An Estate Plan is your "legal tool box"
VIDEO TRANSCRIPT: Hello everyone, this is Robert Mansour. I'm a lawyer in the Los Angeles County area and I wanted to shoot a brief video today about estate planning and the analogy of the toolbox. This is an analogy that I use many time with my clients when they first come in for an estate planning consultation. I basically explain to them that an estate plan is like a toolbox.
So, let's say, for example, your sitting at home and you're watching TV and suddenly a picture falls down from the wall. How are you going to fix that? Well, you need to get the toolbox, right? So, you go to your garage, you get your toolbox, you open it up and you reach for whatever tool that you need to fix that problem. So, it might be a hammer, it may be a nail, one of those level things. Maybe a screwdriver, maybe not, who knows? But here's the thing, if you don't have a toolbox, you're not going to be able to fix that problem.
So, estate planning or an estate plan is like a legal toolbox. it's basically a whole bunch of legal documents that you can use and your family can use if there is a problem of some sort. Now, if you don't have a toolbox, and most people do not have an estate plan, so if you don't have a legal toolbox, some things in life may happen and you may not be able to fix them. You may not have the tools necessary.
You see, one of the other fundamental questions that estate planning poses is this. Who has the legal authority to act on your behalf if something happens to you. Once again, it's very important. Who has the legal authority to act on your behalf if something happens to you? Never mind dealing with your estate after you've passed away, I mean that's important, but also you want to have some legal tools available in case something happens to you, people need to help you out. But if they don't have a toolbox, if they don't have any legal tools, they open the box and there's nothing in there, how are they going to be able to help you?
So, what are the tools in this toolbox? Well, there's four major tools in the legal toolbox. Number one is the living trust. If you have a certain amount of wealth in the California, generally speaking at this time it's about $150,000 or more. And also you want to have some control over those assets and you want to make sure they go to the right people et cetera, you might want to have a living trust versus a simple will. Most of the families that I deal with choose to have a living trust as one of the tools in their toolbox. And that's something that you and your lawyer can talk about, which one is more appropriate. But for most estate plans, a living trust is one of the main tools. And the living trust has three different components to it, or three different cast members. if you will.
Number one is the settlor, this is the person who creates the living trust. Number two is the trustee, this is the person who manages the living trust. And the beneficiaries, this is the person who benefits or the persons who benefit from the living trust. When you first create your trust, whether it's a single person or a married couple, you're going to occupy all three roles. You're going to be the settlors, you're going to be the trustees and you're also going to be the beneficiaries of your trust. As life goes on, different people will become your trustees and different people will become your beneficiaries.
There are three major benefits to having a living trust. The first one is that everything in the name of your trust avoids the court system. So, anything in the name of the Smith family trust, for example, will not have to go through the court system. Number two, the people that you've chosen in advance, people called your trustees can manage anything in the name of your trust. So, if there's an issue involving a trust asset, something going on with it, the persons that you've named can handle that asset. And number three, the rules of the trust govern anything in the name of your trust. So, if something is in the name of your trust, the rules of your trust that you've outlined govern that particular asset. So, that's the first major tool in the toolbox.
The second major tool in the toolbox that most people have is the will. Now, some people say, "Well, wait a minute. Why do I need a will if I have a trust?" This kind of will serves as a backup to your trust. it's often called a pour-over-will. And all it means is this, if something is outside of your trust and for some reason we have to go to court, the will tells the court to please put everything into your trust. Everything pours over into your trust, that's why they call it a pour-over-will. The person in charge of your will is called your executor, not your trustee, your executor. And your executor is the person who is going to have to go to court and work with the lawyer and make sure that any assets left outside the trust are put into the trust after you pass away. The will is going to do very little for you if everything is in the name of the trust and otherwise passes by beneficiary, for example, you won't even need the will. But it's an important tool to have just in case.
The other two major components of the toolbox. Number 1 is the power of attorney, something called a durable power of attorney. This person who manages your power of attorney is called your agent. they're not your executor, that person handles the will. They're not the trustee, that person handles the trust. The power of attorney is a little bit different. The agent under power of attorney basically stands in your shoes and handles all of your other matters that don't involve the trust. So, if something involves the trust, your trustee will handle it. If something is going to involve the court system, then generally your executor would handle it. But almost everything else can be handled by the person under power of attorney. This person can talk to your lawyer, can talk to your former employer, can get information from your financial advisor, can talk to the Department of Water and Power. Whatever the case may be.
Wherever you might need to do something, this person can step in your shoes and do it for you. And the final tool in the toolbox is called an advance care directive. The advance healthcare directive is a document that basically says, "Hey! This person, also called your agent by the way, can make health care decisions for me if I can not." And it's not just about pulling the plug. A lot of people say, "Oh, that's the pull the plug document."
Well, yes it is but there's more to it than that. This person can be your advocate. If they're not taking care of you properly in the hospital, or something is not being done right, these people can be your advocates right away. They can advocate for you and make sure that you're getting the right treatment. They have access to your medical records if it's an appropriate health care directive. They can consent to surgery. They can move you in and out of one facility to another. It depends on what the health care directive says. But, basically, those are the 4 major tools in the toolbox. The living trust, the will, the power of attorney and the advance health care directive.
Now, of course, there's a lot of other tools in the toolbox that we don't really have time to get into in this short video, but those are the four major ones that most estate plans have. Again, this has been Robert Mansour, broadcasting to you from my office here in Los Angeles. If you wish to learn more about my practice, you can visit my website at www.Mansourlaw.com.
Or you can call the office at 661-414-7100 and we can talk about these concepts even further. I hope you found this video very helpful and thanks for watching.
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