Preparing for Estate Planning

In order to prepare for Estate Planning Mediation, you will need to begin by determining who will be your beneficiaries and what property you own. Also, you may want to consider creating a health directive in the event of your incapacity and also (if applicable) instructions on how to provide for your minor children. You will also need to be aware of the legal requirements of making a will or making a trust.

At Peace Talks, we will help you and your family through the process of making an estate plan

Choosing your beneficiaries: Deciding who will receive your property
Direct Beneficiaries: is a person or institution you name in a will, trust, or pay on death account to receive a gift of specific property.
Alternate Beneficiaries: is a person or organization you name to receive a gift you left to direct beneficiary, if that direct beneficiary dies before you do.
It is not mandatory to name alternate beneficiaries, but it is advisable to do so. Naming alternatives will eliminate the risk that you won’t be able to change your will or living trust.

Determining your estate: What property do you own?
Your estate consists of all property or interests in property which you own. This includes, but is not limited to:

  • Stocks and Bonds
  • Life Insurance Benefits
  • Real Estate
  • Furniture
  • Furnishings
  • Automobiles
  • Jewelry

It’s a good idea to make a list of all your property as part of your estate plan. Be sure to include account numbers, property description and amounts.

Itemizing a list of your property is helpful if:

You plan to leave many items of property to many different beneficiaries

You are not sure what you actually own. Shared business or marital property.

You want to figure out what you own so you can estimate your net worth to see if your estate is likely to owe federal estate tax

Checklist: Here is a checklist of common items in an estate.

Determining property ownership of married Couples
California Law:
California is a community property state. This means that spouses share 50/50 ownership of most property acquired during the marriage, even if only one spouse’s name is on the title slip or deed. However, community property includes income that was inherited or was a gift.

Each spouse is free to leave his or her half of the property as a desired, but has no control over the other spouse’s half. However, each person is free to give his or her separate property in its entirety to whomever they wish. (see definition of separate property)

What is Community Property?

Community Property is all income received by either spouse from employment or by other means (except by gift of inheritance to one spouse) during the marriage, unless the husband and wife have agreed otherwise through a separate agreement.

What is Separate Property?

  • All property owned by either spouse prior to marriage
  • All property received by gift or inheritance
  • All property earned or accumulated by one spouse after permanent separation

When does Separate Property become Community Property?

Commingling: When the funds from separate property are intermixed with community property to the extent that it is indistinguishable, the separate property becomes community property.

Separate property can become community property when the separate property owner transfers the property to shared ownership in writing.

Providing for your minor children
Peace Talks Mediation can help you make all the important decisions for your children. Because we work in co-mediation attorney-therapist teams, we can deal with the emotional components of these issues right along with the legal issues.

Choosing a personal guardian: Who will raise your children if you cannot?

Personal Guardian: If no parent is available to raise your child, another adult must be legally responsible to do so. This person is called the child’s personal guardian.

Using a Will: A will is the only legal document you can use to name your children’s personal guardian. Other documents that name a personal guardian are not valid in CA.

Court Approval: The personal guardian named in your will does not actually become the legal guardian until the court approves the person after your death. A letter can be attached to a will explaining why you have chosen the person as the personal guardian. If no one contests your choice named in your will, usually the court will confirm the person you have named.

Appointing the same guardian: When two parents are involved in raising their children, they should agree on the same person to appoint as a personal guardian. If both parents die simultaneously, naming different people as the child’s guardian could result in a conflict.

If you don’t want the other parent to become the Personal Guardian: A general rule is that one parent cannot succeed in appointing someone other than the other natural parent to be personal guardian, unless the other parent:

Legally abandoned the child, or Is unfit as a parent (alcohol abuse, history of violence or molestation, or mental illness)

Choosing a Financial Guardian: Who will handle and supervise your money for your children’s benefit?

Minor Children cannot own property outright: The maximum amount a child can own in his or her own name is between $2,500 to $5,000. There must be an adult legally responsible for all property owned by a child. This person would be your child’s financial guardian.

Duties of a Financial Guardian:

  • Must manage the property you leave for your children honestly and prudently.
  • Must act in the best financial interest of the children.
  • Must use the property to pay for the children’s living, health, and education expenses.

Naming a Financial Guardian:

  • The simplest plan would be to name the Personal Guardian you have chosen as the Financial Guardian.
  • A Different person should be named Financial Guardian if there are compelling reasons the Personal Guardian would not be the best choice to manage your child’s money. These reasons could include that the Personal Guardian many not have the financial or practical experience to manage property prudently.
  • Choose a Financial Guardian that your family members will accept and respect. This is important to avoid any family conflicts.

Legal Methods to Leaving Property to your Minor Children:

Custodianship via Uniform Transfers to Minors Act (UTMA)

In your will or living trust, you can identify the property and the name of the minor you are leaving it to. You also name a custodian who will manage the property and that the custodian is to act “under California’s Uniform Transfers to Minor’s Act.”

This act allows the custodian to have control over the property for the benefit of the minor. In California, the gift is released from the care of the custodian when the minor turns 18 or 21.

Child’s Trust: All property you leave to a child in a trust is established and managed under the terms of the trust.

You are able to specify the trustee’s  power and select the age the beneficiary must reach before the trust property is turned over.

This trust allows property to be held legally separate from the other Children’s property.

Family Pot Trust: A pot trust is often used by parents with younger children.

This type of trust allows the family money be kept together, so that it can be used on any child as required.

The trustee named in the trust decided how much money shall be spent on each child. Therefore, if one child needs braces and the other child wants to go to private college, the trustee has discretion over the property to provide.

Property Guardianship: There are many drawbacks to leaving property to your children to be supervised by a property guardian. There are several reasons why:
The property must go through your will, meaning that it has to go through probate.

Property guardians are subject to court review, reporting requirements and rules on how they can use the funds. This usually requires hiring an attorney and paying fees to the court.
You can’t specify when the guardianship ends. The guardianship must end at age 18.

Leaving Property to Children who are Not Your Own:

Leave the gift in your will or living trust through the Uniform Transfers to Minors Act. (UTMA)

In your will or living trust, you can identify the property and the name of the minor you are leaving it to. You also name a custodian who will manage the property and that the custodian is to act “under California’s Uniform Transfers to Minor’s Act.”

This act allows the custodian to have control over the property for the benefit of the minor. In California, the gift is released from the care of the custodian when the minor turns 18 or 21.

Create a Child’s Trust for your gift.

All property you leave to a child in a trust is established and managed under the terms of the trust.

You are able to specify the trustee’s power and select the age the beneficiary must reach before the trust property is turned over

Leave the gift to the child’s parent or legal guardian and rely on the parent to use the gift for the child’s benefit.

Planning for incapacity
Medical Decisions:

Writing down your wishes for medical care and choosing a trusted person to ensure that those wishes are carried out can take that enormous burden off your family in making agonizing medical decisions on your behalf. You can do this by preparing a Healthcare Directive

Healthcare Directive: There are two necessary parts, a declaration and a durable power of attorney for healthcare.

Declaration/or a “Living Will”  This is a written statement which spells out the medical care you do or do not wish to receive if you become incapacitated. Your declaration becomes a contract with your treating doctor, who must honor your wishes or transfer care to another doctor who will.

Durable Power of Attorney for Healthcare: This document will allow you to appoint someone you trust to ensure that your doctors give you the kind of medical care you wish to receive.

Financial Decisions:
Durable Power of Attorney for Finances:

Appointing a Durable Power of Attorney for finances allows you to name someone you trust to handle your finances if you are unable to do so. You can be a specific as you want in regards to financial actions you do and do not wish for this person to take. The person appointed has only the financial authority that you grant him or her in the document.

Final Arrangement Documents:

You can write out a statement to your family what type of arrangements or ceremony you would like to have. Do not include this statement in your will because most likely the will won’t be read until weeks or months after such a statement will be helpful. Instead, place the document where it can be readily accessible at your death by those who will carry out your wishes.

Specifying in a document your last wishes will help your family in making decisions during a difficult time.

Advance planning of funeral arrangements and related costs can also save your family money.

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