Financial Elder Abuse

Do you think you may have a case of elder financial elder abuse? In 1991, the California legislature passed laws specifically to help people bring elder abuse claims. There are two types of elder abuse recognized in California courts: physical and financial. This blog post deals with financial elder abuse.

For purposes of elder abuse law, an “elder” is described as a person 65 years and older, but the laws also pertain to dependent adults who are 18 to 64 years old and unable to carry out normal activities or to protect his rights.

Financial elder abuse is defined in our statutory laws as taking, secreting, appropriating, obtaining or retaining (or assisting in doing these) the property of an elder or dependent adult for a wrongful use or with the intent to defraud (or both.) Among other things, wrongful use includes acts that one knew or should have known would be harmful to the elder or dependent adult.

It is also defined as taking, secreting, appropriating, obtaining or retaining (or assisting in doing these) the property of an elder or dependent adult by undue influence, which is excessive persuasion that overcomes the elder’s free will and which results in inequity to the elder or dependent adult.

So, who can sue for financial elder abuse? It doesn’t have to be the elder himself, although if they are still alive, the claim is brought in the elder’s name. If the elder does not have the capacity to bring the claim, a conservator or a guardian ad litem can bring the claim for the elder. A Durable Power of Attorney is not enough to allow the agent to bring an elder abuse claim on the principal’s behalf.

If the elder or dependent adult is no longer alive, the personal representative for the estate (such as the executor or administrator), or a successor in interest (such as an heir) can bring the elder abuse claim.

However, you need to bring the lawsuit within 4 years of the time of the abuse or within 4 years of the time you discovered or should have discovered the abuse.

If you prove elder abuse, what are you entitled to? In addition to normal remedies, if you successfully prove elder abuse, you may be entitled to punitive damages, damages for pain and suffering and for attorney fees. If a conservator is bringing the claim for elder abuse, he may be entitled to fees for bringing the case as well. This means that a person who commits elder abuse may be held responsible not just to return the money that he obtained by his actions, but also for the cost of the attorney and the conservator who bring the case against him, and for additional damages to punish him and to cover the pain and suffering that the elder or dependent adult experienced because of the abuse.

Can you sue for other things at the same time? Yes, you can add a claim for financial elder abuse to a lawsuit for fraud, conversion or undue influence among other things, and they are often brought at the same time.

If you have more questions, feel free to post them below or to call for a free consultation.

Originally published by Susan on September 15, 2014.

What to Transfer into Your Revocable Trust

You probably know someone who spent time, money and energy setting up a revocable trust but his or her loved ones ended up in probate court despite it all. What happened?

One common scenario is that there were too many probatable assets left outside of the trust, and the loved ones could not take control of them without a court order. In California in 2014, if your estate is worth less than $150,000 on your death, your loved ones can transfer the assets by declaration in order to avoid probate. However, if your estate is worth $150,001 on your death, this mechanism is not available to your loved ones. Therefore if your goal is to avoid probate, it’s important to reduce the value of the assets that need to pass through probate in order to be transferred on your death.

What is a probatable asset? Its’ one that does not pass on death by contract and must be transferred by court order. The two most common ways to transfer an asset by contract are 1) by beneficiary designation and 2) by a trust. If an account has a valid beneficiary designation that can be reasonably implemented, on your death it will pass to the person (or entity) that you name as a beneficiary. It passes according to the contract that you have with the financial institution. So, accounts with valid beneficiary designations are NOT probatable assets.

If an asset is held as part of your trust estate, on your death it is managed according to the terms of the trust document. Because the trust document is essentially a contract, the real estate is transferred by contract and is NOT a probatable asset. Your loved ones do not need a court order to manage the assets held in the trust. This is why many people make trusts in order to avoid probate.

So, what should you transfer into your trust? If you wish to avoid probate, any financial account that does not have a beneficiary designation should be transferred into your trust. Generally speaking, real property should be transferred into your trust. Vehicles and other personal property of significant value should be transferred into your trust. Anything else that you wish to be part of your trust distribution plan should be transferred into your trust.

One more complexity in this analysis is that you may have loved ones that you want to receive your things on your death but they do not have the capacity to own these assets either because of a disability, because they are simply too young or because they are receiving government benefits that would be discontinued if they receive your money. You should not name these individuals as your beneficiaries on your accounts, and you might consider naming your trust as the beneficiary of these accounts instead.

To answer “What assets should I transfer into my trust?” you and your advisors should consider the types of assets that you own, the overall value of the assets that you own and whom you would like to receive those assets. The answer is not a simple one, so if you need help, you should consult your attorney, CPA or other financial advisor.

Originally published by Susan on March 10, 2014.

Antique Will

On February 20, 1670 John Jarfyd (probably “Garvey” today) wrote his Will. That same year, Puritans founded Charles Town (“Charleston”) in what is now South Carolina, the Hudson Bay Company was founded in England to operate in Canada, and the coffee house was a novelty just beginning to grow in London. Through some mysterious journey, Mr. Jarfyd’s Will came to be framed and hung on my office wall. (It was given to me by a friend years ago when her law firm closed down.)

Will of John Jarfyd

Will of John Jarfyd

The Will is written in brown ink on parchment in beautiful handwriting which is hard for my untrained eyes to read. There were no spelling conventions at the time, and some words are not spelled consistently even throughout the document. It is hard to tell an “s” from an “f,” and the ink has faded over the years. However, parts of it are legible and fun to try to decipher. It begins, “In the Name of God Amen….”and proceeds to bequeath Mr. Jarfyd’s land and money to his family and friends. Although I can’t quite make out the words, it is clear that he intends to leave money to care for his “loving wife Margaret,” that he was a wealthy land-owner and that he was a religious man. At some point someone (a court clerk perhaps?) wrote on the back of the Will, “Probate John Jarfyd.”

The document was folded over several times and sewn shut. I am guessing that this occurred shortly after it was written in order to preserve Mr. Jarfyd’s privacy and to ensure its authenticity when the Will was probated. There is also a binding running across the bottom that seems inconsistent with the folding and sewing treatment. So, perhaps the document was bound to other court records during probate. There is also a separate “page” that is affixed to the binding. This “extra page” is the same size as the document would have been when it was folded, and the writing is the same style in the main document, but it is much smaller and much harder to read. I wonder if Mr. Jarfyd had more to say than what would fit onto the main parchment, so the scribe had to squeeze the rest onto a smaller page.

Next time you are in my office, feel free to examine it more closely. Maybe you can help me decipher some of the words!

Originally published by Susan on August 25, 2014.

What I Do

We live in a complex society. It seems like almost everyone has a specialty of some kind because there is just too much to know to be effective as a generalist. This is true of lawyers, too. The first question people ask when they meet a lawyer is, “What kind of law do you practice?” and my general answer is “Trusts and estates.” What does this mean?

My practice breaks down into four areas: estate planning (the drafting and administration one does before it’s needed), probate (the court-supervised administration of wills), trust administration (the non-court-supervised administration of trusts) and estate litigation (when parties disagree about the terms of an estate document, the choice of fiduciary or the fiduciary’s proposed distribution.) Other areas that are similar but that I refer to other more specialized attorneys are conservatorships, elder law and disability planning.

Because much of what I do impacts families, and because I often represent multiple generations with estate planning, often clients call what I do “family law.” However, family law specifically refers to divorce, support and custody issues. There is some overlap between a trusts and estates practice and a family law practice. For instance, the characterization of property as community property or as separate property is important in both trusts and estate and in family law because assets are distributed at two times: when you divorce and when you die. So both trusts and estates attorneys and family law attorneys can prepare pre-nuptial and post-nuptial agreements. Also guardianships are handled by the probate court, but also involve paternity, support and custody issues. So, a trusts and estates attorney or a family law attorney can help you with these issues.

I enjoy helping individuals and families prepare for their senior years by writing trusts, wills, advance health care directives and powers of attorney. I like guiding loved ones through the intricacies of marshaling, valuing and distributing assets in both probate and trust administration. I relish a good fight when my clients need protection. And all of this falls under a trusts and estates practice!

-Originally published by Susan on November 11, 2014.

Plan of Action

For readers who have yet to complete their estate plans, here is a simple Plan of Action:

1.  Choose the qualified attorney you would like to work with. Call the attorney to discuss availability, pricing and schedule an appointment.

2.  Complete the attorney’s questionnaire that asks for detail information such as full legal names, dates of birth, contact information, etc.  Then gather relevant documents such as your
current estate documents (if any), deeds to your real property, contracts for burial (or cremation).

3.  Meet with your attorney.  At the end of this meeting, sign a retainer agreement to hire your attorney, pay the retainer amount.

4.  Attorney drafts your documents based on your meeting and sends them to you via email or US mail.

5.  You review the drafts carefully to make sure they reflect your wishes.  Call your attorney with comments or questions.

6.  Your attorney revises the drafts until you and your attorney are satisfied with them.

7.  Meet with your attorney for you to sign your documents. Take your current, valid driver’s license for the notary process.

8.  Your attorney records any deeds that you have signed and sends the originals of all your
documents to you.

9.  You transfer any other accounts into your trust and change any beneficiary designations to
complete your plan.

10.  You review your documents annually for any changes such as births, deaths, marriages, financial changes.

See, now isn’t that easy??

Originally posted by Susan on January 13, 2014

The Complete Estate Plan

For the vast majority of clients, a complete estate plan includes four documents: a Revocable Living Trust, a Pourover Will, a Power of Attorney and an Advance Health Care Directive. Each document covers a different set of concerns, assets, and effective time period. The two basic set of concerns are financial and health care. The two basic time periods they cover is either before or after death, and the two basic types of assets are trust and non-trust assets.

FINANCIAL CONCERNS

For your financial concerns the grid looks something like this:

A valid Revocable Living Trust operates during your lifetime and after your death. Because of its longevity, a Trust can help manage your affairs during your senior years or incapacity, and it can distribute your assets to your loved ones on your death. However, it only governs assets that you have transferred into your Trust estate.

A Power of Attorney operates only during your lifetime and only governs non-trust assets. If you have a bank account in your individual name (not in the name of your trust), your agent under your Power of Attorney can access the money in that account. If the Power of Attorney allows, your agent can file your tax returns, use your credit cards and access your safe deposit box, among other things. However, at your death, the Power of Attorney terminates.

Just as the Power of Attorney terminates, your Will becomes effective. A Will becomes effective at the moment of your death, and it governs only non-trust assets. The sole purpose of most Wills is to transfer assets on your death. To do this, you name a person to be in charge of the transfer (called the “Executor”) and you instruct the Executor how you want your non-trust assets distributed.

PERSONAL CONCERNS

An advance health care directive deals only with your health care and personal care, and it is effective both before and after death. So, whomever you name as your agent under an advance health care directive is authorized to make decisions about whether you will receive medical care, what kind of medical care and the treatment of your remains. The agent’s decisions must be consistent with your instructions. So, if your agent knows that your religious convictions do not include medical treatment, your agent should not authorize medical treatment for you. If your agent knows that you do not want life sustaining treatment, your agent should not authorize it for you. If you instruct your agent to have your organs donated and your remains cremated, your agent should follow those instructions. However, you have the right to make these decisions for yourself as long as you have the mental and physical capacity to do so. In other words, you can delegate someone else to make these decisions for you if you don’t want to make them or if you can’t make them, but as long as you have the mental and physical capacity, you can override your agent’s decisions.

Keep in mind that these four documents are the skeleton of a complete plan, and your situation may differ. Many clients also have separate property trusts to maintain their separate property apart from their community property, life insurance trusts to more efficiently manage large life insurance policies, irrevocable trusts for a variety of reasons, community property agreements, pre-nuptial agreements, etc. However, if you have these four documents in place, they offer complete coverage both before and after death, both trust and non-trust assets and both financial and personal concerns.

Originally published by Susan on June 16, 2014.

7 Most Common Estate Planning Mistakes

1.  NOT MAKING AN ESTATE PLAN (and the corollary: not updating your existing plan when your life changes.) You know the saying that showing up is one half the battle.  Writing your estate plan is at least half the battle.  Keeping your documents current is important, too.  If your documents name individuals who are no longer a part of your life, or if they do not fit your current financial status or current laws, you will need to update them so that they meet your goals.

2.  FAILING TO PUT ASSETS INTO YOUR REVOCABLE LIVING TRUST. If you do not transfer assets into your trust, the trust may fail (meaning that the terms of it will not be honored.)  At the very least, those assets left outside of the trust will not be subject to the oversight of your named trustee and will not pass according to your distribution plan.

3.  LISTING YOUR REVOCABLE LIVING TRUST AS THE BENEFICIARY ON YOUR RETIREMENT ACCOUNT.  Doing this can mess up the calculations for the required minimum distributions.  It is better to consider your entire estate as a whole and to name adults as the beneficiaries of your retirement accounts. Under some circumstances (only minor beneficiaries or a special needs beneficiary), it may be your only option, but consult with your attorney or financial advisor before doing so.

4.  FAILING TO SPLIT YOUR TRUST ON THE DEATH OF THE FIRST SPOUSE TO DIE.  If you may be subject to federal estate taxes, and if your trust provides, you should split your assets when the first spouse passes on so that you can take full advantage of the exemption amount (the amount that you can pass on your death without paying estate taxes.)

5.  NOT HAVING YOUR ORIGINAL DOCUMENTS.  This one is not the clients’ fault; it’s the fault of the overly protective (or overly greedy) attorney.  The file is YOUR file, not his file, for goodness’ sake.  Call or send a letter requesting your original documents.  On receipt, store them in a safe place.

6.  WRITING ON YOUR ORIGINAL DOCUMENTS.  If you have your original documents, it’s important to treat them appropriately.  Do not write on them.  If you feel compelled to edit them, copy the originals and write on the copies.

7.  NOT KNOWING WHAT YOU HAVE.  Review your documents annually.  If after reviewing them, you are not sure what they mean, call the attorney who drafted them to make sure that you understand them at least on a basic level.  If they are not appropriate for you at this point in your life, schedule an appointment to discuss changing them.

Originally published by Susan on January 20, 2014.

Why Avoid Probate?

You may have been advised to avoid probate at all costs, but do you know why?

Sometimes probate is a good choice.  Probate is a court-supervised distribution of your assets after your death.  There are systems in place to manage the collection, valuation and distribution of those assets.  Court approval is required for appointment of your representative and for many transactions.  If there are objections to the appointment of the representative or any of the transactions, the judge will listen to those objections and make a decision.  For
these reasons, it is a safe and effective way to distribute the assets.  However, it can be expensive and slow.

In California your representative and the attorney for your representative are paid on a percentage basis that is set by law.  They each receive 4% of the first $100,000, 3% of the next $100,000, 2% of the next $800,000, 1% of the next $9,000,000 and 0.5% of the next $15,000,000 and a reasonable amount over $25,000,000.  For an estate of $500,000, the attorney and the representative would each receive $13,000.00.  There are also court filing fees and referee fees, and if extraordinary services are rendered, the attorney and the
representative could be awarded much more in fees.

In Orange County, a simple probate takes about one year from filing the Petition to termination, and a complex probate estate or a probate where the parties disagree could take years.  That means that your loved ones will not receive their distributions until long after your death. 

If you factor in the public nature of probate and the hassles of your representative appearing in court, taking time from work and navigating the legal system, probate is not an attractive choice especially if you compare probate to the cost of preparing a revocable trust (most likely less than $3,000) and the ease of transferring assets from trustee to beneficiary.  I suggest that you weigh all of these factors when deciding whether to try to avoid probate or not.

Originally posted by Susan on September 24, 2012

D-I-Y Estate Planning

People often ask me about writing their own Wills, and they are usually referring to holographic Wills. A holographic Will is a signed, hand-written document that shows an intent to dispose of assets on the writer’s death. If properly prepared, it can be admitted to probate just like a witnessed Will such as an attorney would normally prepare. Usually these types of Wills are prepared in emergency situations when the writer simply does not have the time necessary to hire an attorney to prepare a witnessed Will. Sometimes, however, people write holographic Wills to avoid attorneys.

Several years ago I probated a holographic Will. Although I never met the woman who wrote it, it appeared that she had wanted to avoid the cost of hiring an attorney to draft a witnessed Will for her. While she was successful at avoiding the up-front cost of hiring an attorney to draft the Will, the cost to probate the Will was far more than she would have paid to have a properly drafted Will.

One problem with her Will was that she did not follow all the rules for a holographic Will, and she did not follow all the rules for a witnessed Will. Her Will was a mix between the two, and the judge decided to treat it as a witnessed Will. However, it was not properly witnessed, so I had to locate the witnesses and have them sign an Affidavit which provided the information that she had left out of her Will. It was a good thing that her witnesses were both still alive, cooperative and had ties to the family so that we could locate them and provide the missing information. If not, the Will would not have been admitted to probate, her estate would have passed by intestacy as if she had not written a Will, and it would have been distributed to different people than she had named.

Most of the time, I recommend that my clients designate their distributions in percentages. So that instead of giving a loved one, say $100,000.00, they give 5% of the estate. With percentages the gifts remain consistent regardless of the value of your estate on your death, and all of your beneficiaries are likely to receive a portion of your estate even if the value of your estate drops significantly. The woman who wrote the holographic Will did not designate percentages for her beneficiaries, but items. So she designated that one of her loved ones would receive a particular piece of jewelry and that another would receive a particular dish. During her lifetime, she had given away some of the items mentioned in her Will, and this created confusion over who was to receive these items at her death. Some of the items she mentioned in her Will were very small value (teacups.)

While I enjoyed this case on an intellectual level, and the clients and family members were delightful to work with, I couldn’t help but think how much easier the estate would have been for all involved if the woman had hired an attorney up front to help her draft the Will. Not only would she have been able to pass more money to her loved ones (by avoiding my probate
fee), she would have saved her loved ones the time and hassle of fixing her mistakes and trying to decipher her intent.

Can you write your own Will? Why, yes, you can, but you can also set your own broken bones, plumb your own house and build your own airplane. The prudent question may not be if you can but whether you should.

Originally published by Susan on May 5, 2014

360° REVIEWS

In the 21st century we all live hectic, busy, crazy lives.  Few of us have time to ponder, to reflect, to plan and to consider.  Yet, there are times in our lives when it may be vital to our well-being to take the time to review where we are and to plan for where we’d like to be.  I call these breaks “360° Reviews” because you are looking at the full circle of your life.

 For your financial and legal documents, it would be best to review them once per year: perhaps at the start of a new year or on your birthday or anniversary.  In addition to this
standard annual review, I suggest that at each major life change you take some time to consider your financial and legal life. Is it where you’d like it to be?

Major life changes include inheritance, marriage, divorce, and retirement.  At each of these junctures, I recommend that you review your Will, Trust, Advance Health Care Directive and
Power of Attorney.  Do they still accurately reflect your wishes? Are the people you have named as your agents, executors and trustees still the people you would like to handle your affairs
when you can no longer do it for yourself? The people you have listed as your beneficiaries—are they still the people you would like to receive your gifts?

 If not, I recommend calling your attorney to update your documents to ensure that your documents are current. Do you remember how relieved you felt when you first signed your
documents?  By performing a complete 360° review and then updating your documents and keeping them current, you will feel just as relieved and ready to tackle what life brings to you next.

Originally posted by Susan on June 26, 2012.