Why don’t more East Bay families have Living Trusts? Good question. But here are some of the excuses:
1. I don’t have an estate–why do I need an estate plan?
This is, of course, the classic excuse. Certainly those with a lot of assets have more to protect and more to lose by not making plans for the distribution of their estates. Yet many people are surprised at the cumulative value of their assets. Here in the Bay Area, with our inflated real estate market, anyone who owns a home has a significant investment. Cars, antiques, artwork, jewelry, brokerage accounts and life insurance policies—collectively, all of these can contribute to a significant total net worth.
2. Won’t my spouse automatically inherit my estate?
Some families assume that if something happens to one spouse, everything will, by default, go to the surviving spouse. In general, this may be true, but what if something happens to both spouses? A tragedy, but it happens. And sooner or later, that remaining spouse will die. So far, no one has figured out a way to beat the odds. Without a Will or Trust, along with their grief, their heirs will be dealing with Probate. Depending on the complexity of the estate, Probate can take several years, and it is entirely preventable by creating a Living Trust.
Or here’s another scenario that will affect spousal inheritance
Let’s say someone refinanced his/her mortgage, and one spouse’s name was taken off the house? Then imagine that spouse dies. That estate will not “automatically” pass to the surviving spouse. In fact, it will potentially make the surviving spouse’s life very difficult indeed.
3. I don’t want to inherit my parents’ credit-card debt
This was a new excuse we heard a few weeks ago. One son had discouraged his parents from creating estate-planning documents because he didn’t want to be responsible for his parents’ credit card debt when they died. In general, children aren’t responsible for a deceased parent’s debts, and in some cases, a spouse may be exempt as well. In general, the estate is responsible for paying debts. Once assets are liquidized and if there isn’t enough money in the estate to cover the amount owed, the debts generally go unpaid. It’s those who are owed money—not the heirs–who are left holding the bag.
4. I have a Will, so my estate won’t be subject to Probate
In fact, all Wills are subject to Probate. It’s the process in which a court determines whether the document is valid and ensures that relatives and creditors are notified. This process can take several months and drain thousands of dollars from the value of the estate. A Living Trust is the legal document that holds your property; when you die or become incapacitated, the property in your Living Trust is smoothly transferred to your beneficiaries.
Something else to think about:
If you own property in more than one state—even if it’s a timeshare–you DO want a Living Trust. Going through Probate in multiple states is an experience that you will never forget.
If you value privacy, you want a Living Trust. A Will is a public document, and anyone can come to a Probate
Keep your Trust updated with life events.What’s a life event? Think about anything that will affect the inheritance of your heirs—births, deaths, divorce, important investments.
June marks the two-year anniversary of California’s End of Life Options Act (EOLA). Between June 9 and December 31, 2016, 111 patients were reported to have died following ingestion of aid-in-dying drugs prescribed under EOLA.
While controversial, the law has stringent controls
The law has been extremely controversial, opposed by many groups who argue that it creates too many opportunities for abuse. Yet the law, as it is structured, has stringent controls. Those with fatal, debilitating diseases who wish to take their own lives must get their doctor’s order and an opinion from a second doctor about the severity of their conditions. The act must be carried out within a certain time frame. The fact that there have been relatively few assisted suicides in California since the law was passed indicates to many that the law is fair and is working.
AHD: The legal document that allows people to detail how they want to die
At California Document Preparers, our Living Trust package includes an Advance Healthcare Directive (AHD). It is this document in which people can detail their final wishes about how they will die—if they want nursing care or prefer to die at home. If they want to be surrounded by their families or if they prefer to enlist the care of hospice and refuse artificial efforts to be kept alive. AHDs are the legal documents that record the ability to halt interventions, treat the patient’s pain and allow them to die as peacefully as possible. An AHD includes patients diagnosed with progressive dementia who can make end-of-life decisions before the disease robs them of their ability to sign legal documents. This practice has not included provisions to refuse food and fluids offered by hand—until now.
Washington state has new end-of-life guidelines for dementia patients
A Washington state agency, End of Life Washington (EOLWA), advocates for medical aid in dying and has created guidelines for dementia patients who don’t want to be spoon-fed at the end of life. The group helps people using the state’s 2009 Death with Dignity Act, recently posted new Instructions for Oral Feeding and Drinkingon its website.
The guidelines are directed at those with Alzheimer’s diseaseand other progressive forms of dementia. It instructs caregivers not to provide oral food or fluids under certain circumstances. “These instructions are groundbreaking for patients who fear losing control not only of their faculties but of their free will to live and die on their terms”, said Sally McLaughlin, executive director of EOLWA. “We get calls from people with concerns about their loved ones with dementia feeling like they’re being force-fed. Those with dementia understand that as they stop eating, they would like no one else to feed them.”
The new guidelines have both their critics and proponents
As with the death with dying law before it, these new guidelines have their share of critics who have concerns about potential mistreatment of vulnerable patients. They fear that these guidelines could be used essentially to starve the elderly or incapacitated. Proponents welcome the new guidelines, believing that they help define the uncertainties surrounding assisted feeding at the end of life.
Guidelines target those who show signs of not wanting food
The guidelines do not apply to people with dementia who still get hungry and thirsty and want to eat and drink, the authors note. “If I accept food and drink when they’re offered to me, I want them,” the document states. But if the person appears indifferent to eating, or shows other signs of not wanting food, turning away, spitting food out, coughing or choking, according to the guidelines, this is when attempts to feed should be stopped, and it’s at this point that caregivers should respect those actions.
“No matter what my condition appears to be, I do not want to be cajoled, harassed or forced to eat or drink,” the document states.
The new guidelines are not legally or ethically binding. It’s important to keep in mind that these are guidelines; they are neither legally nor ethically binding. They do, however, bring increased visibility to an issue that we likely will hear more about as the baby boomer population ages. Nearlytwo dozen states have laws that address assisted feeding, including many that prohibit withdrawing oral food and fluids from dying people.
An Advance Healthcare Directive is part of our Living Trust package
We’ve all read disturbing stories about elder abuse, and it may be these stories that contribute to a reluctance by many seniors to create a Power of Attorney. The Agent you name as your Power of Attorney will be responsible for determining where and how you live out your life. It should be someone with integrity, someone you trust to make good decisions about your healthcare and finances. The following story an example of how one daughter’s getting Power of Attorney was absolutely in the best interests of her father.
Meet Christine and her father, Dick
Christine and her husband, Bill, weary of long, rainy Seattle winters, retired in sunny Florida. Within two years, Christine’s parents, in their early 80s, moved to a nearby community. A pragmatic RN, Christine knew that she had just become her parents’ caretaker. She also knew she would get no help from her only sibling, a sister who lived in Chicago and hated Florida.
Within five years of their move, Christine’s mother died. Her father, Dick, stayed in their home, but his health was declining. He wasn’t taking his medications or eating properly, and the house was more than he could manage. Christine helped him sell his home and move into a very nice retirement community where he had his own unit, was surrounded by friendly people with numerous activities to keep him busy. Dick, however, remained in his unit, didn’t socialize or participate in any events and became increasingly isolated.
He began buying new cars, including a sexy convertible
Dick became obsessed with buying cars. Once he drove the car home, he’d find a reason to sell it. It was too big, too small, too expensive, guzzled too much gas, etc. Within a single year, he would easily have three-four car transactions, always with a different dealer. The irony was that he drove to WalMart once/week; Dick had no need for a car. He also began investing heavily in coupon sweepstakes, convinced that Publisher’s Clearinghouse was going to make him a millionaire.
The problem: Her father was running out of money
Between the car and the coupon fetishes, Dick was depleting his resources. Christine wanted to get a Power of Attorney to control her father’s spending, but he refused. It took Dick’s totaling his latest car, a sexy convertible, and ending up in the hospital, for him to finally relent.
As her father’s Power of Attorney, Christine was able to manage her father’s life
Paid his bills, giving her father a weekly allowance and putting an end to his car purchases and restricting the number of sweepstakes he could enter.
Arranged for a healthcare aide to visit three times/week to monitor his health and make sure he was taking his medications.
Power of Attorney makes decisions in the best interests of the Principal
The Agent under a Power of Attorney has a fiduciary obligation to make decisions that are in the best interests of the Principal. In most cases, the Agent is an adult child who has been named by a parent, but a Power of Attorney can be a trusted friend, financial adviser or a professional fiduciary. In this case, Christine was acting in the best interests of her father. Becoming legally empowered to manage his money meant that Dick would not have to move in with her and Bill. Call it enlightened self-interest, but Bill and Dick hated each other, so avoiding this situation was clearly in everyone’s best interest.
Powers of Attorney all terminate on death or incapacity
The Agent can engage in legal business on behalf of the Principal until that person dies or is mentally incompetent to act on his/her own behalf. Once either of those events happens, the power of attorney is no longer valid.
A Durable Power of Attorneycan survive mental incapacity, but not death. A durable power of attorney allows the agent to continue to act on the Principal’s behalf even if the Principal is mentally incompetent.
Creating a Power of Attorney is part of our Living Trust package
We encourage everyone to think carefully about whom they appoint as their Agent. Being a Power of Attorney can become time-consuming, and it may require dealing with financial accounts, so your Power of Attorney should be comfortable managing financials and dealing with attorneys, accountants and government agencies such as social security. If you need to create or update your Trust, contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. Our dedicated team is helpful, compassionate and affordable.
I don’t know what it’s like in your neighborhood, but where I live, everyone seems to have a dog. On my morning walk I routinely greet a wide variety of scruffy mutts of dubious lineage, sheepdogs, the biggest Great Dane I’ve ever seen, an obese Bulldog and a yellow Lab who has simply stolen my heart. For many people, especially the elderly, a pet is a loyal companion. It shouldn’t be surprising that people want to make provisions for their pets in their Living Trusts, just as they do for the rest of their families. In California, as in 39 states, there are Pet Trusts.
One woman loses her best friend and a dog
Clare Jackson’s eyes fill up when she thinks about the death of her best friend, Sylvia. Not only did Clare lose her friend of 40 years, but she also lost Sylvia’s beloved Labrador, Dolly. Sylvia had a stroke and died, and her caregiver immediately euthanized Dolly. “There was nothing I could do–Sylvia had revised her Will, and there was no mention of Dolly.”
This experience was a bitter lesson for Clare, who also loved Dolly and would have gladly provided a loving home for her. (Note that Clare and her husband have made provisions in their Trust for their own dog, Oliver.)
Animals who outlive their owners face uncertain futures
People who die before their pets leave stranded animals. In a best-case scenario, a neighbor, family member or friend cares for the pet for the rest of its life. The alternatives? The Humane Society estimates that six to eight million dogs and cats enter shelters annually. An estimated half are adopted, and the rest are euthanized. In some sad cases, after the death of its owner a pet is simply let out the front door to get lost, run over or any of the other horrible fates that befall abused animals.
Thinking of leaving a chunk of change to Spot or Fluffy?
So what are your options for your pets? A Will is a transfer of assets. An animal can’t own property–someone has to be in charge.
The solution: A Pet Trust
This legal document outlines the continued care and maintenance of domestic animals; it also names new caregivers or directs Trustees to find new homes for pets. A Trustee has a legal duty to carry out your wishes.
While owners may simply include their pets as provisions in their Wills, Michael Markarian of the Humane Society believes a Trust is a better option in case of disability. “Wills may take weeks to be executed and could be contested, but a Living Trustcan be written to take effect immediately.”
Creating a Pet Trust: Think about the economics of caring for your pet
When naming a Trustee, think about the expense of caring for a pet. Food and visits to the vet can add up. Some owners make outright gifts of cash for their animals’ care.
One woman set aside $5,000 to offset costs for the person who ends up with her dogs.
Another pet owner reveals that she has a list of ten people who are potential Trustees care for her cat, Sadie. What the new caregiver won’t know at first is that the estate is instructed to award the person $10,000 if the feline is still with him/her after six months. “I want someone to care for Sadie out of love and kindness and be rewarded if they keep her and fall in love with her like I did.”
Others leave money to be distributed over time—monthly, annually, or as reimbursement for expenses.
For even more security for a beloved pet, name someone other than the caregiver as Trustee. This person will dole out the cash on some kind of predetermined schedule, reducing the risk of someone’s taking the money and getting rid of the pet.
One man created a Living Trust for his three Rottweilers. If his ex-wife couldn’t take care of the dogs, two Trustees were given explicit instructions to use their best judgment to find good homes for his pets. There were dependencies: The dogs should be kept together, and the new caregiver would receive $150 per month, plus money for veterinary bills and other expenses.
Choose your Pet Trustee carefully, just as you would choose a guardian for your child
Talk to potential caregivers for your pets until you find someone you trust. In the same way that you would be choosing someone to take care of your children, what you really want is a person who will love your pet as you have.
Living Trusts are an important service for California Document Preparers, and many of our clients are retired or thinking about it. As a result, discussions frequently surface about a range of life-planning topics such as social security, financial planning and hospice. A recent New York Times article about assisted-living facilities got our attention.
Federal investigators have discovered significant gaps in the way that assisted-living facilities are being regulated, potentially jeopardizing the care of the growing number of people who rely on these services from a booming, poorly regulated industry.
Assisted Living: Little accountability or regulation
According to the Government Accounting Office (GAO), the federal government lacks even basic information about the quality of assisted living services provided to low-income people on Medicaid. Billions of dollars in government spending are flowing to the industry, yet it has only vague standards and limited supervision. States reported spending more than $10 billion/year in federal and state funds for assisted living services for more than 330,000 Medicaid beneficiaries. That’s an average of more than $30,000 a person, with very little accountability.
Individual states are supposed to keep track of cases involving the abuse, neglect, exploitation or unexplained death of Medicaid beneficiaries in assisted living facilities.
More than half of the states were unable to provide data about the details of those cases.
Out of 50 states, only 22 were able to provide data on “critical incidents—those cases of potential or actual harm.” These states reported more than 22,900 incidents, including physical, emotional or sexual abuse of residents.
Many of the people involved in these “incidents” are older, with physical or intellectual disabilities. More than a third of residents have Alzheimer’s or other forms of dementia.
The National Center for Assisted Living, a trade group for providers, said states already had “a robust oversight system” to ensure proper care for residents. According to this group, California, Oregon, Rhode Island and Virginia have adopted laws to enhance licensing requirements and penalties for poor performance of facilities.
The report, “Improved Federal Oversight of Beneficiary Health and Welfare Is Needed,” grew out of a two-year study requested by a bipartisan group of senators.
The report concludes that the Centers for Medicare and Medicaid Services have provided “unclear guidance” and have done little to monitor the use of federal money that is being directed toward assisted living facilities.
Without a clear process for evaluating and monitoring facilities, the committee has no way of knowing if states are meeting their commitments to protect the health and welfare of Medicaid beneficiaries in assisted-care facilities.
Standards for nursing homes
In 1987, Congress established standards for nursing home residents’ rights, imposed dozens of new requirements on homes, specifying the services they must provide. Yet assisted-living facilities have largely escaped scrutiny, even while the GAO says the demand is likely to increase with the aging baby-boomer population and increased life expectancy. Not surprising, the potential to make money off a needy population has attracted investors to an unregulated industry.
The report was commissioned by a bipartisan group of senators
Democrats and Republicans commissioned this report, and the Trump administration is recommending that federal officials should clarify the requirement for states to report on the abuse or neglect of people in assisted living facilities. The administration said it was studying whether additional reporting requirements might be needed.
Assisted living was not part of the original Medicaid program, but many states now cover it under waivers intended to encourage “home and community-based services” as an alternative to nursing homes and other institutions. The report said that assisted living could potentially save money for Medicaid because it generally costs less than nursing-home care.
Nothing in the report disputes the fact that there are many assisted living facilities that are doing an excellent job of providing high-quality, compassionate care for their residents.
The mission of assisted living facilities
Assisted-living communities can be a wonderful bridge between living at home and living in a nursing home. Residents live in apartments or houses; they have a high degree of independence but require help managing their medications and performing daily activities like bathing, dressing and eating.
Personal experience with assisted living
My own folks moved to a retirement community when their home became too much for them to manage. As their friends died, they also were becoming increasingly isolated. They loved this busy new environment, the activities and the warm, friendly people. They lived happily in their own little unit for seven years.
When my stepfather had a stroke, my mother was too weak to care for him. As part of their contract with the community, they were able to move to assisted care when and if it became necessary. The stroke was the catalyst, and we moved both of my parents into assisted care. Before long, my stepfather moved into nursing care. Both of my parents died within six months. During this time, they were extremely well cared for by kind, generous caretakers to whom we were all very grateful.
Few topics are as polarizing as guns and the controversy that inevitably surfaces over the second-amendment right to bear arms. Guns have dominated the headlines the past few weeks after yet another school massacre—this time in Florida. Angry kids, moms and others are increasingly vocal about the need to enact stricter gun control legislation, yet there remains opposition by gun owners, politicians and the NRA.
California: Stringent laws for passing guns from one generation to the next
As the nation struggles with gun-control issues, you may be surprised that California has some of the strictest laws in the country, including those that regulate the passing of firearms from one generation to the next. So restrictive are California’s regulations that some people have moved out of state to avoid them. Regulations vary not only by what weapon is to be inherited, but by who is in line to receive them. Assault weapons are for all practical purposes nontransferable, and if the relative to whom you’d like to bequeath a gun is a drug addict or ex-felon, be aware that the transfer is illegal.
Yet millions of Americans have sizeable, sometimes valuable collections of guns for hunting or target shooting and may have antique guns that are prized family heirlooms. And now they’re preparing their Living Trusts, deciding how they will allocate their gun collections to their heirs. There are some important things to keep in mind.
Categories of severely restricted firearms
“Severely restricted” describes that category of weapons which is heavily regulated, such as assault weapons, including the Florida shooter’s AR-15, an AK-47 or an Uzi. California is intent on eliminating severely restricted weapons by making their transfer nearly impossible.
What happens to severely restricted firearms when their owner dies? The weapons must be:
Removed from California
Sold to a federally licensed firearms dealer
Turned over to law enforcement
The safest and simplest way to transfer a firearm from one person to another, even in distribution of an estate, is through a Federal Firearms Licensee (FFL) who also has the necessary California licenses to deal in firearms. Not only do such dealers know firearms, but they can carry out required background checks on intended recipients.
What about antique firearms–those manufactured before 1899
Curios, antiques or relics are those firearms of “special interest to collectors” by reason of some quality other than is associated with firearms intended for sporting use. These weapons must be at least 50 years old and derive monetary value for their owners.
Antiques, curios and relics can legally be transferred without going through an FFL, but a qualified FFL should verify a firearm’s classification before transfer.
Since January of 2014, transfer of antiques, curios and relics can’t be made unless the recipient has both a California Certificate of Eligibility and a Federal Curio or Relics license. The firearm must be registered with the California Department of Justice.
Here’s where it begins to get complicated . . .
Let’s say you want to leave your vintage Winchester rifle to your cousin Alfred, who served time for robbery in 2000. You also want your sister, Britt, to receive your Beretta. Everyone loves Britt; she’s got a big heart but also a bit of a substance-abuse problem and can’t seem to stay clean and sober or out of rehab for long. You’d also like to leave some of your gun collection to your nephew Brian—he’s just 13, but very responsible; he’s been hunting since he was five and understands gun safety rules.
You can’t transfer or bequeath shotguns or rifles to minors, and a minor who possesses such weapons cannot be prosecuted, but anyone who gives, sells, bequeaths or transfers a gun to someone under 18–including the executor of a Will–can be criminally liable for doing so. In California, minors can’t own handguns, and they themselves can be prosecuted in juvenile court for possession. There are certain exceptions, such as having the written consent of parents or legal guardians if weapons are for target shooting or hunting.
Who ends up on the no-gun list?
For Executors or Trustees, those prohibited by federal or California law from possessing rifles, pistols or shotguns include:
Convicted felons. If someone has been convicted of a crime and served time, that person cannot legally own a gun.
Anyone convicted of domestic violence or is under a restraining order from an intimate partner and is found to present a threat to that person or to that person’s children’s safety is ineligible to own a gun.
Those who unlawfully use or are addicted to narcotics. Narcotics use does not include spirits or tobacco, so chronic alcoholics, unless they are mentally ill, are not prohibited from owning firearms.
Anyone found by the courts to be mentally defective or who has been committed to a mental institution. This includes those deemed by a court to be a danger to others, mentally disordered sex offenders, and those found not guilty of a crime by reason of insanity or found mentally incompetent to stand trial. It also includes those in custody because they present a danger to themselves or others, individuals undergoing intensive treatment for mental illness, and those placed in a conservatorship because of a grave disability caused by a mental disorder or chronic alcoholism.
Anyone who has violated probation, restraining orders or injunctions by possessing firearms is in violation of California law.
California also has a longer list of misdemeanors–those involving violent or aggressive behavior–that generally result in a ten-year ban on firearm possession.
Conditions for families transferring firearms
Guns may be transferred from parent to child, child to parent, grandparent to grandchild, or grandchild to grandparent as long as all live in California and all children and grandchildren are 18 or older, 21 for handguns. Note that no more than five such family transfers can be made each year.
Recipients must first obtain a firearm safety certificate, issued by a licensed dealer after a written test is passed.
Those receiving anyfirearm (including rifles and shotguns) must have general firearm safety certificates.
Transfers between spouses or domestic partners must go through dealers, and the receiving spouse or partner must have a safety certificate.
A firearm may only have one registered owner who must pass a background check.
Becoming Executor of an estate that involves the transfer of firearms requires becoming familiar with laws relating to their storage, transportation and transfer. If there are questions, an FFL will be able to help you legally manage a firearm transfer.
We encourage everyone to create a Living Trust
This issue of transferring firearms provides a window into some of the responsibilities that an Executor may encounter. We encourage our clients to think carefully about the people they choose for this role, which is an important part of the Living Trust process. If you need to create or update your Trust, contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. Our dedicated team is helpful, compassionate and affordable.
Baby boomers have profoundly affected the way we do business and the way we live our lives. They’re the big, noisy generation that demanded to be heard. They pioneered breakthroughs in multiple industries, including art, medicine, science, education and technology. Now the boomers have gotten old, and while they’re being replaced by millennials, they’re still setting records. They’re joining the ranks of the estimated 5.5 million Americans who have Alzheimer’s disease, a demographic that is growing at an alarming rate. With no cure in sight, one in 10 people aged 65 and older has Alzheimer’s.
With the increased occurrence of some kind of dementia, it’s not surprising that the matter of testamentary capacity is being raised more frequently when it comes to signing legal documents.
What is testamentary capacity and why is this important?
Testamentary capacity is the legal term defining a person’s legal and mental ability to make or alter a valid Will. Wills are often executed by older adults who may be losing their mental capacity; determining testamentary capacity is a process that helps protect these potentially vulnerable adults from those who may be hoping to profit from the Will.
Testamentary capacity is a legal question, not a medical question
It is important to note that having dementia or Alzheimer’s disease does not necessarily mean that a person lacks capacity to execute his/her Will. There is no single definition of capacity, nor is there a general test or criteria that we can apply to establish capacity, mental capacity or competency. Rather, in every case, capacity is specific to each time and situation. Legal capacity can fluctuate. In terms of the law, there is a presumption of capacity until it is disproved.
In determining testamentary capacity, it is critical that the person signing the legal documents understands the relevant information and the consequences of the documents he/she is signing.
Capacity characteristics and criteria
The following capacity characteristics and determining criteria are used as guidance in determining capacity, but it’s important to keep in mind that determining capacity can be a very subjective exercise. It requires the testator to have the ability to understand the following:
The nature of the act of making a Will and its essential elements.
The extent of the property of which he or she is disposing.
The claims of those persons who expect to benefit from the terms of the Will.
An overall understanding of the relationship among these factors—the Will as a legal document, the property identified therein and the people who will be named as its beneficiaries.