Notifying the California Department of Health Services of a death

How does one go about notifying the California Department of Health Care Services (aka: “Medi-Cal”) of the death of a friend or loved one? You can have an attorney help you or just go to this handy link on their website.

Once there click on NOTICE OF DEATH.

Another screen is brought up where you put in a whole host of information about you, the decedent, their assets, etc….  Just fill it all in, honestly of course, and then wait for Medi-Cal to get back to you.

Don’t forget Medi-Cal generally will take a back seat to other costs of administration in a probate. So a large Medi-Cal bill does not mean you should just walk away from a piece of real estate. We can often get our client’s MONEY IN THEIR POCKET. Medi-Cal just wants the house sold and are ok to get paid after probate. The key is talking to an experienced probate attorney.

If you want to talk about Medi-Cal claims, probate, or any related subjects please contact us.  -John

 

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Special Letters of Administration and Mortgage Companies

“My husband died and the mortgage company won’t talk to me.”

This is becoming a common statement that I hear. Mortgages and the actual deed to real estate are NOT connected. They are separate.  So, for example, if a spouse dies with a house in their name the other spouse can often use a “spousal property petition” to transfer assets to themselves without going through a full probate. However, the mortgage, or encumbrance against the property, does not transfer with the “deed” or title.

What?

Say it isn’t so Mr. California Probate Lawyer!

It’s true.

Plus, mortgage companies are making it more and more difficult to communicate with them after death. Sure I have known of people who have pretended to be the decedent and that can last for years but eventually that will stop working. Plus it’s not legally correct to do that!

I recently encountered an interesting situation. Mom and son were thoughtful enough to prepare a deed, before mom died, to transfer her home to her son.

Now, since you read my blog you know this might have negative tax ramifications after death but, putting that aside, it avoided probate so in general it’s fine. However, the mortgage company really doesn’t care about the deed transfer. They do not care because the deed transfer is completely separate from the underlying mortgage. The client wants to talk to the mortgage company about a loan modification.  The mortgage company won’t talk to him since mom is dead. This is truly a problem.

What can be done?

Rightfully so the client wants to avoid a full probate. I do believe a full probate can be avoided. The answer is Letters of Special Administration.

Letters of Special Administration is basically a limited probate. It’s limited to whatever is specified in the petition. The more limited it is the more likely the court will approve it. We thus may ask for limited powers to communicate with XYZ Mortgage Company regarding loan 1234. Or maybe we will ask for general powers related to real estate.

See California probate code 8544 below:

8544. (a) Except to the extent the order appointing a special
administrator prescribes terms, the special administrator has the
power to do all of the following without further order of the court:
(1) Take possession of all of the real and personal property of
the estate of the decedent and preserve it from damage, waste, and
injury.
(2) Collect all claims, rents, and other income belonging to the
estate.
(3) Commence and maintain or defend suits and other legal
proceedings.
(4) Sell perishable property.
(b) Except to the extent the order prescribes terms, the special
administrator has the power to do all of the following on order of
the court:
(1) Borrow money, or lease, mortgage, or execute a deed of trust
on real property, in the same manner as an administrator.
(2) Pay the interest due or all or any part of an obligation
secured by a mortgage, lien, or deed of trust on property in the
estate, where there is danger that the holder of the security may
enforce or foreclose on the obligation and the property exceeds in
value the amount of the obligation. This power may be ordered only on
petition of the special administrator or any interested person, with
any notice that the court deems proper, and shall remain in effect
until appointment of a successor personal representative. The order
may also direct that interest not yet accrued be paid as it becomes
due, and the order shall remain in effect and cover the future
interest unless and until for good cause set aside or modified by the
court in the same manner as for the original order.
(3) Exercise other powers that are conferred by order of the
court.
(c) Except where the powers, duties, and obligations of a general
personal representative are granted under Section 8545, the special
administrator is not a proper party to an action on a claim against
the decedent.
(d) A special administrator appointed to perform a particular act
has no duty to take any other action to protect the estate.

The highlighted portion above is key as it should allow the Special Administrator to deal with the mortgage company and figure out a plan for the mortgage.

Fees in special administration cases are by agreement of the parties. The typical statutory probate fee schedule does not apply. I generally offer these on a flat fee basis to give the client’s the most certainty and avoid surprises.

I should add that special letters can be used in many other situations such as accessing bank accounts to pay mortgages and funeral expenses, investigate safe deposit boxes, and more. The key is getting the court order so it’s all legal!

-John

Could Donald Sterling use a blind trust?

Donald Sterling has a pretty large net worth.  I don’t know if it’s $2 billion or $3 billion or what exactly it is.  I think most of us estate planning attorneys would call him “high net worth.”  I certainly don’t have any billionaire clients at this time.  Anyway, he is probably busily working with a team of estate planning attorneys to figure out how he can retain control of the LA Clippers in light of his recent racist rampage that has gone public and gone viral!

When I think back to others who have gotten themselves into similar pickles I have thought of owners like Eddie Debartolo, of the 49ers, and Jimmy Haslam, of the Cleveland Browns. It is believed that both men utilized “blind trusts” so as to retain ownership of their beloved teams even if they did lose day to day control.

I actually found a great definition of a blind trust on wiki. It reads:

“A blind trust is a trust in which the fiduciaries, namely the trustees or those who have been given power of attorney, have full discretion over the assets, and the trust beneficiaries have no knowledge of the holdings of the trust and no right to intervene in their handling. Blind trusts are generally used when a settlor (sometimes called a trustor or donor) wishes to keep the beneficiary unaware of the specific assets in the trust, such as to avoid conflict of interest between the beneficiary and the investments. Politicians or others in sensitive positions often place their personal assets (including investment income) into blind trusts, to avoid public scrutiny and accusations of conflicts of interest when they direct government funds to the private sector. A blind trust is often used with those who have come across a fortune within a short period of time (e.g. an inheritance, or a multimillion lottery) in order to keep their identity anonymous to the public.”

The above sums it up pretty well.  Donald Sterling could select someone (it’s best for it not to be spouse, parents, children and certain other related or controlled parties) he highly trusts to be the trustee and that person would make all the decisions over trust assets.  For example, if it were me I would select a non-relative but perhaps someone he trusts more than a relative. Maybe he has a good friend (hard to believe of course) that he has been friends with since 1st grade.  Someone like that could serve as trustee and, while  technically independent, would probably do exactly what Donald Sterling asks him to do.

Other options to serve as trustee would be an accountant, an attorney or even a private professional fiduciary. However, I think the old friend would be best. Or possibly one of the immediate above as the trustee but then select the old friend as a co-trustee or “distribution” trustee who would need to be consulted in certain specific situations!? I am just giving ideas. Of course, there are other options to consider.

The key to the blind trust is that the NBA has to see, and believe, that Donald Sterling has absolutely no control over the team. However, even that might not be enough based on his racial blast, his follow up to the rant, and his history of troubles before this year!

Possibly by doing the blind trust set up the NBA wouldn’t mandate a sale next week!?  I guess we shall see….

-John

Finish your parent’s probate and then….

Probate can be a long and drawn out process. These days it’s eight months and often longer.  Many probates drag on for a year or more. So when you finish your parent’s probate what should you  be thinking?

It seems to me that’s a great reminder that YOU need a living trust of your own!

You don’t want your kids or loved ones going through probate at your death, right?

You don’t have to wait for probate to be done but that seems as good a time as any.

Here’s the dirty little secret of probate and estate planning. Don’t tell anybody. Shhhhhh. Keep this between you and I….  you will die some day.

Plan ahead and get your revocable trust done and done right!

 

The Dangers of Do-it-Yourself Wills

I often tell people that it MIGHT work out fine if they do their own will. Of course it might not. I like to tell people that we’ll find out after they die!

Well, a recent Florida case emphasizes this sentiment.  The Supreme Court of Florida recently heard the case of James Michael Aldrich v. Laurie Basile, et al. (No. SC11-2147).  In this case the decedent used an “E-Z Legal Form” will. She laid out every item with detail but failed to mention later acquired assets. She inherited a large sum after doing her E-Z Legal Form will and thus the will did not give away these assets. In fact, the laws of Florida gave those later acquired assets away to someone other than who she intended to give things to by her will.

In her concurring opinion in Aldrich v. Basile, Florida Supreme Court Justice Barbara Pariente wrote:

“While I appreciate that there are many individuals in this state who might have difficulty affording a lawyer, this case does remind me of the old adage “penny-wise and pound-foolish.” Obviously, the cost of drafting a will through the use of a pre-printed form is likely substantially lower than the cost of hiring a knowledgeable lawyer. However, as illustrated by this case, the ultimate cost of utilizing such a form to draft one’s will has the potential to far surpass the cost of hiring a lawyer at the outset. In a case such as this, which involved a substantial sum of money, the time, effort, and expense of extensive litigation undertaken in order to prove a testator’s true intent after the testator’s death can necessitate the expenditure of much more substantial amounts in attorney’s fees than was avoided during the testator’s life by the use of a pre-printed form.”

I am just a mere estate planning attorney so who am I to talk about things like “penny-wise and pound-foolish?”  However, the above quote is a Justice of the Florida Supreme Court. Hopefully her words mean something to you if you are thinking of doing your own will!

Florida, California, or anywhere in between hire an attorney to do your will!

Good luck whatever you decide!  -John

 

We fix $499 Trusts

I was reading the paper the other day and I saw an ad for a $499 trust. This blog post is not specifically saying that trust company is bad because I have no idea. That $499 trust may be the best trust of all time. However, seeing the ad reminded me that you really shouldn’t price shop for your estate planning documents. That can be VERY costly to your family in the long run.

Let me start by saying that our firm has been providing reasonable cost legal services since 1979. We pride ourselves on this. However, we aren’t the cheapest. We are far from the most expensive but also not the cheapest.

When you are searching for your attorney don’t shop solely on price. Yes, consider it but please don’t use that as your only factor. I have seen way too many trust mill trusts that are completely inadequate in one of different ways.

Some common problems:

1) Unfunded trusts;

2) Incorrect type of trust used;

3) Complete errors;

4) Failure to provide a pour over will;

and on the list goes.

Get your estate plan right by an experienced attorney!

-John

Ten characteristics of a good trustee

When I go through the estate planning questionnaire with a client I suggest they think long and hard before selecting their trustee. In fact, if they hesitate for a split second when naming someone I ask about it. For example, they might say, “well our son is probably our first choice… well… ahhh….”  The second I heard the word “probably” I was wondering what that was about. I know it does not mean their son is dishonest but maybe he has an overbearing wife? Or maybe he and his brother don’t get along. Or who knows!? The point is there is a reason they said “probably.” I thus bring you 10 characteristics to look for in your chosen trustees in no particular order:

- Trustworthy

- General competence

- Financial experience

- Life experience

- Ability to see things from the beneficiaries point of view

- Geographic location

- Above reproach

- Wants to do it

- Understand’s your desires

- Understands your future beneficiaries needs

I could go on but this is a good starting point. Let’s talk about your trustees!

-John

Starting probate as a creditor

I have a new case where the decedent’s son contacted me about starting a probate. He wasn’t quite ready as he had other things going on in life. Well, last week he called, in a panic, because one of his mom’s creditors had started probate! That’s right. A creditor, in a California probate, can start the probate process for you whether you like it or not.

In most probate cases it’s better to be in control. There are a variety of reasons for that which is beyond the scope of this post. However, trust me, control is good in probate!

With a creditor’s claim you lose your leverage to negotiate. Think about it. If a creditor is in the driver’s seat it’s a lot harder to suggest they take a haircut on their claim. Plus there are likely going to be added costs.

We can salvage the situation by paying the creditor and then filing our probate case. The creditor has been pretty easy to work with to clean it up but still… why get to this position?

Don’t let this happen to you. Start your probate before someone does it for you.

Oh ya, guess how much the creditor’s claim was for? Only $6,000. That’s right they started probate over a $6,000 creditors claim. Don’t let this happen to your probate case!

Michael Jackson’s estate valuation tax fight with IRS

I read about the Michael Jackson tax dispute with the IRS on a legit website but figured I would get better dirt on TMV so here’s the link to that article.  Most of my readers understand that when a wealthy person dies their estate may have to pay an “estate tax” which is basically a death tax. It’s certainly due to the IRS for estates over $5mil and sometimes also due to the estate depending on what state the decedent lived in. Mr. Jackson lived in California so there is no state estate tax. Just the feds!

This dispute with the IRS is going to get good. Look, I am certainly not an asset valuation expert but for the estate’s advisors to suggest Mr. Jackson’s likeness has a value of $2,105 is sort of silly. I mean really I’ll give you $2,500 without even understanding what’s included in his “likeness.”  The IRS values at $434 million. I imagine the realize is somewhere between those two extremes.

The estate could face significant penalties if they don’t solve this quick!  Stay tuned….

The above is just one example. Read more on tmz. If you think you might have estate valuation issues let’s talk about it now to PLAN AHEAD and avoid the fights later!

Getting on with life and avoiding the family fights

I recently talked to a prospective client. His story made me think of one thing, though I didn’t tell him in these words, IT’S TIME TO SOLVE THIS AND GET ON WITH YOUR LIFE!

His story was one I have heard countless times.  Siblings fighting.  It’s not always clear what exactly they are fighting about and an outside mediator can probably solve everything in 5 minutes. I often say, not to the clients, that issues stem from when they were five years old or at some point when the older sibling was mean to the younger sibling, or the time mom babied the younger sibling and the older sibling felt bad, or whatever. It doesn’t matter the background. The fact is it’s 50-60 years later so let’s help you move on with life.

I am not a therapist or a counselor but my legal services do the same thing sometimes.

My advice is probably what some family law attorneys tell their clients going through a divorce. Put aside your petty differences and focus on GETTING ON WITH LIFE.

I am not saying to just give in. However, I am saying really focus on the BIG PICTURE items. Focus on the big dollar items. Focus on the house worth $300,000 rather than the photo album. Yes, the photo album is important but you can easily duplicate those.  Does it REALLY matter if you have the original photos or a copy? It’s the picture, the memory, that matter… isn’t it?

I have worked with other clients who develop serious medical conditions due to the stress their sibling causes them. Family fights aren’t always avoidable but I would say they often are.  Focus in and move on!

I think I am really good at working with my client to focus in on the important things. I pride myself at helping my clients GET ON WITH THEIR LIFE.  Talk to me if you and your sibling are fighting about mom and dad’s stuff. Maybe we can solve it together!?