This article is intended for general informational purposes only and does not constitute legal advice. California law and tax rules are subject to change, nuance, and interpretation beyond the scope of this article. Readers should consult qualified legal counsel and tax professionals regarding their specific circumstances.

This article series provides an overview of the essential aspects of California estate planning to help make it more accessible to you. Estate planning is about making deliberate decisions now so that your assets go where you intend, your loved ones are protected, and your wishes are honored if you can no longer speak for yourself.

In a recent article, we discussed some of the key features of wills and trusts. If you haven’t had a chance to read that article yet, now would be a great time to check it out.

Here, we cover incapacity documents as well as probate and how to avoid it. Be sure to return for the third article in this series where we will go over tax considerations.

Incapacity Documents: Planning for the Unexpected

Estate planning is not only about what happens when you die — it is equally about what happens if you are incapacitated. Two documents are essential: an Advance Health Care Directive and a Durable Power of Attorney for financial matters.

Advance Health Care Directive (AHCD)

An Advance Health Care Directive (AHCD) is a legal document under California law that serves two functions. First, it designates one or more individuals (the “agent” or “health care proxy”) to make medical decisions on your behalf if you are unable to do so. Second, it records your instructions regarding end-of-life care, artificial life support, organ donation, and disposition of remains.

Advance Health Care Directives can be structured as immediate (effective upon execution) or springing (effective only upon a determination of incapacity). Most California AHCDs are drafted as immediate documents to avoid administrative delays in emergencies.

In conjunction with the AHCD, individuals should execute a HIPAA Release Form authorizing health care providers to share protected health information with the agent named in the AHCD. Without this authorization, providers may refuse to disclose information even to a lawfully appointed agent.

Durable Power of Attorney for Asset Management (DPOA)

A Durable Power of Attorney (DPOA) is a legal instrument under California law (Probate Code § 4401 provides statutory forms) authorizing an agent — also called the attorney-in-fact — to manage the principal’s financial affairs. The scope of the agent’s authority can be narrow (limited to specific transactions) or broad (encompassing substantially all financial matters).

The critical distinction is between “durable” and “nondurable”:

• Durable Power of Attorney: Remains effective (or springs into effect) even after the principal becomes incapacitated. This is the appropriate instrument for estate planning purposes.

• Nondurable Power of Attorney: Used for a specific transaction or limited time period. It automatically terminates upon the principal’s incapacity.

Like AHCDs, POAs can be immediate or springing. Best practice is to have POAs notarized; many financial institutions require notarization before honoring the document.

Other Considerations

If you already have an Advance Health Care Directive (AHCD) and a Durable Power of Attorney (DPOA), you’re well on your way. But a complete, well‑functioning estate and incapacity plan may also include several additional pieces that work together. Thinking through these questions and documenting them now can save a lot of time, stress, difficult decision-making, and heartache for your loved ones in the case of incapacity.

Here are some other documents to consider, with a brief explanation of why each matters.

Physician Orders for Life‑Sustaining Treatment (POLST)

A POLST is a doctor‑signed medical order, not a planning document. The POLST functions as actual medical orders that travel with you (to your home, hospital, or other facility) and is signed by both the clinician and patient. It communicates your wishes for end-of-life intervention to health care facilities and providers, including emergency medical services (EMS). The POLST complements an advance directive and is not intended to replace it.

It is most useful for people who want less than fully aggressive medical treatment in their current health state. The POLST can prevent unwanted or medically ineffective treatment, reduce patient and family suffering, and help ensure that patients' wishes are honored.

It is most helpful if you wish to give special instructions or consideration because:

• You have a serious or chronic illness,

• You are older, or

• You want very specific medical orders (DNR, DNI, etc.)

Digital Assets Authorization

California authorizes fiduciaries to have legal access to digital assets under the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), but it’s best to have:

• A list of accounts (e.g., computer files, email, text messages, social media, cloud storage, domain names, financial accounts, cryptocurrency, digital media licenses)

• User names or other login credentials

• Password management instructions

• Explicit permission for your agent to access digital property; you can identify which accounts you want them to have access to and whether they have full or partial access

Providing explicit permission for someone else to access digital assets can override terms of service from the various online services and entities you’re trying to access and can help avoid locked accounts and delays.

Financial Inventory / Asset Map

This is not legal, but can be helpful for others to locate and navigate assets and accounts. You can include a description of each item, where it is stored, and how to access it.

• Bank accounts

• Retirement plans

• Insurance policies

• Real estate

• Subscriptions and recurring payments

• Other key assets, documents, or accounts to be aware of

Understanding Probate

Probate is the court-supervised process of authenticating a deceased person’s will (if one exists), inventorying their assets, paying debts and taxes, and distributing what remains to beneficiaries. In California, it is governed by the Probate Code and administered through the Superior Court. Probate is public, time-consuming, and expensive. Most estate planning strategies are designed specifically to avoid it.

When Is Probate Required?

Not every estate must go through probate. Under California Probate Code § 890, an estate is subject to formal probate only if the gross value of assets subject to probate exceeds the threshold amount, which is adjusted every three years. Assets that pass by beneficiary designation (life insurance or IRAs, for example), joint tenancy, community property with right of survivorship, or through a funded trust generally do not count toward this threshold.

The Probate Process

For estates that do require probate, the process follows a predictable sequence and typically takes a minimum of one year to complete. The key stages are:

• Filing a petition for probate and, if applicable, admitting the will to probate. This may include appointing the executor (named in the will) or an administrator (if no will exists) and obtaining an Employer Identification Number (EIN) for the estate and opening estate accounts

• Sending required notices to beneficiaries, creditors, the California Department of Health Care Services, and the Franchise Tax Board

• Completing a date-of-death inventory and appraisal, which is reviewed and completed by a court-appointed probate referee

• Collecting assets, paying debts and taxes, settling valid creditor claims, and liquidating assets if necessary

• Filing a final report and accounting with the court. Once approved, the remaining assets are distributed to beneficiaries as dictated by the will or California intestacy laws.

• Filing a petition to close the estate to confirm all actions have been completed

Creditors generally have four months from the date of appointment of the personal representative or 60 days from the date Notice is mailed to them to file claims against the estate.

Probate Fees

One significant drawback of probate is cost. California sets the ordinary compensation for the executor and the estate’s attorney by statute (Probate Code § 10800), calculated as a percentage of the gross value of the estate:

• 4% on the first $100,000

• 3% on the next $100,000

• 2% on the next $800,000

• 1% on the next $9,000,000

• 0.5% on the next $15,000,000

• A reasonable amount as determined by the court on amounts above $25,000,000

These fees are paid separately to both the executor and the attorney, meaning the combined ordinary fees on a $1 million estate would be approximately $46,000. Extraordinary services — such as managing contested litigation, overseeing real property sales, or coordinating ancillary administration in another state — may warrant additional compensation under Probate Code § 10811 and California Rule of Court 7.703.

With our previous article about wills and trusts and today’s article about incapacity documents and probate, we hope you now have a better understanding of California estate planning. In the next article, we will elaborate on tax considerations for your estate plan. Come back soon to read the next article.

Please reach out to us at admin@petrulisfs.com if you need fiduciary support.

This article is intended for general informational purposes only and does not constitute legal advice. California law and tax rules are subject to change, nuance, and interpretation beyond the scope of this article. Readers should consult qualified legal counsel and tax professionals regarding their specific circumstances.