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.

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

I am working with a client right now to help her file a motion to modify her child and spousal support (alimony). It’s a fairly straightforward motion, but there are several moving parts that complicate things a bit. The incomes of both parties have changed, both parties have moved out of California, and there may be an issue of under- or over-payment of support because both the former agreement and the specific circumstances are unclear (the agreement is contradictory in terms in a couple places, and some payments received by one party were for one thing – severance – but called something else – bonus). Oh, and the other party’s income is from a side business of sorts that the other party claims doesn’t exist (or at least doesn’t lead to any income, naturally!).

This client is also trying very hard to save money because funds are tight. So, with this situation, there are a couple options that I have, as an attorney, in proceeding. I could spend 10 hours on this motion to modify, outlining what’s happened in great detail in the 2 years since the agreement. I could document and chart every payment over the years, and compare it to pay stubs and the agreement, showing the payments were or were not appropriate. I could file a lengthy Points and Authorities about the various legal arguments on each issue. I could send discovery over to the other party to discern the situation with the side business. All of this would be proper and appropriate, but at the same time would also cost this client several thousand dollars to complete. Some attorneys will only handle cases in this way.

But the client doesn’t want to spend thousands of dollars to file a modification of a support order – she wants to modify the support order because she is struggling financially. Usually it’s sufficient in a motion such as this one to explain the situation in the plainest terms and request the modification. As an attorney, of course I want to pull all of the stops and file the strongest motion I possibly can. But family law is more than that. Family law issues must take into consideration the time and fees it takes to prepare documents. It has to take into consideration the reaction by the other side, and subsequent breaking down (or not) of the relationship between the two parties – who are often parents…parents who have to parent together for a lifetime. There is often a very strong interest in maintaining civil relationships in family law cases, and the importance of that cannot be ignored. Pulling all the stops in a family law motion – and making the other side angry – may break down any possibility of an informal settlement/agreement (and no time & money spend on a court hearing) before the process has hardly started. Why close that door unnecessarily? I’d much prefer to be a bit more diplomatic, a bit more neutral in my recounting of the circumstances, so that the door to settlement, the options for agreement without court intervention, stay wide open. There’s always time to fight more aggressively, but if you come across too strongly to begin with, then it can be hard to undo the alienation it caused, dial that back effectively & reach agreement.

All of these things have to be discussed between client and attorney to determine the best course of action, given the client’s all-around circumstances. I know a lot of attorneys who approach every case the same way. Sometimes it’s by going full-out on every case, whether it’s warranted or not. Sometimes it’s the opposite, and an attorney will do the bare minimum in each case. I just don’t think cases and clients can be lumped together that way, in a one-size-fits-all manner. Especially when it’s a family law case, with real and long-term repercussions for real people and children, too.

Clients and potential clients have told me about attorneys who have insisted to them that they “fight aggressively” for every client, on every issue, and that this is their job. There are plenty of attorneys who have this philosophy and act accordingly with their cases – and often, too, are quite proud of their “shark” reputation. Personally I think this is poor lawyering, at best, and unconscionable, unethical behavior at worst. Family law involves families, and figuring out how to approach each client, each circumstance, and each case is a balancing act of strong advocacy at all times, tempered by tact, gentle persuasion when appropriate, and consideration of the situation (and consequences of each action) at every turn. A case may start out both amicable and collegial between the parties, and then turn in to a high-conflict, difficult case requiring “shark-like” tactics. The reverse may also happen.

The point is to (1) meet the client where they are, and not try to force the case or its issues to be either higher or lower conflict than they are (though we always encourage settlement, we don’t encourage it when not fair or warranted), and (2) tailor the response to any situation by taking into account the entirety of the case, client, other party, finances, potential consequences, and circumstances in a holistic manner. Every case is different, so every case should be approached by the attorney in a way that’s consistent with the nature of the circumstances.

We do this because we work closely with our clients to achieve their best possible result, and we believe that tailoring the approach to the client and case is the only way to do that effectively. A highly aggressive approach may be appropriate in some situations, and may even be effective in many court situations, but when there are consequences that can do more harm that the aggressive “win” helped, we don’t think that’s the way to go. When choosing an attorney, I think these considerations are important. You want to be sure you’re picking the right attorney for you, your case & circumstances, and for your family and children.

Today we talked about how family law costs are unpredictable because cases vary so much in general. Tomorrow we’re going to talk about the unpredictability of case fees in another way – how the actions and response of the other side/party make all the difference in the world…and again, can’t be predicted with any accuracy.