New Year’s Resolutions

Most of us make them, right?  For the new year I will go to the gym every day, not miss a single of my kid’s soccer practices and…, for many people, FINISH MY ESTATE PLAN!  It is amazing how many people tell me that they talk about doing their estate plan every year around New Year’s Resolution time… but never finish it.  My approach to New Year’s Resolutions has always been to have some resolutions but I try to start enacting them as soon as I think of it. Why wait for January 1st?  Why not start today!?

For example, two weeks ago I realized I had become sloppy in my return of phone calls and emails.  That is, many attorneys belive it’s acceptable to return a client’s phone call (or email) within 24 hours of receipt.  I have never felt that is acceptable. However, over the last couple of years the number of calls and emails has piled up and, at times, I have taken up to 24 hours to reply. That is not acceptable. I want to be an exceptional attorney and not merely an average one.

With the above in mind I have made a New Year’s Resolution to return all calls and emails within 3 hours of receipt.  I am not waiting until January 1, 2010 to start this resolution… I am starting now!  Feel free to email me to see if I am able to meet my goal!

For you, the person looking to finish (or update) your estate plan let’s get it done NOW!  You say it can’t be done, you are too busy, it takes too much time, you don’t know all of the answers… [insert your own excuse here].  I don’t like to tell clients they are wrong but you are wrong. We can get your estate plan done this year! Contact me at once so we can make it happen.

If you contact me by December 15th we can make this happen THIS YEAR. How would it work? We will set a meeting, in office (or on the phone) to discuss your situation.  We would meet around December 16th or 17th for that conversation.  That would be about a 45-60 minute meeting.  I would then prepare a rough draft of your new estate plan the following week and mail (or email) it to you so that you have it in hand by December 24th.  You then have a long weekend to review the documents. In reality you will need about one hour to sit down and review everything. Two hours if you are detail oriented.  You would contact be by Tuesday December 29th with changes and questions.  We could go over those on the phone.  I would make the changes and we would sign final documents on December 30th or 31st.

That’s right, you can put an estate plan in place now and thus check off a New Year’s Resolution NOW before the new year is even here.

Your new estate plan may help you minimize or avoid taxes after death which, at 45%, can be a huge financial burden to your loved ones.  Your new estate plan will most certainly avoid probate, which at about 4%, can be very costly and is always very time consuming!  Even an efficient probate attorney, like myself, can not complete a probate in less than 7 months. The Court time-lines make it impossible to be shorter than 7 months.   An inefficient probate attorney can take one to two years to finish a probate. .. or longer!  That sounds like something to avoid so let’s get your estate plan done!  Also, if you have minor children do you want to make sure they live with your chosen guardian and that your money, including life insurance, is held in trust for your kids benefit? I KNOW you do!

Let’s meet now to get your plan done before you watch the ball drop on New Year’s Eve!  Call me!  Make sure to mention you want the New Year’s Resolution special so I know what your timeline is!   -John

P.S. Happy holidays and I hope your 2010 is happy and healthy!

HOT topic in Estate Planning

What’s the single hottest topic in California estate planning?  Here in Sacramento foreclosures are a popular topic but not so much for people with assets.  Estate tax law changes are always in vogue for people with money.  However, the number one hottest topic, the numero uno point of concern, the biggest area of questions is in the area of asset protection.  The questions start like this, “I have some assets and no immediate threat of a lawsuit but I want to protect my assets.  What can I do?”  I am NOT an “asset protection” attorney if you are in trouble like OJ Simpson.  He probably moved most of his assets to some lawless island nation because the risk of moving his assets to said lawless island nation was less risky than Mr. Goldman tracking those assets down.  In fact, Mr. Goldman is probably still going island to island searching for OJ’s assets and probably eventually will find a way to crack the laws of that lawless island nation.  If you are in a predicament like OJ do NOT call me.  However, if you are a regular person, with some assets, and you wish to minimize your exposure to liability risks please do call me because there are things we can do for you.  Today I am going to talk about a couple of very popular and simple things that can be done.

The easiest estate planning tool, that provides some asset protection, is a Qualified Personal Residence Trust.  This is also known as a “QPRT” which is pronounced Q-pert.  A QPRT is an irrevocable trust.  This means you effectively have GIVEN AWAY the assets put into the trust upon creating the trust.  As the name indicates a QPRT is usually funded with a… personal residence.  It actually can be created with multiple personal residences so for you people with a house at Lake Tahoe or a home at Sea Ranch you can do a couple QPRTs.  How does a QPRT work?  Well, a QPRT is simple a reservation of a life estate in your house with the remainder going to your kids (or other chosen beneficiary).  There can be substantial estate tax reduction by use of a QPRT.  Many people are concerned about giving away property but with a QPRT you retain the right to live in the house, the right to switch houses, the right to an income stream if you sell the house and don’t buy a replacement, and in general many of the rights of ownership. However, it is generally going to be protected from claims of your creditors!  If you want to hear about the mechanics of a QPRT send me an email and we can talk more about it to see if it would be appropriate for you.

A second popular estate planning tool which gives some asset protection is a Family Limited Partnership.  These are also known as “FLP’s” or “FLiP’s.”   We actually use LLC’s now days but they have kept the LP moniker.  Either way you are setting up a business entity, akin to a corporation, to shield assets from creditors.  You then, with the aid of a knowledgeable attorney, break off small interests which go to your kids (or other chosen beneficiaries).  I often recommend putting the kid’s shares into an irrevocable trust to give them additional asset protection.  There can be substantial estate tax savings by the use of an FLP.   This tool is not right for everybody but if you own rental properties, commercial real estate, a business, a farm, and certain other assets an FLP can be an incredible estate planning device to use.

A third popular way to plan your estate, while creating asset protection, is by use of a life insurance trust for your spouse.  That is, you set up an irrevocable life insurance trust (“ILIT”) for the benefit of your spouse and children (or other chosen beneficiaries).  If it’s set up right you get around any issues related to the community property nature of your premium payments and can set up large sums of money to pass with very strong asset protection for your spouse.  That is, your creditors and those of your spouse would have a very difficult time knocking down an ILIT to get at the money sitting inside it.  As with the above devices using a knowledgeable and experienced attorney is crucial here!

All of the above are useful tools to help bolster your personal empire.  They are NOT impervious walls.  Rather each device you put up in another obstacle that a potential creditor must get around.  The number one key with “asset protection” is to do it early and hopefully before any creditors are even on the horizon!  I would love to talk about the above plus other things you can do… or maybe already are doing (pension and 401ks are often given almost impervious protection).

Contact me at once if you want to talk about how these estate planning techniques can help you and your family!

-John Palley

First Post

What does one say for their very first blog?  Many times over the years I have had legal issues arise that I felt others would want to hear about.  I have discussed complex legal issues that I thought other people would want to know about.  I have seen personal, intra-family, situations where people fight over the proverbial toaster. I want others to hear about the situation (without names of course) so that hopefully they won’t make the same mistake when their loved ones die.  I have seen poorly drafted estate planning documents and thought it would be great if I had a place that I could easily tell the world what to look out for in their own documents. I have witnessed situations in Court that I felt others would want to hear about.  Practicing in the area of trust, estates and probate since 1994 I have seen a lot of situations come across my desk.  I want to tell YOU about them.  I thus start this blog with all that in mind.  Bear in mind I am not just some newbie attorney with tons of time on my hand. I am a highly experienced attorney who has an entire law practice dedicated to the areas of wills, trusts, probate and estate planning. I am a Certified Specialist in Estate Planning, Trust & Probate Law as determined by the State Bar of California Board of Legal Specialization.  This means I took a second bar exam only in the area of trust, probate and estate law.  I will tell you more about that in coming days.  I also have been rated “AV” by Martindale Hubbell which is the highest honor they bestow on attorneys.  I should say that I have had some writing experience that was similar to blogging.  For much of 2009 I was the Sacramento Bee’s trust and estate planning “expert.”  In that capacity I answered reader’s questions on-line, at and in print in the Sacramento Bee.  I am certainly happy to entertain questions here so please feel free to submit questions.  I will generally reply, priviately, by email. However, if you would like your question and answer shown on this blog just let me know.

Ratings and Reviews

10.0John Bernard Palley
Wealth Counsel Member
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