Don’t call it “asset protection”

I was just reading about a new California case that cut into the asset protection world a little bit.  It’s the case of Kilker v. Stillman, 2012 WL 5902348 (Cal.App. 4 Dist., Unpublished, Nov. 26, 2012).

Asset protection, in most cases, is simply estate or asset planning that happens to include some protection elements to it. For example, creating an irrevocable trust has some creditor protection elements to it but the purpose is NOT asset protection. Rather the purpose is tax planning generally.

If one sets up a trust for the purpose of avoiding creditors the Courts do not like that. In fact, it can be construed to be a fraudulent conveyance and the whole transaction undone.

The Kilker case involved a person that created a Nevada trust for asset protection and told everybody that was why he set it up. In fact, even on the witness stand, when being sued, that’s what he said.

Mr. Stillman also, it sounds, set up the trust himself rather than with the aid of an attorney. I don’t think I need to finish that thought for you.

So, set up irrevocable trusts, LLCs and other estate planning devices that have creditor and asset protection elements to them… but do NOT go around telling everybody that’s what you did!

If you want to talk about advanced ESTATE PLANNING let’s talk!  -John

Timeshares and estate planning

Client’s often ignore their timeshare. They typically cost much more than they are worth but you should not ignore them when doing your planning. Failing to properly plan for your timeshare can leave your loved ones with a big pain in the neck… in addition to the ongoing maintenance fees!

I deal with dozens of probate and trust administration cases per year. That is, cleaning up affairs after death. Cases with timeshares often have extra headaches.

Do not ignore your timeshare. If you have a living trust transfer the title to your trust. This often costs extra money (especially in states like Hawaii) but it’s worth it!

Talk to me about planning for timeshares or cleaning up after the fact. -John

Thomas Kinkade Estate Dispute Settled

It’s amazing how poorly planned many celebs are. Thomas Kinkade’s estate debacle was yet another in a long line of messed up celebrity estates. The Sacramento Bee has reported that it has been settled privately. Here is a link to the article.

10 requirements to close a probate

“My brother is taking too long to close my dad’s probate….”  I hear statements like this a lot.  Many times they are correct but many times they are not. The purpose of this post today is to give you 10 things to look for which need to be done for the probate to be closed. I am aiming this post at you as a beneficiary of a probate rather than the Executor. However, if you are wondering what your attorney should be doing then these factors may help you as well in administering a California probate case.

TEN requirements to close a California Probate:

10. At least 4 months have elapsed since the date letters were issued by the Court;

9. At least 60 days have elapsed since the last notice to creditors was sent;

8. At least 90 days have elapsed since notice to the Department of Health Care Services (aka: Medi-Cal) was put on notice of the probate;

7. At least 90 days have elapsed since the California Franchise Tax Board (FTB) was put on notice of the estate administration;

6. All heirs at law have been determined if there is an heirship dispute;

5. All assets have been marshaled and inventoried with the Court;

4. All assets have been sold if required;

3. All taxes have been paid;

2. All creditors have been paid;

1. There are no known, or expected, disputes which may arise.

Yes, there are more but these are ten KEY factors or requirements to look for before a California probate estate can be sold.

Still waiting on new estate and gift tax laws

I just read this article in the Sacramento Bee that I found interesting.  It focuses on the income tax side and what the two sides are working on in DC. They claim they are close. The bigger question for me, and my clients, is what will the gift and estate tax exemptions be!?

I’ll be interested to find out. I’ll keep posting as I hear more….


Give the gift of estate planning

The new toy, the new tie, the 1/2 day at the spa… they are all soon forgotten. However, do a solid estate plan and the gift will give every year for EVER and that’s a long time!  Tell your kids you have updated your estate plan and if your kids don’t have an estate plan wrap up a gift certificate to get it done. I’ll be happy to prepare a classy looking gift certificate for you! -John

Do you charge for changes to my trust or will?

Every lawyer and every law firm does things differently in terms of charging for changes to an existing will or trust. For example, I have heard some lawyers say they will not charge for changes for life. Is that your life or their life, I wonder!? What if they retire next week? Does somebody else take on the free changes?  On the other hand I have heard some that charge for changes even at the rough draft stage.

There is no right “answer” but rather I think it’s important that you know what YOUR attorney charges. You should know this BEFORE you hire them.

Many years ago I determined that the best practice for my clients was to offer NO CHARGE FOR CHANGES DURING THE FIRST YEAR. This is not exactly 365 days of course. I have had clients come in after 13 months and I have gladly made changes for no charge. It’s just an approximation of one year. My feeling is that I want you to sign your documents because in almost every single case a signed estate plan is better than no estate plan. I thus want to encourage people to sign their documents even when they are still debating some small issues. GET IT DONE is my motto for clients!

As I have told clients in recent weeks if they sign their documents now they won’t have to pay for changes until 2014!

What about after that? Well, I typically charge existing clients very modest fees for changes. A typical change will be billed at 1/2 to 2 hours of my time depending on how involved and how many documents are being changed. Often it’s a very simple deletion of a name in one document so a 1/2 hour charge is normal. On the other hand some people need to modify all their documents so a 2 hour charge is more likely. There are rare cases where it can be more more than that of course. It just depends but I will always try to tell you up front so you know what you are about to spend.

Of course even better than all that… how about we create really flexible documents that do not need to be changed!? That’s my goal when I set up an estate plan. Back up plans, contingency plans, and the like so that your plan will not have to be changed!

Contact me to discuss your case. -John

How quickly can I close probate?

I hear this question all the time: “How quickly can I close probate?”  Or they will say, “letters were just issued by the court… so now much longer until probate is over?”  Or, “so my dad just died can we end the probate by next month?”

The simple fact is probate is 7 months minimum from start to finish. There are occasionally things to be done to shave a few days off here or there but basically it’s 7 months. Here’s a link to the California probate timeline.

Thus the question, or should I say the answer, depends on another question… did you file for probate yet? That’s my question to you. Did YOU file probate yet?  Once it’s filed, absent unusual circumstances, we should be able to finish your probate in about 7 months.

There are times when it’s better to wait longer but generally speaking 7 months is good.  However, in cases with creditor problems, tax issues, and heir disputes then longer may be required.

So, again the question really is HAVE YOU FILED PROBATE YET? That is, have YOU started the process? From there you can look at the probate timeline and determine how much longer. However, if you haven’t filed yet then it’s going to be at least 7 more months!

I thus encourage you to get your probate started. We can always keep it open longer than 7 months but we can’t shorten it. The sooner you start the sooner you finish!

In the coming days I will answer the question how fast can probate be filed!?

What to expect at your first meeting to discuss your estate planning

It can be overwhelming to some to hire an attorney. They don’t even know what will happen at the first meeting. Here are some thoughts so you know what to expect. A few steps:

– Pick up the phone and call us for an appointment.

– We can usually get you in for an appointment within a week and often within 24 hours.

– We have offices in Sacramento and Roseville so you pick what’s best for you.

– We treat our initial meetings as an opportunity to provide education. That is, education on the estate planning process and what will happen during the preparation of your customized estate plan.

– However, we don’t just give you generic education we give you education that is tailored for YOU! That is, we talk about the estate planning options but with your estate specific assets and family in mind.

– We want to give you guidance about you, your family, your assets so that you leave the initial meeting feeling that you learned a lot… whether you hire us or not.

– We will walk through the steps of the estate planning process so that you know what will happen.

– We will explain everything so that no surprises will come up.

Let us show you how easy the estate planning process can be!

It’s not too late for 2012 BIG gifts

The folks in DC are still twiddling their thumbs, posturing, or just out playing golf!? So nothing new has developed out there and thus the fiscal cliff is coming. The loss of the greatest gift and estate tax exemption of my lifetime is about to sunset into history. Will we look back on 2011 and 2012 as historic years in the gift and estate tax world?

In the past week I have met with four different clients with net worths around $20-25m. In our little practice, in little old Sacramento, these are pretty wealthy people. All of them wanted to talk to me about taking advantage of the 2012 tax laws before it’s too late. The GIFT that is the 2012 gift tax exemption. The gift that expires in 27 days. To say it’s not too late is a stretch in that it’s not too late if you start TODAY or maybe tomorrow. However, the longer you wait in the month the harder it will be to put together a truly tax efficient plan.

We might be able to throw something together on December 20th or so. However, it will not get the benefit of a minority and lack of marketability discounting study done by a forensic accountant. That is, they won’t have time to do their job. However, we can still do things like gift 50% of a parcel and get a 15-20% discount through a tenancy in common (TIC).

The key is planning ahead. Yes, you should have called me 6 months ago. However we can still save your family MILLIONS in estate tax so call us, or another qualified estate planning attorney, today.

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10.0John Bernard Palley
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