Lessons from mom on estate planning

It’s only been three weeks, to the day, since my mom died and I have a few thoughts on what I have learned in regard to her estate planning matters. Some things done right and things not done right.

VICTORY: My mom named me as co-trustee on her trust almost 10 years ago when she was in her mid-60’s. At the time she traveled a lot so it was convenient to have me on her bank accounts if she was out of the country. However, merely being co-owner is not enough it should be in the trust and as co-trustees. Upon her death I was already on her account so was able to keep on writing checks as needed.

VICTORY: My mom was an estate planning attorney and was pretty careful to acquire assets in the name of her trust. I believe we will avoid a trip to the probate court. Might be a few small refund checks, and the like, that come in to her name but those can be dealt with by small estate affidavit.

VICTORY: My mom had some cash in her checking account. It is amazing how much it costs to die in this country. Yes, a lot of things are optional but if given the option, when it’s your mom or dad, don’t you want to say YES?  Having cash available makes it so you can say yes to every upgrade, every reasonable option, and help send your loved one out in proper style! Plus, you may need to pack up a house, hire people, hire movers, etc….  Cash on hand comes in handy!

SET BACK: My mom owned a few, low value, items not in her trust. Most notably factional shares of stock. I can not tell you how important it is to get all your stocks and investments into your trust and please consider holding it all at a stock brokerage company rather than in paper form or in direct investment accounts with each company. The amount of paperwork is tremendous… even when the dollar values are low.

SET BACK: My mom liked to have her assets spread out at a few different financial institutions. With the Patriot Act every bank transaction is a major fiasco. In my opinion less is more when it comes to financial institutions. Assuming there are not FDIC insurance issues (over $250k for cash deposits) I encourage consolidation. In particular I like to have stocks consolidated to one institution. It makes it MUCH easier when someone dies.

At the moment that’s what I have. I am sure there will be more, good and bad, that I learn. In closing I want to reiterate the above set back though. Please get ALL your assets in your trust and please consider putting all stock into ONE stock brokerage to make transfer easier after death!

-John

Losing a loved one

We have all lost a loved one… or will eventually lose a loved one. Losing a loved one is hard there is no question. It is a sad reality of life though.  I lost my dad when I was 14. I remember it well of course.  My mom was a regular on the grief group circuit around west Los Angeles. We talked about the good times we had had with my dad and we moved on. We never forgot him, of course, but life does go on.  As an estate planning attorney, since 1994, I have talked to countless families about losing their loved ones.  In fact, sometimes it’s the loved one talking to me before they die but they know their day is coming very soon due to illness.

My world was rocked on March 11, 2016 when I received a call that my mom and step-father were dead.  Sadly it was a murder-suicide. My step-father, was a great man, who had seemingly benign paranoia issues. Obviously it was much worse than we realized. Ask questions! Do not ignore! Does the picture below look like someone who is unhappy?

Perhaps my message is more of a public service announcement… DO NOT IGNORE MENTAL HEALTH red flags with your loved ones. Even very small red flags could be something worse. Encourage your family and friends to seek medical advice. Help them get to the doctor. I do not believe there was a single member of our families that was not shocked and surprised by the actions he took.  Let’s avoid more surprises like this and deal with mental health head on!

Of course this is an estate planning and probate law blog so let’s talk about that. My mom’s estate plan was pretty well thought out and planned. However, even we didn’t have it 100% organized. There are still a few small assets not in her trust. Not a big deal but more paperwork for me to deal with. Get your trust set up, get ALL your assets correctly tied to your trust, eliminate the unnecessary assets, and simplify what you can! Your loved ones will be grateful to you!

Both my parents were attorneys. I know, I know, that’s really scary. Let me assure you that dinner time conversation, in our house, was horrible growing up.  My mom actually went back to law school when I was about 7 or 8 so our dinner times, for 3 years, was dominated by law school talk.  How funny that 15 years later I would go to law school!  My mom even did estate planning, like me, so we would go to estate planning conferences together.  What a great way to spend time with your mom!

There are several articles about my mom on the web but I thought this one, from the Logan Herald Journal, was the best so I share the link for you here. Please get your estate plan done as it can minimize the confusion and problems if a loved one dies suddenly.

RIP, Mary Flynn Palley, 1942-2016.

-John

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Billable Hours – be careful!

I was talking to one of my probate clients yesterday and he told me a story about a bill he received from the attorney who drafted his mom’s will and trust which include some scary billable hours.  My client, who we will call Bob called the drafting attorney who we will call Tom.  Bob called Tom and they spoke for 20 minutes.  It was a couple of days after Bob’s mom died and he said that Tom was very respectful on the phone and the call was primarily personal in nature and not about probate or trust administration “business.”  Bob told me how much Tom charged him and I was in such shock I wanted to share.

Before I go on let me state the purpose of this blog post.  BE VERY CLEAR WHEN YOU SPEAK TO AN ATTORNEY TO DETERMINE IF YOU HAVE HIRED THEM OR NOT.  Unfortunately some attorneys feel that every phone call is an opportunity to turn the clock on and start billing.  I pride myself on NOT following such horrifying practices but, sadly, there are still attorneys that operate like this.  So, when you call the attorney that drafted your mom’s will or trust ask them “Am I being charged for this call?”  Also you can tell them, “I am not hiring you at this point I am just gathering some information….”

It’s not always clear if you have hired them or not so try to make it clear. There is nothing to be embarrassed about. It’s important for both you and the attorney to avoid miscommunications and misunderstandings.

In this case, as mentioned, Bob called Tom a couple days after his mom died. He was still in shock and, obviously, in grief.  To me that’s a great opportunity to make sure my billable hour clock is NOT on.  It’s a great opportunity to talk for 10 or 15 minutes and set the stage for how I can help that person get through the trust or probate process.  If they hire me I will bill for my subsequent time but I try to make it very clear if I have been hired or not before I start charging.  Also, I often operate on a flat fee basis to avoid this type of billable hour shock. What does your attorney do?

Some of the highlights (I am not taking word for word from the bill):

Review will, trust, file and have phone call with Bob 2.3 (yes, that’s over 2 hours for a 20 minute phone call)

Plus a .2 charge by the office paralegal for her work in prepping Tom for the big phone call.

Draft fee agreement, email client, etc…  .9 (yes, that’s one hour to fill out a form fee agreement – NO we do not charge you for preparing a fee agreement)

On a Monday, above, Tom billed 2.3 hours (let me repeat HOURS) reviewing a trust and will that he himself wrote a few years earlier.  On Wednesday he billed 2.9 additional hours for reviewing the documents. I imagine after 5 hours of review he had them down to memory, right!?

A few other misc charges by Tom and also his paralegal including a lot of back and forth stuff between them.

I won’t bore you with every detail but it totaled over EIGHT HOURS and over $1,900 for a 20 minute phone call. I call this billable hour shock!  Bob doesn’t feel like he hired Tom but Tom, apparently, thought he was hired.  Bob seems pretty astute to me and thus I tend to believe him that he had no clue he had hired Tom. In fact, he mentioned when he got the proposed fee agreement in the mail he just threw it away because he didn’t intend to hire Tom.

Now the State Bar of California has ethics rules for lawyers. Yes, really and yes I am sure there is a funny lawyer joke that should be inserted here.  One ethics rule specifies that if the legal bill (fees and costs) is reasonably expected to exceed $1,000 we are to obtain a written fee agreement for the work.  In my office we try to do this for every matter, even if under $1,000, to avoid confusion and misunderstandings.  A written fee agreement takes a lot of the guess work out of it!

Some things you can do to protect yourself from this problem that Bob has:

  • Clearly state you are not hiring the attorney yet – just gathering information;
  • Ask if you are being charged for the call;
  • Perhaps send a follow up email “Thank you for the time today if I decide to hire your firm I will notify you by email”;

If you do decide to hire them you might then ask some further questions:

  • Ask what their hourly rate is;
  • Ask if they charge for paralegal time;
  • Ask if they add on an administrative fee;
  • Ask if they charge you for every call and every email;
  • Ask if their paralegal or other attorneys in the office also bill on your file;
  • Ask the attorney for an estimate of his fees for the work that is needed;
  • Ask the attorney if they offer flat fee or contingency fee arrangements;

Oh ya, I did gave Bob some suggestions for clearing this bill up. I know Tom. He has a good reputation and I think it was just a mistake on his part. Although as I type that it’s hard to not think just a little bit lower of Tom.  Honestly, it’s hard for me to think it’s just a mistake.   Whatever the case, I am hopeful he will agree to write off that bill in total.  Bob told me he doesn’t like to be in debt but he really feels it’s unfair. Hopefully Bob can resolve it quickly. If Tom is half as smart as I think he is it will take one email from Bob to resolve this and close the matter.

Also, I think this cemented things for Bob that he was smart to hire me and not Tom. Hey, just being honest here!

You should be very comfortable with the attorney BEFORE you hire them. If you aren’t then I would keep looking!   -John

The dog isn't qualified so we'll only bill you his hours at half the usual rate...

The dog isn’t qualified so we’ll only bill you his hours at half the usual rate…

Funding a bank account “in” to a California revocable living family trust

For 20 years I have been telling people how to “put” their bank accounts and other assets into their trusts.  Some things, like real estate, are pretty easy. We just prepare a deed, our client signs it, and we send it in for recording.  Clients who work with full service financial professionals also have it easy as the staff at those financial companies tend to be well trained at trust funding.

We usually start with a letter to the financial institution. If that doesn’t do the trick then we always advise our clients to go into the branch if that’s possible. Some things are just best done in person though.  I have not put a new asset into to my wife and my trust in some years.  We have had a trust for about 15 years, banked at the same credit union throughout, and never put our main bank account into our revocable trust.  What’s that story about the cobbler’s son….

Ok, the balance isn’t huge but it’s enough that it would come in handy for our successor trustee should they need money to pay bills if we are incapacitated or deceased. So we finally did it!  I actually first went in a few weeks ago but the friendly credit union employee told me that my wife had to be there since she was primary holder on the account. So for the next two or three weeks my wife and I talked about going in. Finally yesterday, Saturday, we strolled in as they opened their doors at 9:00.  The whole process took 15 minutes.

So what happened?

We handed the credit union employee our certification of trust or trust certificate or, what some call, a certified extract or abstract. In summary it’s a shortened version of your trust.  Our “CE” is usually two pages including the notary block.  In our opinion the goal of the CE is brevity and just giving the bank, credit union or financial institution what they need.  I am going with the assumption that banks and credit unions generally have the same requirements. However, is important to note that each bank or CU has their own rules. Plus, as I like to (half) joke, each bank or credit union branch may have their own rules… and of course each bank or CU employee may do things differently.  So take this for our actual experience. Your experience should be similar.

We gave the employee the CE and he proceeded to go through our account on his computer.  We have several sub accounts set up so it took him a several minutes to check boxes and enter the trust name for each one.  Then he took the name of our successor trustee, from the CE, and entered that into the computer.  He then asked for the name of our beneficiaries. I told him that in the past I have preferred to put “named individuals” as I don’t like to divulge the private information that is our beneficiaries (actually just our kids).  He explained that the NCUSIF (National Credit Union Insurance Fund) which, he claimed, is essentially the same as the bank’s FDIC gives the $250,000 per person insurance to each beneficiary.

Ok, let’s stop here for a second and take a detour. I do not know if what he says is right. Since my account has well below $250,000 it’s a non-issue for me. However, if your account is anywhere close to $250,000 you should definitely check, double check and triple check the rules.  My advice is always to have less than $250,000 at any one bank. Why take a chance with interpreting the FDIC or NCUSIF rules?  Is it really the contingent beneficiaries I asked the employee?  Why not the current beneficiaries? It doesn’t make any sense to me. So, again, let me repeat that I encourage you to never exceed $250,000 at a financial institution unless you are comfortable with their insurance rules.

So the nice and informative employee finished inputting everything and then had us sign (electronically) new signature cards confirming everything on the account and information about our trust.  It was easy.

Let me stress a couple things:

  1. Our account numbers did NOT change at our credit union (this varies among different banks and CUs);
  2. Our checks do NOT have the name of our trust on them (again this varies);
  3. It took about 15 minutes.

The key here that to have a trust and not spend these 15 minutes just exposes your loved ones to a probate after your passing or incapacity so take the time and fund that trust!

Contact us with questions.  -John

 

 

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

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!?

Probate House Saga and Mystery – Read at your own risk!

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….

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The front door does not show what’s going on behind closed doors….

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The backyard looks fine and even has a pool….

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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….

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It also has a two car garage….

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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!?

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There is a fireplace though….

Now the brutal pictures. Remember someone was LIVING HERE!

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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!

-John

Death and Dying

We have been dealing with a dying family member in my family recently.  Dealing with death every day I know the importance of organizing your affairs. However, seeing it up close reminds me of so many things you can do, before dying, to help your family. Here are a list of things. Thankfully in our case most of these were done by grandma Nancy before she passed early this morning.

– Make plans for cremation/burial, cemetery selection, etc… and pre-pay if you can. Your family will have enough on their mind so help them out and help make sure your wishes are followed.

– Have all your assets in your trust.

– Consider naming your trusted trustee as a co-trustee if you are elderly or very sick.

– Have an immediate power of attorney for dealing with everyday issues like the post office, the DMV, and the like.

– Make a list of personal property gifts or, if you are dying, just give the stuff to the people you want to give it to. See the joy on their face when they receive your treasures!

– If you know you are dying consider signing your car’s “pink slip” to make transfer easy and not require your family having to wait 40 days after death to transfer the car.

– Have a medical power of attorney or “living will” which details what you want done for life support.

– Talk to your family and your doctor about your end of life choices now so that they know what you want when the time comes.

– Oh ya, and MAKE SURE YOU HAVE AN EXPERIENCED ESTATE PLANNING ATTORNEY!

Searching for lost assets in California

In many of my California probate cases there are lost assets… or at least my client thinks there are lost assets. How do you track them down?  There are different ways but I am going to tell you about a real case I am working on right now.

When a person dies I advise my client to go through all the paperwork and bank records they can find to look for possible assets including bank accounts, stocks, life insurance, safe deposit boxes, etc…. Basically anything that indicates there might be an asset. I can then contact them and see if there is any record.

In one case, which will remain nameless as it’s still going on, my client found nothing.   However, the IRS claimed the decedent owed over $500,000 for back taxes.  We explained to the IRS that the decedent hadn’t worked for a few years and we didn’t believe he had any assets.  At that point we did sleuth step number 1… IRS TRANSCRIPTS.

I love IRS transcripts. I currently have two different cases where the IRS transcripts have been extremely useful.  They show all income reported to a social security number, the source (i.e. the bank), the amount, and a bunch of other useful information. In this case we were shocked by what we saw.  Tens of thousands of shares of stock being sold, for gains, over the course of a few years.  All one stock… GOOGLE.  I promise you this is true!  The decedent had, apparently, been buying and selling Google stock for a few years.  Most of the transactions were in 2007 and 2008 and there literally tens of thousands of shares sold. Apparently this crazy old guy and dumped all his money into Google at one point early on it appears!

Ok, so the IRS transcripts show tons of Google stock beign sold through one brokerage account. So sleuth step number 2 we subpoened the records for that stock broker to see what the decedent did with all his gains.  We received a few hundred pages from the stock broker and they show hundreds of thousands of dollars going to two different bank accounts.

Ok, I bet you can guess sleuth step number three… yes, subpoena the bank records.  My story ends here as we are just now preparing the subpoenas but we are curious what they will show.  Where did the money go from that account?  Once I find out I will report back as I am curious for sure.

There are other tools we can utilize but the above is a fair summary of the main things we can do. It takes some time, costs a little bit of money, but we can track down lost (or stolen) assets this way.  Plus, I have to admit, it’s sort of funny playing detective. I am genuinely interested in all my client’s dealings but this one has especially piqued my interest.

If you have questions about any California probate or trust matter please contact me or visit our website at www.californiaprobate.info for more information.

-John

Royalties and Estate Planning

I am sitting at my desk on this lovely Saturday morning which is not my norm. With nobody else here I have Pandora playing in the background. It got me thinking have these artists connected their royalties to their living trusts?

Hey, when you do estate planning for a living everything gets back to probate and estate planning in some way!

So, let’s say you wrote a book, recorded an album, acted in a movie or whatever else it may be that created a residual or royalty. I have worked with many clients with these type of things. Am working with one right now who, interestingly, was the producer of some rather obscure rap music songs in the late 80′s or early 90′s. They were never huge sellers but they continue to sell… world wide. Sure at some point that trail may end but for now it continues and thus it’s important to get that into a trust.

If you don’t get your intellectual property rights into a trust it can be difficult for your family to get it after death. It can require a costly and long probate.

Here in California we have a lot of clients with royalties and residuals. Thus we are familiar with what is needed to get them connected to a trust.

Contact me to discuss your case personally or review our website at www.californiaprobate.info for more information.

-John