Top five excuses to avoid preparing your estate plan…

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 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 heirs 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?
4. I don’t have enough money to need 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? Contact us today to schedule your free estate planning consultation.

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Your pending California divorce case: What to do with your will/trust or estate plan

I have been thinking more about my posting about your will, and I felt it needed more to make it complete. Specifically, IF you have a divorce case currently, what can you do NOW to protect yourself and your children? Divorce cases can last for years. Yes, unfortunately this is true, so we have to hope for the best (a speedy and as-painless-as-possible case) and plan for the worst (an endless case). So if you have a case and the ATROs (automatic restraining orders in California divorce) prevent you from changing your will (or estate plan), here are some things you can do.

First, take advantage of the ability to sever joint tenancy (JT). The ATROs allow you to sever joint tenancy with simply NOTICE to the other party. Sever this JT and should something happen to you, you have the ability to give your half of any real property (a house, for example) to someone other than your estranged spouse.

Second, have a conversation. If you have a lawyer, your lawyer might be telling you never to talk to your estranged spouse. I disagree with this family law case philosophy because (as one of our local judges used to say) YOU are in the best position to come to a resolution of your case. If you stop talking to each other, then hostility can grow and you may be likely to fight more. Now, this approach works well for the lawyer, who gets to funnel ALL of your issues at $450 an hour! It’s better on you, your relationship, your pocketbook, and your case if you’re able to talk to each other. Talk about changing your will so each of you can make an estate plan that provides for your own property to go to the individuals you choose instead of each other.

Third, if you can’t have an informal conversation, bring it up in a formal setting. Whether it’s a meeting with your lawyers, a court conference, or if you add it to the issues to be raised at a hearing, make time to discuss these issues so they’re at least out in the open.

The importance of the Nomination of Guardian: Who cares for your children when you cannot

Say you’ve gone out to dinner with your friends or your spouse or your new beau. The kids are at home with the babysitter, someone you trust but who’s just a teenager. On your way home, the road is wet  and you get into a car accident. When you’re taken to the hospital, unconscious, the police are going to go to your house to check on your children. When there’s nothing in writing saying who should take your children in the event you are incapacitated (I recommend posting this on the refrigerator), then the police will take your children. The Nomination of Guardian can prevent this.

Your Nomination of Guardian states who you want to care for your children if you are not able to. It can be temporary, such as after an accident, or permanent, such as if you pass away. It is critical to have so that you do not have a gap of time in which your children are taken to the police station and sent out to foster homes until the situation resolves itself.

In the case of a divorce or other child custody case, it takes on a new significance because now there are two households involved. BOTH parents should have a custody and visitation agreement readily accessible to them and their child caregivers, and the agreement should be as specific as possible – even if the couple is agreeing and cooperating with each other – to break the “tie” in the event of a dispute. If the agreement/order says, “visitation as the parents agree,” then the police will not enforce that vague order. With a nomination of guardian, if the couple has already chosen one, both parties have to (1) understand that the other parent will be the guardian if something happens to them (unless there are issues of substance abuse, domestic violence, or some other issue that limits custody/parenting time for one parent), and (2) that the person the couple picked when they were a couple might not continue to be appropriate. Because the couple is now separated, there is a significantly lesser chance that they will die together, but that doesn’t mean a nomination of guardian is less important. Each parent needs to decide who THEY think will be the most appropriate person, and create a document memorializing that.

Painful estate planning questions you must answer to avoid disastrous estate planning mistakes

Many of my estate planning clients have put off their estate planning for months, and even years sometimes. Part of this is because death or disability is something we don’t want to think about, and part of it is because some of the questions are difficult to answer.  What my clients do not always understand is that (1) it’s my job to help them to make the decisions, and (2) if they don’t decide, then someone else – a stranger – will decide for them. Here are some questions you need to consider when thinking about estate planning:

1. The guardian for your children. This is probably the most important decision you will make.  In case the unthinkable happens – you and your spouse are out together on date night and get into an accident and are both hospitalized or worse. What do you think will happen to your children, who are at home with the 19-year old neighbor babysitting? The police will likely take your children into protective custody – foster care – until a proper guardian is named.  If you have a formally-named guardian in your estate planning documents (and not some hastily-written page), then you can avoid this awful experience for your children.
2. Who will get your stuff. If you don’t decide who gets your stuff, the state will. And perhaps more importantly than the couch and the jewelry is the estate itself.  Do you have minor children? Do you want them to inherit hundreds of thousands of dollars when they reach 18? Do you perhaps want to hold back some of the estate to pay for college, or at least to let them mature a little before coming into (and losing) a great deal of money right at 18? The only want to do this is through trusts.
3. What do you want the doctors to do if you are in an irreversible coma? If you don’t decide how you want the doctors to treat you and what extraordinary measures will be taken to save your life, then the doctors will endeavor to keep you alive as long as they can.  Do you want to survive by machine alone? If not, then you need to tell someone!  Tell your parents and your children, and create a power of attorney that legally records your wishes.  If you don’t do this, you could cause your family to scramble to determine what YOU would have wanted.
4. Who will help you to manage your assets and estate if you can’t? Most of us are more likely to experience a slow decline than go out with a bang.  Because of the advances in medical and health care, we are living longer and with better-quality lives. But as we slow down, there is a chance that we will start to lose our ability to pay our bills and manage our finances.  To avoid the painful, time-consuming and expensive process of conservatorship, each of us needs to designate someone to make decisions on our behalf if we become unable to.  This is relevant to individuals of all ages, as surviving traumatic brain injuries is getting more and more common.
5. Where are your documents? Part of creating your estate plan in making sure everything is in one place: your will, trust(s), powers of attorney, bank/investment/life insurance/retirement statements, pre-need funeral planning documents, and passwords/keys/online account information.  There is nothing worse than making your grieving family rummage through your stuff to find what they need.

Estate planning is the last thing that you can do for your family to make your passing easier. Isn’t your family worth it?

Why a power of attorney is not enough: Do you have this critical document in your estate plan?

If you created your estate plan more than a couple years ago, you may be missing a crucial piece to the puzzle.  In the past, a power of attorney for health care decisions, which in California includes your advance directive (or living will), was sufficient to name another person (your “agent”) to make health care decisions on your behalf.  But the enactment of HIPAA (Health Insurance Portability and Accountability Act), which was designed to limit the access to your medical records – and was focused on insurance companies – actually resulted in limiting the access to your medical records for everyone, including your agent on your health care power of attorney.

Worse, if you don’t have a health care power of attorney, you may think that your “next of kin” – your spouse, your children, or your parents – will have access to your medical information and to be able to make decisions on your behalf.  Unfortunately, with HIPAA and the stricter privacy regulations on doctors and hospitals, this is not often the case.  While you may be looked to for decision-making, if you want to see the medical records or tests results themselves, for example to get a second opinion, you won’t be able to, not even with a power of attorney.

What’s necessary now is called a “HIPAA Authorization,” which I have been using for a couple years now.  It allows the individuals you designate to have access to your medical records and can save your loved ones from hassle and hardship should you be incapacitated.  I use a separate form document, though my older health care powers of attorney included the HIPAA authorization in the body of the power of attorney.

I’ve talked already about the importance of everyone having a power of attorney once they turn 18, but what is also critically important is that you have all the correct documents in your estate plan as well, and a complete estate plan includes a HIPAA authorization.

Need advice now? Schedule an appointment online, or call us at 925.307.6543.

What is a Power of Attorney? Why is it critical that you have and up-to-date one at all times, once you turn 18?

In California, there are two kinds of powers of attorney: one for finances and one for medical decisions, also called an advance directive or living will.  A power of attorney for finances gives another individual the power to handle your financial affairs if you become incapacitated and cannot manage them on your own, like when you are hospitalized.  While you are unable to manage your own affairs, someone else can ensure that your bills are paid and utilities stay on for when you return.  The power of attorney is necessary because banks generally will not allow access to your accounts without a formal document giving specific permission to someone else, even if you are the spouse, parent, or sibling of the person who is incapacitated.

Similarly, a power of attorney for medical decisions gives the power to another person to make medical decisions on your behalf if you are incapable of doing so due to illness, accident, or other problem.  It specifies what kind of medical treatment you do or do not want, and in the absence of one, the doctors will do all that they can to keep you alive as long as they can, even if you are in a persistent vegetative state.  In addition, in California there is the HIPAA authorization for medical records so that the person who is making your medical decisions can also look at your medical records.

Every individual 18 or over needs to have these three documents.  Sometimes, parents assume that their college-age children do not need these documents because they will be listened to as parents.  This is not always the case, so any child going off to college, or just turning 18 needs to have these documents.  Similarly, aging parents need to have one as well to avoid the difficult conservator process if they become incapacitated without proper powers of attorney.

Have a child heading to college in California? A few legal documents they need before they leave the house

Once your child graduates from high school, they generally head off to college.  If not, they’re probably out in the job market and likely moving out of the house.  Regardless of their plans, they are turning 18 or are 18 already, which means in the eyes of the law, they’re an adult.  What this means is that, even though you’re still their parent, and you may be their next of kin, you may have trouble accessing their medical records or making medical decisions on their behalf should there be an accident or other emergency.

Even if you still cover your child on your health insurance, if your child is 18, you do not automatically have access to your child’s health care records.  There is no special exemption for children until the age of 21.  Here are the simple documents you need to have your child sign before they leave the house, or ideally once they’re 18:

1. Power of attorney for medical decisions and an advance directive.  In California, the power of attorney and advance directive (living will) is the same document.  Signing this simple document allows you to make decisions on your child’s behalf should this become necessary.
2. HIPAA release.  A HIPAA release will give you access to your child’s medical records and to discuss your child’s medical situation with the doctors and other caregivers.  Without this, you could find yourself in court to get the needed access, which is the last thing you want to deal with if your child is injured.
3. Power of attorney for finances.  In addition to the power of attorney for medical decisions, you will want to have a power of attorney for finances.  This document will allow you to access your child’s bank records and pay the necessary bills to, for example, keep the power on in your child’s apartment, or to pay the rent.  It can also become  important if you need to apply for social security on behalf of your child.

These are three simple documents that can help to protect you and your child once your child becomes a legal adult at 18.

Who needs an estate plan? Top 7 reasons why you need one even if you think you don’t. Part II:

Last time, we talked a little bit about the top reasons why you may need an estate plan, even if you think you don’t.  Here are the last three reasons.

1. Your children’s guardian.  Have children?  Have you named their guardian?  Is this document posted prominently in your house in case it’s needed?  If you don’t decide on your guardian, the court will.  The court doesn’t know you, your children, your family, or who you think would be most appropriate (or, conversely, who would NOT be appropriate).  You may not have decided on someone, but you’ve probably eliminated some candidates.  When you name no one, no one knows who you have eliminated, as the job is up for grabs to anyone.  Name your preferences or your very last choice could very well raise your children.
2. Your child’s guardian, part two.  What happens if you’re in an accident and you and your spouse go to the hospital?  Will the police leave your children with the underage babysitter?  No, of course not. If you have not chosen a guardian, and posted that prominently (and told the babysitter), then the police are going to take your children to the police station.  They may very well put your children into foster care while you recover.  While the chance this would happen may be slim, why take the chance?
3. Other documents necessary.  If you don’t have an estate plan, you’re less likely to have powers of attorney, a living will/advance directive, and other necessary estate planning documents.  These documents generally help you when you become incapacitated and cannot make decisions on your own behalf.  Often a spouse is your first choice, but what happens if your spouse is also incapacitated?  You need to prepare these documents to protect yourself and your wishes from being honored if you can’t speak for yourself.

Convinced?

Powers of Attorney: Why do you need them, particularly in a California divorce case?

There are two kinds of powers of attorney: one for health care, and one for assets. They both allow you to choose the person who will make decisions for you in the event you cannot, either due to mental or physical incapacitation. If you are in a car accident and unconscious for several days or weeks, someone will have to make decisions for you regarding your care and treatment (this hospital or that one, this medication or that one, etc.) as well as your finances. Someone will need access to your bank account to pay your mortgage, utilities, etc. so they do not fall behind.

If you do not choose who this person will be, then the state decides for you. If you are married, then your spouse decides. This is still the case if you have filed for divorce but not yet come to a Judgment. If you have filed for divorce, then it is likely that you do NOT want your estranged spouse making medical and financial decisions for you. In that case, you need to create powers of attorney naming someone else.

Everyone who is 18 or over should have these documents prepared to ensure that their medical wishes are followed and that they have someone who can make both financial and medical decisions for them if they are injured or ill, and unable to do so.  Many parents believe that they are the automatic decision-makers for their adult children, but this is not the case.  If you have an adult child, too, they should have a power of attorney naming you as agent so that you can make decisions on their behalf, examine medical records, and handle finances should they be injured or in an accident.

Blended family? Children from a prior relationship? How to avoid these critical estate planning mistakes

As is common, I spoke with a potential new client today from Dublin, and he mentioned that he and his wife had been meaning to do estate planning “for a while” and just now were getting around to it.  I don’t think anyone does it right when they think they should.  I also met with a client in Pleasanton last week, and this couple had a common family set up: one spouse had children from a previous marriage and they were concerned about estate planning.  Here are the reasons why estate planning when you have a blended family (one or both spouses have children from a prior relationship or marriage) is critical – do you really want to take the chance of dis-inheriting your children?

1. Like my clients last weekend, many couples think they have “nothing” and therefore do not need estate planning.  The reality is that if you have $150,000 in gross property (that is, assets – a house, investments, etc. – without regard to any debt, so you can be upside down on your house and still have $150,000 in property for these purposes) in California, then when you pass, your estate will go to probate, which is a lengthy, complex, and expensive court process to resolve your estate. My belief is that anyone with a home in California needs an estate plan – and this is doubly true if you also have children. I do not charge for initial consultations, and one of the many reasons is that I believe that you must make informed decisions about what is best for your family. I don’t want to put any hurdles up in front of you getting the information you need.
2. If you don’t choose a guardian for your children, if you cannot care for them, then the court (and a stranger in a black robe) will decide for you. In a blended family, in most cases, this will mean the other parent will get custody.  In many cases, this is not a problem because custody is shared.  In cases where it isn’t, or perhaps where the other parent lives far away, or there are other circumstances, you may want to designate someone else. For example, say you live in San Ramon and your ex lives in Montana. Your two teenagers have a good relationship with your ex but see him/her for holidays and some time in the summer.  Should something happen to  you, it might make more sense for the teens to stay with your current spouse until they reach 18, and keep some stability in home, school, friends, activities, and time with your ex.  If you don’t have a conversation about this ahead of time, however, it could turn into a mess where your children are not only grieving the loss of a parent, but also are the subject of a custody battle.  If you don’t decide? Someone else will.
3. Do you really want to disinherit your children? Many of us somehow think we know how our lives will play out.  Many couples assume they both will live long, fruitful and healthy lives, and then the man will die first, followed not too long by the woman. In the case of a blended family where the wife is the one with children from a prior relationship, this may work well.  When the husband dies, everything goes to wife and she distributes her estate as she wishes, to her children.  But what if it doesn’t happen that way? What if something happens to wife early in life – say in her 50s – and the husband goes on to live another 30 years, remarries, and has a ‘second’ life with his new wife and family? Without estate planning, everything of the couple’s goes to the husband when the wife dies, and then 30 years later when the husband dies, there may be nothing to go to wife’s children, or husband may be estranged from them of merely closer to his wife and the family he built with his wife over 30 years.  ONLY estate planning with a living trust (i.e. not a simple will) can avoid this very real potential situation.

An estate planning attorney’s job is to make sure that you and your family, and what you want to happen with you, your family, and your estate, are protected regardless of what happens in the future.  We all love our family more than anything, so what are you waiting for to protect yours?