Here is the transcript from the video:Hello everyone. This is Robert Mansour. I'm an attorney in the Los Angeles area and we're going to spend a few minutes talking about five easy things you can do to protect your family today. This doesn't even require going to a lawyer. You can do these things on your own and we'll walk through five things that you can do to protect yourself and your family. If you want to learn more about my office you can go to my website which is right there on the screen, www.mansourlaw.com. My office is 661‑414‑7100. Let's begin.
If you have any assets that are in your name alone you want to make sure you get yourself a will. People say well what is a will? What is the legal significance of a will? A will is just basically a letter to the judge telling the judge where you want your assets to go after you pass away. So that's all it really is and also a will only goes into effect after you pass away. It's really of no legal significance and no legal use while you're still alive. You can name guardians for minor children as part of your will. If you want to get a free California will and you don't want to go to a lawyer and you don't want to get a more robust estate plan that might include a living trust etcetera, you can go to www.calbar.org. On the left-hand side search for the public forms and you will find a free California will available for you with instructions on how to fill it out and you can have it witnessed by two witnesses which is the requirement here currently in California and keep in mind though a will is not a panacea. A will is not going to solve all your problems and in fact a will is to some extent a limited document. But if you don't have one and you can get one for free, why not? Check it out at the California Bar Association. Let's go to Step 2.
Step 2, check the beneficiaries on your life insurance policies and tax deferred accounts. So remember I talked about a will. A will controls assets that are in your name alone. However there is a lot of things you might have like life insurance policies and tax deferred accounts like IRAs and 401Ks and 403Bs. Those things pass by way of a designated beneficiary. When you got those things you probably filled out a form called a beneficiary form. So it doesn't matter what your will says. Basically what matters is what that form says. So a lot of married couples for example will find that they have their spouse listed but when they review these beneficiary designations they find that they often forget to put somebody beyond the spouse. They don't put their children. They don't put their sisters or brothers or whoever they want the asset to go to. So in the event of a common accident, the husband and the wife pass away and now we're stuck because there are no other beneficiaries listed on the form. So not only do you want to check who your primary beneficiary is but you also want to check who your secondary beneficiaries are. Now, if you have minor children and in California that's people who are under the age of 18 are considered minors, you want to be very careful and you may not want to name them as the secondary or contingent beneficiaries. You may want to name a living trust as the beneficiary in the case of minor children. But if you want to learn more about that you can visit my website or give me a call. I'll be happy to explain that further. Also if you have beneficiaries that you might have a concern about how they would handle the money you may not want to name them directly. But at the very least check who you have and make sure that it's correct and make sure that you name individuals and don't put something like my estate shall be the beneficiary. That's inviting trouble right there.
Next is Step 3 here. We're going to get an advance healthcare directive. Get an advance healthcare directive. Now why is that important? An advance healthcare directive allows somebody to make healthcare decisions for you if you cannot. Not only that, they can be your advocate. They can advocate for you in the hospital setting or, you know, let's say for example the hospital staff is not paying attention to you or the nurses are not helping you or they're giving you the wrong medication or whatever the case may be, or you need to be relocated from one facility to another. Your agent under the healthcare directive can advocate for you and make those kinds of decisions. Also the healthcare agent can decide whether or not, you know, life support should be extended, whether or not, you know, a certain surgery that is being recommended should be done or not. People often think that their spouse is automatically entitled to do this. That is an incorrect assumption. One must be given the legal authority to act via an advance healthcare directive. Some states in the U.S. still call this thing a living will, but in California we call it an advance healthcare directive. You can get an entry level form from the California attorney general's office. Just look them up on the internet. Look up the California attorney general, type in the search box advance healthcare directive and you'll find a free form that is entry level but it's better than having nothing so go ahead and get that in place and empower whomever you want. Make sure you list a primary agent and also one or two secondary agents.
Next is Step 4. Examine how you hold title to your assets. Take a look at everything that you own and ask yourself how do I own that asset? Do you own it as a single individual? Do you own it jointly? Do you own it as joint tenancy, tenants in common? Do you own it in a living trust? Do you own it in your name alone? All of these things have legal ramifications. This is not just something to toy with. You really have to examine this and ask yourself is that really the way I want to hold title to my asset? So if you want to discuss that further you might find some good resources on my website or give me a call and I will explain to you the ramifications. One ramification that we could talk about is joint ownership. Joint ownership is when you own property jointly with other people and that's fine. There's nothing wrong with holding property jointly with other people but what happens is if one person passes away, the other person is now the owner of that property and if they add another person and then they pass away then that third person now owns the property. Basically this is one of the easiest ways for people to lose their assets in this country. Joint ownership is one of the leading causes of disinheritance, people losing their wealth to other people because they put others on title with them and the property and the asset mysteriously ends up in the wrong hands. So make sure you take a very close look at how you hold title to your assets.
Step No. 5, review your insurance policies. Now I don't sell insurance and I'm just telling you this because I have seen time and time again people getting burned because they did not have adequate insurance. Sometimes clients come to me and they say, well we don't have a lot of money and we're not sure if we should do an estate plan. We've got these little kids, etcetera. I say look, go get yourself a big life insurance policy. If you pass away a lot of money can be passed onto your children to help them with college, to help them with paying the mortgage, to help the kids with, I don't know, day care. You name it. They're going to need that money and so you want to make sure you have adequate life insurance. So talk to somebody who knows what they're talking about and get yourself some really good life insurance especially if your estate is going to need a lot of cash in order to deal with a catastrophic situation. Also you want to take a look at your auto insurance policies. Do you have enough insurance? A lot of people don't have enough insurance on their car insurance policies and they end up getting in horrific car accidents and there's not enough money there for the family. They generally rely on the responsible party, the person who caused the accident, but guess what? 25 percent of the time that person is either not going to have enough insurance or not have any insurance at all so you want to make sure that you have the adequate car insurance not only for liability but also for something called uninsured motorist and underinsured motorist. Make sure you check your life insurance policies and your auto insurance policies and your homeowners insurance because so many people have basically gone from great wealth to nothing because of a catastrophe and they didn't have the adequate insurance policies.
And that's been five easy things you can do to protect your family. My name again is Robert Mansour. Thank you for watching this short video. I hope you found it helpful and if you did please pass it along to others. Again these are five things that you can do on your own with a few phone calls, talk to a couple of professionals in your life, your insurance broker, if you have an attorney you want to talk to them to get more information that's fine. Or you can call my office and get more information as well. Thank you very much for watching.
People often ask me why they shouldn't buy their estate documents online or purchase their documents from a paralegal. Of course, they are free to do what they want. However, when it comes to legal documents, you have to be very careful. You might buy the prettiest documents in the world. They might even come in a fancy binder. However, they may leave a lot to be desired at the end of the day.
When it comes to estate planning documents, you need to make sure you are dealing with quality. An attorney who is experienced in the field of estate planning knows the language that should be included depending on your situation. They've been "down the river" before, and they can often anticipate what might be a trouble spot for your family.
It is often what is NOT addressed in the documents that becomes a problem. There are many common issues in life that must be addressed in the documents. Therefore, if all your documents do is split up your estate among your heirs, that is often far too basic. Depending on your situation, an attorney with experience might recommend some kind of special language over another. Also there are many common provisions that should be considered when dealing with certain specific situations. Again, what is unaddressed can become a thorn later on. When a document is silent on a particular issue, that issue can become a big problem.
For example, a client came to me and asked why his brother should get a fair share when his brother had borrowed money from his parents several times over the years. When his parents passed away, his brother had borrowed about $100,000 over the years. He asked me whether or not his brother's share should be reduced by the amount of the money borrowed from his parents over the years. Of course, his brother wanted his share without any reduction. I explained the living trust did not address what to do with loans. The document did not say anything about reductions to account for prior loans. Therefore, since the living trust was silent on the issue, his brother was to get a fair share just like him. This of course caused a big problem between the brothers, and they don't speak till this day. This may not be an issue in your family, but most families have their own issues that should probably be addressed in the documents. Also, if issues are addressed in the documents, that causes less family problems because the documents say exactly what the Trustee is supposed to do. Nothing is simply left to the imagination.
It is very important to make sure your documents say exactly what you want them to say. Having a living trust and other estate planning documents in place is wise, but don't get inadequate documents that do not address your specific issues. Also, you want to revisit your trust and other documents over the years to make sure they continue to suit your needs and address your family's issues.
Clients are often surprised to discover that there are actually several different "kinds" of living trusts. They call the office and say, "Hey, how much for a living trust?" The main reason I believe prospective clients ask that question is because they don't really know what to ask, so they ask about fees instead.
Then I tell them, "Well, the fee partially depends on what type of living trust is best for your family." They respond, "What do you mean? I want a 'LIVING' trust." I explain that there are several types of "LIVING" trusts available, and we will address what kind of living trust is best for the client during the initial consultation."
Therefore, during the initial consultation with my clients, we explore the types of trusts available to them, and we try to figure out what would be best for the clients and their particular situation. I make recommendations based on what I learn during the first meeting.
Some trusts allow the surviving spouse to make changes upon the first death. Others do not. Some trusts are only designed to avoid probate and pass assets to others. Other trusts call for a split of the assets into subtrusts upon the first death - some make the split mandatory and others make the trust split discretionary. There are "probate avoidance trusts," "disclaimer trusts," "AB trusts," "ABC/QTIP Trusts," and other variations. Married couples generally have the most flexibility.
Some living trusts have provisions regarding children and some have even further provisions regarding grandchildren. Some contain "Pet Trusts." Some trusts are specific, and others deliberately broad.
Once clients understand they are not going to a get a "one size fits all" estate plan, they start to understand that estate planning is more than just filling out a couple of forms and going home.
I was very honored to be invited to SCV Today, a local television program covering local Santa Clarita events and issues. Hosts Tami Edwards and Dave Caldwell asked me some very common questions regarding estate planning, wills, living trusts, and much more. We discussed issues such as "What is the difference between a will and a living trust?", "Doesn't the spouse simply get everything?", and "Don't my children get everything when I die anyway?" We also touched on the issue of probate and what's involved. Tami also raised the Advance Health Care Directive and how important it is to have someone in charge of such decisions. Finally Dave asked Rob about what's involved in creating an estate plan. Rob explains several basic concepts in this video segment.
Robert Mansour is a wills and living trusts lawyer in Santa Clarita, California. He also serves Valencia, Newhall, Saugus, Canyon Country, Castaic, Stevenson Ranch and surrounding communities. For those without a plan, Rob generally offers free consultations. Call today and schedule your appointment - (661) 414-7100.
HERE IS THE TRANSCRIPT FROM THE INTERVIEW:
Dave: Welcome back to SCV Today. Today we are all getting older. A lot of us are family, have families.
Tami: Mm, hmm
Dave: You're not getting older, but you do have a family.
Tami: Yes I do.
Dave: Right? And, uh, we need to be thinking ahead of things. My parents thought ahead, long, long time ago and they created a living trust, and, uh, now Rob Mansour is on to talk about that, an estate planner –
Rob Mansour: Mm, hmm
Dave: - an attorney, an Oxy grad.
Rob Mansour: Oxy grad, that's right, proud of it.
Dave: Yeah –
Rob Mansour: And Oxy's statistic, uh, most Oxy grads marry other Oxy grads, and my wife is also an Oxy grad.
Dave: Wow, that's very cool.
Rob Mansour: So, she, you know, I'm a good catch so what can I say.
Tami: You are a good catch, Rob.
Rob Mansour: Thank you very much.
Dave: Let's, let's talk about this. We're gonna start the conversation off with something very basic, the living trust versus a will.
Rob Mansour: Mm, hmm
Dave: What's the better way to go?
Rob Mansour: Okay, if you have more than $150,000.00 in California, uh, real estate, uh, bank account, investment, etc., you're better off with a trust. A will only goes into effect when you die, so if you have a will, a lot of please say, oh I have a will. I say that's great, but it doesn't mean anything while you're still living. Nobody can use a will to assist you in case of incapacity or you get into an accident or something like that. A will is just a wish list of where you want your things to go when you die. I want my vase to go to my Cousin Sally. I want my car to go to my, my Cousin Vinnie. I want this to go here, this to go there. That's all a will does, and you gotta go to court with the will. That's called probate court. You've heard of criminal court, civil court, juvenile court. Well, there's something called probate court, and that's where the judge makes sure that Sally gets this and Johnny gets that, and the house gets to the kids, and it's court supervised, but it's very expensive. It takes a long time, sometimes two years or more, and it's very frustrating because who has the time. Also, let's say you have a house that's going through the probate process. Somebody has to pay the mortgage on that house, and statement the family doesn't have the money, so everybody's kinda like, okay, what are we gonna do? And I've had families have to walk away from certain assets because they could not afford to continue making the payment while it's making its way through this probate system.
Tami: So, now I know a big misconception is if you have a will, it, it doesn't go to probate, but that's, that is a huge misconception.
Rob Mansour: Well, a will is almost guaranteeing probate because it's, a will is a letter to the judge.
Tami: Okay.
Rob Mansour: Dear Judge: This is where I want my stuff to go when I pass away. That's all it is. Um, now some people try to –
Tami: You getting nervous over here?
Dave: I'm getting very nervous, yeah.
Rob Mansour: We better get you an estate plan quick because you're about to –
Dave: Yeah, we got about six minutes left in this segment. Can you get it done?
Rob Mansour: Quick, quick, let's get your paperwork in order.
Dave: Yeah
Rob Mansour: But you're right, yeah, there are other things that people try to do. They try to do joint ownership as a way around a will. They'll say, I'll just own things jointly with my spouse or, but that has its own dangers, and if you want, we can get into those, but I don't know, you know, if that's something that you want to address.
Dave: Well, let me, let me ask you a quick question. I'm sorry to interrupt you, but, but I have one child.
Rob Mansour: Yep.
Dave: What happened, is, is everything automatically gonna go to him?
Rob Mansour: Okay, uh, what's your son's first name?
Dave: Chris.
Rob Mansour: Chris, okay, so you pass away. You're unmarried, correct? Everything will go to Chris according to California law. How old is Chris?
Dave: 21.
Rob Mansour: Okay, so Chris will get everything right away, which might be fine, but remember, he's gotta go through the probate process to get everything.
Dave: Oh.
Rob Mansour: If you own –
Dave: Which can take –
Rob Mansour: a real estate –
Dave: -which can take some time?
Rob Mansour: - yeah, there's no magic pixy dust that comes from the sky and makes everything belong to Chris. He can't just sell your house or your car or things that he doesn't own, and he can't just start doing that. Also, if it really a good idea for Chris to get everything at 21? Maybe he should get things at 25 or 30. What if Chris is in a bad marriage and there's a divorce pending? Should that ex-spouse get half of your stuff during that, during that process?
Dave: Good point.
Rob Mansour: What if, uh, Chris becomes a spendthrift and can't hold onto money? What if he's in bankruptcy or creditor trouble or he's got, he made a bad investment and they're coming after him?
Dave: Don't, don't forget, he's an Oxy guy so do you think he's gonna do all these things?
Rob Mansour: No, of course not, but somebody other than Chris –
Dave: Yeah, I gotcha.
Rob Mansour: - might have those problems and wouldn't it be nice if everything was sitting in the Dave Caldwell Trust protected for Chris' benefit and shielded away from all of these things? That might be a good idea.
Dave: Yeah, it sounds like it.
Tami: Now, I, I know people in my life that actually have well over $15,000.00 in real estate and so on and so forth.
Rob Mansour: Mm, hmm
Tami: And they don't have a, a will or a trust –
Rob Mansour: Right.
Tami: - and, the, the thought process is, well when one of us goes, it automatically goes to the other anyway. It doesn't matter. We don't need it.
Rob Mansour: Automatically is a big word because let's say my wife and I own something together, like a bank account. Oftentimes husbands and wives are together on real estate and bank accounts. One person dies; yes that's true. The, the remaining spouse does get everything, but at some point, you're gonna run out of people, and now you got one person on that asset, and so now what do we do? So let's say, for example, my wife and I own our house together. Let's say I pass away, okay? Men generally pass away first, for some reason, so I pass away first, right, Dave, no, no comments.
Dave: ****
Rob Mansour: But then my wife, my wife meets somebody new. Let's call him, um, Bill and she and Bill get married, and she puts Bill on everything, and then my wife passes away. Guess who owns everything?
Dave: Bill
Rob Mansour: Bill
Tami: Bill
Rob Mansour: My kids get nothing. This is the problem with joint ownership. Joint ownership is one of the, the leading reasons why people lose their wealth in this country, remarriages, new friend, somebody you put on your account with you. Sometimes you put people on the account just because you want them to be able to pay your bills, and help you out, but what you don't realize is that, that, you've essentially given them that asset.
Tami: Right.
Rob Mansour: So, automatically also is not true. I had a client who had a property in Orange County. He passed away. His wife did get that house, but she had to go through the court system to get it because it was only in his name. So, yes, she eventually did get it, but it was even more complicated because he had some natural children from a previous relationship. So, now the wife owns the property with those kids from the previous marriage, and they are in business together now, and they don't get along very well.
Dave: Oh boy.
Rob Mansour: So, California has a plan for you, but I always tell clients, look, you take control. You say when people are gonna get your stuff and how they're gonna get your stuff. Don't let California dictate what happens.
Dave: How easy or difficult is it to create a living trust? Is it, is it a long process or is it simply an office visit; you can get it squared away, and needs, does it need to go through a court to be certified?
Rob Mansour: No, not at all. It's a, it's a contract. So, let's say you and, uh, well let's say Tammy and her husband come in, and they wanna do an estate plan. They sit down with me. We spend probably about an hour and half devising the plan. We also wanna talk about what kinds of living trusts are most appropriate because it's not like you just buy a car. You don't go to the dealership and say, hey, give me a car. But, you have to check, well what kind of car do you need? So, then Tammy and her husband and I would talk about what kind of trust would be best, how the children should receive their inheritance. Should it be all at once? Should it be in stages? Who is going to be in charge of everything in that trust if anything happens to Tammy and her husband? And this first process is probably an hour and a half meeting, sometimes two hours, and then I work on the documents, and I send them to the client for their review. The whole process takes about 45 days to 60 days. Keep in mind that a living trust and a will are just two things in the toolbox that you get. You're gonna get an advanced healthcare directive for each party. You're gonna get durable powers of attorney, marital property agreements. If you own a business of any sort, there needs to be paperwork regarding that. So the first question people always say is, how much for the trust, but I, when I educate them that a trust is just one tool in the toolbox, they start to get a better idea that there's more to it than just one –
Dave: Right
Rob Mansour: - one legal document.
Tami: Right, well you know when you're in a situation where there, there is one, one surviving parent, and something happens to them, and if there's no directive as to who is in charge of making the medical decisions, and, um, I can imagine my four children 'cause I would have two feeling one way, two feeling the other –
Rob Mansour: And nobody in charge.
Tami: - Two would be saying pull the plug and the other two would be going, no, save her. I won't say which two are which, but –
Rob Mansour: Also keep in mind that this healthcare directive for example, it's very important because it not only allows you the proverbial pull the plug scenario, but it allows you to be an advocate for that loved one. You can raise, you know, you can raise trouble in the hospital if people are not paying attention to that person. If, you can get the medical records and go to another facility. You can take that individual and take them to a different location.
Tami: Absolutely.
Rob Mansour: Otherwise, without those tools, you might find yourself, uh, very frustrated.
Tami: Mm, hmm
Rob Mansour: Yeah.
Dave: Rob, thank you very much for joining us. We've gotta take a break here, but –
Rob Mansour: Thank you, Dave.
Dave: - I, I have, I have a feeling that we're gonna need to bring Rob back.
Tami: We definitely need to bring Rob back.
Dave: There's a lot, there's a lot –
Tami: Will you come back?
Rob Mansour: Uh, sure, yes, you're very, you're both very nice, and I love the set, so yes. It's my honor.
Tami: We need to talk personal injury when you come back.
Dave: Oh, yeah.
Tami: We need to talk my case with the Super Bowl people that are –
Rob Mansour: Of course, yes -
Tami: - gonna sue me for saying Super Bowl.
Rob Mansour: - your pending litigation.
Tami: Yes. So, you know, we're gonna have you back.
Rob Mansour: Well thank you very much.
Tami: You're awesome, Rob.
Rob Mansour: Appreciate it.
Tami: And call Rob. He's awesome.
Dave: Call Rob Mansour. If you wanna get his information, you can always go to our web site scvtoday.com. We will direct you over to Rob's best way to contact.
Rob Mansour: Thank you very much.
Dave: And we'll do that. As Tammy mentioned, the big game is coming up this weekend. I'm not gonna say way. I respect the NFL. You're not gonna say anything?
Tami: I was gonna say the NFL can suck it, but I won't.
Rob Mansour: Oh boy.
Dave: Mackenzie Holland's gonna join us here in just a moment. We're gonna talk about healthy, big-game snacks.
We should talk about the word "estate." I think it tends to mislead a lot of people. They figure "estate planning is not for me," because the first thing they think of when they think of the word "estate" is of somebody living in a big mansion, somebody who is very wealthy. I tell people to think of the word "estate" as simply being equivalent to the term "stuff." Everybody has "stuff." Your stuff could include, checking accounts, savings accounts of any sort, jewelry, clothing, stocks bonds, etc.
Estate planning is simply planning what to do with your stuff, after you die and if you are no longer able to handle your own affairs. First, ask yourself who will be in charge of your stuff if something were to happen to you. You need to empower people to act on your behalf in case something ever happens, whether it is a car accident, dementia, Alzheimer's disease, a coma. If something happens where you're no longer able to handle your affairs, you want to make sure that you give people the legal tools that they need to be able to assist you the way you want things done. Second, after you pass away you still get to control where you stuff goes, to whom it goes, and in what manner. So by preparing proper legal documents in advance, by creating this "estate plan" with all your "stuff," you get to control a lot more of what happens rather than just leaving things to chance.
The main analogy I use when I explain estate planning to clients is this: "An estate plan is like a toolbox." Most toolboxes have several "main" tools - a hammer, wrench, screwdrivers, nails, etc. If something breaks in your home, how can you fix it if you don't have a toolbox? If you don't have a legal toolbox, then how can your loved ones help you when things go wrong? A solid "legal plan" also has some main ingredients - basic tools that most clients should have in case something occurs. The four major components of most estate plans are:1) A Living Trust - an enforceable legal document that outlines who is entitled to manage your affairs if you can no longer handle them (these are your "successor trustees"). The trust governs everything in the name of the trust or payable to the trust. Also, everything in the name of the trust avoids the court system. 2) A Will - most estate plan use this tool as a backup to the trust. It's more specifically known as a "pour over" will. If you forgot an asset outside the trust, and if court involvement is necessary, the will directs the judge to put your asset into your living trust. The person in charge of your will is called your "executor." 3) A Durable Power of Attorney - This document allows someone known as your "agent" to act on your behalf in most other circumstances. While the "trustee" handles assets in the name of the trust, the agent under power of attorney can act on your behalf when dealing with issues not directly trust-related. By called it a "durable" power of attorney, it means the document is effective even if you are incapacitated - which is basically when you'd want it to be effective after all. 4) An Advance Health Care Directive - This document allows someone known as your "agent" to make health care decisions on your behalf. A solid health care directive addresses more than simply "end of life" issues such as the proverbial "pulling of the plug." Your agent can be your advocate when necessary and direct your health care in your best interests. Please call my office at (661) 414-7100 for help with your estate planning needs. Also, visit our videos page to learn much more about estate planning basics. You can also see our free webinar.
A client called me today and told me he and his siblings were about to inherit a $500,000 home from their mother. She is 87 years old and unfortunately about to pass away soon.
The mother had told him she wanted her youngest daughter to be able to live in her home for at least a few years after her death. The trouble is she has not taken the time to create an estate plan to make sure her wishes are followed. As things stand, there will be 5 siblings inheriting this parcel of real estate. There is no plan in place. To make things more complicated, some of the siblings don't get along very well, and the two that do get along have spouses who don't get along. While the mother has made her wishes known, there is disaster looming for this family since she hasn't taken the time to create the proper legal framework to make sure her wishes are followed. There is no guarantee the youngest daughter will get to live in the house. What is probably going to happen is that the siblings will argue over what to do and as a result, relationships will crumble. I hate to be so pessimistic, but I've seen this scenario play out so many times before. If you want your wishes followed, please take the time to create solid legal documents.
This blog post is a "guest-post" by my colleagues at the Reape-Rickett law firm. The attorneys at Reape-Rickett handle divorces, custody matters, child support issues and related family law matters in Santa Clarita, CA and surrounding communities.
What do estate planning attorneys and dissolution attorneys have in common?
The short answer is ‘more than you may think’. Consider the case of In Re Marriage of Holtemann. In this divorce case, Husband and Wife were married in 2003 and separated a short three years later. Husband had a number of assets while Wife did not have many. As many estate planners know that with considerable assets, spouses must regard considerable taxes upon death if the spouses fail to make the appropriate estate-planning decisions. These parties did just that and sought the appropriate guidance. The parties prepared a Living Trust and a Spousal Property Transmutation Agreement so as to minimize their estate tax. What this Spousal Property Transmutation document set forth was that all of Husband’s considerable separate property was transmuted to community property. Without getting into too much legal-speak, in a divorce action, when a spouse comes into a marriage with assets he/she had prior to the marriage, and does nothing to affect the title of those assets, they will remain his/her separate property upon divorce. Things purchased during the marriage will be presumed community property or owned by both spouses. Back to the Holtemann case. These parties, again to limit estate taxes, indicated in this document that all of Husband’s separate property was changed (the official word is “transmuted”) to community property.
In 2006, Wife files for divorce. After separation, realizing that in the Trust he changed all his separate property from his sole ownership to jointly with his Wife, now states that the Trust is revoked in an effort to cancel the transmutation. At their divorce trial, Wife, of course, uses the Trust to show all the property is owned 50-50 and she should be awarded her one-half. The trial court agreed with Wife and awarded her one-half of the property. Of course, Husband appealed that decision. The Court of Appeal upheld the trial court’s ruling and Wife was entitled to one-half of the property. The Appeals Court looked to whether or not there was a change or transmutation of the property from separate to community and not why the parties were interested in making the change, i.e., to save on estate taxes. The Court of Appeals stated that the evidence at the trial level was clear that Husband was fully aware of what he was doing with the property and the language used in the Separate Property Transmutation Agreement was sufficient and did change the property from separate to community, regardless of the “why” he made the change. Therefore, as the reader can see, estate planners and dissolution attorneys have more in common than one might think.
To learn more about the lawyers and staff at Santa Clarita, CA family law and divorce lawyers Reape-Rickett Law Firm, call their office at (661) 288-1000 for a consultation. The Reape-Rickett law firm serves Acton, Agua Dulce, Canyon Country, Castaic, LA, Los Angeles, Newhall, San Fernando, Saugus, Santa Clarita (SCV), Stevenson Ranch, Valencia, and greater Los Angeles County.
When I talk about estate planning, some people are quick to shut me down. I think they are afraid I might be trying to sell them something. They quickly state, “Oh, we’ve already done that.” However, in most cases, they have no idea what their plan even says. Here are some things to think about when reviewing your existing plan.
If you already have an estate plan, ask yourself the following questions:
1. Do you have a testamentary trust or a living trust? The former only comes into existence after you pass away. A testamentary trust is of no use while you are still alive. A living trust helps you while you are “living” because your named Trustees can handle your affairs for you in the event you can no longer do so.
2. What kind of living trust do you have? Is it what you need? Some people think a “living trust” is a one-size-fits-all document. There are many different kinds of trusts. Do you know which “kind” you have?
3. Do you have a Schedule A somewhere in your plan? Near the end of your Living Trust or somewhere in your document binder, you should have a solid list of all trust assets. There are two reasons for this. First, from a practical standpoint, your trustees will thank you. Second, if an asset was not placed into the trust, the mere fact it is listed on your Schedule of Trust Assets may be enough for most judges.
4. How do successor trustees take charge? What is the system of succession and is it spelled out clearly? It is important to outline exactly how your successor trustees will take charge of your trust assets. This isn’t done by magic, folks…there has to be a clearly spelled out system.
5. Are your assets clearly designated as community property or separate property? If any of your assets are to be treated as “separate” property, then you should make sure that is clearly spelled out in your documents.
6. Are all your beneficiary designations in order? When was the last time you checked? Some people are surprised to find out their ex-spouse is still their beneficiary. The most common mistakes I see is people naming only one beneficiary with no backup or naming minor children as beneficiaries of life insurance policies.
7. Is your trust revocable or irrevocable? Who has the power to do so? If it is revocable, when does it become irrevocable?
8. Does your Health Care Directive really capture your wishes? When is it effective? Do you have a HIPAA authorization? Your named agents may not have access to your private medical and financial records unless you sign the proper releases in advance. Remember your spouse is not automatically entitled to your documents.
9. When does your Durable Power of Attorney become effective? Some people are surprised their current document calls for 2 or 3 doctors to declare them incapacitated before anyone can even use their document.
10. Was your Health Care Directive executed prior to 1992? Health care directives signed before 1992 had a 7 year shelf life. They have expired.
Of course, there are more questions to consider, but this is a good start. If you don't know the answers to these questions or would like your plan reviewed, please feel free to make an appointment. Your plan should reflect your wishes, and your lawyer should explain things to you. I want my clients to actually understand their plan not just have one.
I sometimes hear the phrase "oh, we all get along very well." When I speak to my clients, I may propose an idea that would reduce potential friction in the family. I get concerned about whether or not siblings will fight or others in the family would have concerns about the estate plan. Many of my clients, in an apparent effort to relax my concerns, say, “Oh…don’t worry about us Rob. Our family gets along VERY well. We won’t be facing the problems you fear….”
I smile and I say, “Mr. and Mrs. Smith, I’m sure you are correct. However, my job is to make you aware of POTENTIAL problem areas. If there are no problems, then that is terrific. However, if there are problems, we will have addressed them in advance.” I also add, “There are buildings all over this country called ‘Probate Courts’ which are chalk full of families that USE to get along very well. Money, real estate, and other issues involving inheritance can cause families to fight among themselves.”
If your family gets along “very well,” I suggest you be proactive and protect your family JUST IN CASE something goes wrong.
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