Protecting Your Assets in California: Estate Planning Essentials

Create a comprehensive list of all your assets including bank accounts, investment accounts, retirement accounts, real estate, vehicles, valuable personal property, digital assets, and business interests. Include account numbers, locations, and approximate values. Store this document securely and inform your trusted representatives where to find it. Update this inventory annually or whenever you acquire or dispose of significant assets.

Find and consult with an estate planning attorney licensed in California. While you can create some documents yourself, professional guidance ensures your plan complies with California-specific laws. The California State Bar offers referral services, or you can ask for recommendations from friends, family, or financial advisors.

Create a will that names your beneficiaries, specifies how you want your assets distributed, and names an executor to manage your estate. In California, a valid will must be in writing, signed by you, and witnessed by two adults who also sign the document. California recognizes holographic (handwritten) wills, but a properly witnessed will is more secure. If you have minor children, use your will to name guardians for them.

Create a revocable living trust to avoid probate, which is particularly important in California where probate can be lengthy and expensive. Transfer ownership of major assets (real estate, investment accounts, etc.) to the trust while maintaining control during your lifetime. Name successor trustees to manage the trust if you become incapacitated or after your death. In California, assets in a properly funded trust can be distributed to beneficiaries without court involvement.

Create a durable power of attorney appointing someone you trust to manage your financial affairs if you become incapacitated. In California, this document must be signed before a notary public. Consider whether you want the power to be effective immediately or only upon incapacity (springing). Specify the powers granted, which can be broad or limited to specific transactions.

In California, this is part of the Advance Health Care Directive. Appoint a healthcare agent to make medical decisions for you if you cannot communicate. Choose someone who understands your wishes and will advocate for you. Discuss your preferences with this person in advance. The document must be signed by you and either notarized or witnessed by two qualified adults.

In California, this is also part of the Advance Health Care Directive. Document your preferences for end-of-life care, including life-sustaining treatments, pain management, and organ donation. Be specific about scenarios where you would or would not want certain interventions. The same witnessing or notarization requirements apply as for the Healthcare Power of Attorney.

Create a HIPAA authorization form that allows specified individuals to access your medical information. This is separate from your healthcare directive and ensures that your healthcare agents and loved ones can communicate with medical providers. List all individuals who should have access to your medical information and specify what information they can access.

Review and update beneficiary designations for life insurance policies, retirement accounts, and other financial accounts that allow direct beneficiary designations. These designations override your will, so they must align with your overall estate plan. Request current beneficiary designation forms from each financial institution and submit completed forms according to their requirements.

For California real estate transferred to your living trust, record new deeds with the County Recorder's Office in the county where the property is located. This step is essential to properly fund your trust and avoid probate for real estate assets. You'll need to complete a Preliminary Change of Ownership Report (PCOR) form, but transfers to a revocable trust generally don't trigger reassessment for property tax purposes in California.

Create a pour-over will as a safety net for any assets not transferred to your trust. This type of will directs that any assets still in your name at death should be 'poured over' into your trust and distributed according to trust terms. This ensures consistent distribution of all assets and provides a backup if some assets were inadvertently left out of the trust.

While California has no state estate tax, residents with estates exceeding the federal exemption amount (currently $12.92 million per individual in 2023) should consider federal estate tax planning. This may include gifting strategies, irrevocable trusts, or other tax planning techniques. Consult with a tax professional or estate planning attorney to determine if this applies to your situation.

Under California's Revised Uniform Fiduciary Access to Digital Assets Act, create a plan for your digital assets. List all online accounts, digital currencies, and digital files along with access information. Specify in your estate documents who should have access to these assets and what should happen to them. Consider using a password manager and providing instructions for your fiduciaries.

Store original documents in a secure location such as a fireproof safe or bank safe deposit box. Provide copies to your attorney, executor, trustees, and agents. Inform these individuals where to find original documents and any access information needed. In California, you can also register your advance healthcare directive with the Secretary of State's registry.

Set a schedule to review your estate plan every 3-5 years or after major life events (marriage, divorce, births, deaths, significant changes in assets, or moves to another state). California law changes periodically, so regular reviews ensure your plan remains compliant and effective. Schedule a recurring calendar reminder for these reviews.