The Documents You Need in Your Estate Plan

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0 height="100%"><tr> <td valign="top" rowspan="2" width=185 BGCOLOR="#003333" TEXT="#F7F7FF" bgproperties="fixed" background="195d4c00dduajq.jpg"> <bR> <bR> <bR> <div> <A HREF="id16.htm" TARGET="_top" TITLE="The Danger of Joint Tenancy"><B><IMG SRC="01109110.png" border=0 width="9" height="17" ALT="previous" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></B></A><B>       </B><IMG BORDER="0" SRC="1x1.gif" HEIGHT="17" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" WIDTH="17"><B>   </B><IMG BORDER="0" SRC="1x1.gif" HEIGHT="17" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" WIDTH="17"><B>       </B><A HREF="id25.htm" TARGET="_top" TITLE="Q A"><B><IMG SRC="01409110.png" border=0 width="9" height="17" ALT="next" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></B></A></div> <div> <A HREF="id17_m.htm#the_durable_power_of_attorney_for" TARGET="TRLX_Middle" TITLE="The Documents You Need in Your Estate Pl"><B>Advance Health Care Directive</B></A></div> <div> <A HREF="id17_m.htm#the_living_will" TARGET="TRLX_Middle" TITLE="The Documents You Need in Your Estate Pl"><B>"Living Will" or </B></A><A HREF="id17_m.htm#the_living_will" TARGET="TRLX_Middle" TITLE="The Documents You Need in Your Estate Pl"><B>Directive to Physicians</B></A></div> <div> <A HREF="id17_m.htm#durable_power_of_attorney_for_financial" TARGET="TRLX_Middle" TITLE="The Documents You Need in Your Estate Pl"><B>Financial Power of Attorney</B></A></div> <div> <A HREF="id17_m.htm#nominate_conservator" TARGET="TRLX_Middle" TITLE="The Documents You Need in Your Estate Pl"><B>Nomination of Conservator</B></A></div> <div> <A HREF="id17_m.htm#pour_over_will" TARGET="TRLX_Middle" TITLE="The Documents You Need in Your Estate Pl"><B>Pour-over Will</B></A></div> <div> <A HREF="id17_m.htm#community_property_memorandum" TARGET="TRLX_Middle" TITLE="The Documents You Need in Your Estate Pl"><B>Community Property Memorandum</B></A></div> <div> <A HREF="id17_m.htm#letter_s__of_instruction" TARGET="TRLX_Middle" TITLE="The Documents You Need in Your Estate Pl"><B>Letter of Instructions</B></A></div> <div> <A HREF="id17_m.htm#abstract_of_trust__trustee_s" TARGET="TRLX_Middle" TITLE="The Documents You Need in Your Estate Pl"><B>Certification of Trust</B></A></div> <bR> <div> <A HREF="id16.htm" TARGET="_top" TITLE="The Danger of Joint Tenancy"><B>Previous Page</B></A></div> <div> <A HREF="id25.htm" TARGET="_top" TITLE="Q A"><B>Next Page</B></A></div> <div> <A HREF="id12.htm" TARGET="_top" TITLE=" Trust and Estate Planni"><B>Estate Planning Page</B></A></div> <bR> <div> <A HREF="index.htm" TARGET="_top" TITLE="Law Offices of Mathews Bergen Grier"><B>Home</B></A></div> <bR> <div> <A HREF="mailto:mbglaw@cts.com" TARGET="_top" TITLE="mailto:mbglaw@cts.com"><B><IMG SRC="01573ce0.jpg" border=0 width="115" height="206" ALT="E-mail MATHEWS BERGEN & GRIER" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></B></A></div> </td> <td valign="top" colspan=2 height=75 BGCOLOR="#FFFBF0" TEXT="#080000"> <div> <I>The Documents You Need in Your Estate Plan</I></div> <div> </div> </td> </tr><tr> <td valign="top" height=405 width="100%" colspan=2 BGCOLOR="#FFFBF0" TEXT="#080000"> <div> The Living Trust is the cornerstone of a good estate plan. But there are other documents needed in order to complete the plan. There are five documents which need to be examined. We shall examine them individually, and point out one (the "living Will") which is commonly used but which is almost useless.</div> <bR> <bR> <div> <B> <A NAME="a_complete_estate_plan_should_include"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>A COMPLETE ESTATE PLAN SHOULD INCLUDE, IN ADDITION TO THE TRUST DECLARATION, THE FOLLOWING DOCUMENTS:</B></div> <bR> <div> <IMG SRC="04b2a250.png" border=0 width="42" height="37" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"> <A HREF="#the_durable_power_of_attorney_for" TITLE="The Documents You Need in Your Estate Pl">Advance Health Care Directive(s)</A></div> <div> <IMG SRC="04b2a250.png" border=0 width="42" height="37" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"><A HREF="#durable_power_of_attorney_for_financial" TITLE="The Documents You Need in Your Estate Pl"> Financial Power(s) of Attorney </A></div> <div> <IMG SRC="04b2a250.png" border=0 width="42" height="37" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"> <A HREF="#nominate_conservator" TITLE="The Documents You Need in Your Estate Pl">Nomination of Conservator</A></div> <div>           <A HREF="#nominate_conservator" TITLE="The Documents You Need in Your Estate Pl">(often a part of the Powers of Attorney or Advance Directive)</A></div> <div> <IMG SRC="04b2a250.png" border=0 width="42" height="37" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"> <A HREF="#pour_over_will" TITLE="The Documents You Need in Your Estate Pl">Pour - Over Will(s)</A></div> <div> <IMG SRC="04b2a250.png" border=0 width="42" height="37" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"> <A HREF="#community_property_memorandum" TITLE="The Documents You Need in Your Estate Pl">Community Property Memorandum</A></div> <div>           <A HREF="#community_property_memorandum" TITLE="The Documents You Need in Your Estate Pl">(If married, and if there is any property acquired outside of marriage)</A></div> <div> <IMG SRC="04b2a250.png" border=0 width="42" height="37" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"> <A HREF="#letter_s__of_instruction" TITLE="The Documents You Need in Your Estate Pl">Letters of Instruction </A></div> <div> <IMG SRC="04b2a250.png" border=0 width="42" height="37" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"> <A HREF="#abstract_of_trust__trustee_s" TITLE="The Documents You Need in Your Estate Pl">Certification of Trust</A></div> <bR> <bR> <div> <FONT SIZE="2" COLOR="#000000" FACE="Arial" ><B> <A NAME="the_durable_power_of_attorney_for"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B></FONT><B>The Advance Health Care Directive</B> is the first and most important of the supporting documents you need. By signing this document you can entrust a loved one with the binding legal authority needed to make medical decisions for you in the event you are unable to make decisions. The advance health care directive includes the right to make medical decisions, to (including the authority to withdraw life support systems or refuse surgery <I><B>if actually authorized by you</B></I>, and may authorize the donations of vital organs. If you grant the power, this document transfers the ultimate responsibility of withdrawing life support systems from the attending physician to the person you have designated. This lifts from the shoulders of the physician the potential liability for withdrawing the life support systems. The physicians are required to comply with the instructions of the person you have designated to make decisions. If you have become incompetent, then this Advance Health Care Directive continues to be valid. [BE CAREFUL: Some older durable powers of attorney for health care expire seven (7) years after creation. We do not use a power of attorney for health care or advance directive which expires on a certain date or after a certain number of years, unless directed to do so by the client (for a valid reason).]  After July 1, 2000, the former Durable Health Care Power of Attorney is replaced with a similar, if substantially broader, document entitled "Advance Health Care Directive"; however valid Durable Powers of Attorney for Health Care executed prior to July 1, 2000 ARE STILL VALID EVEN AFTER JULY 1, 2000 and need not be redrafted (unless you wish to take advantage of some of the more generous and broadly crafted terms of the new 'advance directive', such as identifying the treating doctor by name who will make the decision as to when the power is in effect, indicating your specific desires regarding funeral and/or disposition of your remains, etc.</div> <bR> <div> <B> <A NAME="the_living_will"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>The Living Will (Directive to Physicians)</B>.  No longer used in California.  The advance directive replaces this document.</div> <bR> <div> <B> <A NAME="durable_power_of_attorney_for_financial"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>Durable Power of Attorney for Financial Affairs</B>. This is one of the 'safety net' documents. If everything has been transferred to you Living Trust, this document will never be needed. But, if you have not transferred everything into the living Trust, this becomes a very important document. In fact, it can become a critical document. It can help you, while alive, to avoid a conservatorship. It can help your heirs, should you die, to avoid a probate.</div> <bR> <div> By signing a Durable Power of Attorney for Financial Affairs, you grant to someone you trust (usually a family member) the legal authority to sign your name. This is to be used in emergencies when you cannot sign your name. Emergencies such as when you are unconscious, out of town, or become either mentally or physically incompetent.</div> <bR> <div> A regular power of attorney terminates when you become incompetent. A Durable Power of Attorney does not terminate. Of course, the Durable Power of Attorney for Financial Affairs will terminate upon your death. All powers of attorney terminate upon your death.</div> <bR> <div> The Durable Power of Attorney for Financial is intended to serve as a safety net. Assets which are in the name of the Living Trust may be managed by the Successor Trustee in the event you are unable to manage them. Assets outside of the Living Trust must be managed by either a Conservator or a person holding a Durable Financial Power of Attorney.</div> <bR> <div> Not only can the person holding this Durable Financial Power of Attorney manage assets outside of the Living Trust, but that person can actually transfer those assets into the Living Trust.</div> <bR> <div> To protect the peron executing such a power of attorney, a statutory warning is available for the durable power of attorney for property management. It consists of a document to be signed by the client stating that he or she has been advised by the responsible attorney regarding the execution of the durable power, and that he or she has read and understands the warning contained in California Probate Code Section 4128(a).  A copy of the applicable section, initialed by the client, is attached to the document.</div> <bR> <div> Pre-printed durable powers of attorney must contain statutory warnings [see Prob. Code 4128(a); see also Prob. Code 4401 (Uniform Statutory Form Power of Attorney)].  There is no such requirement when an attorney prepares a durable power for a client [see Prob. Code 4128(a)].</div> <bR> <div> <B><IMG BORDER="0" SRC="Symb075c00b7011800000000.png" HEIGHT="19" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Financial Emergencies. </B></div> <div> <B><IMG BORDER="0" SRC="Symb075c00b7011800000000.png" HEIGHT="19" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Authority to Sign Your Name.</B></div> <div> <B><IMG BORDER="0" SRC="Symb075c00b7011800000000.png" HEIGHT="19" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Valid Only During Your Life.</B></div> <bR> <div> <B> <A NAME="nominate_conservator"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>Nomination of Conservator</B>. If you have all of your assets in your Living Trust, you have signed a valid Advance Health Care Directive, and you have an executed a valid Durable Financial Power of Attorney, you should never need to have a conservator appointed. However, your estate plan should provide for this unlikely event.  The typical nomination is a part of the power of attorney and/or advance directive.</div> <bR> <div> The term 'conservator' refers to the legal guardian of a disabled adult. There are two types of conservatorship: A conservatorship of the person and a conservatorship of the estate.  Rather than have a judge decide who should be appointed for you, it is best that you select that person while you are competent to do so.</div> <bR> <div> In order to have a centralization of management, we provide that the person you select as the person to act for you in your Advance Health Care Directive should be the conservator of your person. Likewise, the person you selected as the person to act for you in your Durable Financial Power of Attorney should be the conservator of your estate.</div> <bR> <div> <B> <A NAME="letter_s__of_instruction"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>Letter(s) of Instruction. </B>This is a letter you can write to your successor trustee. No one else ever needs to see this letter. It is intended to cover various personal items and to give your Successor Trustee guidelines to follow in the administration of the Trust. Remember, you have selected whoever it is to be Successor Trustee because you know that person will do what you want done. But how does the Successor Trustee know what you want? The answer is the Letter of Instruction.</div> <bR> <div> The Letter of Instruction covers four basic areas of information you want to give to your Successor Trustee. First, write out your wishes regarding funeral arrangements. Second, list persons and instructs who should be notified in the event of your death. Third, list the location of important documents so that the Successor Trustee can find them. Lastly, indicate to your Successor Trustee how personal items (such as jewelry and collections you may have) should be distributed. Because some of these “instructions” may change from time-to-time, separate “letters” are sometimes prepared covering each matter about which you are instructing the trustee.  </div> <bR> <div> Normally, your Living Trust will specify that your beneficiaries should receive a percentage, a share, or a portion of your estate. How does the Successor Trustee know what to put into each of the shares? The answer is that you may state your <I>desires</I> in the Letter of Instruction. Keep in mind that the Letter of Instruction does not bind the Successor Trustee (and we would not want to bind the Successor Trustee, just in case circumstances have changed and are not as you now foresee them to be), but since you selected the Successor Trustee because you knew that person wants to do what you want done, this is not much of a concern.</div> <bR> <div> <B><IMG BORDER="0" SRC="Symb075c00b7011800000000.png" HEIGHT="19" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Funeral Arrangements. </B></div> <div> <B><IMG BORDER="0" SRC="Symb075c00b7011800000000.png" HEIGHT="19" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Who To Notify.</B></div> <div> <B><IMG BORDER="0" SRC="Symb075c00b7011800000000.png" HEIGHT="19" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Location of Important Documents.</B></div> <bR> <div> We also provide our clients with a specific "Direction to Successor Trustee re Distribution of Specific Personal Propert" form to use to <U>direct</U> the trustee give specific items of personal property to specific persons.  Our direction is effectively an amendment to the trust which can be done from the convenience of the client's home, without a visit to the attorney, but with the assurance that it will be binding on the trustee later.</div> <bR> <div> <B><IMG BORDER="0" SRC="Symb075c00b7011800000000.png" HEIGHT="19" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Disposition of Personal Items.</B></div> <bR> <bR> <div> <B> <A NAME="pour_over_will"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>Pour Over Will:</B> The Living Trust is the document which replaces a 'regular' will. That is to say, the Living Trust will handle the transfer of your property from your name after your death to the names of your beneficiaries. The Living Trust can only do that for property that is in the name of the Living Trust. All property that is not in the Living Trust must pass from your name to the names of your beneficiaries by your Will.</div> <bR> <div> The ‘Pour-over' Will is used only with a Living Trust. It serves as a safety net. The pour-over will is a companion to the Living Trust. It is created for the situation in which you have – for whatever reason -- not transferred all of your property to the Living Trust. The pour-over will transfers all of the assets in your name at the time of your death which are not already in the Living Trust into the Living Trust. The reason this is done is to insure that your Living Trust is the central controlling document in your estate plan and that the Living Trust controls who is going to get which of your assets. Wills modernly do not provide instructions for funeral, burial, cremation or similar arrangements.  See the <A HREF="#the_durable_power_of_attorney_for" TITLE="The Documents You Need in Your Estate Pl">Advance Health Care Directive</A>, above.</div> <div>  <A NAME="community_property_memorandum"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></div> <div> <B>Community Property Memorandum:</B> Sometimes call a Spousal Property Agreement or similar name. This last document is only used between a husband and wife. This is because community property exists only between people who are legally married. Every married couple should have some sort of a property agreement as part of their estate plan, if there is any potential for dispute. This is true whether the couple has been married a few days or for decades. It is even more important for second (or more) marriages where both spouses bring property to the new marriage.  This document can confirm or transmute (change) the character of property.  Special attention needs to be taken to the various ramifications, including the creation of a conflict of interest with the attorney, in drafting this document.</div> <bR> <div> <B>T</B>he purpose of this document is to set out clearly the "character" of the properly. That is, is the property community, quasi-community, or separate? It is important because the law treats property originating from different sources differently. This is true for tax, real estate, and family law. When all of the property is community, the memorandum confirms this fact. If some of the property is separate, that is confirmed. If some property is held as joint tenants, but is truly community, this writing can "set the record straight." </div> <bR> <div> If all property is community property (it was acquired during marriage from the proceeds of the couple's work), there is no need to specify the nature of the property, for it will be assumed to be community. If property has been acquired from a separate property source, such as from the estate of  one of the spouse's relatives, then there is no need for a property memorandum, unless the property was inadvertently <I>transmuted</I>, i.e., its character changed, from separate property to community -- where that result was unintended. In the later case a community property memorandum is essential to make sure the correct character of the property is acknowledged by the parties <I>before</I> the estate plan is finalized. An example of inadvertent <I>transmutation</I> would be if (for example) the husband inherited land in the Los Angeles area from his uncle (call him 'Uncle Fred'). When the property deed was received, husband (thinking that 'joint tenancy' was the way to avoid probate) unilaterally put wife's name on title as a joint tenant (usually, this is done by recording a 'quit claim' deed in both husband and wife's names 'as joint tenants'). On the other hand, much transmutation is <I>intentional</I>, i.e., where the party receiving it desired that the spouse have an equal interest. But, if there is any question whatsoever as to intention, the courts will almost always side with the party claiming that the property to be community property. Therefore, if property is held in both names, but the parties agree that it was intended that the property be the "separate property' of one or the other, a written agreement to this effect is essential.  Remember, however, the attorney preparing you estate plan is not going to automatically know the 'character' of your property; you will need to make sure you communicate these important facts to the lawyer.  Some lawyers charge extra for a community property agreement, since it is not an <I>essential</I> part of every <I>estate</I> plan.</div> <bR> <div> <B> <A NAME="abstract_of_trust__trustee_s"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>Certification of Trust or a Certification of Accuracy of Trust: </B>Either the trustee's certification of trust, the abstract of trust, or the certification of accuracy of copy, depending on the requirements of the institution, may be used to confirm the trustee powers to any institution with which the trustee(s) are conducting trust business.</div> <bR> <div> The trustee's certification of trust gives the drafter the choice of providing that description of trustee powers in the certification or attaching a copy of the trust provisions containing the trustee's powers and the identity and signature authority of the trustee.  Although not often used in California, the abstract of trust contains a description of the powers given to the trustee(s) by the settlor(s), while avoiding disclosure of other provisions of the revocable trust document. </div> <bR> <div> A trustee's certification of trust that meets the requirements of Probate Code Section 18100.5 will afford  protection from liability for third parties who act in reliance on it. A certification of accuracy of a copy of an executed trust document states that the copy of the trust document is a true and correct copy and, if desired, that the trust has not been amended. The certification of accuracy is to be attached to a copy of the executed trust document.</div> <bR> </td> </tr></table></body>