What Is an Advance Health Care Directive – Estate Planning Basics

Posted on April 7, 2014 by Roger Billings

World War II nurses holding hands
An Advance Health Care Directive designates the people responsible for your health and may also state your health care wishes.

It must be a written properly executed legal document.

The health care agent designated by the Advance Health Care Directive has the power to make health care decisions on your behalf when you are unable to do so. You can designate a single agent or co-agents. When designating a single agent, you should also name an alternate agent or two if possible. Spouses each sign their own Advance Health Care Directive, so they are able to make different choices of alternate agents if they wish.

The powers of the agent are specified by the document or by law. Such powers include authorizing medical procedures, making living arrangements, including long term care, and making end-of-life decisions, such as withdrawing life support. The agent also has authority over disposition of remains after death, including choosing between burial or cremation.

The choice of the agent should take into consideration several factors: trustworthiness, understanding of your wishes and values, availability, ability to make stressful decisions, and skills in communicating with other family members. But remember that there is no perfect choice. Choose who you feel most comfortable with among the available family members or close friends.

The Advance Health Care Directive can also state your wishes for health care treatment and life support. These statements can include circumstances under which you want life support terminated, a do-not-resuscitate statement, wishes regarding living arrangements and any other wish you may have regarding your treatment when you are incapacitated.

Statutory forms of Advance Health Care Directives that can be filled in and signed by the maker without the need of an attorney are available from most hospitals. Attorneys can prepare more customized versions.

To be effective, the document needs to be signed and authenticated in two ways. Either your signature needs to be notarized or it needs to be witnessed by two individuals, one of whom cannot be a family member.

The Advance Health Care Directive can be amended or revoked in writing any time, as long as you are legally competent. It can also be revoked or modified orally when you are in the hospital by informing a nurse that you want to do so. The nurse is then required to record the change on your medical chart.

All competent adults, regardless of their financial circumstances, should have an Advance Health Care Directive.

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Think Twice Before Giving It All Away

Posted on April 4, 2014 by Roger Billings

wrapped presents

Whether assets are inherited at death or given away while you are still alive, the federal estate tax exemption is essentially the same, currently $5,340,000 per person. But the effect of capital gains tax may be the deciding factor.

The Bacon Wilson firm explained:

However, before making gifts, attention should be paid to the tax basis, or what is known as the cost basis of the asset. Once the asset is gifted, the donee (recipient) receives the asset at the donor’s tax basis. For instance, if a person bought IBM stock at $10 a share and it is now at $70 a share, if the stock is gifted, the donee receives the basis of $10 a share, which means that when they sell it, they will pay the capital gains tax on $60.00. However, if the donor died with the stock and left it by will or trust to the donee, then the donee receives it at the date of death value so that when it is sold, there is nominal tax basis if any at all. However, the stock is also included in the estate of the donor, so that if this person had total assets greater than $5,340,000, there would be an estate tax also.

The entire article from their Estate Planning Bits Blog is here.

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Jagger Inherits $9 Million

Posted on April 2, 2014 by Roger Billings

 

From the Telegraph:

L’Wren Scott, the fashion designer who committed suicide last week, left her entire estate of $9 million to her long-time boyfriend Sir Mick Jagger, according to a new report.

The contents of her simple will, which were quoted by The New York Post following a review of probate documents, do not however clarify the overall state of her finances at the time of her death. . . .

According to the probate documents quoted by the newspaper, her estate consisted of a $1 million apartment in one of Manhattan’s most expensive tower blocks and $8 million in “tangible personal property and various other assets”.

See the entire article in the Telegraph.

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Not All Deeds Are Created Equal: An Estate Planning Vocabulary Tip

Posted on March 31, 2014 by Roger Billings

 

“Great acts are made up of small deeds.” Lao Tzu

In the legal world, the word “deed” is confusing.

Legal stamp – Conveyance

Used by itself, it usually refers to a document transferring title to real estate. There are different types of such deeds. For example, it may be a Grant Deed, a Quit Claim Deed, a Warranty Deed, or a Trust Transfer Deed.

In California, Grant Deed and Warranty Deed are essentially the same, and they signify that title is being transferred along with certain warranties about the validity of title held by the transferor.

A Quit Claim Deed, on the other hand, is a document that transfers title while limiting the warranties that the transferor makes as to the validity of title.

A Trust Transfer Deed is a document that transfers title of a property to a trust. When in the estate planning process a trust is set up, it is necessary to transfer any real estate that the planners own to the trust, and this is done by a Trust Transfer Deed.

Any or all of these documents are often confused with each other and with a Deed of Trust, which is a much different document. In California, a Deed of Trust is a mortgage. It is a document that the lender records not to transfer ownership but to provide security for a real estate loan. When the borrower is in default, the Deed of Trust gives the lender the right to foreclose on the property.

These different uses of the word “deed” are often mixed up, but the above definitions will help to avoid such confusion.

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When to Update

Posted on March 28, 2014 by Roger Billings

 

What is the point of doing an estate plan if I am just going to update it later? My answer to this frequent questions is that if you know for certain that you are for going to live another 30 years, then it makes sense to wait 25 years to make or update the plan. But, of course, no one knows that. We do estate planning not only to be prepared for death, whenever it may come, but to have peace of mind now so that we can enjoy living.

Happy Family

So the time to plan is now and thereafter I recommend reviewing your existing plan at least every five years.

According to the Wills, Trusts and Estates Prof, we should update our plans even sooner if the following are applicable:

  • Your financial situation changes
  • Your family changes
  • The death of a beneficiary
  • An executor or trustee dies or becomes incapacitated
  • You sell or gift assets in your Will
  • You buy or inherit assets
  • You begin holding assets that your Will cannot deal with
  • The entities or structures holding your assets change

See the entire article here.

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Watch Out for Undue Influence

Posted on May 21, 2013 by Roger Billings

The short video by Stewart Albertson at the link below discusses how undue influence can be used to overturn a will or trust. I suggest that it be used as a warning of the importance of avoiding undue influence while parents are still alive. Children and other family members need to be careful to avoid circumstances that look like undue influence. That means it pays to know how undue influence can be used, as discussed in the video.

Using Undue Influence to Overturn a California Trust or Will

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The Pitfalls for Professionals Writing a Book

Posted on May 17, 2013 by Roger Billings

The stacks at Austria National Library

“Oh that mine adversary had written a book.” Book of Job 31:35

For financial professionals, writing a book is often seen as a means to garnering influence and prestige. A recent post in the Trust Advisor Blog pointed out the downsides of book writing, and it can be summed up in one point: A book is a large investment of time (and money) with no sure return. The risk is reduced if the author is passionate about sharing a message. That way the need to express a message is fulfilled even if the impact of the book turns out to be negligible. As Chelsea Emery writes in the Passive Voice Blog:

 A prospective book writer must be passionate about the subject, said Marie Swift, president and chief executive of Impact Communications, a public relations firm in Leawood, Kansas.

 ‘It’s not always about getting new clients or creating celebrity status,’ said Swift. ‘Sometimes advisers feel they have a mission or a calling, and they feel the book is the mechanism for that purpose.’

 See the entire article here.

I can appreciate the effort that goes into writing a book every time I prepare to give a seminar to other lawyers on estate planning. My next seminar is (endorsement alert) June 7, 2013 at the Red Lion Hotel in Sacramento, and it has already been exhausting to get ready for it. But I always enjoy the experience. It is rewarding to share what you learn with others, and I suppose that is what it feels like to have write a book, too.

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