ESTATE PLANNING FOR VACATION
Recently, I was mailed a thick envelope from a client of mine whom I was assisting with her estate plan. I opened her letter to discover she had mailed me the original of a draft living trust I prepared for her, fully executed. She explained she would be on vacation and just wanted to make sure that she had something in place in case the unlikely happened. Although we had not finished her estate planning, at least, she was being proactive, and indeed, had something happened to her, the executed draft trust would certainly have provided her some benefit, like avoiding a full probate on her house, her most valuable asset.
Indeed, I often get calls from clients who intend to go on vacation and want to get their estate planning done prior to their trip. However, I know there are many people who go on vacation and realize just weeks or even days before their departure that they don’t have their affairs in order. They worry about what will become of their children or estate or both in the event of the unthinkable. The fact is, even when time is short, there is much you can do on your own, without the need of an attorney, to avoid unintended consequences in the event your next vacation is your last. I call this Vacation Estate Planning.
Understand that although Vacation Estate Planning is certainly better than nothing, it is not comprehensive, nor is it designed to be. It is do-it-yourself estate planning that can be done quickly, as a last resort (pun intended). The greatest benefit of Vacation Estate Planning is that it allows you to make decisions that otherwise would be determined by California default, intestate statutes, or worse yet, through litigation if conflicts arise in the family because you left no specific directives. Vacation Estate Planning isn’t about avoiding taxes or probate or guardianship proceedings (if you have minor children), but it is a place to start.
Your approach to Vacation Estate Planning is defined by your familial situation. First, and foremost if you have minor children (especially if you are a single parent), you should make sure you have executed all of the following documents: (1) Guardian Nomination Papers; (2) Durable Power of Attorney for Property; and (3) Advance Health Care Directive. Fortunately, in California, these are all statutory forms readily available on line (or at some retailers) that can simply be filled in, signed, and witnesses (or notarized). If you have no children, or they are all adults, you won’t need Guardian Nomination Papers.
Guardian Nomination Papers allow you to name the person who you want to look after your child’s person and estate in case you are deceased. The guardian of the person manages your child’s personal decisions, i.e. where they live, who they play with, medical decisions, school, etc. The guardian of the estate manages the child’s finances. Often parents will nominate the same person for both jobs, but that is not necessary. The importance of nominating a guardian before you go on vacation is self evident as you certainly want a say in who raises your minor children. In addition, by completing the Guardian Nomination Papers, you most certainly will avoid the potential for infighting among the family if different family members want to raise the kids in your absence. This is because if both parents nominate the same person or people, the Court will almost certainly appoint that person as your child’s guardian unless there is a compelling reason not to do. If you are a single parent of minor children and your ex-spouse has joint custody of your kids, your ex-spouse will act as a guardian over the person as a surviving parent, but he or she doesn’t necessarily have to act as the guardian over the estate. If you are not comfortable with your ex-spouse managing your money for your kids, then you should definitely take advantage of nominating another, trusted person (i.e. parent, friend, sibling) to act as guardian over the estate of your minor children. Finally, I always recommend that each parent complete a separate Guardian Nomination form for each child.
A Durable Power of Attorney for Property ("DPAP") is a document that appoints someone called an agent to manage your estate in case your are incapable of doing so yourself, usually do to physical or mental incapacity. A DPAP is only effective when you are alive, so it has no place in your estate plan post death. However, if you are going on vacation, especially if you are a single person, you should nominate someone to manage your estate for you (and by extension, for the benefit your children) in the unlikely event you get injured on vacation and cannot manage your affairs when you return. Married couples typically nominate each other as first agent and then choose an alternate. If one spouses dies on vacation and the other is injured, the alternate agent will take over. Executing a Durable Power of Attorney has the added benefit of avoiding the need to initiate conservatorship proceedings. A conservatorship is the court process by which the Court appoints someone to manage your affairs because you can’t. It is expensive, time consuming, and burdensome. However, if you have an effective DPAP, since that document gives an agent authority over your finances, court intervention isn’t necessary to appoint a property manager. Finally, by executing a California Statutory Durable Power of Attorney, you are not giving your agent the authority to give your property away or decide who gets your estate (make your will or trust) or even change life insurance beneficiaries, so you don’t have to worry about your agent giving your property away against your will. However, there is a simple way to make a will as part of Vacation Estate Planning discussed below.
The last of the statutory forms you should complete as part of Vacation Estate Planning is an Advance Health Care Directive. This document, like a power of attorney for property, allows you to name an agent to make health care decisions for you in case you are incapable of articulating your wishes to your own doctors. This documents also allows you to state your preferences when it comes to medical decisions (i.e. end-of-life decisions, donating organs, pain relief). Married couples typically appoint each other as their first agent and then name alternate agents. An Advance Health Care Directive is important to make sure family members don’t fight over your medical treatment. You may recall the infamous case of Terry Schiavo, a young woman in Florida put into a coma by a car accident and how her spouse and her parents were at odds over whether to terminate life support. This ugly battle could have been avoided by an effective Advance Health Care Directive that either stated her wishes or appointed someone with the last word on the subject. An Advance Health Care Directive is very important if you have minor children and are a single parent since your minor kids won’t be able to offer medical consent and you have no spouse. In that case, you certainly want to avoid a Schiavo-like battle between relatives. Even if you have adult kids, there is a potential for conflict that can be avoided with an Advance Health Care Directive. Lastly, in California the agent you appoint in an Advance Health Care Directive has priority on how to decide how to dispose of your remains, another potential hotspot for conflict that can be avoided.
All of the above discussed documents make sure that you put someone in place whom you trust to make decisions for you or your kids. The last document for Vacation Estate Planning is a will. By having a will you can avoid intestacy, meaning the State default rules for who gets your property. A will also allows you to appoint someone to manage the distribution of your estate, an executor, so that family members don’t fight over who will control your estate (an appointment which could be very lucrative). Keep in mind, in California assets that pass through a will need to probated if the estate has over $150,000 of assets not held in joint tenancy or subject to beneficiary designations. For most people, this means if you own a house either singularly or with a spouse and you both die on vacation, the house will have to be probated. That is why, if you do Vacation Estate Planning, I strongly recommend when you return from vacation to take the time to do more complete estate planning, especially in the context of leaving your estate to others.
Creating a will for your Vacation Estate Plan will is easy by utilizing a "holographic" will. A holographic will is a will written in your own handwriting, signed by you and dated. To be valid in California it is important that your holographic will not be witnessed. In other words, don’t bother to have any other person sign the will except for you and don’t get your signature notarized either. The will be proven in court by sworn statements of adults who can recognize your handwriting. Make sure you sign your will, date it, and state who will act as your executor (estate manager) and how you want your estate distributed. Also be sure to print your name on the will so people don’t simply have to rely on an illegible signature. You might also want to include a clause stating that the document is intended to be your will. If you have children, I recommend listing their names and ages, even if you chose to disinherit a child. Of course, a holographic will almost certainly won’t avoid all issues that could be prevented with more complete estate planning. However, it will suffice to allow you to leave your estate to the people, organizations, and charities you choose, and prevent a share of your estate from being left by the default rules to relatives who otherwise you would have disinherited.
So Bon Voyage! Enjoy your vacation, but, please, be sure to do a complete estate plan when you return.