BASIC CALIFORNIA
ESTATE PLANNING
_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Lindsay Sellers, J.D.
USC Office of Gift Planning
TODAY’S TOPICS
• Planning starts with goals & values –
strategies & techniques follow
• Everyone should have an estate plan
• Planning for potential diminished
capacity
• Update on 2014 Estate and Gift Tax
• Communicate with family and advisors
GOALS AND VALUES
• Set your goals
• Communicate your values –
in words, deeds and estate plan
• Strategies and techniques follow
goals and values
ESSENTIAL ESTATE PLAN
• Everyone needs an estate plan
• Foundational documents:
• A Will
• Revocable Living Trust
• Power of Attorney for Financial
Matters
• Power of Attorney for Health Care
LAST WILL AND TESTAMENT
•
•
•
Most Wills are “pour over” Wills used in
conjunction with an existing revocable Living
Trust
If a Will is used as the only estate planning
document, it will have to be submitted to the
local Probate Court at death for a supervised
administration process (2-3 years)
Executor administers a Will and may have to
post a “bond”
REVOCABLE LIVING TRUST
•
•
•
•
•
•
•
Living trusts can be individual or joint (spouses)
Living trusts may be changed at any time by a signed
amendment made by the creator(s) of the trust
Joint living trusts generally become partially irrevocable (i.e.
unchangeable) at the death of the first creator
Can be funded during life without altering ability to access ,
invest, and spend assets
Biggest advantage - fully funded living trusts avoid the need
for probate at death of creator(s)
Protection for children of prior marriages
General Assignments
ORGANIZATION IS KEY
• Keep an updated inventory of assets
• Keep important documents in a safe
place – easy to remember and where
others know
• Give copies to your advisors
“TITLE” TO ASSETS – IMPORTANT
• Know how title is held for every asset
• “Funded” living trust
• Real estate – joint tenancy, community
property, tenants in common
• Successor beneficiary designations:
• Pensions/IRAs/retirement plans
• Securities and bank accounts
• Life insurance
UPDATE YOUR PLAN
•
•
•
•
•
Tax laws change
Your goals and values change
Your family changes
Your advisors change
Your estate planning documents may
need to change too!
DIMINISHING CAPACITY
•
•
•
•
Risk of diminishing mental or physical
capacity is a reality of aging.
How can you protect yourself?
How can powers of attorney help?
If you have a funded Living Trust, Successor
Trustees have the power to continue to
administer your assets while you are alive.
POWERS OF ATTORNEY
Management of Non-Trust Assets During Life
•
•
•
•
Who should be your attorney-in-fact?
If more than one – must they act jointly?
What powers should they get?
When should they get them? Immediately (i.e. to
be able to use it if you are unavailable) or only
upon your incapacity?
• Can be used to fund a Living Trust prior to death
HEALTH CARE POWERS
• Communicate wishes with your doctors & person
with the power
• Fill out forms at hospitals/clinics
• California Medical Association – Advanced
Health Care Directive Kit
• Options:
• Organ donation
• Life support preferences
• Religious or other special directives
FIND TRUSTED ADVISORS
• Accountant, attorney, financial
planner, insurance agent
• Select them carefully
• Communicate honestly and
openly with them
• Estimated Legal Costs: $2K-$5K
• Follow their advice!
2014 ESTATE AND GIFT TAX
Estate tax exemption:
• $5,340,000 per person ($10.68M per couple)
• “Portability” of spousal exemption
• Tax rate – maximum rate of 40%
Gift tax exemption:
• $5,340,000 for lifetime gifts
• $14,000 annual exclusion amount per donor,
per donee
• Education and medical expenses
WE ALL LEAVE A LEGACY
Avoiding Pitfalls from Bad Planning
•
•
•
Caveat - different treatment of relatives in
estate plan sometimes alienates family
members
California-specific issues - litigation,
community property disputes, delays,
administrative and probate court expenses
Prop 13 and Prop 58 – exceptions to avoid
reassessment of real property for property
tax purposes upon a transfer to someone
other than your living trust or your spouse
WE ALL LEAVE A LEGACY
Intangible Benefits of an Estate Plan
•
•
•
•
•
Your own peace of mind
Bring and keep family together
Provide for loved ones
Protect your heirs
If important, support philanthropy
USC Office of Gift Planning
(213) 740-2682
usc.plannedgiving.org
Lindsay Sellers, J.D.
Director of Gift Planning
lsellers@usc.edu