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Estate Planning. It’s Not for Everybody. So Who’s It For?

CunninghamLegal – The Living Trust Lawyers

“Estate Planning” is a general phrase that most people associate with planning for the end of one’s life. While that basic definition is a good place to start, estate planning goes far beyond just planning for the distribution of assets upon death. It also includes planning for periods of incapacity, healthcare decision making, Medi-Cal planning, and more.

Despite its importance, not everyone has an estate plan. Since not everybody has an estate plan, it can be reasoned that estate planning is not for everybody. If it’s not for everybody, who is it for?

If you’re the type of person who prepares before leaving town, estate planning is for you.

Most people would not dream of taking a vacation of any duration without making arrangements for their responsibilities and what they hold dear. Bill paying, pet care, home security, giving someone the power to make decisions, etc. are all topics that cross our minds when going away for a week or more. Estate planning is a process through which a person can, in a similar but formalized manner, prepare for life’s unplanned events.

During a period of incapacity, an estate plan allows a person to select who will act on their behalf, how their assets will be controlled and who will participate in medical decision making. Upon passing away, an estate plan allows a person to direct important outcomes, such as: guardianship of minor children, who will care for pets, and distribution of assets. The same foresight that people apply prior to travel can be formalized in an estate plan to thoroughly prepare for whatever lies ahead.

If you’re the type of person who likes to have control over your assets, estate planning is for you.

It has been said that even those without an estate plan, actually do have an estate plan. The problem with the default plan is that it is provided by the government through statutes. A person without their own estate plan who becomes incapacitated is likely to be the subject of a court-ordered conservatorship. A person who passes away without their own estate plan will have their assets administered through the statutory “one-size-fits-all” distribution scheme under the oversight of the probate court.

Few people would consciously invite the government to make such important decisions on their behalf. Living trusts, pour-over wills, powers of attorney, and advanced healthcare directives allow a person to create a unique plan that prepares for their possible incapacity and eventual death based upon their particular circumstances without governmental interference.

If you’re the type of person who wants your financial legacy to be protected from taxes, estate planning is for you.

Tax consequences cause most people to get professional advice, prior to buying, selling, or gifting major assets. The same approach should be taken when considering the transfer of assets upon death.

Estate planning can prevent a person’s financial legacy from being reduced due to estate taxes, generation-skipping taxes and capital gains taxes. What may sound like a good idea (“I’m putting my children on the title to my house now, just in case something happens . . . ”) could cause a tax burden that an estate plan could have prevented.


Estate planning allows a person to create a unique plan to control their assets during their life, through periods of incapacity, and asset distribution after their death. Most people make a plan regarding their assets when just leaving town for a few days. Likewise, most people would rather not have the government control their assets and decision making upon incapacity or death and most people would not want to create a large tax bill simply due to lack of planning, or poor planning. Therefore, upon reflection, most people are likely to determine that estate planning is for them.

By: Doug Reeve. Doug can be contacted in our Camarillo office at (805) 484-2769. Doug’s profile is also found at: Doug Reeve

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Incapacity – Snow White and the Seven Steps

CunninghamLegal – The Living Trust Lawyers

Incapacity is generally defined as lacking the ability to make decisions for oneself. This can occur due to a mental impairment or a physical disability or illness, which prevents a person from having the ability to communicate their reasonable decisions to others. Like most people, Snow White did not know that she would become incapacitated. However, she did understand that proper estate planning doesn’t merely focus on transferring assets upon a person’s death. She knew that an estate plan should also prepare for the possibility that a person may become incapacitated and provide for control of assets and guidance for health care decisions during that time.

Snow White had been warned that the evil queen was out to get her. Despite the warning, she still took a bite of a poisonous (and possibly non-organic) apple. That one bite led to Snow White’s incapacity. She lay unconscious in the forest surrounded by non-CPR certified dwarves, while her real property and financial accounts seemingly had no guidance and medical professionals feared that there was no one who could speak on Snow White’s behalf.

Fortunately, Snow White had a thorough estate plan and she had taken the proper steps to ensure that during her period of incapacity, she didn’t lose control of her assets or medical decisions. The steps she followed were to:

1) Have a Revocable Living Trust: Snow White visited a qualified estate planning attorney who drafted a Revocable Living Trust as the cornerstone of her estate plan. The person she selected as her successor trustee will be guided by the provisions of the trust during Snow White’s period of incapacity.

2) Have a Durable Power of Attorney: A durable power of attorney allows for a person to act as the agent, or attorney-in-fact, on behalf of a person who is incapacitated. Snow White named the successor trustee of her trust to be her attorney-in-fact, thus this person has the power to manage assets that are inside or outside of the trust.

3) Decide When the Durable Power of Attorney Will Be Effective: The durable power of attorney can be effective immediately, upon the signing of an authorization by a person who still has capacity, or upon the occurrence of an event that causes a person’s incapacity. Snow White preferred that her durable power of attorney be effective immediately upon the signing of her estate plan, which means that her attorney-in-fact could act in her best interest anytime thereafter.

4) Create a List of Assets, Obligations and Accounts to Guide Your Successor Trustee and Your Attorney-in-Fact: It can be daunting to assume responsibility for another person’s assets and finances. It is recommended that you keep a current list of assets, obligations, and accounts to allow the people that you have nominated to seamlessly act on your behalf.

5) Have an Advance Health Care Directive: Also referred to as the “medical-power-of-attorney”, this document allows a person to be named as the health care agent and empowers them to make decisions on behalf of an incapacitated person.

6) Thoughtfully Select Who is Best Suited to Make Medical Decisions: It is important to select a health care agent who is comfortable speaking with medical professionals and advocating on behalf of the incapacitated person. Snow White selected the dwarf named Doc as her health care agent. His name indicates that he has a medical background and therefore would be comfortable discussing possible treatments and procedures with Snow White’s doctors.

7) Name People to Receive Medical Information (HIPAA Authorization): The Health Insurance Portability and Accountability Act requires that information relating to a person’s medical condition only be released to named “HIPAA agents.” Although Snow White wanted only one health care agent to make decisions for her, she authorized a handful of dwarves and family members to receive information related to her medical condition.

By following the steps listed above, Snow White’s assets were managed during her period of incapacity by people she had previously selected. Additionally, her health care agent was able to discuss and authorize her treatment. The experimental “kiss-by-a-prince” therapy proved successful and Snow White regained her capacity and her ability to control her assets and make her own health-care decisions. And by avoiding poisonous, non-organic apples, she was able to live happily ever after.

By: Doug Reeve. Doug can be contacted in our Camarillo office at (805) 484-2769.

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Is Hiring a Specialist a Good Idea?

CunninghamLegal – The Living Trust Lawyers

When I was going to law school, I often received calls from family members and friends with legal questions they had ranging from contracts, landlord-tenant issues, divorce, personal injury, workers compensation and the list goes on. I would try my best to help answer someone’s legal question, but I quickly realized that it is impossible for an attorney to know everything about the law. There are millions of pages of state laws, federal laws and even more pages of published court opinions interpreting laws. Just like you would see a cardiologist for a heart problem because they listen to heartbeats all day long, you should hire an attorney to do your estate plan who solely does estate planning.

However, if you are looking for an attorney, how can you be assured that the attorney you are speaking to understands your legal concerns and knows how to help? Any attorney can say they practice a specific field of law, but how can you be assured that they really do? The State Bar of California, the certifying authority for attorneys, developed a “certified specialist” program so that it is easier for you know that you are hiring someone who is an expert in their field. I recently obtained my certified specialist designation in estate planning, trust and probate law, which is no small feat. As the State Bar puts it:

“A Certified Specialist is more than just an attorney who specializes in a particular area of law.  An attorney who is certified by the California State Bar as an Estate Planning, Trust & Probate Law Specialist must have:

  • Taken and passed a comprehensive full-day written examination in estate planning, trust, and probate law administered by the State Bar Board of Legal Specialization;
  • Demonstrated a high level of expertise and requisite number of years of experience in estate planning, trust, and probate law;
  • Fulfilled mandated ongoing education requirements in estate planning, trust, and probate law;
  • Been favorably evaluated by other attorneys and judges familiar with his or her estate planning, trust, and probate work.”

Out of 190,000 attorneys in California, only 1000 of them are certified as specialists in estate planning, trust and probate law. That is only 0.5% of attorneys. From the State Bar again – “Whether your situation is simple or complex, consider hiring an attorney who is a ‘Certified Specialist in Estate Planning, Trust & Probate Law’ by the State Bar Board of Legal Specialization – an attorney who is committed to maintaining skill and expertise in estate planning, trust, and probate law through continual attention and continuing education.

Stephen M. Wood is an Attorney in our Camarillo office. For more information about hiring an attorney who specializes in Estate Planning, Trust and Probate Law, call Stephen at 805-484-2769.

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Should You Settle?

CunninghamLegal – The Living Trust Lawyers

Ever hear this, “Don’t Settle,” or better yet, “Never Settle!” ? 

These may be wise words to follow in certain aspects of your life, but what about your legal life, or specifically, your inheritance?

After a person dies and their estate is being administered, unforeseen circumstances can arise that affect distribution of the estate.  Such factors can include ambiguities or errors in the estate plan, changes in the law, problems with specific assets, and unfortunately – disagreements among heirs.  Sometimes, due to a combination of these factors, it is not possible to satisfy each person’s desire (or opinion) as to the distribution of the estate.  When there is a Trust, a settlement among the heirs/beneficiaries can be useful to resolve some of these challenges.  Although settlement can also be an option in a Court administered probate, that process has parameters which are outside of the scope of this article.

In a privately administered trust, a trustee (often a family member) is the fiduciary named in the trust who will gather the assets, pay expenses, perhaps liquidate assets and prepare the estate for distribution. Say, for example, the trust contains the long-time family residence, cash accounts, investments, and dad’s classic 1959 Chevy convertible.  The trust says to distribute all property “equally to my children who survive me.”  Let’s add to our hypothetical that the family wants to hold on to the home and one child wants the ’59 Chevy.  What options does the Trustee have?

It would be the trustee’s right to sell all of the assets and merely hand out checks in equal amounts to each beneficiary.  However, this could cause a great amount of discontent among the beneficiaries.  If the trustee is a family member, this could cause anger and resentment for years to come, if not forever.  Let’s look at a few of the options available to the trustee.

  • The trustee could ask a court how the trust should be distributed.  This is not necessarily a lawsuit.  The court sits in an administrative role and is empowered to instruct the trustee.  Instructing the trustee and determining how trust property should pass are two of the Court’s specific powers pursuant to Probate Code § 17200.   The details of a 17200 Petition will be laid out in a future blog.
  • Effective January 1, 2017, a trustee may use the Notice of Proposed Action for preliminary and final distributions.  Found in Probate Code §§ 16500 – 16504, the Notice of Proposed Action relieves the trustee of liability for taking specific actions.  The actions must be described in the Notice, and the Notice must be provided to all affected beneficiaries.  Using this process for trust distributions was specifically prohibited until January 1, 2017.  Using our example above, a Notice of Proposed Action can now be issued describing the proposed distribution and/or sale of the house and the ’59 Chevy.  The trustee might seek input from the family members prior to issuing the Notice.  If no beneficiary objects within 45 days of receipt of Notice, the trustee can be confident in taking the described action. If a timely objection is received, the trustee may then choose to file the matter for court determination.
  • Now, let’s look at the settlement option.  Similar to other litigation, a trust settlement tells the “story”, describes the issues, and sets forth the solution.  A trust settlement specifically lays out the provisions of the trust, the beneficiaries, the assets, the distributions outlined in the trust, and the distribution the beneficiaries have agreed upon.  The proposed settlement still must conform to the letter and spirit of the trust document.  Each beneficiary may retain their own attorney (at their own cost) to review the settlement and provide input and suggestions.  This is often a good idea to avoid second thoughts or confusion later.  The settlement could say that one beneficiary will receive the ’59 Chevy, and the remaining beneficiaries will own the home together and rent it out.  It may also direct to sell certain assets or a buy out of the house by one child.  It would reconcile how the estate will be equally allocated in light of the distribution.   If the beneficiaries come to this agreement, the settlement can be signed, which can include a release of liability for the trustee.  The trustee is then free to make the distributions.[1]

If there is remaining animosity, the trustee may still file the settlement with the court for approval.  The difference here between bringing a settlement to court and filing a Probate Code §17200 Petition for instructions is that as to the settlement, the court is being asked to approve and ratify the agreement.  In a 17200 Petition, the Court would make its own determination as to how the trust should be distributed.

So, settling is not always bad and shouldn’t be avoided.  CunninghamLegal handles simple and complex trust administration for clients throughout California.  Please contact us to discuss your trust drafting and administration needs.

Written by:

Preston A. Marx, III
Attorney at Law



[1] There are other statutory requirements such as a trustee accounting that must be complete prior to distribution.  The trustee must complete all required tasks prior to distribution, even if there is a settlement. Those tasks are outside the scope of this article.