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Another On-line Will Form Problem

Ouch. Of course attorneys can make mistakes too but in this case it was the use of an online document service (unnamed to protect the guilty) that messed up. Decedent, we will call Betty, signed a will a few months before dying. Betty asked unnamed online document service to write the will to give all her assets to her one child and nothing to the children of her deceased child. This seemed like a great idea as she saved money, right? I am sure an online will form is cheaper than hiring an attorney, right?

You maybe can see where this is going….

Unfortunately the online document service didn’t write it the way Betty wanted. So instead of 100% of a $300k house my client gets only one-half of a $300k house and the estranged children of deceased child (brother to my client) get the other one-half.

Needless to say client is UPSET! I am just the messenger and still she seemed mad at me. It sucks. Obviously we all wish Betty had just hired an experienced estate planning attorney to get it done right. However, that ship has sailed. She didn’t hire an attorney. Betty tried to save money and it bit her family in the tail!

I should add there is a place for online document services but, in my opinion, only in extremely straight-forward situations. Plus, even then you should read and understand what you are signing!

One side note is that an online will form company, no matter how much advertising they do, has to be able to explain the legal options with an experts precision. For example, why didn’t the online form company suggest a living trust? That would have saved Betty’s family even more money… while, if they had done that right.

Don’t be a Betty. Get your will and/or trust done properly by an experienced estate planning attorney.

-John

Digital Assets after death

The world of “digital assets” is growing by leaps and bounds each day. The issues they present are growing just as fast. That is, what happens to the money left in your Itunes account after death? Or what about your photos on Facebook… who gets to “own” them? The answers are NOT out there yet but there is hope. Here is an article I just saw where two organizations are trying to come up with a master plan. Check it out!

The Pragmatic lawyer

I have always considered myself to be reasonable or a good sense of rough justice. A quick opinion of how things should end up. People have called me pragmatic many times during my 20 years as a lawyer. I will admit I didn’t know exactly what that meant the first couple of times I heard it.  I looked in the dictionary years ago and looking back I remember thinking that made sense. I have pasted a  current dictionary entry below.

As an attorney for more than 20 years now I can tell you there are a lot of attorneys I have dealt with who are very NOT pragmatic. Not to say they are bad attorneys but they are so difficult to deal with because they don’t deal in reality. I am sure they could write a mean brief and research the heck out of archaic laws.

I, myself, like to dig in and solve real world problems! I like nothing more than solving a dispute so that the people can get on with their lives. I thus proudly wear the pragmatic label and hope to continue to!  -John

prag·mat·ic
praɡˈmadik/
adjective
adjective: pragmatic
dealing with things sensibly and realistically in a way that is based on practical rather than theoretical considerations.
“a pragmatic approach to politics”
synonyms: practical, matter-of-fact, sensible, down-to-earth, commonsensical,businesslike, having both/one’s feet on the ground, hardheaded, no-nonsense;
informalhard-nosed
“she remains pragmatic in the most emotional circumstances”
antonyms: impractical
relating to philosophical or political pragmatism.

LINGUISTICS
of or relating to pragmatics.

Origin

late 16th century (in the senses ‘busy, interfering, conceited’): via Latin from Greekpragmatikos ‘relating to fact,’ from pragma ‘deed’ (from the stem of prattein ‘do’). The current sense dates from the mid 19th century.

NEW Heggstad Petition Case

I got notice a couple weeks ago of a new case to help get Heggstad petitions approved. That is, petitions brought under California probate code section 850.

The case is:

Ukkestad v. RBS Asset Finance Filed  March 16, 2015, Fourth District, Div. One Cite as C065630

Here is the summary I received:

Settlor established a Trust which recited that all of his “right, title and interest” to “all of his real … property” is included in the Trust’s assets.  After the Settlor’s death, the Co-Trustee brought a petition under Prob. C. § 850 for an order that two parcels held in the name of the Settlor were part of the Trust.  In reversing the trial court’s denial of the petition, the appellate court noted that a Heggstad petition will lie if the owner of the real property is the settlor creating the trust with him or her as trustee and if the transfer of the real property complies with the statute of frauds. Held, the recital in the Trust satisfied the statute of frauds because it could be established by extrinsic evidence that the Settlor held title to the parcels.

More information can be found on the Court’s website.

It is my experience, after successfully filing dozens and dozens Heggstad petitions that each new case, like this one above, help us. Each new case supports us in our quest to help our clients avoid full probates!

You can always turn to our website at www.heggstadpetition.com for the latest on California probate code 850 Heggstad petitions.

-John

 

Coach Dean Smith leaves a small legacy… what will you do?

As an estate planning attorney I help clients plan the legacy they will leave. Often it’s simple such as “I leave everything to my children….”  Other times it’s a gift to an old friend, a church, or other charitable organization.  I just read an interesting article, on ESPN.com, about the former University of North Carolina coach, Dean Smith, and what he did. He left, in his trust, a gift of $200 to each of the lettermen that played for him.  According to the article it was approximately 180 of them!  That $36,000 will mean a lot. To some of his former players it will be the sentimental value of it as obviously a billionaire, like Michael Jordan, doesn’t need another two hundred dollars. On the other hand there are probably a handful of his former players who are struggling through life and that $200 will be a huge infusion to their monthly budget. The bottom line is he is leaving his mark or his legacy!  You can do that too!  Here’s the link:

http://espn.go.com/mens-college-basketball/story/_/id/12563125/former-north-carolina-tar-heels-coach-dean-smith-leaves-200-letterman

Reverse Estate Planning to get a step up in basis

I heard a great presentation recently by a CPA. He was talking about, what he calls, “reverse estate planning.” Say what? Well, we all know that the focus in estate planning has changed from estate taxes (death taxes) to capital gains tax (income taxes). This CPA had a great idea to improve people’s basis. As he explained we can each give away $5.43m right now. Most of us will never get close to that much in assets. Thus, using our federal gift tax exemption is not as taboo as it used to be. That is, assuming we believe Washington D.C. when they say these laws are “permanent.”

Let’s back up a little bit. Under current laws when a person dies the assets they own receive a step up in tax basis for capital gains purposes. So, if you own a property worth $500,000 but purchased for $100,000 you have a $400,000 gain on sale when you sell it. However, if you die, owning that property, your basis (actually your heir’s basis) steps up to the date of death value; i.e. $500,000. They can then sell it for $500,000 and pay ZERO TAX.

This expert’s idea is to look at your dying parent’s, grandparents, or other loved ones a bit differently. Yes it’s sad but you know those loved ones love two things: 1) YOU and 2) helping family avoid taxes! That’s universal, right!?

The plan is you have this property with $100,000 basis. It can be stock, real estate, or anything else. At least one year before death you gift it to grandma, mom, dad, whoever it is. Obviously, you have to trust that they will give it back to you when they die via their will or trust.

As long as they live that year, so it’s not deemed a “death bed gift,” you will get a full step up in basis. That’s right! You just saved yourself $100,000 in taxes approximately! WOW!

Obviously, this is a very technical procedure with pitfalls. It’s not to taken lightly. Talk to your tax adviser and your estate planning attorney.

Good luck with your estate planning… and REVERSE ESTATE PLANNING!

-John

Top 10 Estate Planning Mistakes

As a California estate planning and probate attorney I see both sides.  I see the planning process and I see what happens, after death, when the planning wasn’t done right.  Here is a top 10 list of estate planning mistakes:

10. Name your estate the beneficiary on your IRA, 401k, and other retirement plans. This is a great way of creating unnecessary tax and probate fees and costs. It also will delay the time when your family will have access to the money.  Attorneys and the tax man will love you for it! Your family won’t be so happy with you though!

9. Name your estate the beneficiary on life insurance.  Similar to above it creates unnecessary delay in access to the money and causes costs and fees.  Your family won’t love you for this.

8. Name no beneficiary on your 401k and other retirement plan.  In some cases the money will flow to your estate and create taxes, fees and costs as indicated at #10 above. However, some plans have a written list of heirs if no beneficiary is named and that list might be different than who you want to give the assets to!

7. Leave money to minor children or to your estate.  By doing this your kids will get your money when they turn 18. They will love you!  Also, the new car salesmen, car stereo salesmen, many other salesmen and also all of their friends will love you!  Plus, your kids will love you for the 6 months it takes them to burn through your money.

6. Outsmart the tax man and add your kids onto your house as a joint tenant.  Sure you might avoid attorney fees for a living trust but you might create a capital gains tax at death due to losing the full step up in basis. The IRS will love you for paying unnecessary tax.

5. If you have a safe deposit box don’t tell anybody about it. Just leave the key.  The family will love the treasure hunt going bank to bank throughout town looking for it. Of course, if you move to a new town before dying that treasure hunt is totally fruitless and they probably won’t be so happy with you.

4. Don’t fully fund your trust.  So many people go to the trouble and expense of creating a living trust but then they fail to put all the assets into their trust.  This creates unnecessary probate fees and costs.  Your attorney will love you!

3. If you re-finance your house do not put your house back into your trust. As above it creates an unnecessary probate and thus your family or loved ones will have to deal with the cost and delay of that. Again, your attorney will be appreciative!

2. Don’t use a certified specialist for your estate plan. It’s a great way of getting an inadequate estate plan. Sure you might, or might not, save a few bucks but….

1. Don’t have any written estate plan. It’s a sure way to cause problems and unnecessary money to be spent after death. If you want to really upset your family do nothing!

Really if you love your family avoid these 10 and hire a Certified Specialist in Estate Planning, Trust and Probate law as determined by the State Bar of California Board of Legal Specialization.  Contact me with your questions.  -John

IRS Gift and Estate Tax Exemptions for 2015

The IRS released their gift and estate tax exemption numbers for 2015 a few months back. In case you missed it they are:

GIFT TAX: It remains at $14,000 per donor per donee.  So a husband and wife can do a “split gift” and give $28,000 to any indivudual (family or otherwise).

ESTATE and GIFT TAX: This exemption bumps up to $5,430,000 in 2015. That is, each person can give away this amount during life, or at death, or in combination. If your net worth might exceed this at death plan ahead with estate planning. There are many ways to maximize the value of each “dollar” given so that $5,430,000 can be much more!

Talk to a qualified estate planning attorney so that your estate gets planned correctly.

Happy new year!  -John

International Wills

I have been practicing law since 1994. I have been extremely focused on the areas of estate and probate law during that time.  Through those years I have a number of clients who have property in other countries. Usually we agree that they will talk with an attorney in the other country.  As you might have guessed many countries have far simpler laws for passing assets, after death, than we do here in California. Some not as easy.  The one, almost uniform, constant I have found is that most countries do not honor our living trusts. That is, the concept of a revocable living trust generally is not one that carries over. There are some exceptions but even then they might prefer, or require, the use of THEIR countries trust and not a US trust.

The use of a home country will is fine. As long as the two wills clearly do not revoke the other one there should be no problem. Yes, watch out for probate but beyond that having a will in the other country should be fine. Just try to meld it with your US will so they work together.

I was recently talking to a colleague about a high net worth client with property in another country.  One thought they had was to use an international will. I must admit my use of international wills is limited but in my research I have to agree this is a great item to consider when you own property in another country. In fact, qualifying your “California” will as an “international” will really is not that difficult.

The the International Institute for the Unification of Private Law (UNIDROIT) held the Convention Providing a Uniform Law on the Form of an International Will in Washington DC in 1973. They developed the guidelines for an international will. The entire text is below. However, in summary the requirements are:

– the will is for one person (not a dual will);

– the will shall be in writing and in any language;

– the will must be signed in front of TWO witnesses;

– the will must be signed in front of an authorized person (attorney);

– all signatures are at the end of the will;

– the testator signs every page;

– every page is numbered.

Again, the full act is below. If you want to talk about an international will for you please contact us.  -John

 

CONVENTION PROVIDING A UNIFORM LAW ON THE FORM OF AN INTERNATIONAL WILL (WASHINGTON, D.C., 1973)

The States signatory to the present Convention,

 DESIRING to provide to a greater extent for the respecting of last wills by establishing an additional form of will hereinafter to be called an “international will” which, if employed, would dispense to some extent with the search for the applicable law;

HAVE RESOLVED to conclude a Convention for this purpose and have agreed upon the following provisions:

Article I

1. Each Contracting Party undertakes that not later than six months after the date of entry into force of this Convention in respect of that Party it shall introduce into its law the rules regarding an international will set out in the Annex to this Convention.

2. Each Contracting Party may introduce the provisions of the Annex into its law either by reproducing the actual text, or by translating it into its official language or languages.

3. Each Contracting Party may introduce into its law such further provisions as are necessary to give the provisions of the Annex full effect in its territory.

4. Each Contracting Party shall submit to the Depositary Government the text of the rules introduced into its national law in order to implement the provisions of this Convention.

Article II

1. Each Contracting Party shall implement the provisions of the Annex in its law, within the period provided for in the preceding article, by designating the persons who, in its territory, shall be authorized to act in connection with international wills. It may also designate as a person authorized to act with regard to its nationals its diplomatic or consular agents abroad insofar as the local law does not prohibit it.

2. The Party shall notify such designation, as well as any modifications thereof, to the Depositary Government.

Article III

The capacity of the authorized person to act in connection with an international will, if conferred in accordance with the law of a Contracting Party, shall be recognized in the territory of the other Contracting Parties.

Article IV

The effectiveness of the certificate provided for in Article 10 of the Annex shall be recognized in the territories of all Contracting Parties.

Article V

1. The conditions requisite to acting as a witness of an international will shall be governed by the law under which the authorized person was designated. The same rule shall apply as regards an interpreter who is called upon to act.

2. Nonetheless no one shall be disqualified to act as a witness of an international will solely because he is an alien.

Article VI

1. The signature of the testator, of the authorized person, and of the witnesses to an internatíonal will, whether on the will or on the certificate, shall be exempt from any legalization or like formality.

2. Nonetheless, the competent authorities of any Contracting Party may, if necessary, satisfy themselves as to the authenticity of the signature of the authorized person.

Article VII

The safekeeping of an international will shall be governed by the law under which the authorized person was designated.

Article VIII

No reservation shall be admitted to this Convention or to its Annex.

Article IX

1. The present Convention shall be open for signature at Washington from October 26, 1973, until December 31, 1974.

2. The Convention shall be subject to ratification.

3. Instruments of ratification shall be deposited with the Government of the United States of America, which shall be the Depositary Government.

Article X

1. The Convention shall be open indefinitely for accession.

2. Instruments of accession shall be deposited with the Depositary Government.

Article XI

1. The present Convention shall enter into force six months after the date of deposit of the fifth instrument of ratification or accession with the Depositary Government.

2. In the case of each State which ratifies this Convention or accedes to it after the fifth instrument of ratification or accession has been deposited, this Convention shall enter into force six months after the deposit of its own instrument of ratification or accession.

Article XII

1. Any Contracting Party may denounce this Convention by written notification to the Depositary Government.

2. Such denunciation shall take effect twelve months from the date on which the Depositary Government has reccived the notification, but such denunciation shall not affect the validity of any will made during the period that the Convention was in effect for the denouncing State.

Article XIII

1. Any State may, when it deposits its instrument of ratification or accession or at any time thereafter, declare, by a notice addressed to the Depositary Government, that this Convention shall apply to all or part of the territories for the international relations of which it is responsible.

2. Such declaration shall have effect six months after the date on which the Depositary Government shall have received notice thereof or, if at the end of such period the Convention has not yet come into force, from the date of its entry into force.

3. Each Contracting Party which has made a declaration in accordance with paragraph 1 of this Article may, in accordance with Article XII, denounce this Convention in relation to all or part of the territories concerned.

Article XIV

1. If a State has two or more territorial units in which different systems of law apply in relation to matters respecting the form of wills, it may at the time of signature, ratification, or accession, declare that this Convention shall extend to all its territorial units or only to one or more of them, and may modify its declaration by submitting another declaration at any time.

2. These declarations shall be notified to the Depositary Government and shall state expressly the territorial units to which the Convention applies.

Article XV

If a Contracting Party has two or more territorial units in which different systems of law apply in relation to matters respecting the form of wills, any reference to the internal law of the place where the will is made or to the law under which the authorized person has been appointed to act in connection with international wills shall be construed in accordance with the constitutional system of the Party concerned.

Article XVI

1. The original of the present Convention, in the English, French, Russian and Spanish languages, each version being equally authentic, shall be deposited with the Government of the United States of America, which shall transmit certified copies thereof to each of the signatory and acceding States and to the International Institute for the Unification of Private Law.

2. The Depositary Government shall give notice to the signatory and acceding States, and to the International Institute for the Unification of Private Law, of:

(a) any signature;

(b) the deposit of any instrument of ratification or accession;

(c) any date on which this Convention enters into force in accordance with Article XI;

(d) any communication received in accordance with Article I, paragraph 4;

(e) any notice received in accordance with Article II, paragraph 2;

(f) any declaration received in accordance with Article XIII, paragraph 2, and the date on which such declaration takes effect;

(g) any denunciation received in accordance with Article XII, paragraph 1, or Article XIII, paragraph 3, and the date on which the denunciation takes effect;

(h) any declaration received in accordance with Article XIV, paragraph 2, and the date on which the declaration takes effect.

IN WITNESS WHEREOF, the undersigned Plenipotentiaries, being duly authorized to that effect, have signed the present Convention.

DONE at Washington this twenty-sixth day of October, one thousand nine hundred and seventy-three.

ANNEX

UNIFORM LAW ON THE FORM OF AN INTERNATIONAL WILL

Article 1

1. A will shall be valid as regards form, irrespective particularly of the place where it is made, of the location of the assets and of the nationality, domicile or residence of the testator, if it is made in the form of an international will complying with the provisions set out in Articles 2 to 5 hereinafter.

2. The invalidity of the will as an international will shall not affect its formal validity as a will of another kind.

Article 2

This law shall not apply to the form of testamentary dispositions made by two or more persons in one instrument.

Article 3

1. The will shall be made in writing.

2. It need not be written by the testator himself.

3. It may be written in any language, by hand or by any other means.

Article 4

1. The testator shall declare in the presence of two witnesses and of a person authorized to act in connection with international wills that the document is his will and that he knows the contents thereof.

2. The testator need not inform the witnesses, or the authorized person, of the contents of the will.

Article 5

1. In the presence of the witnesses and of the authorized person, the testator shall sign the will or, if he has previously signed it, shall acknowledge his signature.

2. When the testator is unable to sign, he shall indicate the reason therefor to the authorized person who shall make note of this on the will. Moreover, the testator may be authorized by the law under which the authorized person was designated to direct another person to sign on his behalf.

3. The witnesses and the authorized person shall there and then attest the will by signing in the presence of the testator.

Article 6

1. The signatures shall be placed at the end of the will.

2. If the will consists of several sheets, each sheet shall be signed by the testator or, if he is unable to sign, by the person signing on his behalf or, if there is no such person, by the authorized person. In addition, each sheet shall be numbered.

Article 7

1. The date of the will shall be the date of its signature by the authorized person.

2. This date shall be noted at the end of the will by the authorized person.

Article 8

In the absence of any mandatory rule pertaining to the safekeeping of the will, the authorized person shall ask the testator whether he wishes to make a declaration concerning the safekeeping of his will. If so and at the express request of the testator the place where he intends to have his will kept shall be mentioned in the certificate provided for in Article 9.

Article 9

The authorized person shall attach to the will a certificate in the form prescribed in Article 10 establishing that the obligations of this law have been complied with.

Article 10

The certificate drawn up by the authorized person shall be in the following form or in a substantially similar form:

CERTIFICATE

(Convention of October 26, 1973)

1. I, . . . . . . . . . . . . . . . . . . . . (name, address and capacity), a person authorized to act in connection with international wills

2. Certify that on . . . . . . . . . . . . . . (date) at . . . . . . . . . . . . . . . . (place)

3. (testator) . . . . . . . . . . . . . . . . . . . . . . (name, address, date and place of birth) in my presence and that of the witnesses

4.     (a) . . . . . . . . . . . . . . . . . . . (name, address, date and place of birth)

(b). . . . . . . . . . . . . . . . . . . . (name, address, date and place of birth)

has declared that the attached document is his will and that he knows the contents thereof.

5. I furthermore certify that:

6.     (a) in my presence and in that of the witnesses

(1) the testator has signed the will or has acknowledged his signature previously affixed.

*(2) following a declaration of the testator stating that he was unable to sign his will for the following reason . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

– I have mentioned this declaration on the will

* – the signature has been affixed by . . . . . . . . . . . . . . . . (name, address)

7.     (b) the witnesses and I have signed the will;

8. *  (c) each page of the will has been signed by . . . . . . . . . . . . . . . . . . . . . . . . . . and numbered;

9.   (d) I have satisfied myself as to the identity of the testator and of the witnesses as designated above;

10.  (e) the witnesses met the conditions requisite to act as such according to the law under which I am acting;

11. * (f) the testator has requested me to include the following statement concerning the safekeeping of his will: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12.                                 PLACE

13.                                 DATE

14.                                 SIGNATURE and, if necessary, SEAL

* To be completed if appropriate.

Article 11

The authorized person shall keep a copy of the certificate and deliver another to the testator.

Article 12

In the absence of evidence to the contrary, the certificate of the authorized person shall be conclusive of the formal validity of the instrument as a will under this Law.

Article 13

The absence or irregularity of a certificate shall not affect the formal validity of a will under this Law.

Article 14

The international will shall be subject to the ordinary rules of revocation of wills.

Article 15

In interpreting and applying the provisions of this law, regard shall be had to its international origin and to the need for uniformity in its interpretation.