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Top Five Deficiencies in Advance Health Care Directives

Top Five Deficiencies in Advance Health Care Directives

I often tell clients when drafting their estate plans that the advance health care directive (AHCD) is the more important than their will and trust. This is because the decisions we make in an AHCD have to do with decisions made for us while alive and spell out the quality of life we want. That said, I am shocked and bewildered by the amount of DIY and attorney-drafted AHCDs I view that are fundamentally lacking in provisions to protect the client’s quality of life. Here are the top five deficiencies I find in the AHCDs that come across my desk:

1. No HIPAA provisions

So what the heck is HIPAA? HIPAA is the federal Health Insurance Portability and Accountability Act of 1996. The primary goal of the law is to make it easier for people to keep health insurance, protect the confidentiality and security of health care information and help the health care industry control administrative costs. Sounds great, right? But a primary effect of the law is that family members and loved ones can be kept in the dark about important information, such as what hospital you are located at, what medical condition you are suffering from, and what kind of treatment you need. You can avoid this with a provision in your AHCD that specifically allows the agent(s) you name to have access to information that would otherwise be protected by HIPAA.

2. Stale AHCD

A stale AHCD is one that hasn’t been updated in awhile and therefore won’t be honored by health care providers. There’s no hard and fast rule for when an AHCD goes stale, but they do. An AHCD from 3 or 4 years ago will usually be honored by medical providers, but not always. An AHCD from 10+ years ago is much less likely to be honored. I usually recommend that clients update their AHCD every other year. This can be done with a simple one-page recertification instead of redrafting the whole AHCD.

3. No conservator of the person named

You’ve named your health care agent because you trust them to make important health care decisions for you. That’s why I’m always surprised to find an AHCD that doesn’t include a provision naming a conservator of the person. A conservator of the person is the person who will take care of you if you should become permanently incapacitated and unable to care for yourself. This person is supervised by the probate court and makes sure that your needs are met on a day-to-day basis. The reason it is so important to name a conservator of the person in your AHCD is to make sure the person YOU choose ends up as your conservator. State law allows for most family members to apply to become your conservator in the absence of such a provision. This is your opportunity to make sure the person you want is taking care of you should you wind up in a coma, with dementia, or with other severe disabilities.

4. Doesn’t work with Trust and Financial Power of Attorney

Times of crisis are the worst times for uncertainty. Most estate plans I see don’t clearly delineate the powers of the agent for health care, a trustee, and a agent under a financial power of attorney. This is nuts. A trustee should know what the limits of a agent for health care’s ability to declare that the trustor is incapacitated. An agent for health care should know if and when he/she can ask a trustee for money for medical bills. All of your estate planning documents should be custom-crafted to work together to avoid any confusion regarding who gets to choose what when the tough decisions need to be made.

5. No home care provisions

There comes a point where everyone wants to go home. Some AHCDs don’t let the agent know when you want to go home. Many people would prefer to go home as opposed to going to hospice. Make sure your AHCD clearly spells out if and when you want to go home.

So there we have it, the five top deficiencies I see in AHCDs on a near-daily basis. These oversights are pervasive in the DIY AHCDs that are sprawled throughout the Internet, but they also appear in many attorney-drafted AHCDs. Take 5 minutes to review your AHCD and make sure these provisions are in there- it could literally save your life.

DISCLAIMER: This blog is not legal advice, nor is it intended to provide legal advice. This blog provides general statements on the law, nothing more, nothing less. Furthermore, nothing in this blog creates an attorney-client relationship with anyone. Period. If you act on, rely on, or otherwise use the information from this blog, you do so at your own risk. We at Toeppen Law recommend you speak to experienced legal counsel when making any important legal decisions.


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Charitable Trusts: Save on Taxes, Save the World

This article is not a substitute for, nor does it constitute, legal advice. Only an attorney who knows the details of your particular situation can provide you with legal advice.

Charitable Trusts: Save on Taxes, Save the World

So you want to give some of your money to charity? Great. It’s commendable that you would want to help causes bigger than yourself. Charitable trusts are an excellent way to give to your favorite charity and to save some of your hard-earned cash. With a little planning, charitable trusts can also help you save on your estate taxes and income taxes. This blog post will cover the basics of a charitable trust.

What is a charitable trust?

A charitable trust is like most trusts in that a trustor places assets in a trust that are then distributed to a beneficiary. The charity then distributes some of the income of the trust to your designated beneficiaries, which can include you. The charity MUST be designated as tax-exempt by the IRS for any of the tax-saving benefits of a charitable trust to work for you. There are a few types of charitable trusts. For brevity’s sake, we will only discuss the most common two types of charitable trusts here. These are charitable lead trusts and charitable remainder trusts.

A charitable lead trust pays the charity first. Upon termination, the rest of the trust assets go to beneficiaries, usually heirs or the donor.

A charitable remainder trust is irrevocable and pays the charity last. That is to say that they provide an income stream to the income beneficiary and the charity receives the remainder.

What are the advantages of a charitable trust?

Outside of the magnanimous act of giving to a charity, there are several very practical tax reasons to include a charitable trust as part of some estate plans.

For starters, you get deductions. You get deductions on your income tax, and sometimes you can get gift or estate tax deductions for making a lead trust gift.

But getting deductions is just the beginning. There are ways you can escape capital gains taxes with a charitable trust. Once you hand over the assets in a trust to a charity, the charity has control of the property. A charity does not have to pay capital gains tax. The charity can then sell assets that have appreciated significantly in value and exchange them for other income producing assets. You can then receive the income from these income producing assets for life without paying capital gains tax.

I hope this brief overview about the benefits offered by charitable trusts has been helpful to you. If you would like to learn more about charitable trusts or have me help you incorporate a charitable trust into your estate plan, please contact me at

The entirety of this article is copyrighted by Grant A. Toeppen, Esq., © 2012.  Please send an email to if you would like to use this article in part or in its entirety.

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Who needs an estate planning attorney?

This article is not a substitute for, nor does it constitute, legal advice. Only an attorney who knows the details of your particular situation can provide you with legal advice.

Who needs an estate planning attorney?

I guess I could give the jerk answer and say “You do!” But that wouldn’t be fair or true. The necessity of hiring an estate planning attorney depends on what you want to accomplish. If you wish to avoid probate, limit your tax liabilities, protect your family once you are gone, and have all of your legal documents in order should you become incapacitated, you might need an estate planning attorney. As I discussed in my first blog post, it’s possible to do these things yourself. However, given the time involved and the high stakes, it’s always worth having a qualified estate planning attorney look over your estate plan to make sure you’ve covered your bases.

Attorney or Not, You Need a Will!

The most common time for a person to hire an estate planning attorney is when they are making a will. Without a doubt, a will is the cornerstone of any estate planning. But Grant, you say, “what of the living trust?” Of course I remain a strong proponent the living trust. But a will accomplishes two functions that a trust cannot: 1) A will allows you to make certain designations, such as guardianships of your children who are minors; and 2) A will allows you to put a “catch-all” phrase where any property that you may have neglected to put in your trust can still pass to whoever you want it to. If you don’t have a will, you may want an attorney to help you out. If you are going it on your own, here’s a link to the California simple will form:

Make Life Easy for Yourself and Your Loved Ones: Set up a Trust

Another great way an estate planning attorney can help you is with creating, managing, or ending a trust. A wide variety of trusts are available to the savvy individual: basic living trusts, ongoing trusts, charitable trusts, AB trusts, QTIPS, QDOTS… you get the picture. Each has its own unique advantages and disadvantages.

Not only can an estate planning attorney help you navigate these confusing waters, but also he can help you manage the trust once it’s created. Management of a trust has special considerations due to the fiduciary nature of the management. Understandably, many people have enough to worry about without stressing out about whether they have breached some seemingly nebulous fiduciary duty. Ending a trust also has its own processes and considerations.

Protect Your Kids and Your Family

An estate planning attorney can help you set up guardianships, conservatorships, and advanced health care directives. Each of these allows you to make decisions that are admittedly very difficult, like who should watch over your minor children when you are gone? Who should make decisions on behalf of your aging parents? Should you be kept alive with medical technology if you are completely incapacitated? The very fact that these are tough decisions indicates that you’re better off making them than allowing the government to step in and do so. An estate planning attorney can help you make sure that your wishes concerning your family are kept intact.

Protect Your Money

There are tons of ways you can protect your estate.  Various methods to escape probate and estate taxes exist that you might not know about. Furthermore, there are lots of tricks of the trade to help you qualify for MediCal, keep ownership of your property in your family, and protect yourself from creditors. These will be discussed more fully in a later post. For now, all you need to know is that there are a lot of ways to protect your money and an estate planning attorney can help you with some of them.


Ahh probate, everyone hates it, except probate attorneys. This is a specific field of estate planning that has hyper-specific rules and procedures in place. If you find yourself in the unfortunate situation of needing an estate to be probated, you probably need an attorney to do it. Just so you know, California is one of the simpler states to do probate in and you may be able to figure it out yourself, just be careful as you open yourself up to lots of liabilities by doing probate on your own.

Hopefully this post has been useful to you. Feel free to e-mail me at if you have any questions, comments, concerns, or would like a free initial consultation (CA residents only).

The entirety of this article is copyrighted by Grant A. Toeppen, Esq., © 2012.  Please send an email to if you would like to use this article in part or in its entirety.

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Avoiding Probate: A Quick Primer Part 2

This article is not a substitute for, nor does it constitute, legal advice. Only an attorney who knows the details of your particular situation can provide you with legal advice.

Avoiding Probate: A Quick Primer Part 2

In my last blog post, I gave you a brief overview of a few ways to avoid probate. Namely, living trusts and joint tenancy. This blog post continues where the last one left off by providing you with a few more ways you can avoid the probate of your assets. These include pay on death designations, life insurance, and California state exemptions.

Pay on Death Designation

Pay-on-death designations (or transfer-on-death designations) are an increasingly popular way to avoid probate, and understandably so. What a pay-on-death designation does is it allows you to choose certain property that will go to the person you designate upon your death. There are some marked advantages to using pay-on-death designations: they are easy to create, can be used to transfer many types of property, and avoid probate.

To create a pay-on-death designation, all you normally need to do is fill out a single form. Institutions such as banks or the U.S. Treasury Department can provide this form (as an example, here’s the Treasury’s Form 4000 for pay-on-death transfer of US Savings bonds: Once you fill it out, the designated beneficiary receives the property you named in the form- all without probate. Pretty great, right?

Many types of property can be placed in a pay-on-death account. Bank accounts are a popular way to transfer money. But why stop there? Many states allow you to transfer government securities, stocks, bonds, retirement accounts, and brokerage accounts. Some states, including California, allow you to transfer your vehicle with a pay-on-death designation. It’s often included right on your title for convenience’s sake. While pay-on-death accounts can certainly be useful for conveying lots of types of property, it’s good to check with your local attorney as state rules and bank policies vary widely.

Life Insurance

It seems to me that life insurance has gotten a bad rap, largely due to a combination of overzealous insurance agents selling people policies that don’t fit their needs and people not understanding the benefits that life insurance can provide. Let’s try to start with a fresh mindset. Given your situation, life insurance could be a great way for you to avoid probate, get an estate tax reduction, and give your loved ones a tidy sum at a time when they might need it most. I will leave all of the nitty-gritty details of policy types and terms to the insurance professionals. What you’ll find here is a brief overview of when life insurance could be a good fit for you.

If your estate will owe substantial debts and taxes after your death, if your beneficiaries will need immediate cash once you are gone to pay for funeral expenses and income taxes, or if you own a small business and want to make sure that business continues without interruption once you are gone, then you should consider getting life insurance. Why? The answer to these questions is all the same: because the proceeds from a life insurance policy can be transferred quickly without much legwork.

Choosing a life insurance policy is tricky. My best advice is that you should choose an agent and company you trust and you should do plenty of research. Compare policies and prices online. If you ever feel pressured into a particular plan, your agent is unwilling to explain the details to you, or something just plain doesn’t feel right- walk away. It’s your money and your life- make sure you are comfortable with any major changes in your estate plan before you make them.

California State Exemptions

As I am a California-licensed attorney, I figured I should include the California probate exemptions here. In brief, California allows you to file an affidavit for $100,000 of personal property of the estate and a special affidavit for real estate worth less than $20,000. You also can choose the “simplified probate” procedure, where the surviving spouse gets what he/she would be entitled under a community property petition. Every state has different exemptions for probate. Check with your local attorney to sort out the details.

Hopefully this blog post has been helpful. If there are any topics you would like me to address, just let me know and I will do my best to address them in a future blog post.

The entirety of this article is copyrighted by Grant A. Toeppen, Esq., © 2012.  Please send an email to if you would like to use this article in part or in its entirety.

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Avoiding Probate: A Quick Primer

This article is not a substitute for, nor does it constitute, legal advice. Only an attorney who knows the details of your particular situation can provide you with legal advice.

Avoiding Probate- A Quick Primer

Probate is a state-mandated, expensive, time-consuming, and tedious process that many estates have to go through before any of the estate is distributed. Probate in California usually takes months and the administrative costs are frequently in the tens of thousands of dollars. Understandably, most people wish to avoid probate for exactly these reasons. The nominal protections offered by having a court oversee the implementation of one’s will and/or trust is rarely worth the administrative burdens of probate. So how do you go about avoiding probate?


Contrary to popular belief, wills in California frequently go through probate. Why? Usually either due to a challenge to the will or the size of the estate automatically begins the probate process. In California, if the overall value of an estate is greater than $100,000, or the value of any real property in the estate is greater than $20,000, then the will must go through probate. The probate court does not take any debts into consideration when valuing the estate. Avoiding a challenge to a will can never be guaranteed but the chance that a will is challenged can be minimized by a well-drafted will with a “no-contest” clause. But how do you avoid the $100,000 cut-off?

Living Revocable Trusts

Living revocable trusts do not go through probate. While most, if not all, trusts avoid probate, we will focus on the living revocable trust here. By creating a living revocable trust, you can avoid probate, still manage and access the assets in your trust, include a successor trustee in case of incapacity (see previous blog post), and your plans for your estate will remain private. You cannot avoid estate taxes with a living revocable trust, nor are living revocable trusts immune from trust contests. Still, you avoid probate and your assets go where you intended.

Joint Tenancy

Owning real property in a joint tenancy can allow you to avoid the probate of that property. A joint tenancy is a type of property ownership where two or more individuals own an equal share of the property with a right of survivorship. What that means is when one person dies, that person’s share passes to the remaining joint tenants. However, once the joint tenancy ends (when only one tenant is left alive), the remaining individual owns the property in fee simple and the property can go through probate.

Other States

The probate rules vary from state to state. While California puts a will that bequeaths an estate of more than $100,000 through probate, the actual dollar value that triggers probate is different in other states. If you have an out-of-state will then different rules may apply.

As always, before making any changes to your estate plan you should consult your local estate planning attorney to make sure you are doing what’s best for you and your loved ones.

The entirety of this article is copyrighted by Grant A. Toeppen, Esq., © 2012.  Please send an email to if you would like to use this article in part or in its entirety.

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Thinking about the Unthinkable: Protecting your Assets in Case of Medical Incapacity

This article is not a substitute for, nor does it constitute, legal advice. Only an attorney who knows the details of your particular situation can provide you with legal advice.

Thinking about the Unthinkable: Protecting your Assets in Case of Incapacity

Before we shuffle off of this mortal coil, we want to make sure that those we care about do not have to worry about anything unnecessary. The decline in health of a loved one is always a difficult yet often inescapable occurrence, and for that reason it must be discussed frankly. The unwelcome moment when a loved one becomes medically incapacitated is one of the most stressful periods many people will ever experience. The least we can do for our loved ones is take a few basic steps to make life a little easier for them should we ever become medically incapacitated.

There are a few ways we can plan ahead to minimize the difficulties our loved ones might face should any of us have a serious decline in health that results medical incapacity. Typically, we should at least draft a living will and give a trusted individual a durable power of attorney.

What is the legal definition of incapacity?

In a health care context, incapacity typically means that a person either:

  • Does not or cannot understand the consequences of the health care decisions that person must make; or
  • Cannot communicate his decisions at all (orally, in writing, or through gestures)

Incapacity can end in one of three ways: when an individual’s health improves to the point where he regains capacity, via a court order, or when he passes away.

Living Wills

A living will is a legal document that expresses your wishes regarding life-prolonging treatment. Having a living will helps your loved ones by allowing them to know if and when you want them to “pull the plug”. This removes the heavy burden of having to guess your wishes from their collective shoulders.

If you remember the Terry Shaivo case, I trust we can all agree that we wish to avoid putting our families through a similar situation: where the family is unsure of the incapacitated individual’s wishes, resulting in a huge family dispute as to what course of action they should take. None of that media-amplified drama would have occurred if Shaivo had a living will in place before she became medically incapacitated.

Durable Power of Attorney

A durable power of attorney is a legal document that gives someone you choose the power to make important decisions for you in case you become incapacitated. The power granted can be general or limited.

A general durable power of attorney allows your chosen individual to step into your shoes and make every legally operative decision you could have made before becoming incapacitated. Typically, these decisions include expenditure of your funds, the disposition of your estate, and decisions about your health care.

A limited durable power of attorney, on the other hand, specifically delineates what your chosen individual can and cannot do. Your chosen individual must closely follow the guidelines provided by your limited durable power of attorney.

Be very careful whenever you choose to give someone a durable power of attorney because that person could literally be making decisions where your life hangs in the balance.


This article only lightly touched upon the estate planning considerations regarding unwanted changes in your health. There are also many tax implications, methods to protect your assets, and further concerns you should address when planning for future in the health care context. I sincerely hope that this article has provided some guiding light as per your options.

The entirety of this article is copyrighted by Grant A. Toeppen, Esq., © 2012.  Please send an email to if you would like to use this article in part or in its entirety.

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Is Do It Yourself Estate Planning Right for You?

This article is not a substitute for, nor does it constitute, legal advice. Only an attorney who knows the details of your particular situation can provide you with legal advice.

Is Do It Yourself Estate Planning Right for You?

There are more options out there than ever for somebody looking to draft an estate plan. It can be overwhelming to figure out what’s right for you. This article will examine some of the pros and cons of each of the various methods available to you to draft a legally operative estate plan.

So what are your options? For starters, form banks like LegalZoom and LivingTrust provide users with legal document templates where you choose the right template for you, fill in the blanks, and voila- you have a legal document! Or you can hit the books and learn how to do it yourself with guides such as the Nolo series. Another option is the tried-and-true method of consulting your estate planning attorney. Regardless of the path you choose, you should remember to think long and hard before doing anything that could have serious implications for yourself, your business, and your family.

Form Banks

If you have a relatively straightforward estate plan and want to create your legal documents quickly, then form banks might be right for you. Businesses such as LegalZoom, LegacyWriter, and Incorporate sell legal document templates online. You start by going to the appropriate website, then find the legal document template you are looking for, and after you have filled in the blanks and performed the formalities you will have a personalized legal document.

The biggest advantage form banks provide is that they are straightforward, quick, and easy. You can literally draft a legal document in just a few minutes.

Another advantage offered by form banks is their cost.  While they are not as cost-effective as doing it yourself, they can be less cost-effective than hiring an attorney to draft your legal document. However, the disadvantages of using form banks may make them a bad choice for you.

The key disadvantage of form banks is that if you use one, you might not get what you expected. What I mean is that many people either fail to meet the very specific formalities required to make the document legally operative, or the document is legally operative but with unintended legal consequences. For example, a person might think he has a legally operative will but really it is not. Then that person’s entire estate passes into probate once he has passed. Or somebody uses a form bank to draft a will and creates a legally operative document but ends up giving all of his estate to his daughter when he also wanted to give some of his estate to a dear friend. The lesson here is that you want to be very sure of exactly what you are doing whenever you use a form bank.

Another disadvantage of using form banks is that you run the risk of receiving poor customer service. Just a cursory Internet search will find hundreds of customer complaints about the poor customer service provided by these businesses. The chief criticisms tend to be that either the customer service is slow to respond in time-sensitive matters or the customer service is unknowledgeable regarding the law behind the documents. Many businesses running a form bank make sure to absolve themselves of any and all legal liabilities so that they cannot be sued by unsatisfied customers. You do not want to be left high and dry after having shelled out the money for a legal document template and then find yourself either unable to create the document you wanted and/or unable to seek any redress from the business itself.

The final disadvantage with form banks that I will address is their lack of customizability. One size does not fit all when it comes to planning for your future.  For example, form banks often fall short if you want to plan for contingent beneficiaries or create a spendthrift trust. Not only do form banks frequently fail to provide you with high customizability, but also they frequently do not provide you with the guidance to get the best document for you.

Overall, my conclusion on form banks is that you should only use one if you know exactly what you are doing and have a fairly straightforward goal in mind. Otherwise, you may find yourself having to pay an attorney to undo the damage caused by using one of these sites. Inform yourself or ask an attorney to review your document before making it legally operative. Remember, an ounce of prevention is worth a pound of cure.

Do It Yourself

There are various resources available for the confident self-starters who are willing to draft their legal documents on their own. Good examples include Nolo, the “For Dummies” series, and reading the practice guides at your local public law library. If you choose to do it yourself, you will probably spend a lot of time learning the law but could save yourself some cash.

The biggest advantage this choice offers is the low cost. You can usually borrow or at least read many of these books for free if you pay a visit to your local library. If you are the rugged individualist who can competently handle matters on your own, a do it yourself approach might be for you.

On the other hand, many of the same criticisms that apply to form banks also apply to doing it yourself. When you want customer service, look in the mirror. Not to mention that you might end up creating a legal document with unforeseen consequences. Or you might end up creating a document with no legal consequence at all. In the worst case scenario, you will end up having to pay an attorney to undo your mistakes.

As far as do it yourself legal document drafting goes, you should probably only do it if you are a quick study, have a lot of free time, or are professionally trained in estate planning. Otherwise, you might end up spending your valuable time to create an unwanted, ineffective, or unmanageable legal document.

Consulting an Attorney

Attorneys have been drawing up estate plans for centuries. The ups and downs are two sides of the same coin- usually you receive quality, personalized service but might end up paying a premium for it.

The best part of consulting a skilled estate planning attorney is that a professional can usually see ways to maximize your benefits and minimize your liabilities that most people cannot. You should expect nothing less if you are hiring a trained professional whose goal is to help you meet your estate planning needs.

The biggest downside to hiring an attorney is that an attorney’s services can be prohibitively expensive. But that is not always true- many attorneys have flexible billing rates. Also, when it comes to making decisions that have serious implications for our futures, sometimes it makes sense to spend more.

Mixing and Matching

You might be able to maximize the benefits of each of these approaches while minimizing their downsides by combining them. Let me be very clear on this next point- regardless of the path you choose, you should at least do enough research to get an idea of what you want your estate plan to accomplish.

If you have a straightforward estate plan you should either use a form bank or an attorney to draft your document. But if you have a highly customized estate plan or want to strategize as far as how to best allocate your assets, it’s probably best that you involve an attorney throughout the process.

No matter what, it’s a good idea to have an attorney do a brief review of any legal document you have created to make sure you have crossed your “T”s and dotted your “I”s. Doing so will be more cost-effective than having an attorney draft the whole thing. This maximizes the benefits provided by each of the above approaches.

I hope this article has helped you to understand some of the strengths and weaknesses of the different options out there for estate planning. Just remember, take your time when planning your estate. This is an important decision that will affect you and those you care about for years to come.

The entirety of this article is copyrighted by Grant A. Toeppen, Esq., © 2012.  Please send an email to Grant@ToeppenLaw if you would like to use this article in part or in its entirety.

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