Estate Plans 101:
The Basics for Those Just Starting Out by Brandon Lee Spivack Imagine a young entrepreneur (“Jacob”), recently graduated from college and living at home to save on expenses. Business is growing and the future is bright until Jacob suffers an unfortunate accident, leaving him incapacitated. Suddenly, Jacob is faced with a series of important issues: • Who is going to make medical decisions for Jacob? • What are Jacob’s instructions?
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• Who will run Jacob’s business? • How will Jacob pay his bills? Dispel the idea that estate planning is only for old, wealthy clients who are married and own property. Estate planning is relevant to young adults who are single or married, rich or poor. Directions on how you want your wishes to be handled in the event of your incapacitation or death is one of the most important gifts you can make to your family and friends. Without an effective estate plan, the court will need to appoint a Conservator of the Person and the Estate to act on Jacob’s behalf. These issues are further complicated if Jacob is not properly insured. Where does Jacob’s Conservator get the money to pay his medical bills, legal fees, student loans, and business expenses? Establishing an estate plan forces a person to confront these issues. An Advance Health Care Directive is a core document in a complete 10
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estate plan. It nominates an agent to make medical decisions on Jacob’s behalf. The nomination can eliminate the need for the appointment of a Conservator of the Person. Also, Jacob can include instructions for medical care, such as limitations on end-of-life care and restrictions on experimental treatments. Jacob can also include burial wishes and instructions for organ donations and autopsy. A complete estate plan also includes a Durable Power of Attorney, allowing Jacob to nominate a person or financial institution to manage his or her finances if Jacob is unable to do so. In our example, nominating a person to manage Jacob’s financial assets would facilitate timely payment of Jacob’s expenses. Also, Jacob’s agent would have access to Jacob’s financial records, allowing his agent to make informed decisions about whether Jacob qualifies for public benefits. Executing an Advance Health Care Directive and a Durable Power of Attorney is easy and should be done by all people after attaining the age of 18 years. If you do not have the money to hire an attorney, form documents are available through the California Probate Code. See Cal. Prob. Code. §§4401and 4701. Another element of estate planning is insurance. In our example, Jacob is unable to work, but his expenses continue to mount. Without insurance and with limited savings, Jacob will need to receive financial assistance from his family, friends, and/or the government to pay his expenses. Evaluating cash flow
