The 2013 report on America’s most advisor friendly trust companies was released last week. Here is a link to the full article. The article has a lot of informative information about working with a trust company and some of the differences of using trust companies in different states. Also, in that article is a list of 24 top estate planning attorneys including my law school classmate, Steve Oshins. When you want to set up a Nevada trust or LLC Steve is the man to talk to! If you have questions about working with a trust company do not hesitate to contact me. -John
My post the other day with the totally destroyed house here in Sacramento reminded me of another probate house from a few years ago. This one involved an incredible mystery which I will try to get to in the coming days. However, for today I’ll just give you the basic overview and some pictures of the house.
A single man lived in this house. The house was in a quiet neighborhood near Sacramento. He was a retired professor from a major university. The term “nutty professor” comes to mind… though when you see the pictures you’ll realize it was much worse. MUCH WORSE. The pictures below are graphic and rather disgusting. This post is not for the faint of heart.
The house was facing foreclosure when I was hired in early 2009. The nutty professor had died and his family had come in to try and take care of his final arrangements. They told me the house was in very poor condition. I said, “ohhhh, I have seen horrible houses… so send me the pictures. My client warned me, “no really… the pictures are disgusting….”
Well, I got a look at the pictures and yes they were disgusting. I forwarded them to a few friends hoping to find someone that would buy it out of foreclosure to make some money for the estate. We tried to get a Realtor to list it but time was short.
We had no valid reason to file a motion for a temporary restraining order to stop the foreclosure so we contacted the bank and slowed them down. While we slowed the bank down we worked hard to find a buyer. We were ultimately not successful as the house was in too bad of condition that people didn’t want to take a chance. There is uninhabitable and then there is this.
This man, the nutty professor, was actually living here. You start at the front door and it looks pretty innocent right. His Mustang convertible in the driveway….
The front door does not show what’s going on behind closed doors….
The backyard looks fine and even has a pool….
Ok, so the pool is not well kept. I guess the nutty professor stopped paying the pool service!?
It does have a laundry room though….
It also has a two car garage….
Ok, now is where it gets a tad graphic and rather tragic. The above shows a common problem. An elderly person who hoards stuff and doesn’t throw ANYTHING away. That’s NOTHING….
The nutty professor liked movies… are those Betamax tapes!?
There is a fireplace though….
Now the brutal pictures. Remember someone was LIVING HERE!
You still with me? Maybe the pictures aren’t graphic enough for you? Some more information may help to show how disgusting this situation was. Remember this man was a retired professor from a university. There was no running water… i.e. no plumbing. Can you guess what’s in the jugs and cans?
I also see cans of Alpo but as far as I know the man didn’t have a dog. However, let’s hope he did.
You ask, did he not have any money? He was a retired professor with a pension from a major university. Certainly he could have called the plumber at least.
This is the mystery! He had a back tax bill of several hundred thousand dollars but no money in the bank. We researched tax records, subpoenaed bank records and you know what we found? It’s actually REALLY interesting. Come back another day and I’ll tell you!
The below are actual photos of a home we have in a probate case right now in the Sacramento probate Court. These are not doctored images. The problem here is the Executor of this probate estate died during the administration. We were eventually notified and got a new Executor in place to protect the estate. However it turns out to be too late.
It emphasizes why I often encourage people to let a family member or friend live in the house for discounted rent. Protecting the home from squatters is very important. All this damage was done by squatters as far as we know.
Start with this picture. Yes, the house is in a rough neighborhood of Sacramento, Del Paso Heights, but you can see from the home that there is hope for it.
It’s a perfectly nice looking home from that angle. Let’s just say that might be the only photo that could safely go in the MLS listing if you want to provide curb appeal.
Below are what the rest of the house look like. People have been living there. They were evicted but have come back… multiple times. The Sacramento police are surprisingly quick to get out there but these rats move quickly. We are having the property re-secured today.
Remember these next time you think about buying a rental house:
It has a very spacious back yard with a “guest house” or two….
Let me out of this place….
Oh ya, and then the people came back in their luxury “RV” and ran an electric cord to the power box (yes, we are working on cutting the power).
All in all this is what can happen to real estate that is not cared for. If you have a home heading to probate get the probate started, get someone in control, and don’t let this happen to you!
“We aren’t quite ready to finish our estate plan yet….”
“We are waiting to finish one other thing first….”
“As soon as we finish our taxes we will get it done….”
“We want to see how our son behaves the next few months and then we’ll finish….”
Clearly no time is “perfect” for finishing an estate plan and getting your wills, trust, powers of attorney, deeds and other documents into place. However, many clients feel they can wait for all the stars to be aligned and then, and only then, can they finish their estate plan.
The problem is obvious… we don’t know when we are going to die. Stuff happens.
The key to estate planning is remembering that something is almost always better than nothing. It is a rare case that a family is better off with the current estate plan than a new and improved estate plan and there is certainly no case where the family is better off with no estate plan.
I encourage people to finish their estate plan by giving them free amendments for one year after signing. Change your mind all you want but let’s get the basics in place now!
Let me know if I can help you end the procrastination treadmill! -John
The government has come up with a “permanent” estate tax solution. Does that mean you can get rid of your family limited partnerships and LLCs? What about your irrevocable trusts? There are a lot of good reasons for them!
Today we will hit on a few reasons why you should keep your family limited partnerships (or LLCs) you already have and consider adding them to your estate plan:
1) Asset protection: Entities like corporations, LLCs and limited partnerships add asset protection when proper business formalities are followed.
2) Management and control: A family entity can keep control of the family empire with mom and dad for as long as mom/dad want!
3) Income tax benefits: With the limited personal deductions available maybe you can receive income tax benefits from writing off expenses at the entity level rather than the personal level!?
There are more reasons, of course, so contact me to discuss. -John
Our office did a lot of advanced estate planning late in the year. We helped clients give away tens of MILLIONS of dollars, without tax, through mediums such as family limited liability companies (FLPs), irrevocable trusts, and tenancy in common agreements. Most experts thought the January 1, 2013 date would come with a lower gift and estate tax exemption. Maybe not the $1mil as the law was written but maybe something like $3mil or $3.5mil. However, yesterday Congress came up with a new law leaving the exemption at $5.12m, leaving portability in place and continuing the recent years of indexing the exemption. This is all good news for high net worth people. If you didn’t take action to do your estate plan, and you are high net worth, then NOW IS THE TIME! Take action now! The law can change at any time. Most likely it will too! The government is likely, at some point, to nip at the corners. Getting rid of valuation discounts is one of the most likely places the government will attack in my opinion. Get it done while you can! Oh ya, and happy new year! -John