Wills, Trusts and Durable Powers of Attorney

Revoke Power Of Attorney Form - Wills, Trusts and Durable Powers of Attorney

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1. California Law

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Revoke Power Of Attorney Form

This document discusses California law only. Each state has its own laws for dealing with wills, trusts and powers of attorney.

2. Durable Power of Attorney for Finances

a. Durable powers of attorney for finances allow man else to cope your finances for you. They come in two basic types:

i. A "springing" durable power of attorney allows your agent to cope your financial affairs (such as paying bills) if you come to be incapacitated.

(1) If you procure capacity, your agent loses this power - unless and until you come to be incapacitated again.

ii. An "immediate" durable power of attorney goes into supervene immediately, regardless of either you are incapacitated or not.

(1) This type of power of attorney stays in supervene until a specified date is reached, a specified event occurs, or the man who made it revokes it.

(2) It is often used when a man is losing capacity or when the maker is going to be out of the country for an extended period of time.

b. If you don't have a durable power of attorney for finances and you come to be incapacitated, often the only thing your house (or friends) can do is go to court and procure a conservatorship. This can take months and is very expensive.

c. Oftentimes your spouse (or partner) is your original agent, and then adult children or friends are the successor agents in case your original (or subsequent) agent is unable (due to incapacity, etc.) or unwilling to act on your behalf.

d. Powers of attorney expire on the death of the critical (the man giving the power of attorney) - so they cannot be used in place of a will or trust.

3. Advanced condition Care Directive

a. In California, this used to be known as a durable power of attorney for healthcare.

b. This is designed to allow your agent to make health-care decisions for you if you are incapacitated.

c. Unlike with a power of attorney for finances, an Advanced condition care directive cannot be immediate; instead it must be springing. This makes sense: if the critical has capacity, he/she should be manufacture his/her own condition decisions.

d. An Advanced condition Care Directive also:

i. Allows your agent to have entrance to your healing records.

ii. Gives your agent priority over whatever else in manufacture condition decisions for you.

iii. Allows you to express your desire with regard to life-sustaining healing treatment. For example, many habitancy have the document state something like the following:

It is my express wish and expectation that I not receive life-prolonging healing treatment that merely delays obvious death if the burdens of treatment outweigh the predicted benefits.

iv. Allows you to express your desire with regard to organ donations, autopsies and routine of your remains. (This same information should be located in the will and/or the trust, since powers of attorney expire on the death of the principal.)

4. Capacity Issues

a. Oftentimes springing durable powers of attorney for finances and Advanced condition care directives state that two physicians must guarantee in writing that the critical is incapacitated. Often it's difficult to procure this, since physicians are concerned about liability.

b. One alternative is say something like the following:

For purposes of this instrument, I shall be deemed "incapacitated" if certified in writing by any two habitancy falling within the following categories:

My spouse, if any.

Any successor trustee to any revocable trust created by me.

Any actual or possible agent specified in this power of attorney.

Any actual or possible executor specified in my will.

The following named persons:

Any licensed physician not associated by blood or marriage me nor to any beneficiaries of any trust or will created by me.

5. Unified Federal Gift and Estate Tax Credit

a. There is a Unified credit against federal gift and estate taxes as follows (based on the net estate):

Year of Death

Unified Credit

(net estate)

2002-2003

,000,000

2004-2005

,500,000

2006-2008

,000,000

2009

,500,000

2010

Unlimited

2011

,000,000

b. Individual retirement accounts are counted as part of the net estate.

i. Where an irrevocable trust holds an insurance course and is specifically prohibited from exercising any power usually conferred on the owner of a policy, the proceeds of the course are not counted as part of the estate.

c. Life insurance proceeds are counted toward the net estate if either i) they are received by the estate or ii) they are received by other beneficiaries and the deceased had any "incidents of ownership" in the policy.

d. Note the drop in the Unified credit between 2010 and 2011. Everyone assumes that Congress will do something about this before 2011, although at the occasion some wags refer to 2010 as "throw momma from the train" year.

6. Agreements between Spouses with regard to the Status of Property

a. Sometimes spouses, as part of estate planning, want to confirm in writing that obvious property is community property or separate property.

b. Such agreements often contribute that joint tenancies (which have a right of survivorship) are nothing else but community property. This creates a new income tax basis for both halves of the community property on the death of either spouse; joint tenancy assets generally receive a new basis only for the decedent's one-half share.

i. On the other hand, with large estates (in excess of .5 million), joint tenancy with right of survivorship may avoid estate taxes since the property does not come to be part of the deceased's estate. This, though, has to be weighed against not receiving a new basis for one-half of the property.

c. Note that since July 1, 2001, the community interest of a husband and wife may be held as community property with right of survivorship. This provides the best of both worlds.

d. As of January 1, 2005, community property law also applies to domestic partners who have registered with the California Secretary of State.

i. Registration with counties, cities or employers does not count for this purpose.

ii. Those who have already registered do not have to re-register unless one of the pair filed to desist the registration at some point.

iii. The tax benefits of community property, though, will only apply with respect to California taxes, not federal taxes.

7. Presuppose to Have at Least a Will

a. If you do not have at least a will, then California law determines who receives your estate. This may not be what you want to have happen.

b. Where man dies without a will, California will generally distribute the estate as follows:

i. If there is a surviving spouse, that spouse receives:

(1) All community property.

(2) As to the decedent's separate property (if any):

(a) All of it if the decedent did not leave any surviving issue, parent, brother, sister, or issue of a deceased brother or sister.

(b) One half if the decedent has only one child or has one deceased child with issue.

(c) One half if the decedent leaves no issue but leaves a parent or parents - or leaves their issue or the issue of either of them.

(d) One-third if the decedent leaves more than one child, leaves one child and the issue of one or more deceased children, or leaves issue of two or more deceased children.

ii. The rest goes first to the decedent's surviving children or, if any of them are deceased, to the children's surviving issue.

iii. If the decedent has no surviving children or deceased children with surviving issue, the rest goes to:

(1) The decedent's parents, if living.

(2) The decedent's brothers and sisters (or their issue if any of them are deceased).

8. Reasons to Have a Trust

a. Normally, unless a trust has been created, an estate must be probated.

i. If, though, the gross value of the estate is 0,000 or less (without subtracting any liens, debts, deeds of trust, etc.), there are straightforward procedures for distributing an estate without using formal probate proceedings.

ii. In addition, all property that a surviving spouse is entitled to receive may be handled with simplified procedures.

iii. Even in these two cases, probate still may be appropriate, though, if there are strained house relations, involved investments, large or involved claims by creditors, or an interest in a good-sized business.

b. There are two problems with probate:

i. It often takes 8 to 10 months. (It can take even longer.) while that time, if the house needs money from the estate, a petition has to be brought and a court order obtained. In contrast, with a trust, there is no probate and the beneficiaries receive the money immediately.

ii. Probate is expensive. Attorneys' fees are set as follows and are based on the gross estate, meaning that there is no subtraction for any liens, debts, deeds of trust, etc.:

(1) Four percent on the first one hundred thousand dollars (0,000).

(2) Three percent on the next one hundred thousand dollars (0,000).

(3) Two percent on the next eight hundred thousand dollars (0,000).

(4) One percent on the next nine million dollars (,000,000).

(5) One-half of 1 percent on the next fifteen million dollars (,000,000).

(6) For all amounts above twenty-five million dollars (,000,000), a uncostly whole to be determined by the court.

For example, if your estate is a house worth 0,000, then the probate fees for the attorney will be ,000 (,000 + ,000 + ,000) - regardless of the size of any loans against the property.

iii. The executor of a will is also entitled to statutory fees, although the executor can waive those fees if he/she wishes (and house members often do).

c. A trust can also be used for some tax planning.

d. A revocable trust can be set up to create, upon the first spouse's death, a "marital deduction trust" (which is usually either a Qtip Trust or a Life Estate with Power of Appointment Trust) and a "credit shelter trust" (also known as a Remainder Trust, B Trust, or Bypass Trust). The advantage of doing this is that it effectively doubles the Unified Credit.

e. involved estates (basically those where the net value of the estate is at least twice the Unified credit for spouses and equal to the Unified credit for singles) may also use varied irrevocable trusts, obvious charitable gifts, generation-skipping trusts, etc.

i. One example is an irrevocable insurance trust, where an irrevocable trust is made the beneficiary of life insurance policies.

(1) If insurance is owned by an irrevocable trust, the insured should not serve as trustee.

ii. Other example is a charitable remainder trust: donating a highly appreciated piece of real property such as a residence to a charity - and receiving a charitable donation - but retaining the right to remain there for life.

9. Revocable Trust Assets

a. For a trust to be effective, most major assets have to be transferred to the trust so that the trust owns them.

i. With real estate, this means that a deed has to be prepared transferring title to the trust, and then the deed filed with the County Recorder's Office.

ii. With stock brokerage accounts, the brokerage company's forms must be completed. Often the signature has to be confirmed (witnessed) by stock broker.

iii. With savings accounts, the bank's forms must be completed.

iv. It's usually more trouble than it's worth to put cars (unless they are highly valuable) or day-to-day checking accounts into the trust.

v. Personal property (jewelry, furniture, artwork, etc.) can be located in the trust just by mentioning them correctly in the trust document(s).

vi. Title is generally transferred to the trust by designating the owner along the following lines: "John and Mary Smith, Trustees of the 2005 Smith house Trust".

b. Proprietary of retirement accounts (Ira's, 401(k)'s, Keogh's) generally should not be transferred to the trust, because doing so will trigger adverse tax consequences.

10. Beneficiary Designations

a. obvious items - the proceeds of life insurance policies and survivor Proprietary in retirement accounts - usually are not governed by the provisions of a trust or will, since they are contractual arrangements. Instead, one designates the beneficiaries by completing the forms provided when the life insurance course is taken out or the retirement list is created.

b. Generally, you can turn the beneficiaries at any time by filing out the allowable forms.

i. One irregularity is with retirement plans. With these, you usually must make your spouse the original beneficiary unless your spouse signs a written waiver.

c. The beneficiaries of a life insurance course generally receive the proceeds free of federal income tax. As noted previously, though, the whole of the proceeds will count toward the net estate for purposes of the Unified credit if the insured retained any "incidents of ownership".

d. Basically, the only time married individuals should not name each other as original beneficiaries on life insurance policies and retirement accounts is when their estates (including individually owned life insurance benefits) exceed the Unified credit (or twice the Unified Credit, if they have the allowable type of trust) and would trigger estate taxes. (As noted before, money that survivors receive from Individual retirement accounts counts towards the net estate for purposes of the Unified Credit.)

i. An irregularity is when the surviving spouse - maybe due to incapacity, ill condition or lack of perceive in financial matters -- may not have the capability to manage the money. In that case it may be good to prescription a trust as the recipient of the life insurance proceeds and survivor benefits of retirement plans.

e. While spouses who are designated as beneficiaries of retirement plans are usually eligible for a tax-free transfer to an Individual retirement list or Other pension plan, non-spouse beneficiaries are not.

i. When the retirement funds are not rolled over, there is income tax, since any time money comes out of a retirement list there is tax.

ii. On the other hand, retirement plan companies can now spread the retirement plan distributions over the life of the beneficiary - minimizing the income-tax impact. As a result, the tax issue here is much less of a question than before. perceive your firm for details.

f. In any case, contingent, secondary beneficiaries should be named. Otherwise the money may wind up being distributed according to the terms of the trust or will.

i. Naming minor children as beneficiaries may be a problem, since the money would likely have to be held by a court-appointed guardian. To avoid this, a trust for minors can be named as a contingent beneficiary.

ii. Other question is that if you naturally name your children as beneficiaries and one predeceases you, that child's children will not receive any money. Again, having a trust named as a contingent beneficiary can avoid this problem.

11. house puny Partnerships and house Llc's

a. A house puny partnership or a house Llc is naturally a puny partnership or Llc where all the owners are house members.

b. A transfer of Proprietary to a child in excess of the ,000 per man each year gift exclusion will reduce a parent's lifetime gift tax exemption (currently .5 million) that is permitted under federal estate tax laws. As a result, the value of the Proprietary transferred to a child is often discounted from a proportional share of the fair shop value to get under the ,000 limit.

c. There are at least two reasons to explain the discounted value:

i. There is a mountainous value in being able to operate a business, and the Proprietary transferred at any one time is relatively small.

ii. Because there generally is no social shop for the interests in the business, it is often difficult to sell the interests later.

d. Discounts Oftentimes range from 10% to 50%.

e. It is crucial that these types of discounts be documented by a supportable appraisal, in case the Irs challenges the discounted values.

12. How Often Should You modernize Your Estate Documents?

a. Basically, you should reconsider updating your estate documents when major life events occur:

i. The births of a baby whom you want to make a beneficiary.

ii. The death of a beneficiary, agent, executor or successor trustee.

iii. Divorce.

iv. A major asset being added or transferred.

b. In addition, the condition insurance Portability and responsibility Act ("Hipaa") has imposed stringent privacy restrictions with regard to healing records. As a result, if your Advanced condition care directive (or durable power of attorney for condition care) does not address the Hipaa requirements, you may want to have it updated.

The foregoing narrative constitutes normal information only and should not be relied upon as legal advice.

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