Legal-Ease: An Attorney’s Perspective When Do I Need an Estate Plan?

March 9, 2018 • Columnists, Legal-Ease

Staci Yamashita-Iida

By Staci Yamashita-Iida, Esq.

A few weeks ago, I met with a widower who was getting his affairs in order after his wife passed away. After our consultation, I walked him out to the lobby where his daughter, who is in her mid-50s, was waiting for him. As we said goodbye, my client asked, “When does my daughter need to get her own Estate Plan going?” At which point his daughter asked, “Before you answer that, what exactly is an estate plan?”

Most people have heard of wills, trusts and powers of attorney. However, sometimes the term “estate plan” throws them for a loop. Put simply, an estate plan incorporates all of the legal documents needed to manage your assets during life and after death while minimizing tax consequences. These documents include a revocable living trust, pour-over will, durable power of attorney for asset management, health care power of attorney or advance health care directive, as well as other ancillary documents.

So, at what point should you get the process started? While there are many causes that elicit the need for an estate plan, this article identifies some of the major motivating factors.

When You Buy a Home

One of the most common estate planning misconceptions is that a last will and testament saves your family from undergoing the probate process. This isn’t necessarily true. If all of your assets total more than $150,000, then a will simply isn’t enough.

Now, many people think, “$150,000? That’s a lot of money! I certainly don’t have that much.” But most people tend to forget about the single biggest asset in their estate — the home.

Homes nowadays are valued anywhere from a few hundred thousand to millions and millions of dollars. So, if you own your own home and you want to avoid probate, it’s time to start thinking about creating your estate plan.

When You Have Children

Creating an  estate plan is especially important once you have children. If you have minor children, then you are able to appoint a legal guardian in the event that you and your spouse are gone.

If you have adult children, then you are able to designate them as beneficiaries of your estate. Put simply, you can ensure that they inherit your real property, financial assets and other personal belongings.

When Your Health Starts to Fail

If your health starts to decline, it is probably a good time to create your estate plan. Included in most estate plans is a health care power of attorney or advance health care directive. These types of documents stipulate your medical wishes and allows you to select a trusted individual to carry out your preferences on your behalf.

The reason why these documents are so important is because they relieve the pressure, burden and guilt off of the person you appoint. By laying out your directions beforehand, your loved one doesn’t have to feel like he or she is making the decisions alone; instead, he or she is simply following your orders.

Additionally, formalizing your wishes beforehand clarifies your instructions for your power of attorney. Think about the person you’d want to choose — perhaps it is your spouse, a child, family member or friend. If you got into a car accident tomorrow, would they know your resuscitation preferences? Would they know your view on artificial life support? Would they know whether you’re open to experimental treatments?

Perhaps you aren’t even sure what your thoughts are on these matters. Creating these medical documents encourages you to think about your wishes, consequently making things easier on your family and friends.

When You Start to Develop Alzheimer’s or Dementia

According to the Alzheimer’s Association., there are more than 5 million Americans living with Alzheimer’s, and every 66 seconds, someone in the United States develops the disease.

Although it is often difficult to differentiate Alzheimer’s from the normal problems associated with the aging process, there are certainly signs to be aware of. Memory loss, issues with problem solving, confusion and changes in mood or personality are just some of the warning signs.

If you start to realize that you are experiencing these symptoms, you may want to consider creating an estate plan. A durable power of attorney for asset management (commonly referred to as a “POA”) allows a loved one to manage your finances if you are unable to do so yourself. For example, if you keep forgetting to pay your bills on time and you’d prefer to have your adult son take care of that for you, then you can do so by electing him as your POA.

Furthermore, you may even decide to appoint your child as the primary trustee of your revocable living trust. Although this is not the standard practice, it can be appropriate under certain circumstances.

For example, I had a client a few years ago who was becoming more and more forgetful and confused. One day, her ex-gardener came over to the home and convinced her that she had owed him $2,000 in unpaid wages.

Since she couldn’t remember whether or not that was true (and because she was a very honest woman), she wrote the check.

Luckily, she told her daughter right away, and they were able to cancel the check. But at that moment, my client decided she did not fully trust her own memory. She requested that I draft the paperwork to have her resign as primary trustee of her trust and have her daughter take her place. That way, only her daughter had the authority to handle her finances.

If you’ve experienced any of these triggering circumstances, then it may be time to create or update your estate plan. Always speak with a licensed professional to ensure that you create a comprehensive, customized plan that is tailored to you.

Staci Yamashita-Iida, Esq. is an Estate Planning attorney at Elder Law Services of California. She can be contacted at (310) 348-2995 or staci@elderlawcalifornia.com. The opinions expressed in this article are the author’s own and do not necessarily reflect the view of the Pacific Citizen or JACL. The information presented does not constitute legal or tax advice and should not be treated as such.

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