So you have a living trust! Congratulations…now here’s some tips on what to do with it

Where to keep it, when to update it, and what to do with it:

o Keep your estate plan in your house, accessible to your family. If it’s in a safe deposit box when something happens to you, your family may not be able to get to it.
o Tell your family, and particularly your successor trustee, where your estate planning documents are located.
o Keep a copy (it does not have to be executed; I give my clients a blank copy) in a safe place, such as a safe deposit box in case your original is destroyed or lost.
o Review your estate plan each time there is a major life event in your family, such as a birth, death, marriage, or divorce. Also review it if you’ve bought or disposed of real property.
o Barring major life events, review your estate plan every two-to-three years to make sure it still reflects what you want. You can spend 15 minutes skimming through the summary sections to ensure you don’t want to change anything.
o Give your power of attorney for health care decisions and living will to your agent (the one who will be making decisions for you), and if it’s your spouse, also give one to the successor agent.
o Give your power of attorney for health care decisions and living will to your doctor(s) for your file, to the hospital if you have one you would go to in an emergency, and to your pharmacist.
o Give your power of attorney for your property to your agent or successor agent as well as to the institutions they will likely be dealing with, such as your bank, your financial advisor, or other account managers.
o Give your named guardian and conservator the nomination documents and make sure all caregivers know about them and how to find the documents in an emergency.
o TALK to your family about your wishes, your plans, and who you have designated as agent, conservator, and guardian.

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Estate planning when you don’t have children or other heirs

Most of us first think about estate planning once we have a child. We know that having a child means we have to create something to secure our children’s future should something happen to us. But what about when there are no children? I have several clients who fit this profile in various areas in the Bay Area, and I have done estate plans – created living trusts – for single and married, childless, individuals and couples in Oakland, San Leandro, Lafayette, Fremont, and Hayward, among others.

There are a variety of different options for you if you don’t have children or other natural heirs. You can leave your estate to your siblings, parents, or other relatives, such as cousins. One client of mine set up an educational trust for her younger family members to help them to pay for college. You can use the opportunity to support a charity, as one client of mine is supporting a local animal rescue charity in her estate plan. In addition to animal charities, there are a wide variety of disease and disorder charities that are always seeking donations. Schools also will gladly accept donations in the form of bequests, so you can support a school that helped you to get where you are. One of my estate planning clients is leaving a substantial grant to UC Berkeley in their trust.

If you don’t create an estate plan and don’t have natural heirs, then your estate will go to the state. While you may not think this is too terrible, perhaps since you didn’t know exactly who to leave your money and assets to, I urge you to consider this:

1. What do you want your legacy to be? Leaving it to no one – the state – means there is no legacy at all.
2. There are so many deserving, hard-working, underfunded charities out there. Isn’t there at least one you would like to support?
3. You worked your entire life to create your estate and your legacy. Why not leave it to a cause important to you?

Estate planning is more than legal documents: Ethical Wills

When I work with clients on their estate plans, I work with them on the legal aspects, such as their living trust, will, and powers of attorney.  But I also work on other aspects of their estate plan and getting their affairs in order.  For example, I work with them to talk to their family about their estate plan.  I work with them to pre-plan and pre-pay for their funeral needs.  Happy stuff, right?  Well, it may not be the most desired of conversations, but –

• It’s necessary.  If you don’t want to talk about it now, you will at some point.  And if you wait too long, you may not get the chance.
• Once you talk about it once, especially with someone uninvolved like me, talking to the family becomes much easier.
• If you knew what you were doing to your family but not having the conversations, and making them guess at what you want, then you would never leave anything unsaid.

Another thing that I talk to my clients about is an “ethical will.”  An ethical will is a document where you share your life lessons, hopes, dreams, values, history, faith, love and forgiveness with your family, friends, and community.  Gaining in popularity in the last several years, there are several online websites where you can record your ethical will and keep it, or there are forms you can download and/or purchase.  For my clients, I ensure that they have the document then need to record everything they would ever want to, such as the items noted above, in addition to genealogical, medical, military, and other histories as well as other pertinent information.

As we get older, the desire and need to leave a legacy becomes stronger and stronger.  We want to be remembered, for our lives, for our contributions and for our love.  As long as we are remembered, we stay alive.  Creating an ethical will is a way to leave that legacy that is so important.

Trusts and debt payment

I am often asked whether creating a living trust will allow the creator to avoid their debts: their mortgage, their credit cards, their other loans and secured debt.  The short answer?  No.

Living trusts are generally created to avoid probate, estate taxes, and allow one generation to pass assets along to the next generation with a minimum of hassle and expense.  Once you pass away, your successor trustee still has to determine what your debts are, pay them from your estate, assess taxes, and then distribute your assets according to your wishes.

What my debt-averse clients may be thinking of is a spendthrift (or asset management) trust, which does in fact protect the assets in the trust from the beneficiary’s creditors.  Spendthrift trusts are used when an individual or couple want to leave money to someone, usually a child, but don’t want to leave a large amount outright, or all at once.  So, for example, the beneficiary gets a certain percentage or amount at regular intervals (or for specific expenses, like education or health or living expenses), but is not entitled to the entirety of the money until a certain time or age.  In this case, should a creditor come after the child and the money in the trust, so long as there are restrictions placed on the disbursements to the child, then the trust money will be protected against the creditor.  This can mean  a great deal when, for example, there are millions in the trust and the beneficiary gets into a serious car accident with large liability.

In general, however, living trusts do not let you get out of paying your debts. The only way to get out of paying your debts is to not leave enough estate to pay them…which I would not recommend to anyone!

Estate planning for same sex couples in California

California has made some strides toward equality for same sex couples, but it cannot be said that there isn’t still a long way to go.  As unfair as it is, same sex couple have to do more: prepare more documents, plan for more contingencies/eventualities, update more frequently – than their heterosexual counterparts.  The worst thing that a same sex couple can do is bury their heads in the sand, hoping or assuming it’s ok not to put anything in place – that somehow, some way, it’ll all be taken care of should something go wrong.

Uh, no.

Even in the best of circumstances, what you effectively do when you don’t plan is place an enormous burden on your loved ones; the ones who have loved you and cared about you the most, and the ones you have loved and cared about the most, are going to be put in a horrific situation should something happen to you and you haven’t planned for it.  And this horrific situation, not only does it come at a time of grief for your loved ones, but it is entirely avoidable.

Some tips to get you started:

1. With no estate plan (will, trust), you die intestate (i.e. the government decides your estate plan) and the government’s plan discriminates against same sex couples.
2. Without powers of attorney in place, the parents who threw you out of the house when you came out could be making medical and financial decisions for you if you’re incapacitated.
3. Being a Registered Domestic Partner in California, or married, does not change these points in their entirety.
4. Holding your property in joint tenancy with your property will not avoid the problems here, plus they could work to DIS-inherit your children and/or cause additional problems down the line.
5. Not choosing a guardian for your child(ren) could mean they end up in foster care should something happen to you.
6. Without a living trust, probate fees could take up to 10% of your gross estate (your estate not taking debt into account) and take 2-3 years – if not more – to resolve.

The best way to take care of your family when you are a same sex couple is to put an estate plan in place.

When to update your estate plan

I am often asked when an estate plan should be updated, and in fact I have written on it before.  But it is important to revisit from time to time, particularly when there are new estate laws as there are now.  In general terms, an estate plan should be reviewed in two instances:

1. Each time there has been a birth, death, marriage, divorce, acquisition or disposition of property or a business in the family, and
2. Every 1-2 years.

By “review” I don’t mean we need to dig up the binder (you do have a binder, right?), and pore over it, page by page.  No.  What I mean is that we need to think about what is in our estate plan.  You should know it in detail because your lawyer explained it so well to you during the process!  So, you want to review who your beneficiaries are, and whether the property distribution you’ve selected still is appropriate.  You want to review who is your successor trustee/executor, as well as who acts as your agent on your powers of attorney.  Have you changed your mind about your advance directive?  These are the questions you should ask yourself, and it really should not take more than 20-30 minutes.  Go through any changes in your family, and see if those changes, or anything else that has happened in the last year or two, make you want to change your estate plan.

In addition, if you have created your estate plan in the last five years, you may want to contact an estate planning attorney now to make sure your estate plan is still the most appropriate for you given the new laws and tax exemption.

In any event, if you have an estate plan that was created before 2008, or powers of attorney created before 2003, you really need to get an update, or at least an opinion on whether an update is necessary.  I don’t know about other estate planning attorneys, but I don’t charge for an estate plan review, even for those estate plans I’ve not created myself.  So what do you have to lose?

Putting your affairs in order: what documents to collect to save your family

Generally, we think of “putting our affairs in order” as something we do after we get the terminal illness diagnosis from the doctor.  There are many reasons not to wait for that time to get your affairs situated, but I’ll leave that for another time.  Today I want to talk about what it actually means to get your affairs in order. First, though, let’s see why it’s important:

Have you ever been the one “in charge” after someone has died?  No?  Imagine this: your nearest and dearest loved one has passed away.  You’ve talked to the hospital and picked a mortuary, so that’s a process that’s been started.  It’s really hard to talk about your loved ones “body” or “remains” while you’re still trying to process the loss in the first few minutes or hours.  But then you feel like you have to DO something, so you head to the house to see if you can find the “important papers.”  Two things can happen at this point:

Scenario one is that you arrive, and already know where the estate plan is, and head right for it.  With it are all of the life insurance policies, retirement and bank accounts, instructions, pre-need funeral planning receipts and contact information, and smaller things like an address book to get in touch with all his/her friends, a locked box (which you have the key) with all of the computer passwords, safe combinations and the like.  There seems to be a lot to do, so you contact the estate planning attorney, who, after asking you a couple questions, says, “there’s nothing to worry about and nothing to do.  Take care of you, your family, and the final arrangements.  Then call me back in a couple weeks if you have questions, but the instructions should all be there…just don’t worry about it now.”  So this is what you do, as you start calling friends and family members and bracing for the days ahead.

Scenario two is that you arrive, and don’t know where anything is.  Does s/he even have life insurance?  Where are the bank accounts?  Was there a will?  Where is it?  You start tearing apart the desk, closets, cupboards,…and find nothing.  Now you’re grieving, in shock, have a million things to do, and now you can’t find anything.  This adds to your stress, so you call in other family members, who are now tearing apart the boxes in the garage.  Everything is chaos, and still no information.  It’s overwhelming to the family.

Which would you prefer your loved ones experience?

The former?  GREAT choice.  Now, here’s what to put in the file:

1. Your estate plan, with trust and will.
2. Your powers of attorney.
3. Your life/long-term care insurance information.
4. Your retirement information.
5. Bank account information.
6. Pre-need funeral planning documents.
7. Investment account documents.
8. Deeds of property, such as homes, vehicles and boats.
9. Health, disability, auto and property insurance documents.
10. Income source documents (social security, employment, investments, child/spousal support).
11. Credit card statements and evidence of other debt.
12. Important papers, such as marriage/birth/death certificates, passports, tax returns, military or genealogical records.
13. Names/contact information of trusted professionals, such as accountants, lawyers, financial advisors, gardeners, house cleaners or caregivers, home repair professionals (electrician, plumber, roofer, chimney sweep, etc.).

And one final thought: make sure you have at least one trusted friend or family member who knows where it is and what’s in it.

Have step-children or a step-parent? Are you one? How to avoid disinheriting your family

Estate planning presents unique issues for blended families.  Blended families are families in which one or both parents have children from a previous relationship.  The problem comes when one spouse dies without an estate plan, or an old or outdated one.  Generally, when spouses hold property in California (or anywhere in the US), they hold it in joint tenancy.  When one joint tenant dies, the other one gets the entire property.

Can you see where we’re going with this?

When one spouse of a blended family dies, then the other spouse generally gets all the property of the couple, often by default.  When it comes time to distribute the assets at the death of the second spouse, the second spouse can essentially disinherit the first spouse’s children.  The second spouse, with all the property in his/her name, has control over the ultimate disposition of the property.  If there is a family rift between the second spouse and the step-children, if the second spouse is negligent in creating an estate plan providing for the step-children, or in other cases, then the children of the first spouse to die can be left out in the cold.

Don’t leave your children out in the cold by failing to provide for them with an estate plan.

An attorney who makes house calls?!

Yes, I make house calls.  In fact, the majority of my appointments are in my client’s homes.  I do have an office in Dublin, but I find that the house calls are more common, more appreciated, and better all around.  Here’s why:

1. Many of my clients are older and appreciate not having to travel to an appointment.  I had a client who lived just about 6 miles from my office, but in his mind, my office was in another country!
2. I offer flexible appointment times, such as weekends and evenings, so making the appointment at a client’s home is easier for travel.
3. I appreciate being able to avoid Bay Area traffic, so I work with my clients so we all avoid it.
4. I am not the kind of attorney who sits in her office all day, waiting for the phone to ring, so I am often on the go anyway.
5. It’s not weird.  Really, it never is.  We usually sit in the dining room, at the table, and everyone is more relaxed and comfortable.
6. Ah, comfort.  No one likes to talk about their eventual demise and dividing up their stuff amongst their family.  Being in a safe, familiar environment instead of a stuffy attorney’s office can make it easier (not that my office is stuffy!).
7. Range.  I work with networking partners who work all over the Bay Area, and if I have a referral from Santa Rosa or South San Jose, I can work with them due to my willingness to travel.

My tag line is “Unlike any attorney you’ve ever met.”  I use this because many of my clients, friends and referral partners tell me this.  I want to blast the stereotypes of lawyers being distant, hard to reach and talk to, stuffy, boring, inflexible, and dismissive.  I know that my clients are putting their lives into my hands, so I want to treat that as if it is the most precious gift, as it is.  My clients and their families deserve the best, so this is what I give to them.

Estate planning for new parents

Your bundle of joy has arrived, and now you’re trying to figure out the new schedule and when you’ll ever get any sleep again.  Also, in the back of your mind, you know that you should probably “do something” about your will or figure out what will happen should you pass away.  Now there’s another life to worry about!  But time passes, you don’t know what to do or how to do it, or who to ask, so it gets placed on the back burner.  Suddenly Junior is 14 and you’re dealing with the death of your parents.  What are the things you wish you had known when Junior was a baby?

1. The time to do your estate planning is NOW.  Should both parents be in an accident and hospitalized for a period of time (or, obviously, if you die), Junior could end up in the court system and/or in foster care.  If you do not choose who will care for your child if you cannot, then the court will decide.
2. Having the court decide who will be the guardian for your child is NOT what you want.  When the court decides, the court does not have the time or ability to distinguish between your crazy Aunt Rose, who you have not seen in years, who lives in a small town in Arkansas (not that there’s anything wrong with Arkansas) and can’t seem to keep a steady job, and your sister and brother-in-law who are close to the entire family and would be the perfect guardians.  If YOU don’t decide who is going to raise your child, a stranger will.
3. Not being able to decide on who your guardian will be it not a good excuse for delaying your estate plan.  A good estate planner will help you decide.  In addition, while you may not have decided definitively, you have probably narrowed the field among the options.  Remember, the court won’t know who you have ruled out.  I can help you to know what to think about, what to consider in making the decision, how to make the decision, and how and when to change it.

Don’t wait.  Once you have a child, it’s time to put your affairs in order.  You love your family and you love your child: it’s them, not you, who will suffer if you neglect these very important tasks.