Our goal for each client at T. Chiu Law is to create a customized estate plan that clearly expresses our clients’ wishes with regards to the management and distribution of their assets. For most clients, this involves the preparation of a Revocable Living Trust, Last Will and Testament, General Durable Power of Attorney, Healthcare Power of Attorney, HIPAA Authorization/Release, and Living Will.
An “estate plan” is a plan for the management of your assets while you are alive, if you become incapacitated, and when you pass away. In creating your estate plan, you should consider all of the assets that you own, whether that includes a home, bank accounts, retirement accounts, life insurance policies, business interests, or even the stuff inside your house! The documents listed above authorize a trusted individual to manage each asset in the event you are unable to do so yourself, either because you are incapacitated or if you have passed away.
Revocable Living Trust (RLT)
This document is often the core of a client’s estate plan. Most assets, including real property, bank accounts, brokerage accounts, and maybe even business interests, should be transferred to the RLT. The RLT is a contract where the parties include the Grantors (the person or people who created the RLT) and the Trustees (the person or people appointed to manage the assets transferred into the RLT). The RLT states how these assets are managed during the Grantors’ lifetimes, including if the Grantors become incapacitated. The RLT also states who gets the assets in the RLT when the Grantors pass away. Importantly, the Grantors appoint successor trustees, people they trust, to carry out the terms of the trust and use the assets in the trust according to the Grantors’ wishes.
Last Will and Testament
Clients often wonder why both an RLT and Will are necessary in their estate plan. A Will does not avoid probate. If a person passes away with assets in their individual name, then that asset will be submitted to probate, a court supervised process whereby a decedent’s assets are transferred to beneficiaries under the decedent’s Will, or, if the decedent didn’t have a Will, the heirs to whom California law determines the assets should go. Most clients with an RLT will have a Will that transfers any probated assets into their Trust. The Will may also be the document nominating guardians for clients who pass away with minor children.
General Durable Power of Attorney (GDPOA)
There are many assets that the clients should not transfer into the RLT including without limitation, retirement accounts and life insurance policies. There may also be assets that clients forget to transfer to the RLT. In such cases, the GDPOA will designate an agent to manage assets that remain in the client’s individual name (rather than assets transferred to the client’s RLT) in the event the client is incapacitated. Furthermore, the GDPOA allows the agent to handle other financial matters on behalf of the incapacitated client, including without limitation, filing taxes, managing business interests outside the trust, settling lawsuits, managing government benefits.
Healthcare documents include either an Advance Health Care Directive or a Healthcare Power of Attorney plus a Living Will. These documents together appoint someone to make medical decisions on your behalf if you are incapacitated and express your instructions as to the decisions you want made.
Importantly, your healthcare documents should also include a HIPAA Authorization. HIPAA is a federal law that protects medical records and other health information provided to health plans, doctors, hospitals, and other healthcare providers. Without a HIPAA Authorization, your loved ones cannot speak to doctors or even medical insurance providers about your health condition. A HIPAA Authorization is essential to allow your healthcare agent make an informed medical decision on your behalf.