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San Fernando Valley Probate & Estate Administration Law Blog

What exactly is an estate plan?

As a California resident, you may have heard your friends and/or family members talking about their estate plans on occasion. Depending on who they are and what their own estate plans include, they may have used such words as “will,” “living trust,” “health care directive,” “financial power of attorney,” or any number of other words or terms.

Given that no two people talk about their estate plans in the same way, you may have gathered that no two estate plans are identical. Each person creates the estate plan that meets his or her own needs, goals and objectives. But this might naturally lead you to wonder just exactly what an estate plan is and what all it could include.

What are your duties as an estate executor?

Last week we discussed the fact that when you assume the responsibilities of becoming the executor of someone’s California estate, one of your duties will be to pay the taxes owed by both the deceased person and the estate itself. This week we turn to the additional duties you likewise will need to perform.

As Kiplinger reports, before you can perform any duties on behalf of the estate, you must first find the decedent’s original will and file it with the probate court of the county in which the decedent resided to begin the probate process. Note that you must file the original of the decedent’s will, not a copy of it. Therefore you may need to search through the decedent’s home, find the safe deposit box where (s)he placed his or her will, or contact the decedent’s attorney to see if (s)he has the original.

Tax duties of an executor

When California residents begin their duties as the executive of a loved one's estate, they may expect to fill out paperwork and distribute assets. They may not, however, consider the tax duties that come with this position.

The executor of an estate usually files a tax return for the deceased. The Internal Revenue Service says that the executor usually needs to report any income the deceased earned before his or her death. This tax return typically also needs to include deductions and credits. The executor is also responsible for making sure income taxes are paid. Sometimes the estate administrator may find out that the deceased has not filed an income tax return for several years. In this situation, he or she is generally responsible for filing these tax returns and paying any money the deceased owes.  

Should you include an incentive trust in your estate plan?

As you watched your children or grandchildren grow, you had a vision for their lives. Perhaps you thought they would attend college, work in a particular field or get married by a certain age. As you prepare your estate plan, you may wonder whether you can provide an inheritance as an incentive for each of them to achieve the goals you envision for them.

You can create an incentive trust that would make receiving distributions from the trust contingent upon them completing a certain goal. The question is whether you should, whether you can count on the trustee to abide by your wishes and whether it would be legally enforceable.

What should I know about first-party special needs trusts?

Like many other California residents, you understand that it is important to have your estate planning in order for the benefit of your loved ones. However, what about taking charge of your own medical and financial needs if you become disabled? If you are unable to work due to a permanent disability, you may need to rely on Medicaid and other forms of government assistance, but your assets may prevent you from being eligible.

This does not necessarily mean you need to get rid of your assets. You may still be eligible for benefits if you fund a special needs trust with your estate. As the National Law Review explains, special needs trusts take care of the health care and financial interests of disabled people while letting them remain eligible for government benefits.

Why should I have a durable financial power of attorney?

As a financially responsible Californian, you likely have always personally handled all your finances from balancing your checkbook to keeping track of your 401(k). You may even own a family business or professional practice that requires you to make long-term financial decisions as well as day-to-day operational decisions. But what if you become ill or injured and cannot do these things for yourself?

As FindLaw explaines, executing a durable financial power of attorney could be one of the best money-related decisions you ever make. In it, you designate the person, called your financial agent or your financial attorney-in-fact, who you want to make your financial decisions for you in the event you cannot make them yourself. You also specify which decisions you want him or her to make for you and under what conditions you want him or her to make them.

What you should know before you challenge a will

At the Law Offices of Alice A. Salvo in California, we realize that sometimes a will challenge is the proper thing for you to do. We also realize, however, that to win a will challenge, you must not only be an “interested party,” you must also allege the proper grounds. You cannot challenge a will simply because you believe the decedent should have named you in his or her will but failed to do so. In addition, you should know that the vast majority of will challenges fail, and your chances of prevailing in one are quite low.

As explains, in California, only an interested party may mount a will challenge. This means that the deceased person must have been one of your family members or that you had some other valid reason for expecting to inherit from him or her.

Who are my natural heirs?

You may not realize it, but California has a set of laws, called intestacy laws or laws of succession, that determine who receives your estate, and in what proportion, in the event you die without first making a Last Will and Testament. These distributions may have nothing to do with the way in which you wanted your property and assets to pass.

Per the California Legislature, your intestate estate gets divided up among your natural heirs, i.e., your family members, most notably your wife, domestic partner and children.

Do you need both a living will and power of attorney?

As you are making estate planning decisions in California, there are many things you need to consider. You not only need to think about what happens after your death, but you also need to make decisions regarding end-of-life issues. While it may be unpleasant to think about these concerns, it can save your loved ones a great deal of distress if you make these decisions now. 

According to FindLaw, a power of attorney grants someone the power to make health care decisions for you in the event that you become incapacitated and cannot make those decisions for yourself. However, if you have specific wishes regarding health care directives, organ donation or similar concerns, it is to your advantage to put those wishes in a living will. The person that you designate in your power of attorney will have the ability to make wide-ranging decisions in regard to your health care, but he or she will not be able to make any decisions that contradict anything in your living will. For example, if you state in your living will that you do not want to receive dialysis, blood transfusions, respirators or other life-prolonging medical treatments at the end of your life, your power of attorney designee cannot order these treatments for you. 

Many documents may have roles in your estate plan

Creating an estate plan is one of the best decisions you and any other California resident can make. You can ensure that your loved ones understand your wishes at times when having that information may prove crucial. Still, you may have questions about its benefits.

First, you may wonder how you are supposed to boil your life down to include all your vital information in one document -- your will. After all, you may need to address many different details for different people and different aspects of your life. Fortunately, an estate plan does not only consist of a will. Several other planning documents can also play important roles in your plan.

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