Too often, the task of estate planning gets pushed aside for more pressing matters. But if it’s not taken care of, you can find yourself with big problems that are expensive and time-consuming to fix. Here’s some excuses and why you should overcome them and get your estate planning done:
1. I don’t want to think about it. No one wants to think about getting older, becoming incapacitated, or leaving this world. We all believe that we’re going to live forever. But we’re not. In fact, we’re all going to go sometime, so denying that it’s happening at all is not going to stop it. Chances are, too, that you DO in fact think about it, and your thoughts take on the quality of worrying (if you’re not thinking about it now, believe me, you will as you get older). Worrying about it is not going to protect you and your family; only doing something – your estate plan – will stop the worry and give you peace of mind. If you’re going to be thinking about it anyway, why not just get your estate plan done?
2. I don’t have time. You might think that preparing your estate plan will take hours and hours, involve multiple meetings, and generally deprive you of family time, work time, and free time. Not so! Most of my estate plans are completed in just two one-hour meetings. Yes, there are serious questions that you have to answer, but you’ve certainly already thought about most of them and they’re really not all that hard to answer anyway. All told? Two, maybe three hours total.
3. I don’t have money. If you leave your estate to probate, then your heir are not going to receive up to 10% of your gross estate, and in fact may be PAYING to transfer your property. You’ll be leaving your family tens if not hundreds of thousands of dollars LESS than if you would have had an estate plan. Why wouldn’t you spend a quarter to save $100? Ultimately, preparing and estate plan saves you thousands – sometimes tens or hundreds of thousands – over not doing it.
4. I don’t have enough money to need an estate plan. Anyone with $150,000 or more in property (regardless of debt and including real property) needs an estate plan. A estate with just $600,000 (think house, life insurance and some retirement) can save nearly $100,000 by creating an estate plan over going through probate. Could you stand to save $100,000? Is your family worth it?
5. I trust my family to do what’s right. Putting the decisions in the hands of your family is more of a burden than anything else. Once something happens to you, your loved ones will be shocked and grieving (you are still shocked when someone passes, even when you’re expecting it). Allow them to grieve – allow them the time and space. Don’t add to their suffering by also making them guess what you would have wanted.
What are you waiting for?
Is there anyone out there anymore who doesn’t know someone who is getting divorced or thinking about it?
The first question on anyone’s mind is what will happen? The most common concerns are about money – rent, bills and health insurance – as well as children. Where will they live? How will we share custody? What are my rights?
Basically, you want to know: what do I need to know NOW so that the process is easier, smoother, and I don’t get in trouble?
Sadly, it can seem nearly impossible to find out this information. If you go to see a lawyer, he or she will spend most of the time trying to convince you to pay out thousands of dollars in a retainer. Trying to find relevant, informative, accurate and current information on the internet is like trying to sort sand on the beach.
So, what can you do? One solution is to consult with an attorney, but say up front that you only want information and do not intend to retain. That can work sometimes, but not all lawyers are equal, and the information you get can be of varied usefulness. You can research on your own – for example, Nolo Press has some GREAT resources. Be sure you stick with state-specific information, however, since state divorce laws vary widely. You can check out my FREE 7-day divorce series on how to save money when getting divorced. Or, you can try family law coaching, which is one of the things we offer.
Here are some tips to get you started:
1. Scan or copy your important documents, like tax returns, bank and credit accounts, retirement and 401K statements, mortgage statements, house and car title deeds, etc.
2. Change your powers of attorney before you file. You may also consider severing your joint tenancy.
3. Get all the most sentimental items out of your house, particularly if they are breakable and/or you have a spouse prone to angry outbursts.
4. Courts like to continue the status quo, so if you plan to make a change (go back to school, change your children’s school, start medical treatment, get braces for your children), then start that before you file for divorce.
5. Talk to a lawyer so you know your rights in your specific situation.
6. Consider getting a post office box.
7. Understand what the date of separation means so you don’t hurt yourself by filing too early or too late.
8. Prepare mentally. Deciding on getting the divorce is not the hard part. It’s only the beginning. Consider going to therapy, even if you think you don’t need it. If insurance covers it, it couldn’t hurt.
Very frequently I have someone come to me and tell me that their ex is crazy and they just can’t get the judge to see it and understand. They give me dozens of examples of what he or she has done, telling me that it’s just not fair that the judge doesn’t see it. In these cases, there’s generally a couple things going on that we have to keep in mind.
First, the reality is that if your ex is crazy, then there’s a pretty high likelihood that the crazy behaviors spill over to you as well. Of course, your excuse is going to be that s/he makes me act crazy! And this may be the case, but from where the judge is sitting, it doesn’t matter. If you both are acting crazy, then the judge is not going to see a difference in the craziness. We can fix this, but it does take some finesse and strategy. Sometimes you may be doing something that seems perfectly reasonable, but doesn’t look so good to the judge. This is where we can really help, and where our experience really matters – we’ll show you how to fix your reputation in front of the court if it’s damaged.
Second, you have to learn how to back up your claims. If you say your ex is crazy and then give examples of the craziness that do not include hard, verifiable facts, then the judge won’t believe you. For example, if you say you showed up at the appointed time to pick up little Joey, and your ex wasn’t there, then your ex is going to be given the opportunity to respond. Your ex may say you were six hours late, didn’t show up at the right place, or showed up on a motorcycle and wanted to take little five year-old Joey away on it. You need substantiation. If your exchange spot is McDonald’s, go in and buy something and keep the time-stamped receipt. Take a picture of yourself in your car – time and date stamped – showing you were at your ex’s house at the appointed time. If you were ordered to contact a mediator or therapist or other professional and your ex won’t cooperate, then get an email showing YOUR contact and acknowledgement that your ex has failed to communicate. You have to give the judge something to go on.
Finally, you have to learn how to talk in court. Keep your emotions down. Stick to the facts. Do not engage in conversation with your ex – talk to the judge. Be respectful at all times, no matter what. If the judge is not hearing you, ask to be heard on an issue. Say thank you at the end, even if you’ve lost.
You have to gain credibility and use it, which can take time. You also have to distance yourself from the craziness so that you don’t get pulled into it.
Mediation for California divorce & family law disputes: What is it? Mediation is a way for couples to resolve their family law case (divorce, custody, support, visitation, asset division) outside of court. The couple can work with or without attorneys, and they meet with a mediator (that’s me) to discuss the issues before them in their case. Depending on the case, the number of issues to resolve and the intensity of the dispute, mediation can take two to many more sessions. In most of my cases, the issues are resolved in about two meetings.
Why is it helpful? Mediation is helpful for a variety of reasons. First, it’s MUCH cheaper than each spouse hiring their own attorney. Mediation can cost from about $3,000-10,000 TOTAL while just hiring an attorney for ONE spouse can be as much as $5,000 – $10,000 just to start. Second, it’s generally much faster than litigation – many of my mediations are completed within about a month or so, versus 6-12 months in court in even a simple case with little conflict. Third, couples in mediation can come to agreements that the court is not permitted to make. For example, if the couple wants to make provisions for the payment of their child’s college expenses, then they can. The court is not permitted to make sure orders. Fourth, mediation is private, so the couple does not have to air their dirty laundry (and finances) in public court documents. Finally, mediation is a way for couples to OWN the agreements they make. Individuals in a dispute are more likely to disobey a court order handed down by a judge (who doesn’t know you, doesn’t know your situation, and makes a decision based on a few short minutes of listening to argument) than they are an agreement they developed themselves. There’s buy-in for decisions made in mediation, which makes all the difference in the world. As a side benefit, mediators are trained in diffusing the emotions of a family law case…and court proceedings are not really known for this.
Who needs it? Anyone with a family law case who would like to preserve their finances for themselves instead of spending it all on attorneys. Also, family law litigants who want to ensure that their children are as minimally damaged by the divorce as possible.
What’s not to like about mediation?
One of the hot button issues in divorce is child and spousal support. It’s a hot button because it involves money, and money is the leading cause of divorce. Many couples are already tense about money, and when you add in the support issue, things can blow up. The problem is one of simple math:
You have one household surviving on the income of two parties. You take that household and divide it in two when the couple separates, and you have the same amount of money (not enough) now supporting two households instead of one. Ouch.
Regardless of who moves out and who is the spouse paying for child and/or spousal support, it hurts both parties. The one paying can see in his or her paycheck that the amount being brought home is, in some cases, actually smaller than the amount being paid for support. The one being paid just looks at the money coming in and the bills to be paid, and can’t quite see how to resolve the disparity.
Arguments, often heated ones, ensue. The key is to recognize that not only is this going to happen, but to catch it early and address it. It isn’t going to be easy for either of the spouses, and they had better be prepared. Both spouses, in most cases, are working hard to maintain their lives while they go through the difficult time, and a small amount of understanding goes a long way.
Here, I want to ask (and answer!) the question, do you need a will (and when and why). The answer, which might be surprising to you, is absolutely YES! With very few exceptions, everyone needs a will.
In my business and in this blog, I have worked hard to educate others on the importance of an estate plan centered around a living trust. A living trust avoids probate, transfers your property easily upon your death, and allows you to avoid fees and taxes (among many other reasons that you can see in my estate planning blog). But your estate plan has other components, and one of these is your will. In an estate plan, your will is called a “pour-over” will because it’s intended to ‘catch’ any property that you have left outside your estate.
Now, you may be asking, what kind of estate plan is it if you leave something out of it?! Well, sometimes we forget (despite the repeated reminders from our friendly estate planning attorney), and sometimes there’s just not time. If you acquire property and pass away before you are able to complete the transfer to your trust, then you want that will to ensure that your property transfers appropriately to your heirs through the probate process.
But in the context of family law, when and why is a will important? Let’s look at this issue in two contexts because they’re very different. First, let’s look at the time when you are going through your divorce or other family law case (where you are restricted from changing/updating your will) and once the action (case) is completed (where you NEED to update it).
The Automatic Temporary Restraining Orders (ATROs) in the Family Law Summons provide,
“Creating a nonprobate transfer or modifying a nonprobate transfer in a manner that affects the disposition of property subject to the transfer, without the written consent of the other party or an order of the court. Before revocation of a nonprobate transfer can take effect or a right of survivorship to property can be eliminated, notice of the change must be filed and served on the other party.”
What? This basically means that you cannot change your will or living trust during the pendency of your action without written consent of the other party or a court order. Note that this includes severing a joint tenancy on a property (which does not require consent but does require advance written notice). So when you are in the middle of a divorce and you pass away, that house you have in joint tenancy goes automatically to your ex. Ouch. But if you don’t know about these restrictions, then you could get into trouble with the court, which is a bad idea. Also, remember this if you’re thinking of filing for divorce.
Once your case is over, however, you really DO need to update your will. In fact, you most likely need a full estate plan that includes a living trust. Hopefully I have convinced you of that by now. If you don’t, then your out-of-date document WILL control the disposition of your assets. To look at recent examples, Brittany Murphy did not update her will when she got married. Heath Ledger never updated his will after his daughter was born (and that caused all kinds of trouble).
Don’t make their mistakes, and always make sure your estate plan is updated to take into account a marriage, divorce, birth, death, or acquisition of property.
We’re all looking to save money and get our to do list done as quickly and easily as possible. But when it comes to estate planning, quick and cheap shortcuts can end up not only costing you in the long run, but can hurt both your family and your legacy.
For example, if you decide to forego an estate plan for your real property, and instead opt for joint tenancy, then you are at best just delaying the probate process, and at worst exposing your home to complete loss in your lifetime. With joint tenancy, there may not be any need for probate or transfer proceedings at the death of the first spouse (just some simple) paperwork, at the death of the survivor, the property goes into probate, which can take years and cost up to 10% of the gross estate value, which can be in the tens of thousands of dollars even for estates with just a house – even one with substantial debt. Putting a child on title to the property does not solve this problem, and can lead to your child’s creditors seizing the house, the inability to undo the transfer at a later date when needed, a loss of control over the disposition of the house, more complications in transfer at the survivor’s death, and more.
Another shortcut is either being incomplete or too vague in your estate plan documentation. If you have a living trust, it must be funded completely. It does not serve you or anyone else to leave “just that one account” outside the trust since it ‘has so little in it.’ Why leave a small account – or a large one – outside the trust and make it more difficult for your family to transfer it? It’s possible then that the bank will just get your money since it will be too much trouble to transfer the account outside the trust. In addition, if you have provisions for the distribution of your estate, make sure you have alternate provisions in case your beneficiaries do not outlive you. For example, if you are leaving everything to your children, make sure you have a provision for who gets your estate if the airplane goes down and you all pass at the same time.
There are a lot of aspects of estate planning that can easily be completed improperly, costing you, your family, and the estate you worked your life to build. Estate planning is not the place to look for a quick or cheap solution, but rather to take the time to ensure that all you’ve worked for is left just the way you want it.