Steps to Resolving Disputes

Last week I posted about beneficiaries’ rights and promised to post this week about how to protect those rights.  The steps that I recommend here are the same basic steps that I recommend for anyone in a dispute, but I will tailor this discussion to trust disputes.

The first step is the cheapest and easiest solution.  So, if it resolves your dispute, you are done
without any attorney involvement: approach the trustee on your own.  State your concerns clearly and ask for a specific solution.  Depending on your relationship with the trustee, you may want to start with an oral conversation, but if your dispute is not resolved after that conversation, I strongly recommend you put your request in writing: either in a letter or in an email.  Send the letter or email to the trustee, but KEEP A PRINTED COPY for yourself, preferably with the date and time sent.

If you are convinced that you cannot resolve your dispute on your own, you may wish to consult an attorney about sending a letter to the trustee on your behalf.  Often in family situations, a family member will not take your requests as seriously as they will an attorney’s requests.  Sometimes there are simple miscommunications or misunderstandings that keep you from resolving your disagreements, and a well-drafted letter from an attorney may be able to avoid both of these deterrences.  Keep in mind that the attorney will require you to formally retain him or her as your attorney, and there will be a charge for the time involved in meeting with you, reviewing papers and in preparing the letter.  However, if this resolves your dispute, it is well worth the investment.  When I draft these kinds of letters for clients, I always include a deadline for compliance so that I know when it’s time to take the next step.

If you cannot resolve the dispute out of court, beneficiaries can ask the court for an order that the trustee meet his or her responsibilities to the beneficiary.  Often a beneficiary wants
information from the trustee in the form of copies of documents or an accounting.  The beneficiary may also want the trustee to manage the assets more prudently.  Sometimes the beneficiary believes that the trustee is using trust money for the trustee’s benefit rather than for its intended purpose.  If the trustee’s actions are egregious, the beneficiary may be entitled to receive money from the trustee for the trustee’s transgressions. The beneficiary may also be entitled to a new trustee.  As a beneficiary you are entitled to ask the court for any of these things.

If you would like more information about protecting your rights as a beneficiary, or about any of my blog topics, please feel free to contact me.

Originally published by Susan on October 21, 2013

Beneficiaries' Rights

What rights do you have as the beneficiary of a trust?  If you are a contingent or successor beneficiary, you probably do not have many rights unless and until you become a current
beneficiary
.  So, if you are not currently entitled to receive anything from a trust, you may have to wait until such time as you are entitled to receive in order to assert your rights.  However, if you are currently entitled to receive from a trust, or if you believe that you are currently entitled to receive from a trust, the three most important rights that you have are 1) to examine the current estate documents, 2) to receive regular accountings of the estate, and 3) to challenge the trustee in court if he or she is not performing the job satisfactorily.

If you do not have a copy of the most current estate documents, you cannot answer the threshold question of whether you are entitled to anything more.  So, before you know
where you stand, you need to obtain copies of the most current estate documents.  Keep in mind that people often amend, revoke or restate their documents over the course of their lives, and you want the most current ones in order to analyze your position in the estate.  If you have copies of documents, but you think that there may be more current ones, remember to look for (or ask for) amendments, revocations and restatements of trusts and codicils, revocations and revisions of wills.

The trustee of a trust has a duty to “keep the beneficiaries of the trust reasonably informed of the trust and its administration.”  One way to keep beneficiaries informed is by rendering accountings of the trust assets.  So, once you have established that you are currently entitled to benefit from a trust, you are entitled to regular accountings from the trustee so long as the trust was written after 1987 when this law came into effect.  If the trustee became trustee on the death of the settlor (the person who initiated the trust), the trustee must furnish an accounting to the beneficiaries within one year of the settlor’s death.  Under other circumstances, you may be entitled to an accounting within 60 days or “on reasonable notice.”

If you have not received what you are entitled to, as a current beneficiary you have the authority to petition the court to order the trustee to give it to you.  Trustees have a fiduciary duty to beneficiaries, which means that they are expected to act in good faith with respect to the beneficiary’s interest.  They should not take money that is not due to them or spend money foolishly.  They should keep beneficiaries reasonably well informed of their actions.  If you believe that the trustee is not performing his job up to this standard, you have the strength of the court behind you to order him perform his duties satisfactorily, to recover money from him and to replace him as trustee.

Next week, I will post about the steps to take if you believe that you have not received what you are entitled to as the current beneficiary of a trust.

Originally published by Susan on October 14, 2013

If You Don't Have an Estate Plan

Do you know what happens after your death when you have not completed an estate plan or the estate plan that you have is not effective?  If you don’t have an estate plan, the State of California has one for you. It’s called intestacy, and it is governed by a series of laws in the
California Probate Code.

In this case, unless your total estate is worth less than $150,000, your loved ones will have to file a petition in the Probate Court.  If you have questions about what specific assets would be included in this calculation, please consult an attorney or financial advisor with knowledge in this area.

Administering an intestate estate (one with no estate planning or ineffective estate planning) is much like administering a probate estate where there is a simple Will (no trust.) 
Your loved ones will have to go through the court process which takes typically six months to one year in Southern California currently.  The Petition will ask the judge to appoint someone as the administrator of your estate, to collect your estate assets, to pay off your debts and then distribute the remainder to the beneficiaries outright at the end of the court case.  Your administrator will have very little authority to take actions without the judge’s approval.

The biggest difference between an estate with no Will and one with a simple Will is that if you have written a Will, you have the opportunity to choose who will inherit your assets and who will manage your estate.  In an intestate estate, the people who inherit your assets are called your beneficiaries, and the people who manage your assets are called your administrators. 
If you are married when you die, your spouse would be your beneficiary and your administrator.  If you do not have a spouse when you die, your children would be your beneficiaries (in equal shares), and one would be your administrator. If you have neither spouse nor children, your parents would be your beneficiaries and your administrators, and if you have none of those when you die, your siblings would be your beneficiaries and one would be your
administrator.  The scheme continues from there.

A properly drafted and executed estate plan allows you to name your chosen beneficiaries.  It
allows you to determine the amount of your estate that goes to each chose beneficiary.  It allows you to choose who will best manage your estate and whether they will receive a fee for doing so.  Most importantly, though, a proper estate plan can help in emergency situations or during your senior years if you are no longer able to manage your affairs on your own.

Originally published by Susan on March 6, 2013.

Where There's a Will...

Leonardo da Vinci said, “Simplicity is the ultimate sophistication,” and Albert Einstein said, in effect, “Everything should be made as simple as possible, but not simpler.”  I try to embrace this sentiment when drafting any document whether it be a motion or other court filing, revocable living Trust, a petition, or even these humble blog posts.  I also try to apply this philosophy when designing an estate plan.  Although the vast majority of my clients need a revocable living trust, sometimes clients simply need a Will without the accompanying Trust.

 A Will may be sufficient for young clients who have not yet acquired many assets, but still want to direct the transfer of those few assets on their death.  Because Wills take less
attorney time to draft, they cost less to prepare, which is another benefit for young clients with few assets.

 Clients can nominate a person to manage their estate and design their own distribution plan in a Will.  For clients with minor children, they can nominate a guardian for their children and give the guardian some guidance.  A Trust can be embedded into a Will to prolong the distribution of assets if necessary.

 If someone dies without a living Trust, there will often need to be probate.  Probate is the
court-supervised administration of a decedent’s estate.  A judge will appoint someone to notify creditors, gather and value the assets, and distribute them.  Although slow and public, probate provides stability and certainty.  When family members resort to courts to sort out estate issues, they file in the probate court.  So, if a client believes that their family members will fight about the distribution of their estate, using a Will without a trust may protect the client’s wishes because family members with selfish motives may not have access to assets without court approval.

 What I try to design for my clients is the most appropriate estate plan for them.  While a revocable living Trust is the most appropriate tool for the vast majority of my clients, sometimes a simple Will is the best tool available under the circumstances.

Originally published by Susan on January 6, 2014.

Honoring Your Healthcare Wishes

The key to having your wishes honored is to put them in writing.  In California there are three
documents that may be appropriate for you to put your health care wishes into writing.

The most personal document that I prepare for the majority of my clients is their Advance Health Care Directive.  Other documents deal almost exclusively with finances; the Advance Health Care Directive deals with the treatment of your body.  What type of health care do you want and what type of health care do you not want?  Do you want pain relief?  What are your feelings about nutrition and hydration?  All of these issues (and more) can be addressed in this one document. 

The Advance Health Care Directive is a powerful tool for you to accomplish your health care goals.  It gives you the opportunity to name an agent who can advocate for you in those
moments when you are not able to do so for yourself.  In the Advance Health Care Directive you can instruct your agent how to make decisions regarding your health care and regarding the treatment of your bodily remains on your death.  You can also grant your agent the right to sue a third party for not honoring your instructions, and you can relieve third parties from liability for honoring your instructions.

Two other documents that may be appropriate for you to have are a Pre-hospital Do Not Resuscitate Form and a Physician’s Order for Life Sustaining Treatment.  The Do Not Resuscitate form (also called a “DNR”) is appropriate if you do not want CPR or any other resuscitative measures taken.  It requires a physician’s signature and is limited to resuscitative measures only.  The Physician’s Order for Life Sustaining Treatment (also called a “POLST”) also requires a physician’s signature, but it is appropriate whether you would like resuscitative measures taken or not.  It deals with additional questions such as pain relief and nutrition and hydration, and for each of these questions, you can choose to accept or reject the options. This is a relatively new form, designed by physicians and recognized by emergency medical technicians and emergency room staff.  It was designed for patients who are chronically ill or who have a life-expectancy of 18 months or less.  However, if you feel strongly about these
end-of-life issues, I recommend you discuss this form with your physician.

Once your health care wishes are in writing, make sure to discuss them with your loved ones whether they will be the ones making decisions for you or not, and then provide them with copies of all your relevant documents.  If you have a treating physician, provide him or her with a copy as well.  Lastly, make your documents accessible to any emergency responders by posting them in your home or providing them to your residential facility staff.

Knowing what tools are available to you and taking advantage of them can help ensure that you receive the kind of treatment that you want.

Originally published by Susan on December 16, 2013.

What to Tell Your Attorney

Humans naturally want to look good to others, and I don’t mean just dropping ten pounds or changing your hair style.  Sometimes it’s hard to admit that there are problems in our lives such as a child who is fighting alcohol addiction or a parent with Alzheimer’s.  However, for your attorney to do her best job for you, she needs to know these things about you and your
family.

Just like Las Vegas, things that you tell your attorney stay with your attorney.  In order to protect your privacy and to encourage full disclosure of information, ethically your attorney may not disclose confidential communications between you and the attorney in the course of the attorney-client relationship.  Generally, the client is the one who controls the release of the
information by either asserting or waiving the right to keep the information confidential.  For instance, I once drafted estate documents for a woman who had a child in a foreign country that no one here knew about; I was not able to release that information.  If a mutual friend asks me about your documents, I cannot tell them whom you have chosen as your trustee, how you
plan to distribute your estate or anything else about them.

There are several exceptions to this rule of confidentiality.  I once prepared an estate plan for a woman who then died, and the grandchildren contested the validity of the documents.  Even though I owed my client a duty of confidentiality during her lifetime, after her death
and in order to help honor her wishes, I was able to talk about her condition and intentions to support the documents that I had drafted for her.  If you tell your attorney about a crime or
fraud you intend to commit or harm you intend to bestow on someone else, that communication is not privileged, and your attorney has the right to inform the appropriate authorities about the imminent harm to others.

Also, if you and your spouse hire one lawyer to prepare your estate plan, there is no confidentiality between you and your attorney with respect to your spouse.  So, if there is
something about your estate planning that you do not wish your spouse to know about, don’t tell your attorney because that information is not confidential between you two.

However, exceptions rarely arise to an attorney’s duty to protect your confidentiality.  So, tell
your attorney all the relevant information, including the embarrassing or unfortunate things.  It may help her help you, and that’s what you pay for.

Originally published by Susan on July 1, 2013.

Powers of Attorney

One of the documents that routinely belongs in a well-balanced estate plan is a General Power of Attorney (also called a Power of Attorney for Asset Management.) What is it and how does it work?

When you give someone power of attorney, you give them the authority to act as your agent. You give them the authority to take your place to make decisions for you and to act for you in specific situations. When properly appointed, an agent has the authority to make any decision for you that you could make for yourself, subject to any limitations that you impose on them. A General Power of Attorney gives the person that you name as your agent very broad authority to act for you in a wide variety of ways. A Limited Power of Attorney gives the person that you name as your agent very specific authority to act for you in a limited number of ways.

For instance, if Patricia gives Alice general power of attorney, Alice may be able to sign checks on Patricia’s bank accounts, sell Patricia’s house, or transfer property into Patricia’s revocable trust. Alice may be able to prepare and sign Patricia’s tax returns, access Patricia’s safe deposit box and use Patricia’s credit cards. On the other hand, if Patricia only gives Alice the authority to sell her car, then all Alice can do is to sell Patricia’s car.

Why would anyone ever want to give someone else this kind of power? While we all expect to handle our own affairs until the end of our lives, often in our senior years, we need someone else to step in to help us out. It may be a question of capacity, or it may be a question of mobility. While my mother was very sharp mentally until her passing, it was difficult for her to get around. I was able to take care of her tax returns, to fetch items from her safe deposit box for her and to interact with her financial advisors because she had given me power of attorney. Other people may not have the mental capacity to handle these tasks any longer and may need someone else to perform the tasks for them.

A Power of Attorney can either become effective immediately when you sign it, or it can become effective only when you become incapable of handling your own affairs. It is a very personal choice as to when it becomes effective and depends on factors such as the integrity of the person you choose as your agent, your relationship with physicians and your overall age and health. I encourage you to discuss this choice carefully with your attorney.

While an attorney-drafted Power of Attorney should be acceptable to all third party banks and other financial institutions, many banks and other financial institutions have their own forms that they require you to use. While I doubt they can legally require you to use their form, it is often easier to just comply with their requirements. If you cannot comply for some reason, I would be more than happy to challenge a bank’s right to ignore a valid Power of Attorney simply because it is the bank’s policy to use only their own form. For instance, if Patricia has signed a Power of Attorney that I have drafted that gives Alice the ability to access her safe deposit box and then Patricia develops Alzheimer’s so that she does not have the capacity to sign a bank’s form and a bank is refusing to let Alice access that safe deposit box simply because Patricia did not sign the bank’s own form, I would be happy to take that bank to court for refusing to honor a valid Power of Attorney. However, if Patricia is still able to sign the bank’s form, most likely it would be easier and less expensive to simply have her sign the bank’s form.

Being named as an agent under a Power of Attorney is different than being named as a trustee of someone else’s revocable living trust. Even though I had power of attorney for my mother, when it came time to buy, sell and rent real property for her, I was able to do these things for her because I was the trustee of her revocable living trust and all of her real property was a part of her trust estate. By naming me as a trustee, she gave me the authority to manage any assets IN HER TRUST ESTATE. By naming me as her agent (power of attorney), she gave me the authority to manage any of her assets that were NOT a part of her trust estate.

While both a Power of Attorney and a Will handle assets that are not a part of your trust estate, the most significant difference between a Power of Attorney and a Will is that a Power of Attorney is only effective during your lifetime, and a Will is only effective after your death. As soon as the Power of Attorney is no longer effective, the Will becomes effective. So, most people need both a Power of Attorney and a Will to cover their lifetime needs and their needs after death.

If you have any questions about Powers of Attorney, I would be happy to discuss them more fully with you.

Originally posted by Susan on May 12, 2014.

Four-Legged Loved Ones

Are you an animal lover? Have you made plans for the care of your pets after your death?

While most of us are aware of our responsibility to provide care for our minor children after our deaths by naming a guardian or setting up a special trust for their benefit, often pet owners overlook their responsibility to provide care for their pets after their deaths. Pet owners have several options available to them to help them carry out this responsibility.

If a pet owner has the means, a Companion Animal Trust can be prepared that names an individual as trustee to care for the pet and that provides a source of money for that care.
This is a sophisticated option that is suitable for clients who have a strong emotional bond to their pets and the resources available to fund a separate trust and to compensate the trustee.  It can be a stand-alone trust or a part of an existing revocable trust.

For other clients who simply want to arrange care for their pets, a provision in their revocable trust can be included that will arrange for either the transfer of the pet to a chosen caregiver or to an animal rescue that will place the pet in a suitable home. As with all nominations of this type, the chosen caregiver is not required to accept the pet and may decline the responsibility. So if you choose this option, I recommend nominating a series of individuals to take over the care of your pet or naming an animal rescue as an alternate.

Many pet owners have more than one pet, and many have more than one species of pet. Please consider the temperament of your animals and the bonds that they have established by
living together in your home. If two dogs are inseparable, consider adding language to your trust provision requesting that they be placed in a home together and not separated.  However, if you have a dog and a bird, it may make sense to nominate separate caregivers for each.  Only you know what is best for your pets.

If you are gifting your pet to an individual, consider the additional cost that this caregiver will incur when caring for your pet. It is perfectly acceptable to give the caregiver a monetary sum to help cover the cost of taking an animal into their home and making this gift conditional on their acceptance of the pet. Of course, some caregivers may accept the money and the pet and then quickly find the pet a new home. To avoid this problem, I advise you choose your pet’s new caregiver carefully.

Your pets provide so much love and affection during your lives. Returning that loyalty by
providing for their care after your death seems only fair. If you have questions about this topic,
please feel free to call.

Originally published by Susan on February 25, 2013.

7 Things To Look For When Hiring A Lawyer

Hiring a lawyer can be an intimidating task. Here are 7 things to look for when you need a lawyer.

LICENSED BY STATE BAR?

A threshold issue is whether the person is a licensed attorney and whether they have a record of discipline with the State Bar. If you are looking for an attorney in California, here is the website for the State Bar of California: http://www.calbar.ca.gov/. Enter the attorney's name in the "Look Up a Lawyer" search section. After entering the name, you can find out whether the person you are searching for is currently licensed as an attorney and whether they have a record of discipline with the State Bar. If you are looking for an attorney outside of California, I suggest you contact the State Bar for that state.

PRACTICE AREA

In today’s sophisticated legal environment, you want your attorney to practice at least 50% of their time in the area that you are hiring them for. You can ask the attorney how much of her practice is devoted to your area of interest, and by visiting the attorney’s website you should be able to tell what areas of law she practices. A good indication that the attorney devotes a majority of her time to a particular area of law is that she is a member of professional organizations that deal with that specialty. For instance, the State Bar and the local bar associations have sections for lawyers who practice in specific areas of the law.

PRACTICE YEARS

The number of years that the attorney has been licensed and the number of years that the attorney has practiced in your area of law are both important factors you will want to consider.

CONVENIENCE

If you will be visiting your attorney’s office on a regular basis, you will want them to be convenient to you. If you will only visit your attorney’s office occasionally, this might not be as important a requirement for you.

ACCESSIBILITY

Can you reach your attorney? Does your attorney answer phone calls and emails? Regardless of what type of case you have, it is important that your attorney answer your questions and concerns. While there may be questions that an assistant can answer for you, when you need your attorney’s input, it is important to know that you can reach the attorney directly.

PERSONAL ATTENTION

Will your attorney spend enough time with you to understand your particular situation or will the attorney hand your file off to an assistant to fill in the forms? Each client has different needs and preferences and should be treated as a person, not as a file. What will your attorney do to personalize your documents or your strategy for you?

A GOOD FIT

Lastly, do you and your attorney have the same general opinion about your case? Do you have the same general outlook and get along on a personal level? While this may not be the determining factor in choosing an attorney, it can make life easier if you enjoy the attorney that you are working with.

Next time you need to hire an attorney, consider these 7 factors to help you find the best attorney for you.

Originally published by Susan on September 29, 2014.

"Let My Kids Duke It Out After I'm Dead"

If this is truly your philosophy, and you truly don’t care about the emotional and financial toll of this attitude, then read no further. However, if this is not your philosophy, or if you haven’t carefully considered the consequences of this philosophy on your loved ones, read on.

While it is almost impossible to draft a bullet-proof estate plan that no one will ever contest and that satisfies all of your goals, having a well-written, well-analyzed estate plan will go a long way to keeping your loved ones out of court and will keep more money in their pockets
If your loved ones are determined to fight, there is nothing anyone can do to stop them, but an estate plan can deter them from doing it. Lawsuits cost money, money that otherwise
would be going to your beneficiaries. A written estate plan can help reduce costs and avoid fights.

Your plan should take into consideration not just your financial status but also your family
dynamics
. Are there family members who will require more care and guidance than other family members? Are there family members capable of stepping up and taking responsibility when you can no longer be responsible? Do some of your beneficiaries have financial
issues that you need to consider such as disability benefits or creditors? An estate planning lawyer can help you plan around these issues.

Do you have certain wishes with regard to your health and personal care?  If so, those should be in writing with penalties for third parties not complying with those wishes. If you have someone close that you can nominate as your agent, a person to make health care decisions for you if you are no longer able to do it for yourself, I recommend that you name that person
as your health care agent. No one has a crystal ball that can predict under what circumstances your agent will need to make these decisions. However, having a person to reason through the options and to apply your values to the facts, can help your wishes to be honored.

Having a conversation with your loved ones about your estate plan also goes a long way to
avoiding conflict between them when the plan becomes more important (on your death or incapacity). When children hear the parents’ wishes directly from the parents, they are more likely to honor those wishes than when they hear them from a sibling.  Once you have signed your estate documents is an excellent time to open a continuing discussion with your loved ones about your wishes. If you do not feel that you can have this conversation on your own, a trained mediator can help facilitate the discussion.

Most people want what’s best for their children. Fighting and losing money are not generally
good for your children. If you want to do your best to avoid these, an attorney-drafted estate plan can go a long way to make that happen.

Originally published by Susan on November 11, 2013