death. In addition, protections can be built into the plan to make sure that children from a prior marriage are not disinherited by the surviving spouse.

Planning For Disabled Beneficiaries

If you have children or other beneficiaries that are disabled, a plan can be created that will allow you to set aside property for their benefit without interfering with their ability to receive or apply for needs based public assistance such as SSI and Medi-Cal. This is done through the use of a special needs trust. This trust, authorized by Federal and state law, allows a third party to set up a trust for the benefit of the disabled person and fund it with cash and other assets. A trustee is named to manage the trust and the trust assets are used to supplement the needs of the disabled beneficiary. Typically, a special needs trust will be used to pay for special therapy, upgrades in care, and entertainment expenses for the disabled person. Distributions are not made directly to the disabled beneficiary nor can the disabled beneficiary demand that distributions be made. Done correctly, the property owned by the special needs trust will not be countable in determining the disabled person's eligibility for government assistance. In certain circumstances, a special needs trust can be set up and funded with the assets of the disabled beneficiary. This is known as a first person special needs trust and is typically used in cases where the disabled person receives an unexpected inheritance or receives a settlement in a personal injury lawsuit. This is a very technical area of the law and you need an attorney that has experience. Mr. Cummings has drafted dozens and dozens of first and third party special needs trusts.

Durable Power of Attorney for Asset Management

Any estate plan should also include a durable power of attorney for asset management. The durable power of attorney gives the person you name in the document the power to make financial decisions for you if you are unable to do so yourself. If you have a will, this document is vital as the will does not give anyone authority to act on your behalf while you are alive. With a trust, this document is also important as there will be assets, such as IRAs, automobiles, and 401ks, that are not transferred to your living trust and over which your successor trustee would have no authority.

Advanced Health Care Directive

An advanced health care directive specifies what types of medical treatment you desire, including your preferences regarding end of life decisions. You also appoint someone to make those decisions for you if you are unable to do so yourself.

Advanced Estate Planning

If you have a larger estate, there are a number of techniques available to reduce or eliminate estate taxes. A number of these techniques will also generate more income for you during your lifetime and will allow for the sale of highly appreciated property without the payment of capital gains taxes and are appropriate for smaller estates that are not subject to estate taxes. Different people have different needs so please call to discuss which of these techniques may be appropriate for you.

When choosing an estate planning attorney, price should not be the sole factor in your decision. You need an attorney that will work with you to place your assets into your trust. This is known as funding your estate plan. Without funding, your trust is nothing more than several sheets of paper. You also want an attorney that will offer future estate planning consultations, free of charge. This way, you will not hesitate to call your attorney if you have a question. Finally, you want an attorney that you feel comfortable with. Call us at the Law Offices of Gerald W. Cummings and find out how we will be a good fit for you. If you would like to download and complete an Estate Planning Worksheet, please click on the link below. Return it to the office and we will contact you to discuss it and to schedule an appointment.

1550 The Alameda, Suite 211

San Jose, California 95126

Phone: 408-286-2122

Fax: 408-286-2121

lcb@alamedalawgroup.com