Why An Estate Plan Is Necessary

Without an estate plan, you invite chaos.

Your assets will be subject to the probate process, whether you have a will or not. If you don’t have a will, your assets will go through probate, but instead of your will determining how your assets are distributed, they will pass to your heirs by something called intestate succession, where the state will determine who gets what. There are a whole host of reasons why you should avoid probate, but the main ones are that it is expensive, it is long, and it is public.

Without an estate plan, important decisions about your healthcare will be made by your family or doctors, not by you.

Without an estate plan, if you are incapacitated, decisions about your financial affairs will not be made until a guardian or conservator is appointed. Who will manage your business? Who will pay your bills?  It could be a few months before that is figured out, and it will cost you time and a lot of money to figure it out.

What is in an “Estate Plan”?

An estate plan is not one document, but a collection of documents that determine who will do what, and how your stuff will move from you to your beneficiaries. It is NOT something you should do once and forget, nor is it something that can be done correctly by purchasing a form on the internet. The documents must be properly created, saved, and updated over time as you progress through the seasons of life. We review estate plans yearly, and we recommend updating them every three years.

An estate plan in California typically includes:

• A Living Trust
• Powers of Attorney for Healthcare (an Advance Healthcare Directive)
• Powers of Attorney for Property (a “durable” Power of Attorney)
• HIPAA Authorization
• A Living Will
• A Pour-Over Will

And that’s just for starters. Depending on your specific circumstances, you may need special needs trusts to protect beneficiaries who are disabled, and asset protection for those anticipating divorce, bankruptcy, or lawsuits.

What is a Living Trust?

For most people, a living trust sits at the heart of their estate planning.

Think of a living trust as a well-organized treasure chest. When you’re alive, you’re the one holding the key, and you can add or remove treasures (assets) as you see fit. If something happens to you, the key passes seamlessly to a person you have designated (the trustee), who continues to manage and distribute the treasures according to your instructions. This way, your valuable items are protected and managed without having to go through the often complicated, long, and expensive process of probate. When you become incapacitated or die, your living trust can be easily handed over to the next generation, usually without the involvement of a court or judge.  

What is a Power of Attorney for Healthcare (Advance Healthcare Directive)?

A Power of Attorney for Healthcare (Advance Healthcare Directive) is a legal document that allows you to appoint a trusted person to make medical decisions for you if you become unable to do so yourself. This document also lets you outline your preferences for various medical treatments, procedures, and end-of-life care. By specifying your wishes in advance, you ensure that your healthcare decisions align with your values and desires, even if you cannot communicate them directly. This helps guide your chosen representative in making informed choices and alleviates potential conflicts among family members and healthcare providers.

A bit of a scary subject, perhaps. But if you don’t select someone to entrust with these decisions, someone else will, and the choices they make may not align with your values. Difficult decisions may have to be made, even if you are only on the operating table for a few hours.  

What is a Powers of Attorney for Property (a “durable” Power of Attorney)?

A Power of Attorney for Property, also known as a durable Power of Attorney, is a legal document that allows you to appoint a trusted person to manage your financial and property affairs if you become unable to do so yourself. This document remains effective even if you become incapacitated due to illness or injury. It grants your chosen agent the authority to handle tasks such as paying bills, managing investments, and overseeing real estate transactions, based on the scope of authority you specify. The durable nature ensures that your financial matters are taken care of according to your wishes, even if you’re no longer able to make decisions independently.

What is HIPAA Authorization?

A HIPAA authorization simply gives whoever has the Medical Power of Attorney the right to access your confidential medical records.

What is a Living Will?

Fun fact: a living will is not the same thing as a will.

A “will” is exactly what you likely already know. It is a document that states your intentions for distributing your property. It is basically a letter you write to the probate judge, letting him or her know your intentions. You still have to go through probate, and it is still more expensive in the long run to only have a will as opposed to a living trust.

A “living will” is a document in which you outline your preferences for medical treatment in case you become unable to communicate your wishes due to a serious illness or injury. It specifies the types of medical interventions you do or do not want, such as life-sustaining treatments, resuscitation, or other critical care measures. Unlike an Advance Healthcare Directive, in which you appoint someone to make decisions on your behalf, a living will focuses solely on treatment preferences. This is not an easy document to draft. But by thinking ahead, you provide clarity and peace of mind for your loved ones if they are faced with difficult end-of-life decisions.

What is a Pour-Over Will?

A “pour-over” will is a special kind of will that is meant to accompany a living trust. It ensures that any asset not already transferred into a living trust is “poured over” into the trust upon your death. It is a safety net that directs any assets that you still own at the time of your death, which were not transferred into the trust, should be transferred into the trust.

By having a pour-over will, you are ensuring that all of your assets that have not been transferred elsewhere are included in your living trust, providing a unified plan for your estate.

How We Can Help

Mansoor Law Firm, a dedicated estate planning law firm based in Los Angeles, specializes in estate planning, business planning, elder law and asset protection. Serving clients across Sherman Oaks, Encino, Woodland Hills, Porter Ranch, Thousand Oaks, Westlake Village, and throughout California, we provide expert guidance tailored to your needs.

For inquiries about creating an estate plan, please contact us at info@mansoorlawfirm.com or complete the contact form below and we will respond promptly.