Monthly Archives: December 2014

Living wills and health care proxies

California residents may be interested in information about health care decisions as one of the more important aspects of estate planning. While many think of estate planning as dealing mostly with the disposition of a person’s assets upon death, making these health care determinations while still healthy can be vital.

The documents that govern medical care in an estate plan are the health care proxy and the living will. Both of these are important in cases where a person has become incapacitated and cannot make their own health care decisions. The health care proxy gives power of attorney to a third party with regard to these decisions. This generally applies when the person is unable to communicate or is not in the proper mental state to make these important decisions. Usually, one person is named, but successors can also be named in the document when that original person is not available to perform their duties.

A living will, on the other hand, is a document which gives medical care directives with regard to end-of-life decisions. The types of things covered are the use of life-saving machines and techniques, such as a heart-lung machine or tube feeding. Without these procedures, the person would die. Having this document will allow doctors to either make use of the procedures to prolong the person’s life or to prevent their use, if the person so chooses. The living will is important when the person is terminally ill and incapacitated.

Determining the appropriate estate planning documents can be difficult without the help of an attorney. The attorney can assess a client’s situation, both financial and personal, and determine and then prepare the specific documents that will be appropriate.

Source: American Bar Association , “Living Wills, Health Care Proxies, & Advance Health Care Directives“, December 15, 2014

The benefits of a trust in estate planning

As California residents address their estate planning options, the question of whether or not a trust is beneficial is common. The concept may seem extreme or inappropriate to those who don’t have a high net worth, but trusts may be equally beneficial to someone whose net worth is a minimum of $100,000 if certain additional conditions are true.

Real estate, businesses, and art collections may be best handled through trusts. A trust can also be beneficial for managing the manner in which payments are made after one’s death. For example, a trust might be structured to support a surviving spouse while leaving the majority of one’s estate to heirs after that individual dies. A trust might be structured to allow partial payments to heirs at various points in life such as reaching an age of majority or completing a college education. A trust is an excellent option for someone who wants to be able to support a surviving loved one who is disabled so that there isn’t an impact on that person’s eligibility for government assistance.

Tax implications associated with an inheritance can be significant, making a trust an option for limiting the tax consequences after an individual dies. Trusts can also minimize the cost and time that would otherwise be spent to deal with probate. Assets tend to be less vulnerable to creditors when included in a trust as well. It is important to note that in order to protect assets, they must be titled in the name of a trust.

Those who are unsure of whether trusts are appropriate may want to begin by formulating goals for the management and distribution of their estate upon their death. An estate planning attorney can be helpful in providing direction for the most appropriate options based on these goals.

Source: CNN Money, “Estate planning: Is a trust beneficial?“, December 02, 2014