Estate Planning Vocabulary Explained: Important Legal Terms Orange County Clients Need To Know

Everyone values control over their life, future, and the choices they make. But inevitably, there may come a time when that control diminishes—whether due to temporary incapacity, permanent disability, or death. Estate planning offers a legal framework to maintain influence over what happens to your assets and loved ones after you can no longer make decisions. This article explains essential estate planning concepts in California, including:

• What makes up an estate plan, and when you might need one (not just for after you die!)
• What assets you can leave behind, and who you can leave them to (even your pets…sort of)
• The difference between key estate planning tools like trusts and wills.

What Is An Estate Plan?

An estate plan outlines how your property, finances, and personal affairs will be managed if you are unable to do so yourself, whether due to incapacity or death. It’s crucial to document these plans properly. When legally binding, your wishes become actionable instructions, ensuring they are followed rather than just hoped for.

Estate planning isn’t solely about what happens after you pass away. It’s just as much about preparing for the possibility of incapacity. For instance, the American Alzheimer’s Association estimates that around 20% of Americans will develop Alzheimer’s before they die. A good estate plan should address both incapacity and death to ensure your preferences are honored in every possible scenario.

What Should An Estate Plan Cover?

A comprehensive estate plan should reflect all the decisions you’d normally make for yourself. This includes matters like medical treatment preferences, financial management, and even routine tasks like canceling subscriptions. While it might seem exhaustive, planning for these details prevents future headache, expense, and stress.

Of course, estate planning also involves distributing your belongings after death. However, many people overlook other crucial aspects, such as designating guardians for minor children, providing for pets, or setting up trusts for beneficiaries with special needs.

Think of your estate plan as a way to designate someone to step into your shoes—whether you’re incapacitated or no longer here—ensuring your wishes are carried out smoothly.

What Is “Incapacity” And How Can My Estate Planning Attorney Help Me Prepare For This?

Incapacity refers to any situation where you are unable to make decisions for yourself. It can range from a temporary condition, like recovery from surgery, to long-term issues, such as a mental disability like Alzheimer’s.

However, this is not a strict legal definition—when it comes to estate planning, you have the flexibility to define incapacity based on your preferences and circumstances.

Your estate planning documents, such as a trust, power of attorney, or advance healthcare directive, will specify what constitutes incapacity and when those tools should come into effect.

For example, in a trust, you could decide that rather than requiring evaluations from multiple doctors, you want two of your three children to decide if you’re unable to manage your affairs. This approach ensures that the decision is made by people you trust, avoiding unnecessary medical evaluations and court involvement.

Failing to define incapacity in your estate plan could lead to your loved ones having to seek a conservatorship—a legal process where the court decides on your behalf.

This process is often rigid, requiring specific medical evaluations and court-supervised investigations to protect against potential elder abuse. While these steps are intended to safeguard your interests, they can be stressful, time-consuming, and invasive for your family.

By planning ahead, you control how incapacity is determined, making it simpler for your loved ones and ensuring that your wishes are followed without the burden of a court proceeding.

Attorney Rebecca Sommer is a compassionate and comprehensive California estate planning lawyer who has helped countless clients navigate the intricacies of setting up their wills, trusts and other estate planning documents. With extensive estate planning experience grounded in prior financial planning training, attorney Sommer is a great guide for anyone creating an estate plan.

Still have questions about the fundamentals of estate planning? Ready to get started on your estate plan? Contact Rebecca Sommer today to schedule an initial consultation.

Call For A Free Assessment Of Your Needs - (657) 571-1241

What Is An “Asset” And Which Assets Should Be Included In My Estate Plan?

An asset is anything you own that holds value, whether monetary or sentimental. While financial assets like money and property are obvious sources of potential conflict during estate distribution, sentimental items can often spark just as much tension among grieving family members. Personal items, such as heirloom jewelry or family mementos, can evoke strong emotional attachments, leading to disagreements that can strain relationships.

This is why a well-thought-out estate plan should account for all your assets, not just the big-ticket items like your house or retirement accounts. Smaller personal items—like family photos, heirlooms, or even digital assets like NFTs—should also be considered.

How you distribute these assets may depend on various factors like tax implications and probate concerns, but the core of your plan should reflect your wishes about who receives what and why. These decisions help avoid future misunderstandings and ensure that your estate is passed on according to your values and priorities.

The purpose of estate planning is to create a positive and manageable experience for your loved ones during a difficult time. By thinking ahead and making clear decisions about your assets—both financial and sentimental—you prevent undue burdens and allow your family to focus on honoring your legacy.

You know better than anyone what matters most to you and your family, so it’s essential to include every significant item and take everyone into consideration. To truly protect your legacy and minimize family stress, it’s important to plan for everything and everyone.

Could A Cat Or A Dog Be Considered An Asset To Pass On? Or Should I Leave Money For Someone To Care For One?

While pets hold tremendous value to their owners, they are typically not considered assets in the traditional financial sense. Instead, they are responsibilities that require ongoing care, which can become burdensome for someone if not planned for properly.

To ensure your pet is well taken care of after you’re gone, you can set up a pet trust. This allows you to allocate funds specifically for your pet’s needs, such as vet bills, food, and other expenses. Even if a family member or friend is more than willing to take on the responsibility, leaving money for their care can prevent it from becoming a financial burden.

In certain situations, pets can have monetary value, such as rare breeding animals (e.g., a prize horse or a stud dog). Additionally, in today’s digital world, some pets with large social media followings or established brands—often referred to as “influencer animals”—may also be considered valuable assets.

In such cases, the pet’s brand, image, and merchandise may need to be included in your estate plan, even after the animal’s death, as they can continue to generate revenue. Whether your pet is a beloved companion or a high-value animal, planning for their care is an essential part of your estate planning process.

What Are Wills And Trusts In Estate Planning?

A will is a legal document, often called a last will and testament, that specifies how you want your assets to be distributed after your death. It includes details about who should inherit your property and, if necessary, who should be the guardian of any minor children.

The document also typically includes a final statement verifying your competency and intent, ensuring that your wishes are clear and legally valid.

A trust is a more complex estate planning tool. In a trust, the person creating it (known as the grantor or trustor) transfers ownership of their assets into the trust and appoints a trustee (often someone else) to manage and distribute those assets according to the grantor’s instructions.

Trusts are highly flexible and can be designed to address a wide variety of situations, such as incapacity or specific inheritance plans.

How Do Trusts Work?

Unlike a will, which involves only two parties—you (the testator) and the beneficiaries who inherit—there are three key players in a trust:

1. The grantor (you), who creates and funds the trust.
2. The trustee, who is responsible for managing the trust’s assets according to the instructions in the trust document.
3. The beneficiaries, who are the individuals or entities receiving benefits from the trust.

In the most common type of trust, a revocable trust, you typically serve as all three roles while you’re alive: you create the trust, manage the assets, and benefit from them.

If you become incapacitated, you remain the grantor, and perhaps a beneficiary, but someone else—your designated trustee—steps in to manage the trust on your behalf. Upon your death, the trust continues, and the assets are distributed to your beneficiaries according to your instructions, without going through probate.

Attorney Rebecca Sommer is a compassionate and comprehensive California estate planning lawyer who has helped countless clients navigate the intricacies of setting up their wills, trusts and other estate planning documents. With extensive estate planning experience grounded in prior financial planning training, attorney Sommer is a great guide for anyone creating an estate plan.

Still have questions about the fundamentals of estate planning? Ready to get started on your estate plan? Contact Rebecca Sommer today to schedule an initial consultation.

Call For A Free Assessment Of Your Needs - (657) 571-1241

What Are The Main Differences Between A Will And Trust?

One of the most significant differences between a will and a trust is that wills are subject to probate, while trusts generally are not.

Probate is a court-supervised legal process required to validate a will, appoint an executor, and distribute the assets still in your name. This process can be time-consuming and costly. In some cases, very small estates may bypass full probate through the small estate affidavit process, but most estates must go through probate.

A trust, on the other hand, is funded during your lifetime, meaning the assets are transferred out of your name and into the trust’s ownership. As a result, those assets avoid probate entirely. This not only speeds up the distribution process but also reduces costs and keeps the details of your estate private, since probate is a public process. Trusts also lower the risk of legal challenges or contestation.

Another key difference is that a trust can act during your lifetime, especially if you become incapacitated. A will only takes effect after death, but a trust can manage your assets if you are no longer able to do so.

For example, if you become incapacitated, your appointed trustee can step in to handle your affairs, preventing your loved ones from having to go to court for a conservatorship.

This makes trusts particularly useful in comprehensive estate planning, as they provide continuity and help ensure your wishes are followed during your life and after your passing.

What Is A “Beneficiary,” And Who Can Be Designed As One In California?

A beneficiary is anyone or any entity designated to receive assets from your will or trust. In California, you can name almost anyone as a beneficiary—whether individuals, such as family members or friends, or organizations, like charities or religious institutions.

While you can leave assets to almost anyone, there are a few important considerations. For instance, pets cannot directly inherit property, but you can set up a pet trust to ensure they are cared for.

Additionally, special care should be taken when naming beneficiaries who are minor children or individuals who rely on government benefits, as they may be unable to own or manage certain assets directly. Special planning, such as setting up a special needs trust, may be necessary to ensure these beneficiaries receive their inheritance without jeopardizing their eligibility for benefits.

In essence, a beneficiary can be anyone you care about—whether it’s a person, cause, or organization you are passionate about. You can pass on not only your assets, but also your legacy, by ensuring your support continues for those people and causes you value most.

How Should I Leave Behind Assets For Minor Children In My Estate Plan?

Since minors cannot legally own property, any assets left to them must be held in trust until they reach adulthood, typically at least 18 years old. If you name a minor as a beneficiary without setting up a trust, a court will intervene to establish a trust on their behalf, which could result in additional legal fees and oversight.

By creating a trust for your minor children, you maintain control over the distribution of their inheritance. A trust allows you to specify when and how the assets will be distributed—whether in a lump sum at a certain age or gradually over time.

You can also add provisions that provide financial support for education, living expenses, or other needs, offering more flexibility and security than a court-managed arrangement.

What Do I Need To Do To Protect Special Needs Or Government Beneficiaries?

For beneficiaries who rely on means-tested government benefits—such as Medi-Cal, Supplemental Security Income (SSI), or CalFresh—receiving an inheritance could unintentionally disqualify them from those benefits.

Means-tested programs have strict income and asset limits, and even a small inheritance could force your loved one to lose eligibility until those funds are spent down, after which they’d need to reapply. To avoid this issue, it’s essential to set up a special needs trust.

This type of trust ensures that the inheritance remains outside the beneficiary’s ownership, preventing it from impacting their eligibility for government assistance. The trustee will manage the assets according to your instructions, ensuring they are used to enhance the beneficiary’s quality of life without jeopardizing their benefits.

Can I Leave Assets To Family Or Loved Ones Overseas Who Are Not US Citizens?

Leaving assets to family members or loved ones who live abroad and are not U.S. citizens requires extra care.

International inheritance can involve complex tax rules, both in the U.S. and the recipient’s country, potentially leading to unexpected tax liabilities or complications.

Because of this, it is crucial to work with an estate planning attorney to ensure compliance with applicable tax laws and to make sure the transfer is structured correctly.

Why Is It Important To Fully Understand The Estate Planning Process?

There are several reasons why understanding the estate planning process is vital:

• Maximizing Benefits

The more you understand about estate planning, the more effectively you can engage with your attorney and take advantage of the available legal tools. Knowing what options exist can help you shape a more comprehensive and effective plan.

• Clarifying Your intentions

By reflecting on what matters most to you—whether it’s family, specific assets, or charitable causes—you’ll make decisions that truly reflect your values and wishes. This thoughtful approach ensures your estate plan aligns with your intentions and provides for those you care about in the way you desire.

• Avoiding Oversights

Your estate planning attorney will ask a lot of questions, but they may not know every detail of your personal situation. By understanding the process, you can help identify important nuances that could affect your plan—such as special family dynamics, unique assets, or other concerns that might not arise in typical consultations.

Working closely with a qualified estate planning attorney is essential for ensuring your wishes are honored, but understanding the process yourself helps you be more proactive and confident in shaping your legacy.

How We Support Clients Like You

When you work with us, our focus is on empowering you to make informed, confident decisions about your estate plan. We understand that every family is different, and your plan should reflect what matters most to you. That’s why we provide tools and resources to help guide you through the process, starting before you even walk through our doors.

Tools To Help You Get Started

To get you thinking about your goals, we offer two valuable resources: the Legacy Dream Book and the Costly Estate Planning Mistakes guide. These tools are available to you right from the start.

• The Legacy Dream Book is designed to help you reflect on what’s truly important to you. Only you can define your goals, and this resource helps you clarify them before we dive into the planning process.
• The Costly Estate Planning Mistakes guide highlights common errors people make, often leading to unnecessary stress or financial loss. This book helps you avoid those pitfalls and feel more prepared, whether it’s understanding when to ask questions or ensuring you don’t rely on incomplete advice from non-legal sources.

Workshops and Webinars for Extra Support

Beyond these resources, we also offer workshops and webinars to deepen your understanding of estate planning. These sessions provide different perspectives and practical advice to help you feel more comfortable and confident as you make decisions.

Our Personalized Process

When you choose to work with us, we follow a personalized approach, including at least three face-to-face meetings to ensure we fully understand your needs and that you feel supported throughout the process.

• Before the first meeting, we encourage you to review and complete the Legacy Dream Book. This helps us start with a strong foundation and gives you a chance to reflect on your goals.
• The first meeting is all about you. We spend about 90 minutes discussing your family, your situation, and what you hope to achieve with your estate plan. This helps us tailor the plan to your unique circumstances.
• The second meeting focuses on details. By then, you’ve had time to think about our first conversation, and we’ll go over your questions and the options we’ve discussed. Together, we’ll review the first draft of your plan.
• The final meeting is where we finalize your documents. We’ll also provide additional tools to help you keep your estate plan current, so it continues to work for you as your life changes.

Tools For Maintaining Your Plan

After your plan is complete, we’ll give you practical advice for keeping it up to date. This includes guidance on when to contact our office or handle updates on your own.

For example, if you have minor children, we recommend including and annually updating detailed instructions about their needs—whether it’s their schooling, hobbies, or something specific, like needing a math tutor.

These personal details ensure your wishes are clear if someone else needs to step in and care for them.

Helping You Build A Lasting Legacy

Through our meetings, resources, and ongoing support, we aim to ensure that your estate plan not only reflects your wishes but remains flexible for the future. Our goal is to make the process smooth and give you the peace of mind that comes from knowing your loved ones will be taken care of.

Still Have Questions About Estate Planning? Ready To Get Started On Your Estate Plan?

For more information on Estate Planning In California, an initial consultation can get you the answers you need. Get the information and legal solutions you are seeking by calling (657) 571-1241 today.