A gift to your family
Discussing death is never a pleasant aspect of financial planning, but it's certainly one of the most important. While no one likes to consider their mortality, properly planning will make a big difference for your family after you're gone. A living trust is just one of many important tools you should consider.
RESOURCES The California Bar Association publishes an excellent consumer pamphlet on living trusts. Information is available for free at www.calbar.org. For the specific laws governing trusts in California, see Division 9 of the California Probate Code §15000-19403. For further information on gift and estate Federal taxes, visit www.irs.gov.
A Good Start for Estate Planning
Your estate plan shouldn't end with the living trust, but rather begin there. At a minimum, your plan should include the following documents:
Pour-Over Will: This will directs that any assets you did not transfer to your living trust during your lifetime should be transferred to the trust and distributed according to the terms of your trust at your death. In addition, it should contain your nominations for guardians of any minor children in your care.
Durable Power of Attorney for financial purposes: This document authorizes your agent to transfer property to your trust and manage your financial affairs should you become unable to manage them yourself.
Power of Attorney for health care: Also referred to as a "Health Care Directive," this document authorizes your designated agent to make medical decisions on your behalf when you are not able to. This document should contain your directions regarding prolonging life by artificial means in the event you become diagnosed with a terminal condition.
HIPAA waiver: Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), hospitals, physicians, and other health care providers must take certain measures to protect patient information. A HIPAA waiver gives them permission to release your health information and medical records to people you designate.
Assignment to Trust of your personal property: This document funds your trust with your personal belongings such as your household furnishings, artwork, jewelry, etc. It establishes your clear intention that you want to have your personal belongings distributed according to the terms of your trust at death.
Certificate of Trust: This is a document you can give to financial institutions and others when they request a copy of your trust. It keeps the personal and financial information in your trust private.
TIP: Your living trust should include a provision authorizing the Certificate of Trust on the first page of the trust document. This way, when a financial institution requests the "authorizing language" of the trust, you only need to produce the first and last pages of the trust. Although it is beyond the scope of this article to go through these items in detail, it is important to know that these documents complement a living trust.