Flat Fee Probate Court Attorneys

Ethics are important to us and thus our hourly fee time is carefully noted in our time keeper program. However, some clients just do not like hourly fee arrangements. They want to know exactly how much they are going to spend.  We have heard the request many times and now we can offer FLAT FEE PAYMENT OPTIONS in most California probate Court matters.

Flat fee payment options are available for most all probate court work including:

– Under $150,000 probates

– Spousal property petitions

– Trust petitions

– Heggstad petitions

– and the list goes on.

If you have the need to file in a California probate court and want a FLAT FEE that you know about BEFORE the work starts let us know!

California Probate Form DE-147 Duties and Liabilities of Personal Representative

California Probate Form DE-147 Duties and Liabilities of Personal Representative is an essential form needed to get Letters issued.  In it the purported PR agrees to a number of things that relate to the fiduciary duty that the Administrator/Executor will be accepting. This includes the need to insure property, care for property, and other things and when in doubt CONSULT AN ATTORNEY!  That is on the actual state prescribed form which tells me most people should use an experienced probate lawyer to navigate the California probate process.  Again this form has to be filed BEFORE the Court will issue Letters so it is essential!   Let me know if you have any questions about this or any other probate form. -John

Trust Funding is critical

A lot of people create a basic estate plan. They have a will, trust, power of attorney for finance, medical directive, general transfer, certified extract and in some cases other documents too.  In some cases they take great care to plan their trust out. They think about who should be the trustees. They think about what ages money should be distributed to their kids or maybe even held in trust. They ask questions about their spendthrift clause, the S-corporation clause and the no-contest clause.  They sign it with the notary and feel good about themselves. They feel they can check it off the list. However, they CAN NOT check it off the list. The trust funding has not been done yet and that is critical.  That is, GETTING THE ASSETS INTO THE TRUST.

Most good attorneys, and even some others, will do the quitclaim or grant deed of the house, or other real estate, to the trust. This will include the preliminary change in ownership (or “PCOR”). Of course don’t forget your timeshare, vacant lot in Palmdale or 1/4 interest in the family home in Ohio. Get ALL your real estate into the trust.

Beyond that though you need to contact every bank, stock brokerage, mutual fund, financial institution, credit union and others to get those accounts transferred into the trust. It’s crucial to avoid unnecessary paperwork and attorney fees after death.

Then do a change of beneficiary on your life insurance to flow it into the trust.

Lastly, is retirement accounts. Trust funding with retirement accounts is a little different than the above. It’s a bit more of a loaded question. Each client is unique and many types of retirement accounts have different rules. However, as a GENERAL RULE here are some guidelines to consider for funding your IRA, 401k, 403b, pension, and any other retirement type asset or “qualified” money. We typically recommend the spouse as the primary beneficiary as that will be easiest in most cases and provide the best options for the surviving spouse. If your children (or other chosen beneficiaries) are minors, or not as responsible adults as you would like, then name the trust as the contingent beneficiary.  If your children are adults and responsible then it might be best to name them as the contingent beneficiaries. However, these are just general rules. There are so many variables to think about.

The key is working with a qualified California trust lawyer to get your trust set up AND funded properly.

Let’s talk about your trust funding!  -John

California Probate Form DE-140 Order for Probate

California Probate Form DE-140 Order for Probate is a crucial form in the California probate process.  It is a California Judicial Council form of course.  It is THE form that the Judge signs to officially state when you become the Administrator or Executor (collectively the Personal Representative) of the estate.  The form provides if you are Executor  or Administrator (generally speaking will or no will), if you can have access to cash, if a surety bond is required, if you have authority under the Independent Administration of Estates Act, and if there are any special or specific powers. The Judge signs it and then you can get Letters issued. Letters are form DE-150 and that will be discussed in a coming blog post.

2012 Gift Tax Exemption – MAKE GIFTS NOW!

This blog post is a modification of a letter I sent to an actual client recently. I have generically made it available to all high net worth families here. Of course if you want me to review your estate, or your loved one’s estate, let’s talk about YOUR options personally!

Dear Sample High Net Worth Client:

Thank you so much for coming into my office on April 1st to talk about your estate plan. I have reviewed the value and basis numbers given to me by your accountant and provide the following review.

Let me start by saying that I have absolutely no idea what the federal gift and estate tax exemption will be going forward.  Having said that, I do read a lot and go to a lot of estate planning seminars but I really do not “know” what the law will be.  Also, to state the obvious, we do not know when you will die or what your assets will be worth at that time.  The laws are very uncertain to say the least.  Any action you take has to include considerations for gift, estate, income and even property tax; along with the personal analysis that must be factored in to any estate planning choices.

As we discussed under the current tax law you can gift during life or death (in combination) $5.12m tax free.  Your current total estate is about $8.6m in the calculations from your CPA but that includes $1.6m on your husband’s side of the trust (the B trust) and $7m on your side of the trust (the A trust).  It’s the $7m that I am focusing on here as those are the assets that could be taxed when you die. 

As of today you can give away $5.12m but as of January 1, 2013 the law is set to revert to $1m.  The amount above $1m would be subject to tax at 35% and thus a potential tax bill of about $2,500,000 at your death.  Let me clearly state that if no action is taken by our friends in Washington DC the law will revert to $1m. That’s the way the law is actually written now.

As I told you one of the key issues with the current tax law is that you can give away up to $5.12m during life or at death.  For the past 10 years the gift tax exemption (during life) was set at $1m while the estate tax exemption (after death) varied between $1m and unlimited. Thus you could die with billions of dollars in 2010 and pay zero estate tax but if you had given away money while still alive that year you could only give $1m tax free.  Thus, the current $5.12m gift exemption is a huge benefit if people can take advantage of it.  However, to really take advantage of it you have to give more than $1m this year. 

Certainly any amount of gift is great as it reduces your estate and, most importantly, gets the future appreciation out of your estate.  Getting the appreciation out is important as that appreciation could be subject to tax at your death if still in your estate.  However, to really get some bang for your gifting buck, and take advantage of the current law, you would need to give more than $1m this year.

As I type that let me state that though the law, if it is changed, might not be changed until after the presidential election we are encouraging clients to act now as we will not have time to help everybody in December. In 2010 when they made the previous huge estate tax law change it was done around December 15th.  That just doesn’t give enough time to help everybody if action is needed.  In fact, we are planning to sending out letters to our entire database of clients and past clients, in the next couple of weeks, which could make us very busy as the year goes on.

In the simplest of terms, if you want to take full advantage of the current law, I would advise you to give away up to $5.12m to the boys this year.  I would encourage you to use two separate irrevocable trusts so as to give the boys creditor protection. I would probably recommend a standard irrevocable trust which would be “defective” as to income so that you would be responsible for the income tax.  That way the trust could stay in tact as much as possible.  You could use other A trust assets as well as the income from the B trust to pay that tax. You might make the boys the trustee and add an independent trustee (non-relative) as a “distribution trustee” who could approve or disprove any distributions.  It gives a small amount of protection to you but it does give the boys added creditor protection for after your death. 

In a way you could say the trusts are really the boys trusts as they would be designed to benefit them.  That is they would receive the creditor protection of a third party trust, which is key, but they would retain control over investments, purchases, and how the money would be distributed at their death.  I do this for a lot of clients and think it is good estate planning.

The biggest “problem” is you would be giving this money away and it would be out of your control. Obviously you trust your boys, or you wouldn’t have come in to talk about your options, but I realize it is a big step.  There are ways to keep more control with you, by using a family limited partnership (or LLC) for example but it adds a lot of complexity and cost.  Additionally, other than the control factor I don’t think your estate needs an FLP.

You could put the house into the boy’s trusts or, what is more common to do, would be to use a qualified personal residence trust (QPRT). A QPRT is an irrevocable house trust that gets the house out of your estate for a reduced tax cost. I believe we spoke about this at our meeting. Basically you give away a future interest in your mom and the IRS lets you take a discount for the current value of that future interest. It’s a very common estate planning tool that a lot of people are using right now.  A QPRT even provides creditor protection for you so it’s a great estate planning vehicle to consider!

Before I go on let me say that there are counter-balancing tax considerations that need to be made.  Under current law when a person passes assets at death there is an estate tax (35%).  However, under current law the assets pass with a “stepped up” basis for income (capital gains) purposes. This step up is really huge as the boys would be able to sell assets, at your death, without any income tax.  I use 25% as an estimated combination of federal and state capital gains tax (15% federal and 10% state) but the federal is set to go to 20% on January 1st.  Yes, there might be an estate tax if you die with the assets but capital gains would be avoided. The point is it’s a gamble!

In conclusion doing the trusts for the boys would be a wise thing to consider but is certainly not “mandatory” due to the counterbalancing tax considerations.  If you chose to not do an irrevocable trust you might think about doing a complete restatement of your revocable trust so as to create creditor protection trusts for the boys for whatever they inherit.  Your previous attorney, though well known, did not set up your trust to maximize creditor protection for your children. 

Please contact me with questions. 


John B. Palley

For Meissner, Joseph & Palley, Inc.

Use that GIFT Exemption NOW

The current federal gift tax exemption amount is $5.12m.  It truly is a gift. I had the pleasure of speaking about this topic to a group of high net worth individuals at Granite Bay Country Club last night. The current federal gift exemption is unprecedented and it’s set to expire December 31, 2012. Our office does a lot of high net worth estate planning. Using the exemption now is crucial to good planning!  There are some great options including setting up a family dynasty trust.  Let’s talk NOW to see what your options are to keep the money in your family rather than Uncle Sam’s family!   -John

California Probate Form DE-135 Proof of Holographic Instrument

California Probate Form DE-135 Proof of Holographic Instrument is used when there is a handwritten will in a probate. That is, when someone is trying to have a handwritten will admitted to probate in California so that letters testamentary or letters of administration can issue.  The form can be filled out by anyone who is familiar with the decedent’s handwriting. This form has to be used when there is a handwritten will in a probate or your probate case will not move forward!

California Probate Form – DE-131 Proof of Subscribing Witness

California Probate Form – DE-131 Proof of Subscribing Witness is the form to use when a will is not “self proving.”  How do you know if a will is self-proving? You look at the witness section which is typically at the end of a will.  If it has language like this it is self-proving and thus you do not need to use DE-131:

“We declare under penalty of perjury that the foregoing is true and correct and that this declaration was executed on April 23, 2012, at Roseville, California.”

The key words are “declare under penalty of perjury” and those are really the words to look for in a will.

If you need help determining if a will you are about to probate is self-proving let me know. If you have a will and it’s not self-proving get a new one ASAP!


Multiple Party Bank Accounts in California

In California a joint bank account, or “multiple party account,” is presumed to belong to the surviving account holder. See California probate code 5302(a) which reads, in part, “…(a) Sums remaining on deposit at the death of a party to a joint account belong to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a different intent.…”   I added the emphasis so then the question is what is clear and convincing evidence of a different intent?

I would say that arguably a written statement, or letter, by the decedent saying they wanted the joint account person added to “help pay my bills” or something like that would be good evidence. Or a will specifically mentioning the account would be good. The key is there is a burden on the person trying to unwind the joint account to show CLEAR AND CONVINCING evidence of a contrary intent. Your work is cut out for you!

Let’s chat about your multiple party account situation.  -John