Estate planning is a process that enables families to ensure that their assets, loved ones, and wishes are protected and respected in the event of their passing or incapacity.
Many people today do not have an estate plan in place, leaving no sure way to protect their wishes or the future of their assets. In California, this process involves understanding the legal aspects of wills, trusts, and guardianships.
Each of these provisions serves a specific purpose, and together, they form a comprehensive estate plan.
This guide provides a legal perspective on estate planning for families in California, focusing on the roles of wills, trusts, and guardianships. We will review four important concepts to know regarding family trust and estate planning.
Understanding Wills in California
A will, or “last will and testament,” is a legal document outlining how a person’s assets and affairs will be handled after death. In California, the creation and execution of wills are governed by the California Probate Code.
The nuance regarding these laws can be complicated. It is important to hire the right family and divorce lawyer to ensure a will is crafted correctly.
Key Legal Requirements for California Wills:
- Legal Capacity: The person creating the will, known as the testator, must be at least 18 years old and of sound mind. Being of sound mind means the testator must understand the nature of their property, the extent of their assets, and the people who would naturally be considered their heirs.
- Written and Signed: The will must be in writing and signed by the testator. Additionally, two other people must serve as witnesses and they cannot be beneficiaries of the will. These witnesses must sign the will with the testator present and each other.
- Holographic Wills: California also recognizes holographic wills, which are handwritten and signed by the testator but do not require witnesses. However, they must clearly indicate the testator’s intent to distribute their assets.
The California Probate Process
When a person passes away, the will generally goes through probate, a court-supervised process to authenticate the will, pay taxes and debts, and distribute the remaining assets to the beneficiaries. In the state of California, probate can be a long and costly process, depending on the estate’s complexity.
Probate can be avoided with prudent estate planning, which often includes creating trusts or other mechanisms to help bypass the probate process. Proper estate planning can be complex. It will be vital to meet with a local family law attorney to help you protect your assets and plan correctly.
Meeting with a California estate planning attorney can guide you on the right path.
The Role of California Trusts in Estate Planning
A trust is a legal arrangement through which one party (the trustee) holds and manages assets on behalf of another party (the beneficiary). Trusts offer flexibility and benefits that wills do not, such as avoiding probate, managing assets during the grantor’s lifetime, and providing for specific needs or contingencies. Again, we urge you contact a California estate planning attorney to help guide you through all the details.
Types of Trusts Commonly Used in California
Revocable Living Trust: The most common type of trust in California is the revocable living trust. It allows the grantor to retain control over the trust assets throughout lifetime and make changes or revoke the trust as needed. Upon death of the grantor, the trust is designated as irrevocable. Then the assets are distributed to the beneficiaries according to the trust terms, bypassing probate.
Irrevocable Trust: In contrast with a revocable trust, an irrevocable trust cannot be altered or revoked once established. Assets transferred into an irrevocable trust will not be considered part of the grantor’s estate, which can provide tax benefits and protect it from creditors.
Special Needs Trust: This trust is designed to provide for a beneficiary with special needs without disqualifying them from government benefits like Supplemental Security Income (SSI) or Medi-Cal.
Spendthrift Trust: A spendthrift trust protects the beneficiary from creditors and ensures that the assets are distributed gradually or under certain conditions, which can be helpful if the beneficiary has issues with money management.
Advantages of Trusts
- Avoiding Probate: Assets held in a trust will not go through probate, which can help save time, money, and privacy.
- Control and Flexibility: Trusts allow the grantor to set specific terms for when and how assets are distributed.
- Incapacity Planning: If the grantor becomes incapacitated, a successor trustee can then manage the trust assets without the need for court intervention.
- Tax Planning: Certain trusts can reduce or eliminate estate taxes, though California does not impose a state estate tax.
Trust Administration in California
Administering a trust involves managing the trust assets, paying any taxes or debts, and distributing the remaining assets to the specified beneficiaries. California law requires trustees to act in the best interests of the beneficiaries, maintain accurate records, and provide regular accountings. Trustees must also adhere to the trust terms and the California Probate Code.
It’s important for married couple to get their estate planning in order sooner than later.
California Guardianship for Minors and Incapacitated Adults
Guardianship is a legal relationship established through the court in which a person (the guardian) is appointed with the authority to make decisions on behalf of a minor or sometimes an incapacitated adult (the ward).
In California, guardianships are essential when a minor’s parents are unwilling or unable to care for them or when an adult is no longer able to make decisions for themselves.
Types of California Guardianship
- Guardianship of the Person: The guardian is responsible for the ward’s personal care, including decisions about education, healthcare, and living arrangements.
- Guardianship of the Estate: The guardian manages the ward’s finances, including managing income, paying bills, and handling any property or assets.
- Temporary Guardianship: This is a short-term guardianship established when immediate action is needed, such as in cases of emergency or while a permanent guardianship is being established.
Establishing Guardianship
To establish guardianship in California, a petition must be filed with the court, followed by a court hearing. The court will consider the best interests of the ward, including their physical, emotional, and financial well-being. The court may also consider the wishes of the ward if they are old enough to express a preference.
For minors, a guardianship may be necessary if the parents are deceased, incarcerated, or otherwise unable to care for the child. Parents may nominate a guardian in their will, but the court will have the final say. In the case of incapacitated adults, guardianship may be necessary if the individual has not created a durable power of attorney or if the appointed agent is unable to fulfill their duties.
Guardianship vs. Conservatorship
In California, a conservatorship is like a guardianship but applies to adults who cannot manage their own affairs because of physical or mental limitations. While guardianship generally refers to the care of minors, conservatorship is for adults. The court process and responsibilities are similar, with conservatorship focusing more on financial management and personal care.
What is the Difference Between Will and Estate Planning?
Estate planning is not just about a will or distributing assets; it’s about protecting your family’s future, ensuring your wishes are respected, and minimizing the legal and financial burdens on your loved ones.
In California, wills, trusts, and guardianships are the foundational tools of an estate plan, but they work best when used together in a comprehensive strategy.
Combining Wills, Trusts, and Guardianship in California
- Wills: While a will is essential for naming guardians for minor children and specifying who should inherit your property, it may not be sufficient for avoiding probate or managing complex assets.
- Trusts: Trusts can provide ongoing management of assets, avoid probate, and offer flexibility in how and when beneficiaries receive their inheritance. They can also ensure that assets are managed if you become incapacitated.
- Guardianships: Designating a guardian in your will is crucial for minor children. However, establishing a guardianship or conservatorship may be necessary if circumstances change or you become incapacitated without a plan in place.
Updating Your Estate Plan
Given the complexities of California estate law, working with an attorney experienced in family estate planning and property rights is essential.
A knowledgeable attorney can help you understand your options, draft necessary documents, and ensure your plan complies with current laws. Additionally, estate plans should be reviewed and updated regularly, especially after important life changes such as marriage, divorce, the birth of a child, or changes in financial circumstances.
Estate planning for families in California requires a thorough understanding of wills, trusts, and guardianships. When used together, these legal tools provide a robust framework for managing and distributing assets, protecting minor children, and planning for incapacity.
By taking the time to build a comprehensive estate plan, you can help make certain that your family is cared for, your wishes are honored, and your legacy is preserved.
Whether you’re just beginning the estate planning process or looking to update your existing plan, seeking legal advice to navigate California’s specific laws and regulations is critical.
This proactive approach will provide peace of mind, knowing you have taken the necessary steps to protect your family’s future.
About Family and Divorce Lawyer, Leon F. Bennett, Esq.
The Law Offices of Leon F. Bennett provide efficient and effective Family Law services throughout Southern California for over 35 years that satisfy you and your family’s goals. Whether you’re in need of a divorce mediation attorney or a same sex divorce attorney, Leon F. Bennett, Esq. is a venerable Los Angeles and Ventura County family law expert who will get the desired results for you and your family.
Contact us today to request a consultation.
