Tuesday, June 20, 2017

Divorced Couple Rethinks Estate Planning after Cancer Diagnosis

A 60-year old Antioch woman came in to our Walnut Creek office because she needed assistance creating Living Trusts for both herself and her ex-husband. “Anna” and “George” divorced seven years ago after more than 20 years of marriage and three grown children.

Now, it seems, they have become each other’s best friends

This happens more often than you might think. People share many experiences as they build their careers and raise their children together. Once the day-to-day pressure of living together is removed, we often hear about couples rediscovering the reasons they got together many years before and rethinking their relationship.

George’s struggle with cancer has been a wakeup call for this couple

Anna is now there for George as he struggles with terminal cancer. His treatment has given him hope, but he’s also realistic. He and Anna want to be prepared so that their children don’t have to deal with Probate when he dies.
Anna and George co-own two townhomes in the same Antioch neighborhood. They own the homes 50/50 as unmarried people; they’re listed on the title as joint tenants, which means that if one of them dies, the other automatically becomes the property’s owner.
Anna and George are considering separate Living Trusts, and as part of their Trusts, they will create Powers of Attorney and Advance Healthcare Directives, naming their younger daughter, “Amanda” as their Agent. Amanda is a CPA and lives close by, which makes her an ideal candidate. Being an Agent is a responsibility that can require a significant commitment, so we generally caution our clients to name someone who has availability. It also helps if it’s someone who has a facility working with numbers, as it’s often necessary to manage financial accounts.

There are other issues on the table for this couple as they complete their estate planning 

  • If each creates a separate Living Trust, they will spend twice as much money.
  • Anna may be eligible to receive a portion of George’s pension when he dies.
  • If they remarried, they could create a joint trust, which would meet their requirements, including providing ownership succession for George’s home, Power of Attorney and an Advance Healthcare Directive.
  • Most of all, if they remarried, Anna might be better positioned to receive a portion of George’s pension.
We printed a marriage-license request from the county recorder, and Anna took it with her as she went home to talk to George about the practical benefits of becoming man and wife again—nearly 30 years after they’d originally exchanged their vows.
If you’re working on an estate plan, a Living Trust is an important part of that planning. Call California Document Preparers at one of our three Bay Area offices today to schedule an appointment today. You can also jumpstart the process with our easy-to-use, secure online storefront. We’re still available by phone and email if you have questions. We’re helpful, compassionate and affordable.

Wednesday, June 14, 2017

Deed Case Study: Incorrectly Prepared Deed Results in Tax Reassessment

This story is a cautionary tale, an example of the potentially costly consequences of well-intentioned efforts from a family member.
Barbara Theobald, who has worked in our Walnut Creek office for more than eight years, was contacted by “Sherry”, a previous Living Trust client. Sherry needed assistance solving a dilemma with a Deed that her mother and brother had created for her.
  • Sherry created her Trust in 2014, and her mother, “Irene”, gave her another property in Redwood City.
  • Sherry transferred the property into her new Trust.
  • Irene had recently changed her mind and decided to transfer the property back into her own Trust, which requires preparing a Deed to transfer ownership.
  • Irene asked her son, “Richard”, to prepare the Deed.
  • Sherry signed the Deed and Richard recorded it with the county clerk in January 2017.

Property now being reassessed, with a considerable bump in taxes

In April, Irene received a notice from the assessor’s office that the property was being reassessed for tax purposes. The bill was substantial and Irene couldn’t understand what had happened. Barbara did some research and discovered that Richard had prepared the deed incorrectly. Instead of its being transferred from Sherry’s Trust to Irene’s Trust with the appropriate assessor forms so there would be no reappraisal of property taxes, the deed was recorded from Sherry as an individual to her mother as an individual and recorded as a gift. The lack of supporting paperwork to show that the property was going from child to parent caused the reassessment and the subsequent bump in property taxes.

Barbara was able to correct the Deed

Barbara was able to correct the Deed for Sherry and Irene, but it ultimately cost this family more money than it would have if they’d come to California Document Preparers in the first place to transfer and file the Deed. It also would have saved considerable time and anxiety.

A final note: DIY processes can often have consequences

We hear this a lot from our Do-It-Yourself (DIY) clients who abandoned the process. Those “simple, easy processes”—especially when it comes to Divorce and Living Trusts—can quickly become complex. Legal documents that have long-term consequences are not the place for guesswork.
Do you need to transfer your Deed? Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment today. You can also jumpstart the process with our easy-to-use, secure online storefront--we’re still available by phone and email if you have questions. We’re helpful, compassionate and affordable.

Wednesday, June 7, 2017

Social Security Benefits for Spouses: Are You Leaving Money on the Table?

At California Document Preparers, Living Trusts are an important part of our business. While we believe that everyone with assets and dependents should have a Living Trust—the reality is that many of our Trust clients are older. They may or may not be retired, but they’re thinking about estate planning and how they’re going to be spending the final years of their lives. This spawns a wide range of discussions about sometimes-controversial topics such as hospice, Medicare, Medi-Cal and long-term care insurance.

Retirement and quality of life issues center around economics and health

In all of these conversations, everyone is concerned about the quality of life issues in retirement—having good health and enough money to be able to travel, spend time with family and slow down to enjoy life. But there’s one economic benefit that many people are completely unaware of—the Social Security spousal benefit.

Jane Bryant Quinn, personal financial expert: Guide to Social Security spousal benefits

recent article from personal financial expert Jane Bryant Quinn, whose excellent articles on personal finances regularly appear in the AARP magazine, prepared a guide to Social Security spousal benefits. While the guide is from the perspective of a wife filing on her husband’s earnings record, the same rules apply to either spouse.
  1. What is a spousal benefit? It’s a payment originally designed for women who left the workforce to raise children. You need ten years of work (40 quarters) to claim aretirement benefit of your own. If you worked fewer than ten year or 40 quarters (or not at all), or your earnings were very low, you qualify for a spousal benefit based on your husband’s earnings.
  2. How much is the spousal benefit? It depends on your age when you claim it. If you wait until your full retirement age (somewhere between 66 and 67), you’ll get half of what your husband could get at his own full retirement age. If you claim earlier, you’ll receive less.
  3. What if you worked 10-plus years and earned a Social Security retirement benefit of your own? Here’s where claiming gets tricky. If your husband has not retired, you can file for a benefit based on your personal earnings. When he finally quits work and goes onSocial Security, the spousal amount you can receive depends on your personal benefit’s size. If it’s higher than what you’d get as a spouse, you’ll continue to receive that same, higher amount, says Philip Moeller, coauthor ofGet What’s Yours: The Secrets to Maxing Out Your Social Security.
If your personal benefit is smaller, it will be topped up to the spousal level. If you file when your husband has already retired, Social Security will normally assume that you’re claiming your personal and your potential spousal benefit at the same time. You will receive the higher of the two. There’s an exception for people who were born on or before Jan. 1, 1954. If you put off your claim until full retirement age, you can file a “restricted application” for a benefit based on your spouse’s earnings, without also claiming the personal benefit you’re owed. At age 70, you can switch to your personal benefit, which will have grown at 8 percent per year plus the inflation rate.
  1. What if you’re divorced? You get the same benefits as a current spouse if your marriage lasted at least ten years and you are now single. Also, you can claim the spousal benefit even if your ex has not retired, provided that he is eligible for benefits and you have beendivorcedfor at least two years. If you’ve been working, however, you will probably find that sticking with your own benefit is the better deal.

In conclusion, and for more information

While there are special rules for those who are disabled or for retirees with children who are under 18, these rules apply for most people. If you need more information about spousal Social Security benefits, the agency’s website is very helpful. If you want to talk to someone, you can try calling 800.772.1213 and use the automated telephone services to get recorded information and conduct some business 24 hours a day.
A reality check: These are national numbers; they do not publish the numbers for local Social Security offices. These phone trees can be very frustrating, and the mailboxes often fill up early. A note from personal experience: I had to do something last winter that required my going into my local Social Security office. I put this off as long as I could, fearing it would be like a trip to the DMV. I was delighted when I went into the office, signed in, waited five minutes and met with an extremely knowledgeable, professional and gracious woman who solved my problem in fewer than ten minutes. I hope my experience was not an anomaly and that others will go to their Social Security offices and meet with problem solvers.

Are you putting off creating your Living Trust? Call California Document Preparers at one of our three Bay Area offices todayto schedule an appointment. You can also jumpstart the process with our easy-to-use, secure online storefront–we’re still available by phone and email if you have questions. We’re helpful, compassionate and affordable.

Tuesday, May 30, 2017

True Default Divorce Finalized in Just Six Months!


Divorce is never easy, but a recent Divorce for a Walnut Creek client was finalized in six months. This relatively simple solution went a long way towards helping our client get on with her life.
“Zoe”, who lives in Pleasant Hill, came in to our office for assistance with her Divorce. Zoe is 32, has a good job as an account executive with a national publication, and had been married to Bobby, 34, the operations manager for a manufacturing company, for nearly two years. Like many busy professionals these days, they met online and were delighted to discover their shared interests. They quickly fell into a pattern of spending their weekends together.

Zoe and Bobby began to drift toward marriage

The couple had attended a number of weddings together over the last year, and they were at that age when young couples begin to think about settling down. They set a date and married in the summer of 2015. Bobby moved into Zoe’s home that she’d inherited from her parents, and they began their new life together. But almost from the beginning, their relationship was troubled. While they’d spent considerable time together before marriage, they found that actually living together was challenging. They were soon quarreling, tried counseling, but finally admitted that they they’d married for all the wrong reasons, and in less than a year, Bobby moved out and left no forwarding address.

Zoe wanted to be married and have a family, but with a different partner

Zoe wanted to divorce and get on with her life. There were no kids, no support issues, no property issues or community assets. When Bobby moved out, he simply packed up his belongings and took them with him. (While California is a community property state, Zoe’s home was deeded to her before she met Bobby, and she made no effort to include him on the title after they were married.)

Bobby was not involved in the Divorce

Zoe knew that Bobby wouldn’t want to be part of the Divorce process, but she also knew where he could be served. She filled out our workbook, we prepared the initial paperwork and one of Zoe’s friends served Bobby the Divorce papers. Bobby didn’t file a Response within the required 30 days, so we were able to file a “true default” judgment for Zoe, which was signed by the judge and filed with the court. Bobby never had to sign a thing, and Zoe’s Divorce became final within six months of her initial office visit.

True default judgments and California law

According to California law, if someone does not respond to his/her spouse or partner’s petition for Divorce, the case will be considered a “true default” judgment. In a “true default” case, the spouse is giving up the right to have any say in in the Divorce. A true default judgment is uncommon because, unlike Bobby, most people are stakeholders in their marriages—they have emotional and economic investments—there are kids and property to divide–so this kind of simple solution is somewhat unusual. In most cases, even if the Divorce is uncontested, both parties work together to make decisions about custody, a parenting plan and division of property.
Are you contemplating divorce? Call California Document Preparers at one of our three Bay Area offices today to schedule an appointment. You can also jumpstart the process with our easy-to-use, secure online storefront–we’re still available by phone and email if you have questions. Our dedicated family law specialists are helpful, compassionate and affordable.

Wednesday, May 24, 2017

Who Has the Title to Your Deed: You May Be Vulnerable to Probate

This case study is a cautionary tale, and unfortunately, we see this kind of situation all too often. It highlights the importance of what is called vesting, or the way in which title to a Deed is held. It seems like a small thing, but a Deed is the legal document that identifies the property owner. Without the title, it is impossible to buy or sell a home. And as our client discovered, she also couldn’t update her Living Trust.

Updating Claire’s trust to reflect the changes in her life

It began when our client, “Claire”, came in to our Walnut Creek office to update her Living Trust. She’d experienced some significant changes since she’d created her Trust more than ten years before. She’d divorced, added a grandchild, lost her daughter to breast cancer and her mother to heart disease, changed jobs so that she was making significantly more money, bought a very promising stock that was soaring, invested in a Tahoe timeshare and purchased a life insurance policy. These were precisely the kinds of life events that should alert people to the need to be updating their Trusts.
We began amending Claire’s Trust to reflect the many changes in her life, but ran into a problem when we got to Claire’s Walnut Creek home. We needed to move the home into the Trust, but it was partially owned by her mother, and mom had died in 2015. Unfortunately, the Deed didn’t state that the owner and her mother were “joint tenants”, which meant that full title didn’t automatically pass to Claire when mom died. The result: 50% of the property would now have to go through Probate to determine ownership.

Probate a growing practice area for us

At California Document Preparers, uncontested Probate is a growing practice area for us, and this is one of the situations we most frequently encounter.
As part of Probate, the Court appoints a personal representative, or administrator, to settle the estate, so we work closely with the administrator throughout the Probate process. Claire became the administrator for the Probate, responsible for the following:
  • Placing a notice in the local newspaper and mailing notices to creditors. Probate is a public process.
  • Collecting the Probate property of the decedent.
  • Paying all debts, claims and taxes owed by the estate.
  • Collecting al rights to income, dividends, etc. and settling disputes.
  • Distributing or transferring the remaining property to the heirs.

Access to the decedent’s accounts

As an administrator, Claire can access all of the decedent’s records to understand the financial landscape. This may include valuing assets, taking physical custody of assets and selling assets, as necessary, to pay off debts or expenses. In this case, since Claire’s mother had already dealt with those financial assets by beneficiary designations, the only outstanding issue was the Deed to the home.
During Probate, the deceased’s estate becomes a separate tax entity, so Claire had to obtain a federal identification number. She was also responsible for filing the estate’s tax return and a final individual tax return.

Distribution of remaining assets

Once all taxes and debts have been satisfied, the Court distributes any remaining assets according to state law. In California, as in most states, the first priority is given to the deceased’s spouse, followed by the deceased’s children. In this case, the only asset in question is the 50% ownership of the home in which Claire is living. Claire was her mother’s only daughter, so mom’s interest in the house was distributed to Claire.

By vesting the Deed as joint tenants, they would have avoided Probate

If the Claire and her mother had been joint tenants on the Deed to their home, this scenario would have been dramatically simplified and they would have avoided Probate. When we prepare a Deed, we present all the options so clients can make informed decisions about how they wish to hold title—hopefully avoiding an unfortunate situation like this.
Do you need to transfer your Deed? Call California Document Preparers at one of our three Bay Area offices today to schedule an appointment. You can also jumpstart the process with our easy-to-use, secure online storefront–we’re still available by phone and email if you have questions. We’re helpful, compassionate and affordable.

Tuesday, May 16, 2017

Updating Living Trust After Death of Spouse


When we create Living Trusts for our clients, we always caution them that there’s a reason these are referred to as Living Trusts---these are living documents that need to be updated with important life events.

So what are life events?

A good way to think of this is anything that would affect the inheritance of those who are included in the Trust: Births, deaths, divorce, the acquisition of significant assets, including real property.
A good example of someone’s updating his Trust is Mike, from Pleasant Hill, who came in to update his Trust after his wife, Mary, died from a long battle with breast cancer. Mike and Mary originally created their Trust in 1997, when their daughter Lucy was 15 and their son Joey was 17. They had named Mike's older brother, Bob, as the Successor Trustee, and his wife's twin sister, Jennifer, as the Backup Successor Trustee. Lucy and Joey were equal beneficiaries when they reached 25.

Amending their old AB Trust

Mike and Mary had a complex AB Trust, fairly common at the time, that was to be divided into two Trusts when the first spouse died. But according to Article 7.3 of their Trust, at the death of the first spouse, the surviving spouse can amend or revoke any part of the entire Trust. As the lone Trustee, Mike had permission to amend his Trust.

Needs had changed; Mike now wanted adult children to serve as Trustees

When Mike and Mary had originally created their Trust, their kids were young, and they needed to include adult Trustees in the event something happened to them. But those kids were now grown and married, with lives of their own. Mike wanted to remove Bob and Jennifer as Trustees and make Lucy, a CPA in San Jose, the Trustee—she was most able to take care of him and manage his affairs if he became incapacitated. Joey, a graphic designer, would be Lucy’s backup.
Mike’s home was in the Trust, and he had inherited his mother's home from her Trust when she died. His mother's home was in Washington state, and while he had added Mary to the title, he had never moved this home into their Trust. He wanted to move his mother’s home into his and Mary's trust.

How California Document Preparers assisted Mike

  • Amendment to Living Trust. Mike amended their Trust, converting it from an AB Trust.
  • A change of Trustees. He amended the Trustees, making his CPA daughter Lucy the first Successor Trustee and Joey her backup. Lucy also became his Agent with Power of Attorney for financial matters and the Agent for his Advance Healthcare Directive.
  • Affidavit of Death of Joint Tenants. We created an Affidavit of Death of Joint Tenants, informing Washoe County, Washington, that Mike’s wife had died and prepared a Deed to transfer his mother’s home into his and Mary's Trust.
  • Pour Over Will. A standard part of our Trust package is a Pour Over Will, which Mike created. There is a lot to think about when preparing legal documents, and clients are often concerned that they will have forgotten to include some of their assets in their Living Trusts. The Pour Over Will acts as a safety net, stating that any remaining assets or property not previously transferred into the Trust “pours over” into the Trust so they may be distributed according to the terms of the Trust.
  • Personal Organizer. We also included a personal organizer, a place for listing contact information of healthcare providers, insurance agents, financial advisers, veterinarians, etc. We also encourage our clients to include login information to their digital assets.
Mike's total fee was $949. This fee included amending and updating his Living Trust, the Will, Power of Attorney, Advance Healthcare Directive, Affidavit of Death and Deed Transfers. The fees for our Living Trusts and Deeds are fixed rates--no surprises.
We were delighted when the following week Mike’s daughter, Lucy, came in to create a Living Trust for herself and her husband, Jake.

Call California Document Preparers today at one of our three Bay Area offices today to schedule an appointment to update your Living TrustWe’re helpful, compassionate, affordable.

Monday, May 8, 2017

Single Mom Creates Living Trust to Provide for Her Daughter

The concept of family has evolved. It’s not uncommon for men or women these days to decide that they really don’t want to get married at all, but they do want to have a child and be a parent. The families they form may include the child’s birth father or mother—or not. It’s really up to them to define their version of the new American family.

Introducing Mary: A 34-year-old pregnant surfer

One such woman, “Mary” recently came in to our Walnut Creek office. She is 34, lives in Danville, has a great job, loves to surf at Ocean Beach—and is five months pregnant with a little girl. She and her boyfriend, “Oliver” have been together for five years, and he’s a software salesman who does a fair amount of traveling. When she told him that she was pregnant, he wanted to get married. But while she loves Oliver, she doesn’t want to marry him.
Mary owns two properties—a four-unit apartment in Alameda and the home in Danville in which she lives. It had been her grandmother’s house, and when she died, Mary and her parents became equal owners.

Having a child will dramatically change her lifestyle

Mary is healthy, happy and eagerly anticipating the birth of her daughter. She knows that being a single mother is going to be challenging and that her lifestyle will change dramatically. Even with her demanding job, she knows she must prioritize the needs of her new daughter.
But Mary has always wanted to have children, and she knows that this is the right time. She also knows she can count on her strong support system, including Oliver. Her parents, who live close by, are ecstatic about the prospect of their first grandchild. Mary also has friends and extended family members who live in the East Bay, and she knows she will need to rely on all of these people as she navigates her new life as a single mom.

What happens to her daughter if something happens to Mary?

Mary is worried, however, about what would happen to her daughter if something happened to her. She wants to make sure her daughter would inherit her assets, but she also wants to make it easy for Oliver to raise their child.

Here’s how California Document Preparers helped Mary provide for her daughter:

  • We created Mary’s Living Trust package from the information she provided in our easy-to-use workbook.
  • She named Oliver and her father as Co-trustees.
  • Mary left the apartment to Oliver and her home to her parents.
  • She named Oliver as the child's guardian and her sister as a backup guardian.
  • Our comprehensive Living Trust package includes a Power of Attorney, and she decided that her father, an attorney, will be her Financial Power of Attorney, with Oliver as the backup.
  • Mary named Oliver, her sister, mother and father on her Advance Healthcare Directive.
  • We also did two Deeds transfers for Mary; the Alameda apartment building is 100% in her Trust and her grandmother’s Danville home is 50% in her parents’ Trust and 50% in her new Trust.
Mary is delighted that we were able to take care of her Trust in one week--long before her child is due. It is giving her peace of mind as she prepares for the birth of her daughter.
There’s a common misperception that Living Trusts are just for old people! In the same way that Mary wanted to provide for her daughter if something happened to her, anyone with dependents should have a Trust.
Call California Document Preparers at one of our three Bay Area offices today to schedule an appointment. We’re helpful, compassionate, affordable.