Wednesday, May 24, 2017
Tuesday, May 16, 2017
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.
Monday, May 8, 2017
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.