Wednesday, August 31, 2016

What We Can Learn About Estate Planning from Yogi Berra


It’s baseball season. In the Bay Area, that means the Giants are running true to form–the best record heading into the All-Star break and now they’re playing like the worst team in baseball. Sadly, if you’re an A’s fan, you’re faring much, much worse. We love our Giants for their ability to play killer ball when it really matters, but no one expects the A’s to rally.

But let’s take a look at Yogi Berra

Yogi Berra, who made an extraordinary contribution to baseball, died last fall at the age of 90. Every baseball fan has his or her heroes, but Yogi Berra was extraordinary, a little guy who earned a big spot in the pantheon of stars. Yogi was voted into the Baseball Hall of Fame in 1972 on the first ballot and had a historic baseball career: a .285 lifetime batting average, 358 home runs and 1,430 runs batted in. Not only was he a catcher for both the New York Yankees and the Mets, but he also managed and coached both teams. Yogi appeared in 21 World Series as player, coach or manager–and won 13 of them. No other player can touch this kind of record.

Another contribution: Yogi was a financial planner and adviser

But Yogi was also insightful, thoughtful and a savvy financial planner. We’re left with many of Yogi’s pearls of wisdom which we can apply to investing, managing money and planning for the future.
  • It ain’t over till it’s over. You’re investing for the long term, so stay focused on your long-term goal—college planning for your kids or retirement.
  • It’s déjà vu all over again. The fact that stock prices have been down much of this year isn’t unusual. We’ve seen declines before, and we’ll see them again. We’re enjoying a robust economy right now, but we all remember the recession. Economic cycles repeat themselves, so we should never get too comfortable.
  • When you come to a fork in the road, take it. You don’t need to choose between owning stocks or bonds; your portfolio should be diverse and should probably include both.
  • I usually take a two-hour nap from 1 till 4. If you’re wondering about investing in the latest hot stock, sleep on it. Do some research and talk to a financial advisor.
  • Pair up in threes. You should rely on a financial planner, a tax advisor and create a Living Trust.
  • It gets late early out here. If you haven’t started preparing for retirement, start today. If you’re waiting until you get old to create a Living Trust, “old” may have arrived. Yogi knew that you don’t have to be old or have an estate to need an estate plan, and that a Living Trust is an important component of this.
  • If the world were perfect, it wouldn’t be. It’s impossible to be completely correct with every financial decision or preparation for end-of-life care. We live in a world of constant change, and there are too many variables over which we have no control. In the words of Warren Buffet, another sage who can afford to build his very own pantheon, “It’s better to be approximately right than precisely wrong.” This is the time to get started.
Our comprehensive Living Trust package includes a Power of Attorney and Advanced Healthcare Directive. Call the California Document Preparers team today to make an appointment to get started on your Trust.

Wednesday, August 17, 2016

Cautionary Tale: Father Has Dementia; Living Trust MIA



A client recently came into our Oakland office seeking our advice. His father was 82, in a nursing home after suffering several strokes, and now in the early stages of dementia. He had always assured his family that he set up a Living Trust for himself and his wife, our client’s mother, who is also in failing health. Our client recognizes that there is some immediacy, and while he’d been going through the chaos of his father’s papers looking for the Trust. he could find only unsigned copies of the document.
His mother knows nothing about where his father might have put the signed legal document, but for whatever reason, she doesn’t believe a lawyer was involved. Our client is worried about what will happen when his father dies. If the Trust is not found, his father’s estate will be subject to Probate.

His questions to us were those that we frequently field:

Q: Are Living Trusts recorded somewhere?
A: Unlike Deeds that are recorded with the county clerk, Living Trusts aren’t recorded anywhere. It’s up to each individual to store his/her Trust in a secure place and make sure that a family member has access.
  1. Can the father sign the copies of the Living Trust? 
  2. The father can’t sign the copies or have a new Trust created if he’s not mentally competent. At this point, with the strokes and the dementia, it’s likely that he would be declared legally incompetent. If he can’t find a copy of it, and if the assets, such as the house, weren’t transferred into the name of the Trust, he can’t use the unsigned copies to avoid probate. Like the tree falling in the forest—if no one can find the Trust, it doesn’t exist.
  3. Can the mother set up a new Living Trust? 
  4. While Living Trusts aren’t filed anywhere, Deeds are, and you can check who owns the title to a home. The house may be able to avoid Probate if it’s titled in joint tenancy. If the father dies first, the mother will inherit it; she could then create a Living Trust of her own, thereby avoiding Probate for her son when she dies.
  5. They don’t have a lot of assets–just a house and car—is our client worrying needlessly?
  6. A. It’s worth putting some effort into this search. A house in the Bay Area is a significant asset.

A few other ideas for tracking down missing legal documents

  • Check papers for bank statements—the father might have had a safe deposit box there.
  • Time to put on your private investigator hat–the Living Trust may be carefully hidden somewhere in the house. Heirs have found documents hidden in freezers, taped to attic rafters, tucked under mattresses and floorboards and slipped behind the mats of framed pictures. Think of places that are secure and dry, that would be undiscovered.
  • Review a checkbook around the period when the documents were created, if possible. If a check was made out to an attorney during that time, the signed document may have been filed with him/her.

A cautionary tale; situations like this happen more often than we’d like

When our clients create a Living Trust, they receive both hard and soft copies. We also take a scan of every signed Trust. We advise them to update this periodically with important life events—births, deaths, divorce and important investments. These documents should be kept in a safe place. Home safes are popular these days, but for them to be secure, they should be difficult to move, fireproof and waterproof. Safe deposit boxes may be a good option as well, but for each of these storage solutions, it’s critical that a trusted family member or friend has access to them.
Do you and your heirs know the whereabouts of your Living Trust? Does it need to be updated with important life events? Call the California Document Preparers team today to make an appointment.

Wednesday, August 10, 2016

Prenuptial Agreements: Who Needs ‘Em? Johnny Depp!


Johnny Depp and 30-year old model-turned actress Amber Heard are apparently divorcing after only 15 months of marriage. Heard filed for Divorce in May, citing irreconcilable differences and requesting spousal support. Two days after filing for divorce, she also filed domestic violence charges, accompanied by graphic photos of her bruised face and black eye she claimed were caused by Depp’s throwing his cell phone at her.

Depp: A prenup poster boy

To the surprise of everyone, this Hollywood couple did not have a Prenuptial Agreement, which leaves Depp extremely vulnerable. At 50, Johnny Depp is among Hollywood’s most enduring actors; he’s had an extraordinarily successful film career that began with the improbable Edward Scissorhands in 1990 and has continued steadily for 25 years.
Since this marriage only lasted 15 months, legal experts predict that Heard will have a hard time winning a hefty sum from Depp in court. One attorney described the marriage as more of a long date than a marriage. Nevertheless, they were married, and for whatever reasons, Depp failed to protect himself with a prenup. Depp not only asked the judge to deny Heard’s support request, he also asked that she pay her own attorney’s fees.

It may be worth it for Depp pay up

If Depp has to give Heard a million dollars to get rid of her, under the circumstances, many believe that would be a great deal. The alternative is a protracted legal battle that could stretch out over a long period of time, cost millions of dollars in legal fees and be followed closely in the media. It may be worth it for the wealthy actor to pay up to avoid a lengthy, unpleasantly public divorce.
Unlike Johnny Depp, most people haven’t amassed huge fortunes that they need to protect from greedy spouses. While every couple likes to think that their marriage will last forever, the reality is that an estimated 50% of US marriages end in divorce. For those over 50, the divorce rate has increased even more dramatically. Yet it’s a sociological face: people are inclined to mate. Divorced people remarry, but they are now older, have accumulated assets, children and heirs. Their financial landscapes are much more complex than they were when they first exchanged their vows some 20 or 30 years before.
For older couples on their second or third marriages, Prenuptial Agreements are becoming increasingly common. They’re the contract that defines the couple’s financial relationship.

Generally speaking, prenups are an important consideration for:

  • Older couples, those on their second or third marriages, often with assets.
  • People who have children from prior relationships.
  • Those who expect future celebrity and significant income. Johnny Depp is likely wishing he’d taken the time to prepare and sign a prenup before marrying Heard, who was 20 years his junior.

Other considerations

  • prenup can protect your assets not just in divorce, but in death. A prenup could be worded to require your new spouse to waive the right to dissent or take an elective share in your estate.
  • For young couples, a prenup provides the opportunity identify issues like joint efforts to pay off one partner’s student-loan debt, or how a partner might be compensated for leaving the workforce to care for their children.

Attorney review: A very good idea

Because a Prenuptial Agreement deals with the property rights of the marrying parties, it is advisable for both parties to have separate and independent attorneys review the agreement. Certain provisions, such as giving up the right to spousal support, are unenforceable if the party who later wants support (in a divorce proceeding) did not have an independent attorney explain the agreement to that party. California Document Preparers has relationships with excellent local attorneys and can provide referrals for the reviews. Combining quality legal document assistance with legal advice is an excellent use of your legal dollars.
Are you considering a Prenuptial Agreement? Call the California Document Preparers team today to make an appointment.

Sunday, August 7, 2016

Living Trusts and the Baggage of Second—or Third–Marriages




There are many things to keep in mind as you plan the distribution of your assets among your heirs for your Living Trust. But for those in their second or third marriages, replacing the name of the former spouse with that of the new one on all assets, including life insurance policies and Deeds, then making sure they all get transferred into the Trust often means that this process requires significantly more attention.

Husband dies unexpectedly in his 50s, without a Living Trust

In a recent example, one woman’s husband of five years died. He had children from a first marriage, a family business in his name, lots of debt and no Living Trust—he was in his late 50s, after all, and he, like many people, figured that he had plenty of time to do this when he got old. Unfortunately, “old” never came. He also owned timeshares in Hawaii and Mexico, a cabin in Tahoe and oil rights in Oklahoma. His widow’s name had never been transferred to the Deeds of any of these properties.
In addition to the costs and delays of the inevitable Probate, this grieving widow now had to fight with her husband’s sister to keep her own interest in the family business, file a lawsuit to divide real estate her husband owned with a friend of theirs and fight with a large life insurance company over a life insurance policy on which her husband had forgotten to make her the beneficiary.

With second and third marriages come baggage and complexities

These days 50% of US marriages end in divorce. And now, there’s an even greater percentage of couples over 50 getting divorced. There’s a greater likelihood than ever before that married couples will grow old with their second or even third husband or wife. There is a common misconception that all assets owned by husbands and wives automatically belong to the other at death. This can be the case but it’s not an automatic rule—especially for these divorced couples whose financial landscapes are more complex. It’s not uncommon that a husband and wife, especially in a second or third marriage, neglect to get all of their assets into both of their names, then get them moved into their Living Trust.
Have you and your husband updated the assets that go in your Living Trust? Call the California Document Preparers team today to make an appointment. We help you through every step.