The laws in California have specific requirements when it comes to signing estate planning documents. Some require witnesses, whereas others require notarization or other formalities.

For example, certain types of Wills need to be signed by the Testator (creator of the Will) and the signature must be witnessed by at least 2 other people, all of whom should sign the Will. If a document needs to be recorded at the Recorder's Office, then the document must be notarized. 

Purpose

These laws are enacted for your protection. They help ensure that you understand the seriousness of your actions. The formalities may also have the effect of preventing others from forging your name and/or giving notice to the public as to the ownership of your assets, such as with recording of deeds at the Recorder's Office. 

Out-of-State Estate Planning Documents

For people moving to California that already have an existing estate plan, a concern is whether those documents are effective under California law. As a general rule, if the documents followed the formalities of the state where you are moving from, then it should be valid under California law. For a specific statute involving a Will, see California Probate Code Section 6113.

Sometimes the obstacles to transferring property for estate planning purposes are outside of your control. The restrictions may be due to your marital status or status as a registered domestic partner, or the type of asset, such as an interest in a trust for which you may be beneficiary (i.e., a trust that was not created by you, but for your benefit).

However, restrictions may also be self-imposed, such as by agreements that you have with others not to transfer your property. A major hurdle in transferring property occurs when the transferring person loses the capacity to make the transfer.

Finally, even if you have the legal ability to make the transfer, you may nonetheless, wish to retain absolute control over property.

Lack of Legal Capability

A risk faced by some individuals is the possibility that someone will challenge the estate planning documents after you pass away. This often comes in the form of a challenge to the Will or other estate planning document that you've created.

You may have heard of this terminology before, but the challenges can range from the following:

1. Failure to follow the formalities required when signing the estate planning documents. 
2. Lack of capacity, mental or otherwise, to sign the estate planning documents.
3. The assertion that there was fraud, duress, or undue influence.

Risk Minimization

If you are clearly competent, and your lawyer is not in a position where there's a conflict of interest, others are not unduly influencing the decision-making or otherwise inappropriately pressuring you to make a decision, and the proper formalities of signing your estate planning documents are followed, the risk of someone challenging your estate plan is relatively low. 

Although estate planning may present challenges even after the documents are prepared and signed, the risk of having your transfer fail can be minimized by introducing an independent lawyer to draft the documents. He or she can be on the lookout for potential future causes of challenges to your estate plan and can help you to navigate away from them.

Estate planning, for most, has as its primary objective, the transfer of one's assets. On the surface, this appears simple, but a number of factors ranging from client fears, related costs, forgetting best practices when it comes to handling ones existing and newly acquired assets, as well as outsiders who seek to take advantage can all pose obstacles in the estate planning process.

Emotions

Estate planning can often feel like going to the doctor to do your annual check-up. Many people fear facing the inevitable and putting off the tasks required to do an estate plan is often the path of least resistance.

Fortunately, if you've contacted an estate planning lawyer, you at least recognize it's importance and are making a very good first step. A large portion of clients are motivated by family members such as a spouse or child to ensure that an appropriate plan has been put in place to protect them.

Others, particularly those of high net worth, are motivated by possible tax savings to be had as a result of estate planning; however, the present costs and potential loss of control as a result of those techniques often outweigh a client's willingness to pursue them.

It's also not uncommon to find the rare breed of clients who take a deep and sometimes all-consuming interest in estate planning.

Costs

A simple, yet very common hurdle, is simply the cost of doing estate planning. Many clients are scared away by the initial investment associated with setting up a basic estate plan. However, if the estate planning lawyer has done a good job, the cost of establishing a plan and maintaining it, should only amount to a fraction of the cost associated with not having an estate plan in place. Not to mention the additional stress that can be lifted from your family members as a result of your advanced planning, which can be priceless.

Maintenance

Even the best estate planning requires regular review. Actions such as purchasing additional assets like life insurance, the creation of new accounts, or purchasing of real estate are all situations that should be revealed to your estate planning lawyer.

Failure to regularly review your estate plan and assets, may cause you not to receive the full benefits of the plan that you established. Often, something as simple as acquiring new assets directly in the name of the trust can save you considerable sums and help avoid unintended consequences such as probate at the time of your death.

Unscrupulous Third Parties

A difficulty, particularly for the elderly, are individuals who take advantage of clients' weakened emotional, mental or physical states to extract their wealth. Although it can be difficult to detect and opportunities are limited, at least part of an estate planning lawyer's observations will include an assessment of whether a client is being unduly influenced or forced to make an estate plan that is contrary to what he or she would request had they not been pressured.

As you can see, a number of factors are at play that make estate planning challenging for clients. That's why having an actual firm or lawyer that you have a relationship with can be crucial since they will be "plugged in" to your life and have semi-regular communication with you.

Irrevocable trusts are trusts that cannot be revoked or amended (with a few exceptions depending on the state that you live in). There are different varieties of irrevocable trusts and they may be used for a variety of reasons, including tax savings, protection from creditors, and charitable giving. Usually, irrevocable trusts will be used by individuals or families who either have or expect to have a taxable estate for estate tax purposes.

Gift Tax

A transfer of property to an irrevocable trust with nothing in return is generally treated as a completed gift for gift tax purposes (it may be a whole or partial gift, depending on the circumstances). The transfer may not qualify for the "gift tax annual exclusion" ($15,000 in the year 2018) because usually a future, rather than a present, interest in the trust property is created (i.e., the beneficiaries don't get immediate access to the property). 

Income Tax

The irrevocable trust will generally have its own annual income tax returns depending on the items of income, deductions, gain or losses on sale of assets, and credits that it has. In some cases, special provisions will be included in the irrevocable trust to treat it as a "grantor trust," which cause these items to show up directly on the trust creator's income tax returns. There are strategic decisions that may cause one form to be better than the other.

Estate Tax

In most cases, unless the creator of the irrevocable trust retains some interest or power over the irrevocable trust he or she creates, the assets of the irrevocable trust will not be included in the trust creator's "gross estate" for estate tax purposes. In other words, the assets of the irrevocable trust won't be added into the value of the assets that he or she owns at the time of death.

For those with a particularly high net worth, it is worth considering how irrevocable trust planning can be incorporated into the estate plan, as it may bring considerable tax savings to you and your family.