Posts tagged estate planning documents
Do I have the capacity to create estate planning documents?

Having enforceable estate planning documents require that you have the necessary capacity. This is self-evident, since those who lack the mental ability to understand their actions can't coherently express their wishes about how they want their assets distributed. Capacity, however, can be a sliding scale depending on the particular action being completed. 

California Law

The California Probate Code is helpful to some degree in understanding the definition of mental competence. For example, in the case of a Will, one can look to Probate Code Section 6100 and 6100.5. Probate Code Section 6100 states the following:

"(a) An individual 18 or more years of age who is of sound mind may make a will.

(b) A conservator may make a will for the conservatee if the conservator has been so authorized by a court order pursuant to Section 2580. Nothing in this section shall impair the right of a conservatee who is mentally competent to make a will from revoking or amending a will made by the conservator or making a new and inconsistent will."

And, Probate Code Section 6100.5 states the following:

"(a) An individual is not mentally competent to make a will if at the time of making the will either of the following is true:

(1) The individual does not have sufficient mental capacity to be able to (A) understand the nature of the testamentary act, (B) understand and recollect the nature and situation of the individual’s property, or (C) remember and understand the individual’s relations to living descendants, spouse, and parents, and those whose interests are affected by the will.

(2) The individual suffers from a mental disorder with symptoms including delusions or hallucinations, which delusions or hallucinations result in the individual’s devising property in a way which, except for the existence of the delusions or hallucinations, the individual would not have done.

(b) Nothing in this section supersedes existing law relating to the admissibility of evidence to prove the existence of mental incompetence or mental disorders.

(c) Notwithstanding subdivision (a), a conservator may make a will on behalf of a conservatee if the conservator has been so authorized by a court order pursuant to Section 2580."

Other Probate Code Sections thare are helpful in understanding mental capacity and its contours are Sections 810-813.


It's important to know that many mental impairments do not necessarily rise to the level of legal incapacity. For example, one may suffer from depression or anxiety, and yet may still be able to fully comprehend and understand the decisions they are making in their estate planning documents.

That being said, lack of legal mental capacity can present a substantial stumbling block for families trying to help a loved one complete an estate plan. The best course of action is to begin relatively young, when the mental faculties are still in tact. You never know if a sudden, unexpected accident or illness could lead to a permanent and lasting impairment.

What do I need to do if I already have an estate plan?

Even if you already have an estate plan, it's still important to review it periodically to ensure that your wishes are accurately reflected. By reviewing your estate plan every 1-3 years, you can make sure that you and your family's needs are appropriately met. 

Updating Your Estate Planning Documents

If some time has passed since you created your estate plan, you may want to consider reviewing it (either with or without an estate planning lawyer) to see if there's anything you want to update.

If circumstances have changed since you initially created your estate plan, then you may need to hire an estate planning lawyer to help you make updates. Here are some common situations that prompt people to update their estate planning documents:

  1. The death or birth of family members.
  2. A substantial increase or decrease in wealth.
  3. Changes in the law.

Partial Amendment or Restatement? 

If the changes to your Revocable Living Trust or Will are minor, you may only need a partial amendment or codicil, respectively.

However, if the changes are substantial, it's often best for the lawyer to "restate" or re-write the entirety of your trust or Will. This is often because your existing trust may contain provisions that depend on one another and making too many changes may detrimentally affect how your trust operates.

Indeed, with the rise of word processing and document assembly programs, restating documents can often be much cheaper than trying to hobble together changes to an existing document.

In simple situations, estate planning documents rarely need a complete overhaul. However, it's still a good idea to review your estate planning documents periodically, and at the very least, when there are major events such as the birth or death of a family member. In fact, you might consider setting a date every year where you review your financial situation, as well as your estate planning documents to ensure that both are performing properly.

Be Prepared

Kudos to you if you've already established an estate plan. You're among the small minority of responsible adults! You (and more importantly, your family) are likely in a much better position than other people you know. Interestingly, after a client finishes signing their estate planning documents, they often sigh and tell me how relieved they are. When I ask how it feels to be done, they reply, "I honestly can't believe I waited so long. I feel a sense of relief about concerns that I didn't even know I had!"

What is a Revocable Living Trust? (A Brief Overview)

One of the most common estate planning documents in California is the Revocable Living Trust. You can think of a Revocable Living Trust kind of like a container to hold your assets while you're alive. This container is governed by a set of specific instructions that you lay out in the document that creates the trust, and tells others how the assets inside the trust are to be used for your benefit while you're alive and how the assets are to be distributed after you pass away. Depending on your marital status, there will be different ways to create a trust.

Single Person

If you're single, or not married and not in a registered domestic partnership, you will most likely have a revocable living trust that holds all of your own assets. Also, any assets that use a beneficiary designation, such as life insurance policies or retirement accounts will likely have the trust named as its primary beneficiary so that the proceeds from those assets can be distributed in accordance with the revocable living trust provisions.

Married Persons

If you're married, it is likely that you and your spouse will create a single joint revocable living trust that holds both of your assets--whether it is community property or the separate property of both spouses. Occasionally, couples will create 2 or more revocable living trusts--one to hold the couple's community property, one to hold one spouse's separate property, and perhaps one more to hold the other spouse's separate property. The specific combination will depend on factors such as:

  1. Whether and/or the amount of separate property that each spouse has.
  2. The value of the assets that the spouses' own overall.
  3. The similarity or disparity in how each spouse wants to distribute his or her assets.
  4. Other personal factors such as each spouse's belief in the other's ability to handle financial affairs.

Day-to-Day Life Remains the Same

So long as you (and your spouse, if you have a joint living trust) are alive and fully functioning, there's no practical change to how you handle your financial affairs once the trust is set up. Because revocable trusts can be amended, changed, or revoked by you, they do not provide any immediate benefit for tax or creditor purposes (though this is not necessarily the case after you pass away). If a trust is revocable and amendable, then:

  1. Transferring assets to the trust does not cause any adverse tax consequences.
  2. Income taxes as a result of rent, dividends, capital gains or losses are treated the same as it was prior to creating the trust. 
  3. The trust assets will be included as part of your estate.
  4. There is no reassessment of your real estate for real property taxes (a huge benefit for long-time residents in counties where the property tax bases tend to be much lower than the fair market values of the property, such as in Los Angeles County).

Schedule of Assets

In most trust documents, there's a separate schedule which lists all of the assets that you own and is supposed to be contained within the trust. This is helpful for at least a few purposes.

First, if you die and haven't otherwise kept a good record of the property that you own, this schedule can be useful to your successor Trustee, who can use the list to track down your assets.

Second, if you forgot to re-title those assets in the name of your trust, it could serve as the basis for a "Heggstad" petition, which is a special procedure to transfer those assets to your trust without the need to go through a full probate process.

So there you have it, a few basics of a revocable living trust. 


What is a Will? (A Brief Overview)

Every estate plan should have a Will as one of its components. Wills, however, can come in several varieties and have different requirements depending on which one you select.

Formal Witnessed Wills

A formal Will is usually produced on a word processor or other text editor. It has to be signed by you (the creator of the Will, also known as "Testator") and be witnessed by 2 witnesses. Best practice is to also include the date the Will was signed on the Will itself.

California Statutory Will

If you have a very simple situation, very little in the way of assets,  or an immediate need (e.g., before you travel) it may make sense for you to utilize the California Statutory Will.  This Will is essentially a form created with the Probate code of the State of California. (See California Probate Code Sections 6200-6243).

Holographic Will

A holographic Will is one that is completely hand-written by the Testator. It must be completely handwritten by the Testator but it does not require witnesses.  

Ancillary Provisions in the Will

The Will should also designate someone to act as your "Executor"--he or she will be the person in charge of making sure that your wishes are carried out. The Will is also where you may appoint a guardian for any minor children that you have.  Finally, you may have a "power of appointment" that another person granted you, which may require you to exercise that power in your Will by including a provision in it. 

Pour-Over Will

Wills that are created in conjunction with revocable living trusts are often referred to as "pour-over Wills". The reason is that the primary function of the Will is to "pour-over" the assets into the revocable living trust that you created after you die. In this context, the Will is essentially a back-up document in case you forgot to properly re-title certain assets in the name of your trust. As mentioned in prior posts, avoiding probate is a major goal for most clients, and in most counties, Los Angeles included, the probate process can often take over a year to complete.