9. Other Documents You Need

This is part 9 in my series, Estate Planning – What You Need to Know.

Part 9 – Other Documents You Need.

Pour-Over Will

When you create a revocable living trust as the central piece of your estate plan, you should also include a pour-over will.

A revocable living trust only controls property that you have transferred to it. If you die without transferring your property to the trust, such as real property, bank accounts or investment accounts, the omitted assets will not be owned by the trust.

This is where the pour-over will comes in The pour-over will instructs your personal representative to literally pour-over the omitted assets into the trust and distribute those assets as if they were part of your revocable living trust.

This is an effective tool for getting your assets to the right person. But I don’t recommend you rely on the pour-over will.

The better approach is to take the steps to formally transfer your assets to your trust. Assets distributed to your trust after your death via the pour-over will be subject to probate. And if your assets have to go through probate, you will have defeated one of your primary objectives of creating your revocable living trust, AVOIDING PROBATE.

The better approach is to consider the pour-over will as a safety net, which insures your assets get to the right person. But be diligent in funding your trust.

Health Care Documents

Your estate plan should include an Advance Health Care Directive, also referred to as a Power of Attorney for Health Care.

The Advance Health Care Directive accomplishes two objectives. First, it authorizes your spouse, children or close friend (referred to in the document as your “agent”) to make health care decisions on your behalf if you are unable to do so.

The Directive gives your health care agent the right to, among other matters:

  • Consent or refuse consent to medical care or services
  • Choose or reject your physician
  • Consent to the release of medical information
  • Donate organs, authorize an autopsy and dispose of your body.

Second, the Advance Health Care Directive includes a provision for you to state your intent regarding life support if you are seriously ill.

We generally use the following provision by the California Medical Association:

I request that all treatments other than those needed to keep me comfortable be discontinued or withheld and my physician allows me to die as gently as possible.

Most of my clients are comfortable with this language and include it in their Advance Health Care Directive.

In addition to the Advance Health Care Directive is the HIPAA (medical privacy act authorization).

The HIPAA authorizes your doctors and hospital staff to talk to your health care agents about your medical condition. Without a HIPAA, hospital red tape could kick in and delay vital communications with your health care agents.

Durable Power of Attorney

The Durable Power of Attorney authorizes the agent you name to manage your assets for you if you become incapacitated.

This is an important document if you have a revocable living trust, but a vital document if you don’t have a living trust.

If you become incapacitated and you don’t have a Durable Power of Attorney, no one will have the authority to get to your accounts or other assets. So your family would have to go to court to have a judge appoint someone as your conservator.   This is not something you want. A conservatorship can be worse than a probate.

With a conservatorship, someone, hopefully someone that knows and cares about you, would be appointed by the court to manage your affairs.

A conservatorship is expensive and becomes a hardship on the person the court chooses to manage your affairs.

Bottom line. When you do your estate planning, make sure you get all the important documents.


3. What if You Don’t Have an Estate Plan?

Here is Part 3 of my series, Estate Planning – What You Need to Know.

What if You Don’t Have an Estate Plan?

Simply put, if you don’t have a will or a revocable living trust, then when you die, your assets will go according to state law found in the probate code.

If you live in California it goes like this:

  • if you are married, your assets will go to your spouse.
  • If you have children, your separate assets will go either one-half to your spouse if you have one child, and one-third to your spouse if you have more than one child. The rest will go to your child(ren).

If you are not married and don’t have children, your assets will go to your next of kin in the following order:

  • to your parents, if they are alive, then
  • to your siblings, if they are alive, then
  • to your aunts and uncles, if they are alive, then
  • to your cousins, if they are alive, then
  • to your crazy fourth cousin twice removed, if he isn’t alive, then
  • to the state. Believe it or not (or course you can believe it) if  there are no living family members, the state will take your assets. The sophisticated legal term for this is “escheat” – your estate will escheat to the state.

You get the picture. If you don’t have a will or a revocable living trust which states how you want your assets distributed, you have what is called an Intestate estate. Intestate estates are distributed according to the state probate code.


It’s bad enough to rely on the state to distribute your assets when you die, but it’s even worse to rely on the state to manage your assets while you are alive.

If you become incapacitated, which means you are no longer capable of managing your affairs, e.g. dementia, then someone else must manage your assets for you. For that someone to manage your assets, you must have already signed a Durable Power of Attorney.

A durable power of attorney is a document that gives the person you name the authority over your assets, like bank accounts and real property, if you become incapacitated. The person you name, your Agent, can take the durable power of attorney to your bank and get access to your accounts to take care of you – pay your bills, etc.

However, if you did not sign a durable power of attorney, no one will have the authority to manage your affairs. And once you become incapacitated, it’s too late to sign a durable power of attorney because you are incapacitated. Incapacitated people cannot sign legal documents.

So now what? Your loved ones will have to hire an attorney and petition the court to appoint one of them or someone the court chooses as your Conservator. A conservator is a person authorized by the court to manage your affairs, and in many cases must submit an account of her activities to the court for the judge to review. It is an expensive, tedious and nightmarish solution, which could have been simply avoided if you had signed a durable power of attorney.

Bottom line: If you don’t have an estate plan, state law will determine who gets your stuff, and if you become incapacitated, the court may end op overseeing the management of your assets.

Next up is Part 4.  Why You Need Guardians If You Have Young Children.

1. What is an Estate Plan?

In the next two weeks, I will publish my new series entitled, Estate Planning – What You Need to Know. Here is part 1.

1. What is an Estate Plan?

An estate plan is a set of legal documents that allows certain things to happen when you die or if you can no longer manage your affairs.

If you have young children, it names the Guardians you want to raise your children if something happens to you and your spouse. If you have young children, this is the most important reason to do your estate planning.

It names the person you want to manage your estate when you pass away or if you become incapacitated. You don’t want a judge who doesn’t know you or your family to make the decision for you.

It sets out your plan of who you want to get your assets. You don’t want your family fighting over your stuff.

It can also significantly protect the assets you leave your children from divorce claims and lawsuits filed against your children. If you are leaving assets to your children, why not protect them?

It also names the person you want to make health care decisions for you if you can’t. Doctors and hospitals need to know who is authorized to make decisions for you.

The documents typically included in an estate plan are:


Durable Power of Attorney

Health Care Directive and Medical Privacy Act Authorization (aka HIPAA)

If you have a Revocable Living Trust, the documents will also include:

Certification of Trust

Transfer Deed to transfer your home to your trust

Schedule of Trust Property

Personal Property Memorandum

Next in the series is Part 2 Who Needs an Estate Plan.