New Year Resolutions & Essential Legal Documents Everyone Should Have

Posted on December 29, 2011 by Daryl Binkley

As we approach 2012, it is a great time to look back, see how much we have accomplished in 2011, and set our goals for the New Year.  This time of year is when many of us start writing New Year resolutions to set the tone for what to expect of ourselves.  At times, these resolutions can be a long list of to-do items that can overwhelm rather than inspire. So, for me the trick has always been to add some fun items. 

Every year, in addition to my professional and personal goals, I try to add a few fun things like playing tennis or travel to a new destination to keep me going.  My wife, Ana, for example creates a separate list of mostly fun items that you can see below (surprisingly, she added rising at 5 AM here too, hmmm?)

Over the years, I have noticed that in December, most people tend to review with me their existing legal documents or plan to see me in January to start something new.  So, I thought it would be great to share with you an essential list of legal documents everyone should have, regardless of how much money or assets they have.  Also, I added a few items (not legal documents) that are good to review every year to ensure they reflect your wishes. 

 

Essential Legal Documents

 

·     Power of Attorney: In case of your incapacity, you can assign someone to act on your behalf for your financial or other accounts.  This document can authorize someone you trust to pay your bills, take care of your utilities and any other financial affairs.

·     Healthcare documents: These documents designate your wishes for the end of life procedures (think of the Terri Schiavo case). Also, these designate who gets your healthcare documents, or who can make health decisions for you. These documents include:

    1. CA Advance Healthcare 
    2. Living Will
    3. HIPAA

·     Will and/or Trust: In case something happens to you, a Will or Trust designates who will be an executor or trustee of the estate, and how your assets are distributed. Talk to your attorney to find out whether a Will or Trust best suits your needs.  I am a big proponent of a Trust as it avoids probate (you can read more about this topic here). A Trust Package plan should also include a Pour-over-Will and all of the other documents mentioned. It is best to discuss your personal situation with a trusted attorney.

·     Guardian Instructions: If you are the parent of a child under 18 years old, creating guardian instructions is very important to ensure people you trust to take care of your child in case something happens to you. You can also include specific instructions about your views on education, religion or any other matters, such as medical conditions or food allergies. 

 

Additional Items to Review:

 

It is a great idea to review beneficiary designation forms from time to time to be sure they reflect your current wishes. If you were recently married, divorced or had more children, look into the following policies/plans to verify they reflect your wishes. 

 

·     Beneficiary designation(s) on your  life insurance policy

·     Beneficiary designation(s) on your  retirement plans

·     Beneficiary designation(s) on your investments accounts 

You may consider adding a few of these recommendations to your New Year resolutions. It will give you peace of mind that you took care of some essentials.  

 

Wishing you a happy, healthy and prosperous 2012!

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Plan Your Estate or Plan on Probate...

Posted on January 14, 2009 by Daryl Binkley

When you ask someone: "Do you have an estate plan?"  You get a myriad of answers, from the: 1) "Planner" types, that say "Definitely!" or 2) "Middle of the Road" types, "Well I have a will, that's an estate plan, right?" or 3) "Resistant" types, "What, do I look like a Rockefeller?"  And, of course, every imaginable response in between.

Well, everyone has an estate plan.  The issue is whether you have created an estate plan that maximizes your amount of control under the laws, or whether you let the government's default plan (generally termed probate) decide what happens to your assets. 

I have talked to many people--even those that have substantial assets--about estate planning and probate, with the following exchange occurring, almost verbatim, each time: 

I'll say, "Do you have an estate plan, or are you familiar with probate?" And the other person will respond, "Oh, I don't have to worry about probate, I have a will."  My response is invariably, "Well given the amount of assets in your estate, then you WILL go to probate.  Further "probate" essentially means to prove the documents (will)."  For example, in California if you are a single homeowner and you have a house titled in only your name, then most likely its gross value (not net equity) will trigger a probate.   (NOTE:  In California, a probate generally occurs when an estate has real and personal property with a combined value in excess of $100,000)

The point is that if you have not created an estate plan that directs how assets are to be transferred upon your death (i.e. through the use of a revocable living trust, or other planing device)--then the government has a plan for you.  So, you can call it a "Probate Plan," "A Plan for Probate," or "Just Plain Trouble."  Your loved ones and heirs will most likely call it a nightmare!

Some professionals attempt to define probate in terms everyone can understand. I will attempt to summarize these other definitions found in the Internet world--while trying to keep its somewhat humorous tone:  

A probate is a case you bring against yourself (your estate), 

With the costs coming out of your pocket (paid by your estate), and 

That provides arguably as much or more protection to creditors (people you owe money to at your death) and to "disgruntled" heirs (people you may be related to but may not really care about)-- 

When compared to the protection provided to the ones your really care about (true loved ones). 

If you have "no estate plan" then start your year off right and make a plan to do something--or when someone asks if you have an estate plan, you can at least sound somewhat knowledgeable as you say, "No, I have decided on a probate plan."

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"Where there's a will, there's a way...to probate!"

Posted on September 22, 2008 by Daryl Binkley

"'I have an estate plan--I have my will, and that means my loved ones won’t have to go through a probate when I die.” This is a great misconception about wills. Maybe the greatest. 

However, PROBATE essentially means to prove the will (see Etymology on Wikipedia).

Think about it, you might find a "form will" on the Internet for free, or pay an Internet site a low fee.  This seemingly inexpensive price for the handling and organizing of your affairs, comes with its own cost--YOU have to complete the form, completely at your own risk. 

In California, probate generally occurs when an estate has real and personal property with a combined value in excess of $100,000.  For those owning real estate in the Desert, probate is a real threat (THINK ABOUT IT:  when was the last time you bought a home in the Desert or anywhere else in California for less than $100,000).  

So, while you may pay little or nothing now for that "cheap" will you procured, your estate may pay much more later, with overall costs related to the settling of a probate from 2% on up to 5 or 6%.  And in some cases, there might be extraordinary fees raising the costs even higher.  On an estate with a total value around one million dollars, the costs could be in the range between $20,000 to $50,000, depending on the circumstances and involvement of outsiders to administer the estate.  All of a sudden free or cheap, doesn't seem so FREE or CHEAP. 

This reminds me of one of my favorite sayings, “When you try to get something for nothing, you might get NOTHING for something.” 

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