By Stephanie Bezner, Attorney
In the past year, I have come across many people who have said they are so relieved they don’t need to worry about an estate plan anymore because the federal estate tax exemption was increased to $10,000,000 per person, and they are worth less than that amount. For 2019, the federal estate tax exemption is now $11,400,000. This means estate taxes will impact less than 0.5% of the people in the United States! As a result, people are thinking they don’t need to bother with a trust.
However, Californians are faced with a different reality. Consider aging Californians with diminished capacity who may be unable to manage their own affairs. Without properly drafted powers of attorney that are current and effective, decisions about that person’s property and health care may need to be made in court in a conservatorship proceeding. These proceedings take place in California Probate Court, part of California’s overtaxed court system. The costs are generally high, and there can be many delays.
Consider also people who pass away and either do not have assets that pass automatically on death without probate or who have assets that do pass automatically, but they pass to people who lack capacity. Once again, people often unwittingly find themselves in a time-consuming and expensive probate proceeding. At best, the process takes a year and costs thousands of dollars.
With a little planning and modest investment, these people could have avoided this process. They could have executed powers of attorney by which someone makes health care decisions and financial decisions – thus avoiding a conservatorship. They also could have created a simple trust, which can provide for many alternate disposition strategies – thus avoiding probate.
When considering whether a trust and powers of attorney are right for you, you should not be considering how much you have, but who you want to make decisions for you. None of us has a crystal ball to forecast the future. But each of us has the power to create a plan to address as many contingencies as possible and avoid the need for an expensive court process.
Stephanie Bezner, Esq. is a partner with Doan-Bezner in Rancho Palos Verdes. She is a member of Torrance Memorial’s Professional Advisory Council. www.doan-bezner.com. (310) 541-4076.