California Estate Planning Practice Blog

Just The Basics.

Estate planning is one of those phrases that tend to confuse most people. Many people really don't know what documents consists of estate planning documents. I don't blame them as the term estate planning somehow confers a meaning that someone must have an estate. And people think of estates as those lovely homes off of Newport Coast or a spread in the Hamptons.

Generally whenever someone dies, whatever they leave behind is called their estate whether it be assets or debts. So, estate planning is really planning for handling your affairs after you die.

In some instances, estate planning is also incapacity planning. As if who would manage your affairs if you were alive but deemed unable to manage your affairs. You got into a car accident. You developed dementia.

I wish there was a better phrase for estate planning. Anyone have any ideas?

Without reviewing your personal situation, the basic estate planning documents suitable for most Americans who are worth less than $2 million are generally the following documents:

1. Will
2. Living Trust
3. Durable Power of Attorney
4. Advance Health Care Directive

The Will names a guardian for your minor children.

The Living Trust holds title to your property, spells out who should get what and names a successor trustee to manage your trust property either if you died or became incapacitated without going to court.

The Durable Power of Attorney nominates someone to manage your financial affairs while alive, but unable to do so.

The Advance Health Care Directive names someone to make medical decisions for you in the event you are unable to do so and where you can indicate your wishes for end of life choices.

Tough Competition Out There.

As an estate planning attorney, I keenly notice other estate planning attorney's attempts to advertise and market their services. Some attempts make me cringe and others make me say why didn't I think of that?

I rarely get mail at home about estate planning or from lawyers in general. Direct mail is expensive and hungry lawyers can't necessarily afford it.

Anyway, I received a rather nice piece in the mail today. It was addressed to me and my husband. They were offering free seminars at a local prestigious University. The letter explained the rationale for estate planning in a clear, concise and not too inflammatory manner.

My overall impression was that it is nice to know that other estate planning attorneys can solicit for business in a generally pleasing way.

Estate Planning Documents A La Carte?

Estate planning when it is all set and done is often a variety of documents prepared in accordance to your wishes and financial situation that work in conjunction with each other to accomplish a variety of objectives.

Sometimes you may only need one or two documents prepared as a stop-gap measure before you are able to deal with the larger estate planning concerns for your family.

Obviously, the largest barrier to estate planning for most Americans involves money. Most Americans don't have enough money in their checking account to write a check for a grand or two to an attorney for estate planning documents without budgeting for it.

One way to get around this is to ask your attorney if he or she would be willing to prepare estate planning documents a la carte.

Here are some ways this can work:

• You are leaving for a two week trip to Europe. You want to name someone to manage your financial affairs while you are out of the country. And, better yet, you want this power to be effective for only the month of October. A Durable Power of Attorney with an expiration date of midnight, October 31, 2006, would accomplish this. [An expiration date of midnight, October 31 would truly be a witching hour.]
  
• You find yourself communicating with a loved one's doctor for a recent medical condition. Your loved one is having a hard time understanding their treatment options and want you to get involved. Your loved one can appoint you as their agent in their Advance Health Care Directive. This Advance Health Care Directive can be effective immediately.
  
• You have a minor child. You and your spouse are worried about who would be named guardian for your minor child if something happens to you and your spouse at the same time. You can draft a Will with testamentary trust provisions to nominate guardians for your child and put it place a trust to be formed if you and your spouse passed away.

One document alone does not make a proper estate plan, but it is important to realize that each document has different objectives and can be prepared independently.

Most attorneys charge a flat fee to prepare these kinds of documents. The flat fee is usually equivalent to one hour of the attorney's normal hourly rate.

$400 For A Living Trust?

I met with a nice lady this morning. She wanted to meet me to see if I could add value to her business and her clients. It was more of a cross-marketing meeting. She interviewed me and one of her questions was what was my fee for estate planning. So I told her my range. Her initial response was, "oh" and then she followed up with what's the difference between your fee and a $400 fee?

I knew immediately what she was referring to. In our local newspaper, there is a lawyer who advertises estate planning for $390 for a single person and $450 for a married couple. She used him a few years ago.

Here's the difference:

1. You get more time with me. She said she felt rushed with him and that there were a few other people waiting in the reception area to meet with him while she was meeting with him.

2. I have malpractice insurance. (No clue if he has it. He might. It is not required in California.)

3. I offer a 60 day window to make changes, update or overhaul your documents if you really reviewed it at 3am after it is all said and done at no charge. (He didn't even return her calls.)

4. I tell my clients that if they email me, they will get a response when I am in the office. If I am out of the office, I will email them upon my return. (He didn't return her calls so can I surmise that he would not email her back either?)

5. I've customized my binder to make it easy to find the documents. It looks neater too. (She said her documents didn't look as good.)

6. I send out an annual letter to my clients reminding them of reasons to review their estate plan, changes in the current laws and other pertinent information.

7. If you have a minor change requiring an amendment to your documents, if you email me your wishes, I will draft the amendment and send it back at no charge. Now, it has to be a minor change like a change of trustees for instance.

After discussing these things and hearing her replies, she also said out loud that, "you know, you really get what you pay for." She also told me that after trying to reach him a few times after he completed her estate plan, she is no longer referring any clients to him.

Young, Single And Healthy?

Okay, and maybe broke, too? If so,  Kiplinger's personal finance website has a nice article about estate planning for young people.

"Even if you aren't rich and don't have children or a spouse, you still need to spell out your wishes in case you die or can't make medical decisions for yourself. Plus, we help you decide whether to write your will on your own or if you need to hire a lawyer."

That Home Of Yours? Make Sure It Is In Your Trust.

Time and time again I hear from potential clients inquiring about trust administration of their loved one's estate. It all starts out innocently enough. There's a Living Trust. Great. There's a home. Even better. But is the home in the Living Trust? It has to be deeded or transferred into the home for it to be effectively in the Living Trust.

In other words, the successor trustee, the person nominated to manage the assets, can only manage assets in the Living Trust. If the assets, like your home, are not in the Living Trust, there's no way the successor trustee can manage those assets.

What happens is this... you set up a Living Trust. Your home and other real property are transferred into the Living Trust by a grant deed and recorded with the County Recorder.  And later on, maybe a few years later, you refinance your home, take out an additional construction loan, obtain a reverse mortgage or purchase a new home.

When you do these kinds of financial transactions involving your home, lenders and title companies will take the property out of the Living Trust.

It is up to you to make sure it is back into the Living Trust once the financial transaction involving your home has been completed. This is where most people get stuck. You have to remember to check on this and ensure that the property is transferred back by recording another grant deed.

Who Needs A Living Trust?

I can almost say that all property owners in California need a Living Trust without any exceptions. But what if you do not own property in California?

Do you need a Living Trust? Maybe.

If you are single, have no children and do not own property in California -- at first glance you probably do not need a Living Trust.

Your assets will have a payable on death feature or beneficiary designations for you to transfer bank accounts, retirement accounts and life insurance policy death benefits to your loved ones upon your death. This is usually sufficient and will only require a Will to name who should manage your estate and get your personal belongings. Yes, a Will goes through probate, but only if your estate is worth more than $100,000. To recap, if your assets have beneficiaries designated and your other assets are not worth more than a $100,000 -- you might squeak by with no estate planning documents. Cool.

But say you are working for a Fortune 500 company. You have significant retirement savings, a nice executive life insurance policy and stock options. Sure, you don't own property. So at first glance, you would think you do not need a Living Trust.

But what if you want to give your entire estate to fund your three favorite nieces' college education? What if you want to hold your money in trust until the nieces collectively reach age 30 before making a final distribution of your assets? This would be a perfect reason to set up a Living Trust even though you do not own a home, not married or have no kids.

Now I Know Why Attorneys Get a Bad Rap.

I met with a potential client today who wanted me to review her existing estate plan. She had a pretty complicated distribution requests and wishes for her family.  She wanted to her existing attorney to prepare an amendment to her Living Trust to reflect her change of wishes and nomination of successor trustee.  He pretty much refused. She's a well-kept younger lady so capacity is not at issue here.

She came to me because she was thinking about changing attorneys. She said he was rude and not very responsive to her requests. She also wanted to retrieve the original copies of her documents and he refused to turn them over.

If you are not happy with your estate planning attorney, you can change at anytime. You are not obligated to work with the same attorney if you are not happy with the services being provided. Some conduct by attorneys are considered sanctionable by the California State Bar. If you have a gripe, consider contacting the State Bar for assistance.

Her words after leaving my office was that I was a breath of fresh air. I'm shocked actually to find that other estate planning attorneys are not kind and careful about their perception of customer service. It is, after all, a customer service business. Clients should be happy with their representation.

Of course, some clients, and you may be one, are considered high maintenance and become a thorn in the attorney's practice due to unreasonable demands. That's rarely an excuse for poor customer service though.  Gotta handle it with a smile. No need for cranky attorneys.

Identifying The Client.

It is important to remind readers who the client is when it comes to estate planning. The client is not the person who finds me, hears about me, emails me, calls me, makes the appointments or pays me.

Simply, the client is the person for whom the estate planning documents are being prepared for. In other words, the client in estate planning situations are the testator or settlor* who will be signing the estate planning documents.

Of course, for many individuals, those who contact me, set the appointment and pay my fee are also the client for whom the documents are being prepared for.

But you would be surprised.

Many people urge others to seek the services of an estate planning attorney. Many people usher others into my office for a consultation. This happens pretty often. The most common scenario is when an adult child brings in their elderly parent for an estate planning consultation.

In situations where there are others in my office other than just the client, I remind everyone in my office who the client is. I ask my client if they consent to other individuals being in the room. I look to the client to make decisions about their estate planning. I follow my client's directions in preparing the documents.

If the client seems uneasy about the process, I ask others present to leave my office and wait in the reception area. And the client and I talk about what a busybody those in the waiting room are ... no, I am kidding ... we continue on with our conversation about what his or her wishes are with respects to their documents.

*A little legalese education: the testator is the person who is drafting the Will and the settlor is the person who is creating a Living Trust.

In The Middle Of A Real Estate Transaction?

This week I spoke to two different potential clients who had major estate planning issues and were in the process of buying or selling real estate.

While I understand that real estate transactions are time consuming and fraught with issues, it is also the best time to take care of your estate planning concerns.

If you have not set up a Living Trust and wish to do so, it is very easy to place your home in the Living Trust before you close escrow. It saves everyone time and money. It is easy to call your real estate agent or escrow company to change the vesting instructions before escrow closes and the deed is recorded to reflect that the property should be owned by your Living Trust.