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Sacramento Estate Planning Law Blog

Estate planning and personal items: do the kids even want them?

For many people in California, passing on treasured family heirlooms and sentimental property is an important part of estate planning. But, according to a recent news story, many members of the so-called "millennial" generation are not particularly interested in inheriting furniture, antiques and collectibles from their older relatives.

The owner of one auction and consignment business says business has increased threefold over the past five years, as baby boomers pass away and their children don't want the furniture and personal items they left behind. But, the auction house is turning down 60 percent of the items that come in.

New Medi-Cal recovery law is another reason for avoiding probate

Avoiding probate has long been an important goal for those preparing an estate plan in California. Probate refers to the process of administering a deceased person's estate through the state court system. In California, the process can take months or even years. It can also be very expensive. Fees for lawyers and executors are based on the size of the estate and can devour a significant portion of the decedent's assets.

Now there is an additional reason to avoid probate in California. In last week's post we discussed the new Medi-Cal recovery law which will apply to the estates of California residents who die on or after January 1, 2017. Among several significant changes, the new law provides that only assets in an individual's probate estate will be subject to Medi-Cal recovery claims.

How will the new Medi-Cal recovery law affect estate planning?

For more than two decades Medi-Cal, California's state Medicaid program, has had the right to assert claims against the estates of people who received Medi-Cal benefits when aged 55 or older. Avoiding a Medi-Cal recovery has been a major estate planning priority for many people. This is about to change significantly. Under a new state law, Medi-Cal's recovery rights will be significantly more limited with respect to the estates of people who die on or after January 1, 2017.

The new law will provide a number of protections for families of Medi-Cal recipients. It will restrict recovery to benefits paid for nursing home and specified community and home-based services, as well as hospital and prescription expenses related to those services. The state will no longer be able to seek recovery for other health services, including doctor visits and prescription expenses, not related to nursing home, community-based or home-based services.

Preparing a California Advance Health Care Directive

When most people think of estate planning they think of preparing a will or trust to direct the distribution of their property upon death. But the estate planning process is also an ideal time to prepare a California Advance Health Care Directive.

The California Advance Health Care Directive has two parts. The first part is a Power of Attorney for Health Care, in which people appoint a trusted individual as their health care agent. The agent's appointment will become effective when people's primary physician concludes they are no longer able to make health care decisions for themselves, or can no longer communicate those decisions to others.

Judge rules two women are not Prince's heirs

When California residents die without a will or trust, their estate is distributed according to California's intestacy laws, without regard to whatever wishes the decedent may have had. If the decedent left a substantial estate, there is also a significant risk of litigation among surviving family members and would-be heirs.

We reported in a post earlier this year that when famous artist Prince died, he apparently left no will. No will has since been found, his wealth -- said to be about $300 million -- will be distributed according to the intestacy laws of his home state of Minnesota.

The importance of estate planning in California

It might not be the easiest thing for people in California to think about, but estate planning is important for the future of their loved ones. It can help the individual with their own piece of mind for the inevitable. Death is a part of life. For many, illness can come before death. Because of that, having a reasonable set of goals for the future with estate planning is a sound method for asset protection. This is true whether it is a substantial estate or one more modest. Everyone has property that they want to go to the people of their choosing. Knowing how to make certain one's wishes are adhered to requires planning.

There are numerous factors that come into focus when planning for the future and all need legal guidance. With legal, financial and medical issues all coming to the forefront, having a plan for if there is disability or death can avoid confusion, rancor and legal troubles for the individual and his or her family. Even those who do not have a great deal of assets in a portfolio and do not believe estate planning is a priority need to know the importance of it. For example, if there is more debt than marketable assets, there must be a plan in place for this situation.

What are the duties of a trustee when the trustor dies?

Under California law, a trustee has significant responsibilities. Some of the most important of these arise upon the death of the person creating the trust - called the trustor or settlor.

In many cases the trustor acted as a trustee during his or her lifetime, with a successor trustee named to take over upon their death. One of the first duties of a successor trustee is to execute an Acceptance of Trusteeship. This document confirms the trustee has accepted the position of trustee and the responsibilities that go with it. The trustee may also want to sign a Certification of Trust, which, along with the Acceptance of Trusteeship, serves as proof of the trustee's authority.

Divorce or remarriage should trigger an estate plan review

An estate plan is not something that should be prepared once and then locked away, not to be seen again until a person passes away. As we discussed in a recent post, everyone with an existing estate plan should review it every few years to make sure it still addresses their needs. It should also be reviewed and updated after certain major life events - including divorce and remarriage.

Using a living trust to avoid probate in California

Probate in California is unfortunately an expensive and time-consuming process. Probate refers to the court proceedings to administer the estate of a deceased person and distribute their assets to heirs and beneficiaries. Court costs and legal fees can be prohibitive. For this reason, many people who are beginning the estate planning process are interested in avoiding probate.

The inter vivos or living trust is the most popular strategy for avoiding probate in California. By using a carefully drafted revocable trust instead of a will as the primary estate planning document, the creator of the trust - called the trustor - can keep assets out of probate. This is because the trust, not the trustor, owns the assets. The assets are therefore not part of the trustor's estate when they die. The assets are managed and distributed by a trustee chosen by the trustor.

Candidates' estate tax plans will not affect most Californians

As the 2016 presidential election enters its final weeks, those voters who have not already made up their minds will be studying the candidates' positions on various issues. Some voters in the Sacramento area may wonder if the federal estate tax should be an issue of concern. The answer, for all but the wealthiest California residents, is no.

The Republican candidate has proposed abolishing the federal estate tax. Even if this were to happen, it would have no effect on the vast majority of people. Currently the federal estate and gift tax does not apply to the first $5.45 million of a decedent's estate plus prior taxable gifts, due to the lifetime exclusion. Married couples can combine their exclusions and effectively shield $10.9 million from estate and gift tax.

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