Estate planning “musts” to take care of NOW

I often get asked what the most basic “must dos” or “must haves” are in estate planning.  Here is the answer:

1. Talk to an estate planning attorney.  Most, like me, offer free consultations, so you don’t have to spend anything but time, and then at least you’ll know and understand your need and risks, and be able to make informed decisions
2. Talk to a financial advisor.  See above – you only lose your time, and if you find a reputable one (your estate planning attorney should know several fantastic ones, as I do), then you can make sure that as  you grow older, you are working toward your financial goals.

Those two items will give you all the information you need.  But more specifically:

1. If you have children, decide on and formally nominate a guardian to care for them if you are unable to.  If you don’t decide?  A judge – a stranger – will make the decision for you.
2. Create a will or trust.  If you don’t decide who will get your stuff, someone else will.  You’ll also pay a lot of money for the privilege.  Again, talking to an estate planning attorney to find out your risks and options costs nothing.  Why remain uninformed?
3. Make sure you have enough life insurance.  What you think of as “enough” and what is really and truly “enough” should your spouse die may be entirely different amounts.  If one spouse doesn’t work, and the working spouse dies, wouldn’t you want to have enough life insurance to allow the survivor to take time to grieve, take care of the children, and then think about work, instead of having to worry about finding work right away?
4. Make sure your retirement and life insurance beneficiaries are always up to date.  If you’ve been married for 20 years and your life insurance names your girlfriend of 25 years ago when you pass away?  Then your girlfriend gets the money and your wife doesn’t.  Is that what you want?
5. Make sure you have long-term care insurance if you need it.  A financial advisor can help you to decide on this, and the earlier you get it, the cheaper it is.
6. Make sure both spouses know and understand the family finances, even if one spouse does the day-to-day management.  Do not get caught in a situation where one spouse dies and the survivor does not even know what accounts exist.
7. On that note, put your paperwork in order, or at least in one place.  Even if it’s disorganized in a drawer, make sure all the important paperwork, account statements, estate plan, life insurance, etc. is all in one place and easy to find.  Should you pass away, your family will be going through a rough enough time as it is – don’t make it worse by leaving a scattered financial life.

None of these items are difficult or even time-consuming, but they mean everything in the world to your family should something happen to you.  What are you waiting for?

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Estate planning for the digital age: what critical item most estate plans fail to include

I read a great article this morning about the failure of most estate plans to include information about computer account passwords and all of the transactions we do online on a daily basis (Estate planning for iTunes, passwords, and other digital assets). This is a great article because it highlights a problem in ‘modern’ estate planning.  A lawyer may be preparing your legal documents: your will and trust, and powers of attorney.  Your financial advisor is working with you to ensure that you have enough wealth to live out your life, and resources should you become disabled.  But who is assembling the information about your Amazon.com account (and perhaps an auto-ship of vitamins or other health care items)?  Who is ensuring that successor trustees or executors have access to online banking accounts to manage automatic payments. When you use a power of attorney (POA) to handle the finances of another, a copy of the POA goes into your file, but when you’re operating online, who is checking?

These are financial concerns, but there are also personal concerns here, too.  If a loved one of yours passed away suddenly, would you know everyone to contact? It’s likely that they have a contacts list on their computer or smartphone, but is the computer, smartphone, or even the contacts application locked? The same goes for email addresses and even Facebook. Your mom may have really taken to Facebook and rediscovered old friends from all aspects of her life.  When she passes, what do you do with that account?

In my estate plans, I always include a fillable book that can be used to record all of these kinds of information, and more.  I consider it to be my job to ensure that your whole estate and all of your affairs are taken care of when you’re finished with me. Sometimes I refer to other experts in other professions, and obviously I can’t force you to record your passwords and security codes anywhere, but I can let you know that this is a critical aspect of your estate plan, and encourage you to complete as much information as you can for your family, since the more you have available and accessible to your family when you pass, the easier it is for them. Who doesn’t want to do everything they can to make it easier for their family?

Did your estate planning attorney talk to you about estate planning for digital media?

Can a nursing home in California kick out a senior resident for being unable to pay the bill?

No – even if the nursing home is trying to convince you that they can. They cannot. But you should act quickly to take advantage of the options you have to pay for care. Give us a call at 925.307.6543 or click here to make an appointment directly using our online scheduling. We have offices all over the Bay Area for your convenience, with our main office in Dublin and satellite offices in Oakland, Walnut Creek, San Francisco, San Mateo, Palo Alto, Sunnyvale, San Rafael and Antioch.

How to save money in California divorce

Divorce can be very expensive.  Not only are you separating households, now working with the same funds but supporting two homes (and two rents/mortgages, two sets of utilities, expenses of duplicate furniture, etc…), but you may be taking time off work (unpaid, of course) for court hearings, spending money on filing fees, and – of course – hiring a lawyer.  And lawyers?  Can be very expensive.

I do what I can to keep the costs down for my divorcing clients, from offering flexible options for payment (no, not monthly payments but I generally try to “break down” the case into more financially-manageable pieces for the client), family law coaching, and divorce mediation, but the cost is not entirely under my control.  What my clients do – or don’t do – essentially drives the path and cost of the divorce.  So, regardless of whether you have an attorney or not, here are some ways to keep the costs of your divorce down:

1. Manage your emotions.  Divorce is incredibly difficult even in the best of circumstances.  It is likely that you have some strong emotions around it.  But the court and legal process generally will not be concerned about these emotions, and the more  you bring them into your divorce, the more you will likely pay.  Whether it’s spending excessive time with your attorney discussing the emotional issues or pursuing a losing issue because of an emotional attachment, emotions can bankrupt you when they take center stage in your divorce.
2. Get professional help. As a part of managing your emotions, get the support you need for them by finding qualified mental health professionals to help you through it.  Your lawyer, your family, and your friends will be a great support during this time, but do not mistake any of them as qualified advice helping you through the roller coaster of emotions in divorce.  Find a therapist if you need one.
3. Get – and get rid of – qualified professional help when appropriate.  Hire professionals who are going to work with you, for you, and who are on the same page as you.  If you feel like your lawyer doesn’t care, or is gouging you, or won’t pay attention to you or return your calls, then get rid of him/her.  Your divorce is yours, and you should have legal counsel that you feel comfortable with, who understands what is important to you, and who is reasonable and professional about fees.  Same with your therapist.
4. Play fair.  The court and legal process in California has no patience for bids for revenge.  Mud-slinging and nasty declarations for the purpose of hurting the other party can not only rebound and hurt you, but can cost you unbelievable amounts of money.  They also drag on the process, increase the hostility between you and your spouse, and ultimately hurt your children.

The probate process in California

Many people know that it is wise to create an estate plan that allows your estate to avoid probate when you pass away.  But few know or understand why probate it something to be avoided. One of the ways to understand it is to take you through the process of what happens when someone passes away.

For our purposes here, imagine for a moment that it’s not you that is passing away, but rather your closest family member – except for this discussion let’s choose someone other than our spouse.  Take a quick moment to think of how difficult that would be to lose someone you love so dearly.  And now, imagine all that there is to do when someone passes away:

1. There’s the funeral, which generally happens pretty quickly and plans are made within hours of the death.  There are decisions to be made about clothing, caskets, scheduling day and time, who will read, what will they read, will there be a gathering afterwards, will there be food, where will it come from, who will be invited…it’s overwhelming.
2. Then there’s the will – is there one?  The life insurance, the retirement accounts, the bank accounts.  You go to the house: do you know where your loved one keeps the important documents?  Would you be tearing apart the desk, the file cabinet, the drawers?  What would you find?  How would you feel about having to search?

REMEMBER:  This is all in the first few hours and days after the death, at a time when the loss is most shocking, most raw, and most difficult to deal with.

1. Once you find the documents – did you find them? – you have to figure out how to transfer the property, and generally – without a plan – this means the probate process, which we’ll talk about in a minute.
2. In come the lawyers, the lawyer’s fees, the appraisers – the strangers, in your home, in your life.
3. To transfer the property, the pay the debts, to sell the house – or even transfer it – to get access to the bank accounts…all of these things can take weeks, months and years.
4. The probate process, which is the court procedure for transferring your property when you don’t have an estate plan or have just a will, is a long, arduous process.  It involves:
   1. Multiple court hearings and appearances, lawyers, accountants, appraisers…
   2. A timeline of 2-3-5 years…or more
   3. Cost:  A huge cost.  Probate fees and costs can take up to 8-10% of your gross estate – that’s your assets not including your debt, so if you have a house worth $300,000 and nothing else, probate fees can be up to $30,000
   4. You have – your family has – worked your entire LIFE to create and build your estate.  Why give it to lawyers and courts?

In the probate process, while the cost is a big consideration, the time is also key because you and your family need and want to move on from the death and the grief, and when the probate process continues on for years and years – and you can’t sell the house, and you can’t get access to the accounts, then it drags out the normal emotional process way beyond what is healthy.

Does this sound like something you want to go through?  Something you want to put your family through?

Now, what if I were to tell you that there is a BETTER WAY?  A way to avoid ALL of this trouble?  There is, and in fact it’s pretty easy to set up. If you create your estate plan, and within it a living trust, then you can avoid all of the probate hassle. You can even do your estate planning online with us! Click here to access our online estate planning portal.

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: Will a living trust protect me from my creditors?

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. Living trusts are critical for any family to have, and have many advantages, but they do not shield assets from creditors.

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!

Privately paying for nursing home care in California? How you can qualify for Medi-Cal benefits

It’s a common misconception that one cannot have any assets to obtain Medi-Cal benefits in California. The rules that most of us know about (you can’t have more than $2,000, for example) leave out the rest of the story as well as the options available for you and your family. In fact, the reality is quite a bit more complicated, but it’s this complexity that opens the door for planning. If you’re paying for a skilled nursing facility with private money and assets, then the likelihood is high that you could benefit from planning and reduce (or eliminate!) your share of costs as well as protect the remaining assets from Medi-Cal recovery. At $10,000/month or more for skilled nursing care, what do you have to lose to find out if you can stop the bleeding of assets? We offer a complimentary analysis of your situation for Medi-Cal eligibility. If you download and fill out this form, we will get back to you within 48 hours with a preliminary report on how we can help you qualify for Medi-Cal benefits. Click here for the FREE Medi-Cal Eligibility Form.

How much is this going to cost me: why attorney fees for divorce and family law cases are so hard to predict: Part II

Yesterday we talked about how family law/divorce case fees are hard to predict because every case is different. Today, we’re going to talk about how the other side makes things unpredictable as well.

In discussing how we approach our family law cases, we made it clear that we look at each case individually, and determine strategy depending on what that case, that client, and that specific issue requires. Generally-speaking, you’d think that, with time and experience, we’d be able to make estimates or educated guesses on the total cost of a family law or divorce case. Unfortunately, there’s another variable in these cases that throws a wrench into that theory, and sadly, blows it all apart: the other side.

We don’t know what the other side is going to do.

When we talk to a client, we talk about the current relationship between the parties and potential reactions to whatever action we’re contemplating. We talk about tone for declarations and proposals. We talk about the need to be gentle where needed, and more aggressive in other situations, where appropriate. We talk about options the other side might agree to, and what are more likely to be sticking points. Our goal is to get the result that our clients wants, and part of that is understanding how to present ourselves and our case to get that result from the other side or from the court. But that’s just step one.

Ultimately, though, we don’t know what the other side is going to do.

We’ll present our argument – whether it’s to the court or to the other side directly (or most often, both at the same time in a Request for Order) – in a manner that we think will maximize our chances of getting what we want. But then it’s time for the other side to respond to our request.

Initially, it’s a pretty fair assumption to make that the other side will get some advice in determining what to do. They most likely won’t respond, agreeing or not, based on just conversations between the spouses or what they think they know about divorce or family law. They’ll look for advice. That advice could take the form of talking to a family member or friend, whose advice could be spot on, but is more likely to be utterly inaccurate. The advice could be in the form of internet research, which could be as helpful as it is harmful. The advice could take the form of consultations with an attorney or several attorneys, each of whom could have different approaches or advice. The advice could, of course, be the hiring and retaining of an attorney for the other party, which is most often what happens.

Before we move on, I want to make one point clear. Regardless of whether the other side has a great attorney or not-so-great attorney or no attorney, we must respond to what they do. So if they file unnecessary motions or react explosively to every little thing, then we have to respond. If they have an attorney who is hard to get in touch with – or they don’t have an attorney and are hard to reach – then we have to work harder (i.e. spend more time and money) to get things done. If the other side hires one of those aggressive attorneys we discussed yesterday, and send over a mountain of discovery on a simple case, we still have to respond. In this way, the actions of the other side have a lot to do with how much any case costs. In fact, each side contributes almost equally in determining how much a family law case costs. The difference is that we can only have any control over what our side does.

So, by not knowing – or having any way of knowing – what the other side is going to do, we just can’t make any predictions as to the total cost of any of our divorce cases. No one can. We don’t know if the advice they get will be good or bad. We don’t know if they’re going to hire an attorney who is both responsive and reasonable – like we are – and thus allow us to keep fees down. We don’t know if they’re going to hire someone who will do everything they can to drive up the fees. We don’t know if they won’t hire anyone, and will make mistakes or emotional decisions, being unreasonable & delaying the process because they can’t handle it or don’t know what to do.

All we can do is control what our side does, and keep in close contact with our clients to be sure our approach is consistent with what the client and case needs. Tomorrow, in the final Part III of this series, we’ll talk about ways to keep attorney costs down.

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.