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California has its own laws and requirements. When we use generic forms that are intended to be used in any state, these California specific laws may be overlooked. For example, I have had a great deal of trouble finding the proper California notary language on legal forms online. If the document is not properly notarized, it may not work. You can't afford to have your documents not work because when you most need them you won't be here to fix them.
Another big difference lies in the fact that California is also one of nine community property states. This status provides a great deal of benefit from a capital gains perspective for married couples upon the first death. It is important to use community property language in the legal estate planning documents. Determining what is community property and what is separate property in California could be the worst part of the whole estate plan if it isn't addressed from the beginning. You can only give away what you own. You may not own what you think. Community property formulas are very messy and often require hiring forensic accountants to trace back how assets were acquired and paid for over the many years of the marriage. My clients always sign an aggregate property agreement to clearly opt-out of California "item theory" which states that each person owns one-half of each item. The problem with item theory is that it limits the surviving spouse's ability to choose which items should be placed in to the tax shelter trust that is often created at the first spouse's death.
Using California specific forms makes it more likely that California banks and financial institutions will honor them. Banks are often the hardest part of the estate planning process from a practical perspective because they have their own rules and protocols which may or may not conform to state law. Many banks have their own powers of attorney and refuse to honor any other form, regardless of state law to the contrary. In my entire career, I have never seen a bank honor the generic check-the-box power of attorney form that can be found freely online.
What is worse than having nothing in place? Thinking you are all set and finding out that the forms don't work after it is too late. You may want to check with your banks about their policies with regard to honoring Durable Powers of Attorney for Financial Management.
Attorney Heather Tremain has focused her law career on Estate Planning, Trusts and Probate Law since 2000. For five of those years, she was a Specialist in those areas, Certified by the State Bar of California, Board of Legal Specialization. Attorney Tremain was featured in Forbes Magazine in December 2009, as one of 10 "Leading Providers" of legal services in the State of California. For more information about California estate planning mistakes and how to avoid them, visit http://www.yourlegacylives.com/
