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Estate Planning

Thursday, November 10, 2016

2016 Election Analysis for LGBT Issues


Many of my LGBT clients have reached out to me in a panic wondering how the election of Donald Trump will impact their families, benefits, marriages, and other legal issues.  My advice….breathe, try to relax and let’s take a look at what the election MAY mean in the future.

In my opinion, the biggest issue is the future of the Supreme Court.    There is one vacancy that will now be filled by President-elect Trump.
Read more . . .


Monday, September 21, 2015

Food for Thought - Legal Punch

Food for Thought – Legal Punch

Every now and then, I need to stop and remind everyone about the perils of forgetting to create a Will or a Trust. Sometimes I meet people who say “Who cares about a Will? I’ll be gone! It won’t hurt me!”. I also know lots of people who nod their heads and say “Oh yes, I know I need a Will and I’m really, really going to do it…soon”. Folks who pass away or become seriously ill without estate plans are practically guaranteeing that lawyers will earn hefty fees to clean up the mess. Put some legal punch into your life, and prevent troubles and woes.

Here are some real-life examples of what can happen:

Out in the Cold
Bob and Stu were life partners who never registered or married. They were comfortable in their 24 year relationship. When Stu suddenly passed away, Bob was left with a major problem – Stu never created a Will or Trust. Stu’s two adult children, Laura and Willy, filed a probate petition, and the court appointed Laura as administrator of the estate. The house was in Stu’s name, and Laura decided to sell it to get cash, so it could be divided equally between the siblings, who were Stu’s legal heirs. In spite of living there and sharing expenses for all those years, Bob got nothing and had to move out. The only asset he could claim was Bob and Stu’s joint checking account with $1,516.32 in it.

Under the law, Bob was nothing more than a stranger to Stu. Friends and other relatives were shocked. Bob and Stu cared deeply for each other, and Stu would never have wanted Bob put out in the cold like that. Stu was always certain that Bob would be provided for by the children, but he never did anything to make sure that would happen. Now Stu is gone (and it’s true - he isn’t hurting), but Bob will suffer for the rest of his life. Will your children or other heirs actually do what you want when you’re gone? Only if you put some legal punch into those hopes and wishes.

War Story
Sharon and Jeff’s mother recently passed away without a Will or Trust. Because mom had been in poor health for some time, Sharon held a power of attorney to handle her mother’s financial and health care matters during the last year of her life. When mom died, Sharon transferred her checking account to a new bank and took most of the funds from mom’s sizeable savings account to invest in some stock that her boyfriend thought was a “terrific deal”.

After a month or two, Jeff began worrying about how he was going to get his share of the estate. He checked with a lawyer, who told him that a probate needed to be opened in court, and an administrator appointed to pay bills, distribute the assets to the heirs, and then close out the estate. Sharon had no authority to touch the money. Her power of attorney expired when mom died. Sharon was frantic. The stock was going south, and she could be in a lot of trouble.

Jeff petitioned the court to be appointed as administrator. Sharon petitioned the court to be appointed administrator. They battled it out in a series of hearings over many months until the court finally determined that Sharon was unfit to serve because of her unauthorized use of estate assets. Jeff is now the administrator, but the assets are, unfortunately, half of what they used to be. Can you always trust a sibling or other heir to know the law and do what’s right? Only if you put some legal punch into the mix.

Man’s Best Friend
Waldo, age 65, was pleased with his simple life. He had enough money to be comfortable, and he loved his best friend, Tonto, a Cockapoo. One day, Waldo suffered a stroke and was rushed to the hospital. It was clear that Waldo’s memory and speech were seriously affected, and he would likely be incapacitated for a long period.
Waldo’s nearest relatives, a nephew and his wife, came 2 days later to see if they could help. They found a key for the house and went to check on things. Poor Tonto was there, unfed, un-walked and frantic.

The relatives had no place to keep the dog, and no access to Waldo’s checking account to pay someone for its care. They decided to take the dog to the local shelter for adoption. Several weeks passed and Waldo was recuperating in a nursing facility. As his speech and memory improved, his first questions were about Tonto. Was he all right? Who was feeding him? Was it the right food? Could Tonto come to see him?

You know the rest of the story. If only Waldo had planned ahead for incapacity – something that a majority of us will experience some time in our lives – he would have authorized someone to handle his financial and personal affairs, providing a safe haven for Tonto, and assuring his best friend would be at his side as he took his long journey back to the comfort of his home. Have you planned for your possible incapacity? Please put some legal punch into your pet’s future.





Monday, September 14, 2015

The Art of Collecting Art - Under the Law

The Art of Collecting Art – Under the Law

Most of us will never own a million dollar art or antique collection, but we always wonder if our own little treasures – 141 different vintage nutcrackers, a sketch by that street artist in Quebec, 17 stuffed pigs in all shapes and sizes, cocktail napkins from every major bar in Chicago - might someday be worth a tidy sum. Here are some interesting facts about art collections of all kinds:

Building your Collection - Art, antiques and collectibles are available from a wide range of sources. Established dealers and auction houses such as Bonham’s and Butterfields’, Sotheby’s and Christie’s have long handled direct sales, auctions and transfers of art. Now it is possible to buy or sell art online at all kinds of sites from amazon.com to ebay.com to shopgoodwill.com. It is unlikely that any expert or art connoisseur would recommend picking up important pieces from these internet sites, but if you are just putting together a little collection of comic books or a few interesting watercolors by unknown artists, it might get you off to a good start.

If you are, or hope to become a serious collector, it is necessary to keep detailed records and attend to all the other issues of managing what is really a business. Your records should give details and description of the item, where and when it was purchased, its provenance (ownership history), what and how you paid for it, and where you keep it. There should be photographs and it should be listed in an inventory together with all of the other art pieces you own.

Each piece in your collection should be appraised and insured. You may want to create an LLC to hold the collection and all its transactions, so it is separate and protected from your personal finances and assets. And the IRS must, of course, be a part of your planning. Are your collection activities for profit or for pleasure? Do you have to report on-line sales? Do you meet the definition of being a “dealer”? The way you buy, sell and manage your collection will determine how it will be taxed if you sell it, or when you pass away. Check with your CPA as soon as you decide to become a collector, and before making any declarations to the IRS or state tax board.

The Criminal Element - According to the US Department of Justice and UNESCO, art crime is the third highest-grossing criminal trade, just after drug and weapons traffic. Art trade is a lawful business, but almost totally unregulated around the world. There is little or no paper trail when art changes hands. Few transaction records. No public listing of art sales or transfers. It is an open invitation to shady deals, unscrupulous dealers and thieves.

Private art sales are estimated at $30 billion per year; and art crime may account for $6 to $8 billion of this total. Art thieves count on resale or ransom of the stolen pieces. Around the world, as many as 100,000 works of valuable art are stolen each year. It is likely that only 10% are ever recovered. There are also thousands of fakes and forgeries on the market, and many are likely to be found in museums or private collections everywhere. Dealers and private sellers are sometimes unethical, or prone to look the other way when questions of authenticity or true ownership come up.

Art crime and museum heists have been the focus of many popular films over the years. Topkapi, How to Steal a Million, The Thomas Crown Affair, Entrapment, The Monuments Men, and the Grand Budapest Hotel are a few of the films that have fascinated us, often clever and full of Hollywood glamour and intrigue. Captivating, but they also make us think about the serious side. How do you know if your art piece or collection is authentic, or truly valuable? How do you protect it? And what do you do with it when you die?

Where Will My Collection Go? Art is a unique possession, an asset that family members and friends may feel a strong emotional connection to. It is a part of your estate that requires special thought and planning for its future after you pass on. For a few pieces or small collections, you may wish to pass them along in your Living Trust to family and friends who will value and care for them. But depending on the dollar value of your art pieces or collection, there can be substantial tax implications for your estate based on how and when they are distributed to your beneficiaries.

Many serious collectors choose to make a charitable gift of their art pieces to a museum or other organization that can accept and maintain them. You could make the gift prior to your death, or gift it from your estate after you pass away. The tax laws regarding non-cash charitable gifts are especially complex, and you will need to consider the best way to donate your collection with a minimum of tax liability. Something as simple as whether you received an art piece as a gift or purchased it can make a difference in whether it is a deductible donation. The legal status of the organization receiving your gift, how it will be used, and whether the art is capital gain property or ordinary income property are a few of the many other issues that will affect the tax treatment of your art.

Whether your art collection is small or substantial, check with your attorney and CPA before deciding how to plan for its future and protect your estate.



Monday, August 31, 2015

Travel Forecast - Crossing the Line into a No-Comfort Zone

Travel Forecast - Crossing the Line into a No-Comfort Zone

Crossing state lines and international borders is something millions of us do every day. As long as we pack what we need, have our maps, GPS, and our tickets or gas in the car, we are pretty much ready for anything when we hit the road. But for the LGBT community, travel requires careful planning and an extra layer of protection. Both the journey and the destination determine our level of comfort on the trip. Using same-sex marriage equality and other non-discrimination laws as a guide, here are some of the things you should consider when you decide to travel for business or pleasure, or move to a new location:

U.S.A. - Currently, 37 states and Washington DC recognize same-sex marriage and/or registered domestic partnerships. If you are married or registered partners, you are likely to be treated fairly in these states, and especially in the larger cities. Smaller towns may still be catching up, and there are pockets of resistance in some states. Some businesses have invented a “religious exemption” excuse for not serving LGBT people. They claim that discrimination against homosexuals is permitted (and even required) by their religious beliefs.

For the states that have a ban against or don’t recognize same-sex marriage, there will soon be a resolution to our quest for equality. The Supreme Court of the United States is considering whether such marriages are constitutionally protected in every state, and their decision is expected sometime in June. But even if they decide in favor, there will be states and areas that will delay our civil rights in every way they can think of. We are unlikely to feel comfortable in many of those places.

So the U.S. is a checkerboard of states that may or may not be welcoming to LGBT travelers. When planning a trip, check where you have to pass through to get to your destination, and what you can expect when you get there. Look at the same-sex marriage record, and state or city laws regarding fair housing, employment, safety of LGBT youth, and HIV care and prevention. These are indicators of the comfort level of your stay in those communities.

Canada and Mexico - Our nearest neighbors are two sides of a coin. Canada permits same-sex marriage and has long had laws in place regarding other types of LGBT discrimination. Mexico is on the move toward equality. Mexico City permitted same-sex marriages several years ago, and court rulings since then have found that a ban on such marriages in many other areas of the country is unconstitutional. However, the rulings do not always give blanket permission to marry. They are sometimes limited only to the people bringing the suit. Progress toward equality in Mexico will likely take some time. And many other areas of discrimination have yet to be addressed.

Elsewhere in the World - A total of 18 countries have legalized same-sex marriage. 13 countries in Western Europe, 3 in South America, and New Zealand and South Africa now permit and recognize such marriages. A few other countries recognize same-sex civil unions, including Ireland, which may soon become the first country to legalize same-sex marriage through a popular vote. Some of these also have fair employment, housing and other non-discrimination rules. It is likely that all of these countries will be welcoming to LGBT individuals and couples.

At least 80 countries or entities around the world criminalize homosexual behavior, with 5 countries imposing the death penalty for such offenses. Most of the countries are in Africa, the Middle East and Indonesia. Others, such as Russia, have repressive laws against homosexual propaganda. When you cross the borders into these areas, you have entered the no-comfort zone. Plan your itinerary carefully, and be super-aware of your actions and speech that might run afoul of the local laws.

Pack That Extra Layer of Protection – Wherever You Go

You need these to insure wellbeing at home, and especially when traveling:

- Advance Health Care and Medical Care Directive: A detailed, notarized statement appointing agents to decide for you how your medical care will be handled if you are unable to make your own decisions. You will decide what kind of medical treatment you do or don’t want to keep you alive, manage pain or provide other care at end of life. There are issues of resuscitation, tube feeding, organ and tissue donation, and other critical matters.

Single travelers especially need this document, since there is no-one with them to provide information. Same-sex couples, married or not, will likely find that, even in comfortable locations, one partner or spouse may have little legal standing to make decisions as an agent for the other. It needs to be in a legal document.

- Emergency Medical Card: A card that allows medical professionals access to
your document. You are unlikely to carry your Directive on your person everywhere you go. There are several organizations that store it electronically for you, and they provide a credit-card size emergency card that instructs medical personnel to call or email to retrieve it, 24/7, from anywhere in the world. It also identifies the people you have named as your agents, and how to reach them. Carry this card in your wallet or pocket everywhere you go.

Monday, August 17, 2015

Can You Predict the Future? A Good Life Plan Needs Good Estate Planning

Can You Predict the Future? A Good Life Plan Needs Good Estate Planning

Most of us like to bring some order and predictability to our lives by planning ahead. We think about where we are now, and where we would like to be. We figure out how to get there, and how to avoid as many pitfalls along the way as we can. Moving through life, we accumulate things - our possessions, our estate – which are integrated into our lives. As an estate planning attorney, it is my job to help everyone plan for the care of their possessions as they move through life now, and after they die.

Here are a few of the issues that should make you think and do something about estate planning:

Do you have a live-in partner and you aren’t married or registered?

The 2013 U.S. Census Bureau Survey listed around 107,000 California same-sex couples living together. Of these, about 37% were spouses, and the rest were not. In California, community property rules mean that possessions (assets), and what happens to them, are clearly defined for spouses, but not for others. Although you and your partner may have a long-term relationship, your possessions can become a serious issue if you drift apart, become ill, or die. A plan for the care and keeping of your assets is essential to avoid the pitfalls that can upset your lives. If you have a car, bank account, savings or retirement funds, or a home, you have assets to plan for. What will happen to them if something happens to you or your partner?

Do you have children?

Many in the LGBT community have children from a previous or current relationship. If they are minors (under age 18 in California), they are usually under the legal control of one or both parents. But what happens if a parent becomes incapacitated or dies? That is where planning is essential to the child’s welfare. Care of children can’t be transferred to just anyone. A legal guardian will be required, and if there are no other plans in place, the state will appoint one and maintain jurisdiction until the children reach adulthood. It is always possible that the guardian will not be one that the parent would choose. Planning ahead can make the process predictable and greatly reduce the stress on the children.

Do you own a home?

If you own or are buying a house, it is an asset that is part of your estate. What will happen to that house if you become incapacitated or die? It all depends on how the property is titled on the deed. If you own it alone, you can create a Will that gives the house to a partner, a spouse, or another person if you die. The Will must be probated in court, and it may take a year or more to actually transfer the property to the beneficiary. As a better option, you can create a Trust, and transfer the property into the name of the Trust. Your Trust names who will manage the property if you become incapacitated, and who will inherit the property when you die. The Trust does not need to be probated in court.

What if you own the house jointly with a partner, and you aren’t married? There are several serious problems with this strategy. What happens if one of you becomes incapacitated and you need to sell the house? A joint tenant has no right to act alone on any house issues. What happens if one of you has a tax problem, or is in an accident, and a lien is placed on the house? What is the tax bite if your partner dies and you now own the whole house? There are much better ways of holding title to property, and a little planning will avoid lots of pitfalls.

Are you covered for illness or incapacity?

I am not a medical professional, so my concern with these issues is not about your health care plan, but with the plan for care of your possessions when something happens to you. And I say “when” very seriously. As our population ages, a majority of us will, at some point, require assisted living, long-term care or hospice. What happens to your estate when you can no longer manage it? Who will pay your bills, keep up your house or sell it, make sure your finances are in order? If you have a Will, it won’t help at all. A Will is effective only when you die. If you are a single person, or partners who are unmarried or registered, you need to plan very carefully for your own protection.

A Durable Power of Attorney will provide for a personal agent of your choosing to handle financial matters for you. An Advance Health Care Directive will give your instructions to your agent for handling medical and end-of-life issues with the medical professionals who care for you. A Trust will provide the instructions for handling all of your affairs when you are incapacitated, and after you die.

I have never been able to predict the future, so good estate planning is the very best I can do to help you keep your life plans on track.






Wednesday, June 10, 2015

All About Joint Tenancy - Are You and Your Partner at Risk?

Should your home, bank accounts or other property be held in joint tenancy with your partner or other family member? Many people comment to me that they don’t need an estate planning attorney because they own all their property as Joint Tenants with Rights of Survivorship. If they die, the property will automatically belong to the other joint tenant. No need for a Will or a Trust. No need for Probate. No need for an attorney’s services. 

Unfortunately, life is rarely that simple. There are numerous pitfalls in joint tenancy: 

         *   Joint property is exposed to the liabilities of either or both owners. If one

              owner gets a judgment against him or her, the entire property may be taken         

              to satisfy that judgment. If one is a doctor, lawyer or sole proprietor of a business

              in a highly litigious field, or if one is found at fault in an accident, or if one owner

              has a tax lien placed against the property, this may be the worst way to hold title.

          *  Joint owners lose individual control over the property. For example, with real

              property, one owner has no right to act alone in selling, making improvements,

              or refinancing the property.

          *  If one joint owner becomes mentally incapacitated, the property is in legal limbo.

              The owner can no longer convey legal title or sign ownership papers. This can

              prevent property such as a home from being sold or rented. It usually requires

              the healthy owner to go through a lengthy and expensive conservatorship

              process in Probate Court.

          *  When property passes to another owner through joint tenancy, that property

              is left outright, meaning there are no strings attached. The danger is that the

              surviving owner can then leave that asset to his new partner, or anyone else he

             chooses, and the first owner’s share of the estate never makes it to his own

             heirs. The last owner to die wins everything.

         *  When the first owner doesn’t do any estate planning, usually the second owner

             doesn’t either. Although probate may be avoided at the first one’s death, it will

             not be avoided upon the second owner’s death. In the event of simultaneous

             death, all assets held in joint tenancy must go through probate since both owners

             of record are no longer living.

         *  Even if the joint tenants do have Wills or Trusts, the surviving partner will receive

             the deceased joint tenant’s interest in the property, regardless of what that

             owner’s Will or Trust says. Wills and Trusts have no control over jointly owned

             property.

          *  Finally, transferring property into joint tenancy may have tax consequences. If

              you place another person on your bank account or a deed as a joint tenant, you

              have just given that person a gift. If the value is less than your annual gift

              exemption of $14,000.00, there may be no problem. If it exceeds that figure, you

              must file a gift tax return with the IRS. You may or may not owe taxes on the gift,

              depending upon your financial situation.

 

I hope you will give the joint tenancy risks careful consideration before you try to use it as a do-it-yourself estate planning tool. For very small estates such as those having only moderate sums in a bank account and no real property, joint tenancy can work to avoid probate and smooth the transition when a joint owner passes on. For most other estates, there are various planning tools that reduce or eliminate the risks of joint tenancy, and make far more sense.

Careful estate planning and correct property titling are especially important for same-sex couples. For partners who are not married or registered as domestic partners, it is essential to maintain as much individual control over property as possible. Couples can own homes together; have joint and individual bank and investment accounts; and own other property that they share equally, without the pitfalls of joint tenancy.

Many of my clients are same-sex couples who own various assets together. Often, we find that individual Revocable Living Trusts are the best way to maintain their property and allow each partner maximum flexibility and control over their shares. Each one creates the necessary documents to control how assets will be managed if incapacity or death should occur, and this allows each partner to pass his share on to whomever he names in the Trust. Each one has a plan that covers many of the risks in life, and gives partners greater peace of mind about the future.


Wednesday, May 20, 2015

Are You "Judgment Proof" After You Retire?

The bankruptcy rate for Americans over age 55 is soaring. This age group now accounts for over 20% of all bankruptcies filed. Some analysts estimate that for every older person who files a bankruptcy petition, there are two more seniors who should, because of their dire financial straits.

What’s going on?  Retirees used to be seen as financially stable, kicking back on their savings and pensions, mortgages all paid off – enjoying their golden years. But not any more. Here are some of the major reasons why so many of our older generation have hit financial hard times:

 

          *  People are living longer, making seniors a much larger percentage of the

              population than in generations past.

          *  Retirement funds are inadequate to cover the living expenses of a longer life, and

              income has gone down in recent years – hit by the recession and lack of cost of

              living increases in social security and other pensions.

           * Property taxes and the cost of gas and ordinary consumer goods keep going up.

           * Medical expenses grow rapidly as the population ages. Medicare and other

              health care insurance plans do not begin to cover all costs of medical care for

              older people.

           * Seniors often have to rely on credit cards to pay their routine bills, burying them

              in debt they will never pay off.  This group now has more credit card debt

              than younger generations – debt that was often unthinkable for seniors only

              10 or 20 years ago.

           * Late payments on credit cards and other unsecured debts result in penalties and

              a huge increase in interest rates to over 30% interest in most cases. This makes

              even modest debts spiral rapidly out of control.

But wait…aren’t retirees “judgment proof?” Why should seniors worry about their debts, when, in most cases, creditors can’t touch their pensions or their homes during their lifetimes? If social security or IRA income each month can’t be levied by a creditor, grandma or grandpa can stop stressing, right? And if a creditor puts a lien on your aging mother’s home, what does it matter to her?  She will continue to live there until she dies, and after that, the creditor will get the money from the sale of her house.

“Judgment proof” is not the best way to describe the financial situation of many older Americans. The term is commonly used to mean that creditors can’t collect money from assets that are protected – pension, IRA, or social security income – or the home you live in, while you continue to live there. But a creditor can still file a lawsuit against you, and a court might agree that you owe the money and issue a judgment against you. So technically, virtually no one is “judgment proof.”

A better term is “collection proof” – because, even if you have a judgment against you, the creditor can’t collect it from your exempt assets. So if you have debts you can’t pay after you retire, or even if there is a judgment against you, why should you care? Here are two very important reasons:

 

       *  Creditors are shameless and relentless. They never give up trying to get money

           out of you. They call, send mail, and use every means to get your attention. To

           an older person who may be in declining health, or barely able to make ends

           meet every month, the constant harassment by creditors takes a heavy      emotional and physical toll.

       *  Creditors will often get judgments against you. You must respond to the Notice

           or Summons you receive from the court. If you do not take action, the court may

           very well authorize a levy or a freeze on your bank account. The county sheriff

           in your county is responsible for carrying out the levy, by ordering your bank to

           freeze your account and/or pay the debt out of your account. Neither the sheriff

          nor the bank may know that all of the funds in your account came from pensions

          or other exempt income. Once a freeze is in place, it can take weeks or months

         to get it reversed. In the meantime, your money is out of your reach.

Creditors can ruin a retiree’s life in ways that are far worse than their effect on younger people. Seniors have few chances to go back to work to pay off debt. There is little or no prospect of their paying off their debts in their lifetime. Credit card debt, in particular, grows rapidly, as retirees pay higher interest on interest over the years. A lien on a senior’s home to pay off that inflated debt after death often means there is little or nothing left to pass on to their children or grandchildren.

For retirees caught in the clutches of creditors, bankruptcy is often a good solution.

It usually wipes out credit card, medical and other unsecured debts, and makes it possible for most people to again manage their everyday living expenses within their income. A huge relief and peace of mind make a fresh start possible for seniors.


Wednesday, April 22, 2015

Money Matters

I handle estate planning for people who have a handful of assets, tons of assets, and everything in between. Other people have serious financial problems, and I help them file bankruptcy, so they can get a fresh start. And some folks are married or registered domestic partners and need me to file for a dissolution of the relationship. Whatever your fortune or misfortune, money and other assets are usually the focus of my work. Here are some notes and suggestions that can help protect what you already have, or regain a solid footing when you need it:

 

  • Finding Money:  You or a family member may have money waiting for you.

    Unclaimed monies must be turned over to the state by financial institutions and

    other companies. The state then must try to find the rightful owners. There is no charge to check these two official websites to search for unclaimed property:

     

    www.Unclaimed.org            www.MissingMoney.com

     

    Be wary of companies that charge you or send “special offers” to locate funds for you. Some are legitimate, but some are not. Check the above websites first.

 

  • Finding More Money:  Did someone pass away recently? Could you be the beneficiary of a life insurance policy? To get any information from insurers, you must have the authority to discuss the matter with them. You must be the executor or administrator of the decedent’s estate, a member of the immediate family; or have written authorization from that person for the insurer to release information to you. You will need a certified copy of the death certificate and as much information as you can find about the policy itself. Contact the insurer’s main office to see if they are permitted to talk to you as a possible beneficiary. If the death was a long time ago, it is likely that the funds have already been turned over to the state and will turn up on the websites listed above.

 

  • Marrying for Money:  When you marry or register as domestic partners in California, look carefully at both of your financial situations. You each bring

separate property to the union, and can choose whether to keep all of your property separate, or co-mingle some or all of it. What you acquire after the union

will usually belong to both of you as community property. You can choose how to identify all of your property by creating a pre-marital or post-marital agreement.

 

  • Splitting Up Money:  Sometimes things just don’t work out. You married,

    registered, or were in a committed relationship, and now you want out. Were you smart and signed that pre- or post-marital or cohabitation agreement? If you did, your path to single life should be fairly smooth. Everyone is clear on who owns what and who gets what when the relationship ends.

     

    Forgot those agreements in the thrill of romance? Unless you both agree completely on who is entitled to all the assets and debts, your escape from the union is likely to be painful. To dissolve a marriage or registered partnership, each person must provide very detailed financial information and documents that will serve as a basis for the two of you and the court to determine what is a fair settlement of your property. If your partnership was simply a committed relationship, it is not recognized as a union in California, and you and your partner must sort things out by yourselves. A civil lawsuit could be filed to try to settle disagreements, but the process is very complex and expensive.

 

  • Erasing or Reducing Debts:  Financial problems can hit any of us, any time.

    Student loan debts drag many of us down. Although most of these debts can’t be discharged in a bankruptcy, some can be reduced or forgiven through various programs. Get a job in public service, government or with a non-profit entity. Join the military. Apply for the Income-Based Repayment Plan. For certain student loans, become a public school teacher in a low income area. There are many other forgiveness programs that could help. Check first with your loan provider, who should be able to identify the programs that might work for you.

 

Housing debts are a major contributor to bankruptcies. If your mortgage is more than the value of the property and it is tough making the payments, it is possible the lender will foreclose and you will lose your home. There are several good refinancing programs available now. Check with your lender for options.

 

If refinancing doesn’t work, and you are in genuine financial distress, consider

bankruptcy. It can often stop an imminent foreclosure, help reduce or wipe away your other debts, and make it possible for you to retain your home and start off with a clean slate.

 

  • Giving Away Money:  Many folks give gifts to family members and charities. There may be tax consequences for these gifts, and it is crucial that you check with your tax professional to review these first. When choosing charitable organizations for your gifts, do careful research. Are they well-managed and are  they actually accomplishing what they set out to do? Use these websites to learn:

    www.CharityNavigator.org    www.Guidestar.com    www.MinistryWatch.com


Wednesday, March 25, 2015

When Life Throws You Questions, You Need Answers

A new year is ahead of us, and some of these real-life questions and answers may help you make and keep resolutions that will pay off in the future:

 

Question:  Joanne and Marie are planning to marry in January. They know they need a marriage license from the county clerk. Is any other paperwork required before they can have their wedding ceremony?

 

Answer:  No other paperwork is required by the state or county, but there are several important issues that should be reviewed by the couple before they marry. When their status changes from single to married, many of their rights and responsibilities will change, too. Ownership of assets like a home, bank and investment accounts, and beneficiaries of retirement funds, insurance policies and annuities may need to change. There may be tax advantages and disadvantages that need to be considered. It is wise to sign a pre-marital agreement that spells out who owns what. This new chapter in their lives needs a rock-solid legal and financial footing. The marriage license is just a piece of paper – the icing on the cake.

 

Question:  U.S. citizens Sammy and Dejohn were live-in partners for 2 years, and decided to jump on the marriage bandwagon in Palm Springs last year. Everyone was doing it. Now, things are falling apart, and they are going their separate ways. Dejohn is moving back to his family’s original home in Jamaica, to settle down there near his relatives. Since Jamaica doesn’t recognize same-sex marriage, is Sammy still married, in case he wants to marry someone else in the future?

 

Answer:  The two guys are still married under U.S. laws and those of many other countries. They should file for a dissolution and move on. Bigamy is never a good idea.

 

Question:  Calvin and Greg are in their 60’s and have lived together for 24 years.  Recently, Greg had a stroke, is developing some memory problems, and is not fully able to care for himself. Calvin is taking physical care of him, but Greg’s sister is handling his medical bills and personal paperwork. Recently, she brought over some papers, which she persuaded him to sign. Then she told Calvin that Greg had given her authority over all his finances, and she is going to make some major changes in his bank and investment accounts. Calvin is really concerned, because he and Greg have several joint accounts and own the house together. What should Calvin do?

 

Answer:  If this couple ever registered as domestic partners, or married each other, it is likely that Greg can’t give away spousal rights just by signing a paper. Also, Greg can’t sign over the joint ownership of the home and bank accounts.  However, in joint accounts, either owner is entitled to use of the whole account. Technically, if the sister is now Greg’s legal agent, she could take all the funds out of the bank accounts, leaving Calvin with nothing. Calvin should consult an attorney immediately, to find out what he  can do to protect his share of the assets. And definitely contact the local elder abuse authorities – it is possible the sister used undue influence to obtain control of Greg’s finances.

 

Question:  Wally and Susan’s mother was a smart lady, and she created a simple Will for herself on her computer. As assets, she listed her house and personal property, including 2 antique cars, some valuable art pieces and jewelry. Wally, Susan, nephew Randy, and 3 friends were listed as beneficiaries, with the items each would receive. She signed the Will, had it notarized, and put it away in her safe deposit box, where it was found when she passed on 12 years later.

 

Mother named Randy as executor in the Will, and as required, he petitioned the probate court to give him authority to manage her estate and distribute all her property. Everyone was shocked to learn that the Will wasn’t valid. California Wills require at least two disinterested witnesses, not a notarization. Aside from that, the list of assets was sorely out of date – in need of money, mother had disposed of many of the items over the years, including most of the personal property promised to her beneficiaries. And 2 of the 3 friends had passed away. The Will said nothing about what would happen to their bequests if they departed. And mother’s house now had a reverse mortgage, and no equity left in it at all. What more could go wrong?

 

Answer:  Wills must meet very specific requirements to be valid in California. In spite of her intelligence, mother made several critical mistakes: the most obvious were not knowing the legal requirements for a valid Will; not providing for what would happen if named beneficiaries passed away before she did; and not updating her Will regularly to keep the list of assets and property current. Now, Randy must ask the court to probate an “intestate” (without a Will) estate, and appoint him administrator to pay off debts and distribute any remaining assets to the statutory heirs, who, under California rules, are normally the next of kin. Wally and Susan are mother’s closest relatives. Randy is farther removed, so he and the remaining friend have no right to inherit anything.


Wednesday, March 11, 2015

So You Agreed to be a Trustee - Now What?

We help lots of clients with their estate plans, crafting Wills and Trusts and other documents that are designed to protect people and their assets. A revocable living trust is often a good choice because it provides for the smooth transfer of property if the owner becomes incapacitated or dies. It usually avoids handling the estate through a probate court, which is a public process that can be very costly and time-consuming.

 

For every trust, there must be a trustee  -  the person who is authorized to manage and control all the property in the trust. In a revocable living trust, the initial trustee is usually the person who created the trust (called the grantor or settlor) – the owner of the property transfers everything into the name of the trust, and then controls it as the trustee. A great advantage of a trust over just having a Will is that a successor trustee takes over if that person becomes incapacitated or passes away, and there is no need to go to probate court to have someone appointed. The successor trustee continues to manage the property in whatever way the terms of the trust require.  

 

For single individuals, or partners who are not married or registered domestic partners, the choice for a successor trustee is usually a relative, partner or friend. These people agree to be the trustee if and when something happens. Although the estate in a trust may not need to be probated, California has strict legal requirements for the performance of trustees and the management of trust property. It is very important that a successor trustee understand the role he or she will play, and the rules that must be followed.

 

Trusts can range in value from a few thousand to many millions of dollars. As you might expect, a successor trustee’s time and effort will be proportional to the complexity of the estate. But the legal requirements are the same, regardless of the value of the estate.

Most important is the responsibility of the trustee as a fiduciary – managing the assets in the trust for the benefit of others. Heirs and beneficiaries are usually named, and the trust states how the assets of the estate will be divided up among them after all bills are paid and other requirements met. The trustee is responsible for conserving the assets, growing them, if possible, and delivering the assets to the beneficiaries.

 

Most trustees are ordinary folks who have no experience with managing estates for other people, so they usually retain an attorney to help them administer the trust. Lots of details must be handled over a period of months or years. An estate planning attorney is familiar with all of the duties spelled out in the Trust Administration sections of the California Probate Code, and can assist the trustee with all of those administrative tasks.

 

Whether the trustee has an attorney or not, it is essential to document everything that happens. Notices of the trust administration and copies of the trust document must be sent to all beneficiaries and heirs. The estate must be valued on the date of death, which may require professional appraisals of personal and real property. Liquid assets such as cash, bank accounts and money market funds must be transferred into a trust account. All valid bills, invoices and other creditor claims must be paid out of this account, along with any expenses for maintaining property or administering the estate.

 

Account statements must be kept in order and reviewed regularly to track the continuing value of the estate. Investments need to be managed to avoid or minimize any losses. If there is real property, it may need to be sold and the proceeds deposited into the trust account, or be distributed directly to beneficiaries before the trust administration is closed.

 

Once all debts have been paid, and all assets are in the form required for distribution, there is usually a final accounting. This details everything that happened to estate assets from the first valuation on the date of death to the current date. Unless they waive it in writing, all beneficiaries and heirs are entitled to an accounting at least once a year. If the trust administration continues into additional years, an interim accounting must be sent out at the end of each year, and the final accounting is done just before distributions are made.

 

If the trustee does not have an attorney, it is strongly recommended that a CPA or other accounting professional be retained to prepare the accounting and handle the filing of required personal and estate tax returns. Failure to follow tax laws can result in serious losses to estate assets and to beneficiaries and heirs. 

 

Finally, distributions are made according to the terms of the trust. The trustee will write checks on the trust account for cash bequests, and transfer other personal and real property as required. At this point, the trustee may write a check to himself or herself for serving as trustee and administrator of the estate, if the trust terms permit it. The amount will be stated in the trust, or if not, will be determined by local customary fees based on the trustee’s detailed records of hours spent and tasks performed.

 


Friday, September 26, 2014

Same-Sex Marriage: Down the Primrose Path

It’s been a year since the landmark U.S. Supreme Court decision allowed federal recognition of same-sex marriages. The LGBT community is still rejoicing, and with great energy, is pushing ahead for equal rights in all the other aspects of our lives. 

 

What have I seen in my practice this year? Many committed same-sex couples getting married - some quietly, some with joyous celebrations, and a few with reckless and thoughtless abandon. Most have lots of questions about what the legal and financial effects of marriage will be. Those who have come to me for answers are eager to “do things right” and protect themselves and their future. Some who rush into marriage without thinking, or without understanding the consequences, may not make it into the future together.

 

Here are a few of the questions and issues I have worked with recently:

 

  1. If we marry, does everything we own become community property?

    That depends on how you own the property before you marry, and how you

    agree to acquire new property after you marry. Do you already have joint bank

    and investment accounts? Do you own your house as joint tenants? Do you

    share legal title on your car? It is likely that these will be considered community property once you marry. If you are Registered Domestic Partners, you are already subject to community property rules, and marriage will not change that.

 

  1. We own a checking account together, and furniture and things in the house, but we want to keep our investments and other property separate after we marry. I want to stay owner of our house. How can we do that?

    The very best way is to create a pre-marital agreement that clearly identifies each person’s separate property and the couple’s shared property. This agreement will also state who will own new property acquired by either or both after marriage. Both partners agree that all property will be covered under the agreement during the marriage. And if there should be a breakup in the future,

    there will be little or nothing to argue about when dividing up their assets and debts. A pre-marital agreement usually must be signed by both parties at least seven days before the date of marriage, so it is not something that can be put off until the last minute.

     

  2. We just want to be sure that once we are married there won’t be any problems with everyone recognizing that we are now legally responsible for each other.

    You will have your marriage license, if anyone asks. But in most states in the U.S., this will be meaningless. In spite of federal recognition of same-sex marriages, they are only legal in 19 states and the District of Columbia right now. In all the other states, lawsuits are pending, but will not be quickly resolved. If you travel to other countries, most do not recognize marriage equality at all, and some criminalize homosexual behavior of any kind.

     

    For legal protection, married and unmarried same-sex couples should have all the important documents that spell out the rights of partners and spouses to make personal and medical decisions in case of emergency, incapacity or death.

    At a minimum, there should be an Advance Health Care Directive, and a means to provide this immediately to medical and other professionals in an emergency.

     

    You may not want to carry the actual documents around with you all the time, so there are some excellent organizations that store them for you electronically, and can provide them 24/7, any day of the year. We provide this service to most of our clients.  You are issued an emergency access card, the size of a credit card, to carry in your pocket or wallet. It provides the information necessary to access your documents right away. This can give partners and spouses a solid legal foundation for their relationship, and peace of mind, no matter where in the world they might be.

 

  1. My old partner and I were Registered Domestic Partners (RDP) years ago, and then split up. Now I am going to marry my new partner. Will this be a problem?

    Unfortunately, yes. You are not free to marry a different person until your RDP is terminated. In nearly all cases, you are required to file for a dissolution (divorce), just as if you had been married. You must file a petition with the court, and go through the process of serving notice to your old partner, dividing up assets and debts, and agreeing to a settlement of your affairs that the court will find is fair for both of you. A dissolution can take anywhere from 6 to 8 months to a year or two, depending on the amount of cooperation between partners in getting all the paperwork filed, and any disagreement as to how to settle things.

     

 

 



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