1. Each person writes one Will.

2. It needs to be completely in your OWN legible handwriting, NOT typed.

3. Include these statements:

This document is my Will.

This document revokes any prior Will of mine.

I nominate [name of person] _________, then __________, then ___________, to serve as Executor of my estate without bond.

My Executor shall distribute my tangible personal property, such as items in my home and my vehicles, to [name of person or charity] __________, then to ___________.

My Executor shall distribute the remainder of my estate, including cash, investments, and real estate to [name of person or charity] ____________, then to ____________.

If any beneficiary is under age _____, my Executor shall hold that person’s share in trust for the beneficiary’s needs, including health and education, until age ________.

4. Add your own signature, print your name, and add the date at the bottom.

5. Do NOT have it notarized or witnessed. Send a copy to the named Executor. Keep the original in a fireproof location, and a copy accessible in your home with a note as to where the original is located so your Executor can find it if needed.

Q:  IF I BECOME DISABLED OR MENTALLY INCAPACITATED, WILL A POWER OF ATTORNEY PROTECT MY ASSETS?

A:  The short answer is: Sometimes, yes. But that protection depends on the language in your Power of Attorney, the financial institution’s acceptance of the document, and the types of assets you own. What if your document names only one agent but that person becomes ill or unavailable? Also, some banks will not accept documents which are too old or with unfamiliar provisions because they don’t want to accept liability if your agent fails to carry out the terms. The only way for your loved one or agent to gain control of the assets in that situation is to obtain a court-ordered conservatorship.  Powers of Attorney, unlike a Living Trust, terminate upon your death, so assets are typically frozen upon death until the probate court names your executor.

In California, using a Living Trust can be a better option than sole reliance on a Power of Attorney. If you hold your assets in your Trust, the Trust language gives instructions for handling your assets upon your incapacity as well as after your death and no court intervention is necessary. A valid Power of Attorney is still useful for managing assets outside of Trust, such as IRA accounts and annuities. I recommend that clients review and update their Power of Attorney documents every five years.

Q:  WHAT ABOUT THE ESTATE TAX?

A:  For a summary of the estate tax, click here.

Q:  DO I NEED A BYPASS TRUST?

A:  Many Living Trusts drafted for married couples in the last two decades have a forced Bypass Trust, also known as A-B Trust structure, in order to save on estate taxes. However, the estate tax law has changed so that most people will never owe estate tax upon death, but their documents still require the surviving spouse to fund and manage a separate trust for the deceased spouse’s assets anyway. While there may be good non-tax reasons for using a deceased spouse’s trust, for many couples, the Bypass Trust is a paperwork hassle best avoided. If your Living Trust has a forced Bypass Trust provision, I recommend an immediate review by a legal professional.

Q:  WHAT IS A LIVING WILL? WHAT IS AN ADVANCE DIRECTIVE?

A:  A Living Will, once also known as a Durable Power of Attorney for Health Care, is now known in California as an Advance Health Care Directive. This document sets out your wishes for medical treatment in case you are too ill or hurt to communicate with your doctor. It can be difficult to convince a hospital to let a dying patient go with dignity without an Advance Directive — while the medical bills can escalate and wipe out remaining assets.

Q:  WHAT ABOUT HEALTH CARE DECISIONS?

A:  Every adult should have an Advance Health Care Directive, and it should name a trusted person as your Agent to work with your medical providers if you are unable to do so. The Agent may have temporary authority – such as if you are in a car accident and unconscious, or post-surgery on pain medications. The Agent’s authority may become permanent if your condition does not improve. Your Advance Health Care Directive should specifically authorize your Agent to access your medical records if a second (or third) medical opinion is needed – this provision is called a HIPAA waiver. Many form Advance Directives are missing this crucial provision! In drafting your document, you may prefer to give your Agent broad discretion about how to manage your health care, or you may prefer to be very specific about the care you want, especially at end of life. For example, you may direct that if you have a diagnosis of dementia and can no longer make your own decisions, if no improvement is expected, you would want no life support or treatments, but comfort care only. This would mean that if you had a heart attack, they would not perform CPR, and if you got pneumonia, they would not provide antibiotics. You may be as specific as you like in your Advance Health Care Directive. Be sure to give copies of your document to your Agent(s) and your doctor(s) and discuss your specific wishes directly with them.

Q:  WHAT IS A “POLST”? WHAT IS A “DNR”?

A:  These are specific documents signed by your physician that direct medical providers in your treatment in case of emergency. “POLST” means Physician Order for Life-Sustaining Treatment. “DNR” means Do Not Attempt Resuscitation. If you do not want CPR or other life-support measures in case of emergency, ask your doctor to provide you with one of these documents. You should provide a way for emergency personnel to know about your wishes by using a MedicAlert bracelet or medallion which states, “Do Not Resuscitate -EMS”. Be aware that your Agent will not necessarily be contacted in case of emergency – it is important that you give your medical provider a copy of your Advance Health Care Directive showing your Agent’s contact information.

Q: HOW SHOULD I CHOOSE MY TRUSTEE OR EXECUTOR?

A: During your lifetime, you will be the trustee (manager) of your own living trust. The question is how to choose someone to be the next trustee after you are gone. This person will also serve as the executor of your will, if your estate needs probate.

The first rule of thumb is this: Don’t nominate two or more family members to work together after your death (co-trustees). The risk of conflicts, family disharmony, wasting assets, and involving the Court to resolve disputes is many times higher when multiple people must sign every document and agree on every small step of the administration. There are so many decisions that can put a stop to the process of settling your estate, such as when to sell your securities, what CPA to hire, whether to fix up your home for sale, or which real estate agent to use to sell your home. When there is no agreement, the task does not get done until someone forces the issue by going to court, costing everyone time and money. There may be a lingering power struggle between family members that plays out during the trust administration, resulting in siblings who no longer speak to each other after your death. That said, the trustee must follow the language of your trust, be prudent and reasonable with your finances, and must answer to your beneficiaries when making decisions. So naming only one person at a time is always best.

The second rule of thumb is this: Use a professional trustee. It may be surprising, but putting your adult child in charge of your trust will usually end up costing them more money than using a professional trustee. The reason is that the professional trustee will not need to take time away from work and family to deal with the administration. The tasks include collecting all your accounts into one, paying final bills, clearing your home, getting appraisals, dealing with your retirement accounts, handling your insurance claims, selling your residence, filing tax returns, and preparing a formal accounting of all their work for the other beneficiaries.

A professional trustee does these tasks on a daily basis as part of his or her job, and can do them much more efficiently than a family member who is unfamiliar with trust administration. A professional won’t have a conflict of interest with any of the family members, and they won’t have to deal with a period of mourning before getting busy with the administration. Also, while professionals are entitled to the exact same compensation as a family trustee, the family trustee will generally hire an attorney to guide the administration process, assist with the formal accounting, and minimize liability. So the advantages of a professional are many: lower attorney fees, no conflicts of interest, less chance of litigation, more efficient management, and quicker ultimate distribution of the assets. Most family beneficiaries are immensely relieved to learn they will not have the burden of being a trustee or executor.

How does one find a professional trustee? Laura W. Patton can help you choose a licensed fiduciary or a corporate trustee in the East Bay area. The state of California has a licensing board called the Professional Fiduciaries Bureau, which enforces the statutory requirements that licensed fiduciaries must follow, including having proper insurance, continuing education, and reporting rules. Corporate trustees are generally banking or brokerage institutions and can be effective trustees after a death. If you want to plan for a time of disability, you will need a trustee willing to manage your money and pay your bills for you while you are still living but incapacitated. Most bank trustees will not serve as agents under a Power of Attorney, so the trend for the last several years has been in favor of individual licensed fiduciaries instead of corporate trustees.

Q:  WHAT IS MY ESTATE PLAN GOING TO COST?

A:  Every situation is different, so the answer depends on the complexity of your family, your mix of assets, and what you are hoping to accomplish. You may need an education trust and guardianship options for minor children, or you may want to provide charitable contributions, or you may need a complex trust for a son or daughter with special needs, or you may have a second marriage with children from your first spouse. Each of these situations can add to the complexity, and thus the cost of planning your estate. As a basic rule of thumb, a relatively simple estate plan for a married couple rarely costs more than $4800. At the end of your initial consultation, Laura W. Patton will recommend specific documents to suit your situation, estimate the time it will take her to complete the project, and give you a fee quotation so you can decide if you wish to proceed.

Q:  HOW LONG WILL IT TAKE TO COMPLETE MY ESTATE PLAN?

A:  While every client has different needs, the typical non-emergency project is complete in a 4-6 weeks.

Q:  WHEN SHOULD I REVIEW MY EXISTING ESTATE PLAN?

A:  You should review your estate plan every five years, whenever a major transition occurs in your family (such as a wedding, divorce, your minor child turns 18, or death of a family member), or when the estate tax law changes. For existing clients, Laura can assist you with a complimentary estate checkup by phone every five years. As part of her commitment to her clients, after each estate checkup she will provide an updated Durable Power of Attorney for no charge.

Q:  WHAT SHOULD I DO NEXT?

A:  If you live or work in Contra Costa County or Alameda County, contact Laura W. Patton for your initial consultation and get the process started!

If you live elsewhere, ask your friends and colleagues for referrals to their estate planning attorneys. Or you can check with your local bar association for a referral to a competent estate planning attorney in your area.

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