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Nine Things Women Should Know - Estate Planning for Women

Posted on | June 30, 2010 | No Comments

“Women’s life expectancy, combined with their tendency to marry older mates and their lower lifetime earnings means they are far more likely to see their living standards compromised in retirement if proper estate planning isn’t done.” This statement begins a very savvy column in an article titled “Six Estate Planning Questions for Women” by Deborah Jacobs for Forbes Magazine. Generally, women enjoy a longer life expectancy than men, which leaves them vulnerable if they fail to make a plan. In my own practice, it is not uncommon to see many women alone in their final years. Beyond that harsh reality, even with supportive family members and friends, the issue becomes not what you want to do with your estate, but rather who will make decisions for you if you fall ill or are unable to make decisions on your own behalf because of an accident or progressive disease.

If you do not make your choice and formalize it via a medical power of attorney (called an advance health care directive in California – see “What is a Living Will? California’s Advance Health Care Directive”), then the government will make the decision through a long and protracted process called a conservatorship. Conservatorships are not fair to your friends and family because of the prohibitive cost and publicity that is attendant to them, and those same people will be placed in the position of having to guess what you would have wanted should you have made your wishes known. Furthermore, you may rebel at the very notion of a conservatorship and may have to hire a lawyer to defend you during the process.

On the other hand, an advance health care directive will only manage personal care decisions for you –leaving perhaps the most important choices regarding your money to your agent through a financial power of attorney. The issue can occur like this: you are involved in an accident and are hospitalized for a month, unable to make decisions on your behalf. Your mortgage or rent becomes due and you have no one authorized to pay it on your behalf. Now you become entangled in a messy legal scenario in which someone must first petition the government on your behalf – usually through an ex parte temporary conservatorship legal procedure – to pay your bills to avoid foreclosure or eviction. All of that is unneeded if you have someone selected as your financial power of attorney. If drafted the right way, that power of attorney will only become effective should you become incapacitated (called a “springing” power of attorney  - see “What is a Springing Power of Attorney?“). To learn more about who to select and other matters on this topic, the article has a nice section under the section “Whom can you trust?”  My thanks to Professor Beyer for bringing this article to my attention.

Category: Estate Planning - Generally
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The Reading of the Will – When, Why and Who Should Be There?

Posted on | April 30, 2010 | No Comments

That’s really a trick question. Although made famous in various movies, television shows, and books, probate and estate planning attorneys no longer (if they ever did) orally read the contents of estate planning documents to family members. They are primarily tasked with finding beneficiaries and heirs of a will and sending them a copy of the document. In fact, wills are an outdated form of estate planning and are generally discouraged from use (See “What Are the Advantages of a Trust?”). This does not make those scenes any less funny – as epitomized by this will reading from the television show 30 Rock.

Thanks to Joel A. Schoenmeyer for bringing this clip to my attention.

Category: Estate Administration
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Trust Mills, Trust Scams, and Trust Lies - “Estate Planners” Unlicensed to Practice Law & Elder Abuse

Posted on | March 31, 2010 | No Comments

I am often approached by people who have been in contact in one form or another with trust mills. Trust mills operate by doing estate planning on a large scale and by threatening elderly (and even middle aged) people with scare tactics if they do not use the estate planner’s often formulaic trusts. Although the use of a trust can in fact save your family money and time (See “What are the Pros of a Living Trust“), it will not allow you to prequalify for Medi-Cal or other public benefits (”What Are the Cons of a Living Trust“).

Nevertheless, that was precisely the alleged claim of two men (who were unlicensed to practice law) in San Jose who convinced some elderly residents that the use of their services would prequalify them for public benefits. The problem is that most of the seniors already qualified, and those did not would have to “spend down” their earnings which would incur heavy penalties.

What are the types of costs that are incurred if an elderly citizen is caught in a trust mill? Often the trust will have inconsistent and ambiguous distributive provisions that must be interpreted by a probate judge before the family can receive anything. The petition to do that is very costly and time consuming – it often takes months before the court order is finally signed and attorney’s fees will total in the thousands of dollars. Never mind the risk that the trust mill will take the private information of seniors and pass it off to others who will try to exploit them for gain. An attorney who breaches attorney-client privilege by releasing such information is subject to serious sanction – which is why estate planning should only be done by licensed members of the bar.

If you know someone who has been ripped off by a trust mill, do not hesitate in getting the plan corrected now. I offer discounts on repairing or restating plans that have been prepared under those circumstances, and I am sure other attorneys would offer the same deal as well.

Category: Probate Litigation
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8 Steps To Avoid Estate Litigation

Posted on | November 30, 2009 | No Comments

An article by the US News and World Report gives “8 Tips to Avoid Nasty Estate Surprises.”  I agree with most of the points, and add my critique after each tip below:

1. Get a good lawyer. I would add that your lawyer should concentrate exclusively in this area.
2. Pick the right executor and trustees. The right trustee will be solid and will react neutrally to avoid disputes over the estate’s property.
3. Talk about it now. This seems obvious, but most people will not let their intentions be known ahead of time. Unfair surprise is one surefire way to start a contest.
4. Know state laws. In California, as the Tax Professor adds, probate can be avoided entirely through the use of a trust.
5. Make your intentions known early and often. Making repeated modifications to the will or trust will make it harder to invalidate later.
6. Make sure title to your assets is clear. Circumventing the estate distribution by retitling assets later in life is another way to encourage litigation.
7. Consider including a “no contest” clause. Then give the beneficiary an amount that they would rather not sacrifice if they lost the contest.
8. Don’t try to manage your estate from the grave. Although I am not sure that I entirely agree with this one, in theory giving discretion to your beneficiaries may stop them from fighting over items to which they are personally attached. I agree that not every item need be listed in the instrument, but sometimes a person who writes a will or trust can avoid disputes ahead of time by simply making the right decision.

Category: Probate Litigation
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Legal Fights Over Wills - No Contest Clauses Hit the Public Spotlight

Posted on | October 31, 2009 | No Comments

With the death of Michael Jackson and other celebrities, no contest clauses have come to the fore of the public’s attention. No contest clauses are an attempt to keep brothers and sisters, aunts and uncles, and everyone else from suing in probate court every time someone writes an unfair will. There are quite a few benefits to discouraging litigation – as well as some detriment where there is a legitimate cause for concern. In fact, the California law on the subject is complex and will change in 2010. As it stands now, there are multiple statutory exceptions to no-contest clauses that everyone must follow. It is even possible to set aside a no-contest clause if the contest is brought with “reasonable” cause on the grounds of forgery, revocation, or an action to establish the invalidity of any transfer. So at least for now, would-be litigants can take heart that there may be a remedy when a relative makes a move to steal through influence or lack of capacity, as long as there is a solid reason to pursue it.

Category: Estate Planning - Generally
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What is an Advance Medical Directive or Living Will?

Posted on | August 31, 2009 | No Comments

A recent Wall Street Journal article discusses the importance of having an advance health care directive in place should you become incapacitated. Though the article refers to an “advance medical directive,” in California it is called an advance health care directive. These directives give doctors direction, in your own words, should you not be able to speak them. Yet less than a 1/3 of Americans have them in place, despite the fact that most Americans will need them at some point. This saves your family members from making agonizing choices that may place them at odds with each other in the midst of a crisis. For more advice on advance medical directives, you can read the article here.

Category: Uncategorized
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10 Odd Bequests; Or How to Disinherit With Style

Posted on | July 31, 2009 | No Comments

The law regarding wills and trusts has changed greatly over the years. New law makes it difficult to precondition a devise by will or trust on an act that would violate public policy. For instance, California Probate Code § 710 prohibits imposing a condition or restraint on marriages under certain circumstances. In other words, you can’t place a restriction that discourages your son or daughter from marrying a certain person or encouraging their divorce. Likewise, “[i]f a condition precedent requires the performance of an act wrong of itself, the instrument containing it is so far void, and the right cannot exist. If it requires the performance of an act not wrong of itself, but otherwise unlawful, the instrument takes effect and the condition is void.” California Probate Code § 709. In other words, be careful what you wish for in a will or trust.

The link at the end of this paragraph gives ten examples of odd bequests that may or may not be enforceable in a court of law – but are entertaining nonetheless. Consider the man who preconditioned his wife’s receipt of £330,000 by devising that she could only receive it if she smoked 5 cigars a day (she refused to allow him to smoke). Or the woman who gave her husband $2.00 provided he spend half the money on rope to hang himself. Check out the full list here.

Category: Wills and Trusts
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California Probate Guardianships - No Contest Clauses in a Will or Trust May Not Apply to Minors

Posted on | October 9, 2008 | No Comments

A minor who nominated his mother as guardian ad litem (See What is a California Guardianship?) does not voluntarily participate in a probate proceeding triggering a no contest clause provision in a will or trust. Safai v. Safai, 164 Cal.App.4th 233 (2008).

“The Trust (What is a Revocable Living Trust?) and the will both included ‘no contest’ clauses, with the Trust’s clause stating, as follows: ‘Any beneficiary who directly or indirectly voluntarily participates in any proceeding or action in which such person seeks to void, nullify, or set aside (1) any provision of this instrument; (2) any provision of the Settlor’s will; or (3) any amendment of this instrument or codicil of the Settlor’s will shall be considered to have predeceased the execution of this instrument without surviving descendants[.] The provisions of this paragraph shall not apply to any disclaimer by any person of any benefit under this instrument. The Trustee is authorized to defend any contest or other attack of any nature on this instrument or any of its provisions.’”

The court reasoned that the settlor did not intend “to disinherit his only son in the event that [the son] contested the Trust while still a minor,” even though a “guardian or guardian ad litem is not a party to the action; instead, he or she is a representative of record of a party who lacks capacity to sue.” Thanks to Professor Beyer for bringing this case to my attention.

Category: Probate, Probate Litigation, Trusts, Will Contests, Wills, Wills and Trusts
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Heath Ledger’s Daughter Will Inherit His Entire Estate

Posted on | October 2, 2008 | No Comments

Heath Ledger’s daughter Matilda will apparently inherit his entire $16.3 million estate. The actor executed a will (What Are the Advantages of a Will?) that left nothing to his daughter, but left everything to his parents and three sisters. Those family members have allegedly gifted those distributions to Matilda.

Category: Current Events, Estate Planning of the Rich and Famous, Probate, Probate Litigation
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Will I Inherit from My Husband or Parent If I Kill Them (Part II)? The Answer Could be Yes

Posted on | September 26, 2008 | No Comments

A Wisconsin court has ruled that giving a loaded shotgun to a suicidal parent is not the proximate cause of the parent’s death (although it is the actual or but-for cause), so that a wife and daughter of the man may inherit his $500,000 estate. The man was terminally ill with lymphoma and his wife and daughter took him directly from the hospital (where he had only a one day pass to leave) to a cabin, gave him the loaded shotgun and left him.

The Wisconsin Slayer Statute (Read here about California’s Slayer Statute – Will I Inherit from My Parents if I Kill Them? Part I) prohibits those who “intentionally kill” another from inheriting from the person. California’s statute has basically the same language, and it is not clear what the result would be on the same facts here. The wife and daughter were embattled in probate litigation (See What is Probate?), and the case will likely be heard by the Wisconsin Supreme Court. You can read the full story here.

Category: Current Events, Probate, Probate Litigation, San Diego Estate Planning, Will Contests, Wills
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