Estate Planning

Saturday, August 14, 2010

The Will did Not Work

Horror Story

The Will Did Not Work

In a recent posting, I mentioned horror stories that family members sometimes face after the death of a loved one. Believe me, they are real.

Here’s one. The gentleman drafts a will on a computer program and says he leaves “everything to my son.” But he had two sons. After his wife divorced him, the second son was adopted by the stepfather. The man who died wanted everything to go to his first son; he had absolutely nothing to do with the second son. But under the law, because of the vague wording of the will, the second son was entitled to 50 percent.

That’s the law and because he didn’t plan for it… And this is really a horror story, because he drafts the will and then he kills himself. The first son should have gotten it all, but he had a chance to lose it all – except that the probate was handled by a good attorney. We were able to work around it.

The worst thing is to have no will at all. The reason that’s the worst thing is that you have to pay for probate. You have delays and you run the risk of the siblings arguing about who’s going to be in charge. This is especially problematic if it’s a dysfunctional family and there are disagreements about how the estate should be divided.

If you have no estate plan in place and your home is worth less than half a million dollars, the automatic probate cost is $26,000. If the home is worth $1 million, the cost your relatives will have to deal with is $46,000. But if you have set up a probate avoidance trust, the cost would be $3,000, maybe $5,000 at the most. It’s a big savings.

If the deceased person had set up a probate avoidance trust, within days after the death, the successor trustee can take over. You’re not fighting over who’s in charge. In addition to saving more than $20,000, you’re also making it easy for your family to get through an emotionally charged time.

Saturday, July 24, 2010

It's For Those You Leave Behind

It’s For Those We Leave Behind

People spend considerable time planning for their retirement, but many neglect one of the most important aspects of personal and family planning – estate planning.

Everyone should have a legally accurate and complete plan for the administration of their estate after they die. Remember, you do this for those you leave behind, not for yourself. They are the ones who will bear the burden. You can lighten that burden if you take advantage of the opportunities that are available in estate planning.

It’s your obligation to protect your family members, to save them the headaches and legal problems after you’re gone. Many of you know people who have suffered through such trying times while mourning the loss of a loved one at the same time.

I do this all the time, so I don’t think of it as difficult. But it would be difficult for my wife. I did my planning to protect her not for me.

I’m a family person. I’ve got eight children and a handful of grandchildren. I’ve been focusing my practice for the last 15 years in the areas of estate planning and estate administration. I’ve been practicing law for 30 years. I’m here to listen to you and help you make the very best personal decisions for you and your family.

When someone dies without having a legal representative for their estate, no one can access the deceased person’s assets. They’re all frozen. You can’t get to their bank account. You can’t do anything with their real estate. Everything’s frozen until somebody has authority to act. And even if that person has a will, you don’t get that authority until a judge grants it to you.

If you and your wife have a joint back account and you die, your wife probably still will have access to it. But if there are assets that are not joint, she’s locked out.

If you get the proper legal assistance to make sure your estate is administered correctly, you will avoid the kind of horror story I deal with often in my business.

Saturday, April 17, 2010

Quiz -- Do You Need Estate Planning

Do you need to do estate planning?

Your response either    Yes or   No then decide if you need estate planning.

Are you going to die        
Have you been married more than once        
Do You Have 2 or more Children        
Do your children have imperfections        
You do have children or if you have no children do you like all your brothers and sisters and all of their children        
Are all of your children are perfect all of the time        
You want your children to fight over who will be in charge of the estate        
Do You want to give your family guidance for the future        
Are all of your sons and/or daughter in laws are perfect        
Do you care if the majority of your assets are consumed getting your estate to your family        
Do you care if your heirs are in harmony over their inheritance        
Do any of your children need government benefits        
Non of your children will ever need government benefits        
Do you love your children        
Do you give over $1,500.00 to $5,000.00 to charities so they can help strangers and would rather give the money to the charity then to your children.        
Your spouse is perfect        
Do you want to protect your children if your spouse re-marries        
You do not want to protect your spouse if your spouse marries again        
Do you want to preserve your Legacy        
Do you want your children to receive your core assets and experience assets        

What do you think, do you need estate planning and should you talk to an Estate Planning Attorney? Only those who answer the questions Yes need estate planning.

Sunday, April 04, 2010

Do you know why people do not plan?

    I need your help answering this question.
Why Do So Few People Have An Estate Plan?


    I am sure you have never asked that question and frankly I don’t dwell on it myself.  I am an estate planning attorney and in the estate planning community the fact that only 35% of the population has an estate plan leads my peers to conclude that there is potential for a great amount of business.

    I am not sure their conclusion is correct.  I saw a survey result recently that causes me to conclude estate planners have it all wrong.  People do not have estate plans because they just do not care.  It is not important to them.  It is not because they do not want to talk about death and taxes.  It is because no one is talking to them about what is important.

    Americans are Explorers.  We are a people who are comfortable with uncertainty, 60% of Americans “tend to enjoy the uncertainties of life”.  Only 33% tend to avoid uncertainty and want everything in life to fit in a neat box.  Most of what we have IE., our financial wealth and our stuff we acquired through our hard work as a result of our experience and values.  Things were not neatly boxed up and handed to us.  We took what we had in an uncertain world and made something out of it.  Therefore if we could do it so could our children can do it.

    Over the years I have talked to many parents who have said, “let our children work it out”.  Or we have taught them well and they are prepared to work it out themselves.  Or I just don’t care what happens after I am gone.

    I think estate planners are not offering the correct product.  What we offer is not something people care about.  Consider this the estate plan does not save the planner any money or time.  It is just an expense that may put things in a neat box for their children and save them some money. We need to help parents pass on what is important.

    Estate planning is more than controlling the money from the grave.  Parents want to return to their roots and pass on what is important.  Their core and experience assets because with those assets in a world of uncertainty they know that their children will have the tools to be financially secure.  I believe Estate planners have focused too long on only the financial assets we must also help parents pass on their other more important assets.

    Parents have spent a lifetime living their core values and have years of experience which is more important to share with their children and grandchildren than their money.  They do not do their estate planning becaue they do not want to think their life only in financial terms.  They do not want their children to remember them for the money and estate they left.  They want to be remembered for something more.

    What do you think?    I agree _____ I disagree __________ 

Tuesday, March 30, 2010

L A Times Got It Wrong

The Money Talk Column of the LA Times by Liz Pulliam Weston on Sunday March 28, 2010 responded to a question by a reader.  The question is from a son who cannot find a signed copy of a revocable Living Trust prepared by his parents.  His father is now suffers from dementia and his mother does not know where the trust might be.

This question was what should they do.  The main asset is the house.  Before spending hours looking for the trust which was the advice given, they need to check the title of the house, with the county recorder.  If title has been changed into the trust they will then know a trust was prepared.  But if title is not in the name of the trust there is no reason to keep looking for a trust.

A trust will only control the property that is titiled in the name of the Trustee of the Trust.  Therefore, it may not matter if they find the trust it may not avoid probate.

If title is in the name of the trust you still may be able to avoid probate even if you cannot find the trust.

If title is not in the trust than we address the question of how to avoid probate even though dad has dementia and may not be able to sign a trust.

This is an example of a situation trying to do it yourself when there are too many things that can go wrong.  People may not want to take the time and spend the small amount of money on an attorney who would have a copy of the signed trust.

Besides there are many reasons in addition to avoiding probate to prepare a comprehensive estate plan.  One of the most important reason is Because You Care Enough.

Tuesday, March 16, 2010

Increasing Estate Litigation

Recently I was asked the following question. Is the economy causing more contested probate cases?  After thinking about the question for over a day I think it is but not in the way the questioner was thinking.  The increase is not directly connected.

There will be more contests because people are NOT doing their planning.  As a result the family will be faces with uncertainty at a time when they are most vulnerable to conflict.  Uncertainty because there is no direction and guidance from the decedent is a situation that we all recognize as a breeding ground for conflict.

Add to the uncertainty of no planning is the changed family structure.  Families are no longer just mom, dad and the three kids.  Today it is yours, mine and ours and there is no connection after parent is gone.  The relationships become strained and conflict erupts.  The result is another case of probate litigation.

The growth area of litigation is Trust Litigation.  This is because the Trust is not correct and the Trustees do not do their jobs.

 

Saturday, November 07, 2009

To Contest or Not to Contest that is the Question

I found this article from the Houston Chronicle and it is right on point. Here in California the law governing the No Contest Clause has been changed. 

If you want to disinhrit someone it is more important to discuss your estate plan with a qualified attorney.

In terrorem’ clause is one way to cut heir out of will
By ALBERT E. VACEK JR.
HOUSTON CHRONICLE
Nov. 6, 2009, 10:42PM

Curry Glassell, the daughter of oilman and arts benefactor Alfred Glassell, is disputing his last will in a high-profile Houston court battle that will have serious consequences for Houston's arts groups as well as for the Glassell family. One of the issues at stake is what is called an “in terrorem” clause in the will (also known as a forfeiture clause) that provides that anyone who contests the will is to lose whatever bequest has been granted to him or her — hence, the “terror” that will result if one does not follow the directives of the will. The will of the recently and tragically deceased John O'Quinn also contains a no contest clause.

Many people who are not specialists in estate planning law would tend to take such a clause at face value and believe that, if their lawyer includes such a clause in their will, their chosen heirs will be protected forever from the possibility of litigation challenging the will. Unfortunately, this is not the case.

An “in terrorem” clause sounds great and offers apparent reassurance to those who rely on a will, but it is no panacea. In fact, a new Texas law that went into effect on June 19, 2009, reduces the effectiveness of these clauses even further by clarifying that they do not apply if an attack on the will is made and maintained in good faith and on the basis that probable cause exists. On the other hand, an “in terrorem” clause may still apply if a lawsuit challenging a will is deemed to be just a frivolous nuisance suit designed to extort more money from the beneficiaries.

Unhappy heirs or potential heirs who decide to challenge a will often do so either on the basis that the testator was unduly influenced by a beneficiary, or that he or she was suffering from diminished capacity at the time the will was made and did not really know what he was doing — as in the recent New York case involving the estate of wealthy socialite and philanthropist Brooke Astor. In that case, the jury agreed with prosecutors that Brooke Astor's son took advantage of her reduced mental capacity to trick her into changing her will to his benefit.

There are other, better ways to protect a will from a challenge than just relying on an “in terrorem” clause. One method is to, in a sense, buy off a potential challenger by leaving him or her something of value so that he or she will be tempted to take the money rather than file a lawsuit and await the uncertain outcome of litigation.

Another tactic is for the testator (the person making the will) to be entirely frank with heirs and potential heirs while he or she is still alive, and let them know exactly what to expect, so there will be no nasty surprises or disappointment down the road. If a potential heir is to be disinherited or left very little in comparison to others, the will should state that fact plainly, so that a challenger cannot claim that the testator was not in his or her right mind and simply forgot about his oldest son or youngest grandchild. Such a clause might state that the testator had adequately provided for the heir during his lifetime, or that he is leaving the potential heir some small amount, or even that the potential heir is to receive nothing, in the words of the infamous Leona Helmsley will, “for reasons well known to them.”

In every case, all the required formalities should be carefully observed, such as, for example, making sure the will is signed in the presence of impartial witnesses. It's also a good idea for any testator to design and execute a plan to provide for heirs well in advance of serious illness and death so there can be little question later that he or she didn't know what he was doing.

Testators should also consider a living trust as a valuable tool to minimize the possibility of a contest. Typically, living trusts are harder to contest than wills.

Few testators have $500 million to bequeath, as did Alfred Glassell, or the many millions probably involved in the John O'Quinn estate.

But whatever amount a testator may have to leave to loved ones, whether large or small, a proper will should include every possible protection to ensure that his or her wishes will be observed.

Vacek is a board-certified estate planning and probate attorney who has been practicing in Houston for more than 38 years.