Wednesday, December 20, 2017

Getting Divorced? Have You Reviewed Your Estate-Planning Documents?

Divorce has become a reality for many couples, and for most, the details of dividing property, developing a parenting planand helping their kids adjust to what will be a new family situation are consuming. There are often additional challenges, including selling the family home, packing, moving to a new neighborhood and enrolling in a new school. With these kinds of pressures, it’s not surprising that people aren’t thinking about their Living Trusts and other estate-planning documents at times like this. But failing to update these documents to reflect the changes in your life can have significant long-term consequences.

California: A community property state

According to California’s community property law, upon divorce, each party is entitled to half of all property accumulated during the marriage, and each spouse is entitled to retain control and ownership of separate property.
  • Once divorced, most estate-planning documents are legally nullified, yet that nullification can be enforced only if an estate is submitted to Probate.
  • While the divorce is pending, those documents remain in force unless legally modified.
  • If one party dies before a divorce is granted, the courts may treat the parties as if they are still married, depending on the stage of the divorce proceedings when the death occurred.

Temporary restraining order prevents disposing of property without spousal consent

When someone files for Divorce in California, the court issues an automatic temporary restraining order (ATRO). This order prevents either party from disposing of any property–whether community, marital, or separate–without written notice to the other party. If that order is ignored, the offending party may be assessed attorney’s fees and be ordered to provide full restitution. However, nothing prevents making changes to appointments and bequests in estate-planning documents. So if one spouse were to sell or redistribute a property without notifying the other spouse, there would be consequences, but changing the way that property will be distributed in a Living Trust is legal.

Divorce clients: Strongly consider reviewing your estate-planning documents

Because of the document nullification issue, it may be in the best interest of Divorce clients to review their Wills, Living Trusts, Powers of Attorney and Advanced Health Care Directives. It may be time to revoke your Joint Trust and create new individual Trusts. Appointing new representatives and adjusting bequests ensures that intent is clear and will not be subjected to legal challenge. Failure to adjust bequests can raise the question of whether someone actually intended to benefit an ex-spouse. Documents that are revised and executed after a Divorce assure that the issue has been addressed.
Family law is an important service for us. We’ve helped hundreds of couples get divorced. For those who may be contemplating Divorce, we are happy to answer questions and explain how we work with our clients. Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. We’re helpful, compassionate and affordable.

Wednesday, December 13, 2017

“Olderpreneurs”: Carving Out a Larger Role in the Workforce

In our youth-driven culture, we hear more about people losing jobs because they’re too old than we do about those over 50 who are launching new businesses. In the UK, however, this demographic is thriving. An estimated one in five people over 50 is self-employed—a higher proportion than for any other age group. They’re called olderpreneurs, and there are now nearly 1.8 million self-employed people over the age of 50, an increase of 21% since 2008.

Entrepreneurship is no longer the exclusive domain of the young

Many of those starting new businesses realize that they have the life skills, contacts and business experience that will help make them successful. They understand sales cycles, marketing, the importance of relationships and often have more money for the startup investment. Statistics show that older entrepreneurs tend to be more successful than those who are starting businesses at a younger age.

Other typical demographic information of olderpreneurs in the U.S.

  • According to Jeff Williams, founder of BizStarters, a service that coaches older entrepreneurs here in the U.S., roughly 60% of clients prioritize schedule flexibility over economics—being able to take time off to travel or spend time with family is important.
  • Very few older business founders are trying to replace corporate salaries; average earnings expectations are $50,000-75,000 a year.
  • The majority also prefer to be solopreneurs, depending on strategic alliances when necessary. Many have spent their careers managing workforces and now prefer to create a simpler business model that fits their new lifestyle—without employee concerns.
  • The internet, which enables research, virtual sales and sourcing, has made the solo enterprise model infinitely more accessible.

Regardless of age, new business owners need to identify a business formation structure

Whether 25 or 65, those starting new businesses in California need to identify a business formation structure. Many people with years of industry experience retire and become consultants, often going back to their former companies on an advisory basis to share their expertise. For these individuals, a sole proprietorship may be the right business structure. California Document Preparers assists our clients in preparing the documents to set up the business structure, such as an LLC or S Corp, that is the right fit at the right time for your business.

From sole proprietor to corporation

A number of our clients starts out as sole proprietors, but as their businesses grow, as they hire either part-time or full-time teams, they choose to incorporate, separating the business from the owner. A corporation acts like a separate body that can do things like buy and sell property, be taxed and enter into contracts. Perhaps most important, it protects its owners from personal liability for corporate debts and obligations.

The growing popularity of LLCs

Many business owners who wish to incorporate these days are choosing LLCs because of the personal liability protection, flexibility and tax benefits. An LLC can be one or many members; they’re not required to have Boards or keep meeting minutes and can be managed by the members themselves.
Are you starting a new business or planning to change your business structure in the New Year? Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. We’re helpful, compassionate and affordable.

Wednesday, December 6, 2017

Plan While You Can: Now is the Time to Make Critical Life Decisions

Clients frequently come in to our offices seeking to get a Power of Attorney and Advanced Healthcare Directive for a parent who is suffering some degree of dementia. In many cases, one parent has died, and the remaining parent is no longer able to manage his/her financial matters or make informed health care decisions. Unfortunately, by the time these clients come in, it is often too late; that parent is no longer legally qualified to sign documents.

The solution is a Conservatorship

In most of these situations, our clients become court-appointed Conservators of both the Person and the Estate—a process that is both expensive and time-consuming. Sadly, this could have been avoided by creating a Financial Power of Attorneyand a Health Care Directive when those parents were still alert and legally able to sign documents.

Jane Bryant Quinn recommends long-term planning to protect against poor decision-making later in life

Jane Bryant Quinn, a personal finance advisor who writes for the AARP, discusses the importance of making important life decisions while you still can, protecting yourself against the risk of poor decision-making in the later stages of your life when you may be affected by dementia or other illnesses.
Quinn uses the example of a University of California professor whose 85-year-old father had fallen down the stairs, broken some bones and had become very weak. Yet for some reason, without consulting his son or healthcare providers, he decided to cancel his long-term care insurance. Within two years, he wound up in a nursing home, uninsured. That fall had taken a big toll and the client’s father was no longer thinking clearly. If anything, the fall and its subsequent debilitating effect should have prompted him to take out more long-term care insurance—not cancel it completely!

Loss of powers might come on us gradually or suddenly

The better prepared we are, the safer we’ll be. Below are some suggestions on ways to plan for old age now to ensure you will be making sound decisions.
  • Simplify your finances to make it easy for someone to take over.
  • Consolidate any scattered CD accounts and IRAs.
  • Set up automatic payments for household bills.
  • Create good financial files that are easily accessed. If you pay your bills and access your accounts online, provide login information.
  • Choose an Agentwho will help you with your finances if you become uncertain or unable. Give your Agent durable financial Power of Attorney.
  • Get in the habit of talking to your Agent about even small money decisions.
  • Make sure your financial adviser(s) is part of your plans and has the name of your Power of Attorney and can contact him/her if you begin to do irregular things with your money.
  • Create an Advance Healthcare Directive and name an Agent. This person will be making critical medical decisions for you if you can no longer do this yourself.
  • If you’ve not already done this, create a Living Trust and make sure this is funded and updated with important life events. At California Document Preparers, our Living Trust package includes a Power of Attorney and Advance Healthcare Directive.

Other considerations for your long-term planning

  • Where will you live? The family home may be more than you can manage. This may be the time to downsize to a smaller home or condo or investigate independent or assisted living possibilities. Many senior communities provide a wide range of activities and care designed to help keep seniors from becoming isolated.
  • Think about when you’ll give up driving. This may be part of the downsizing plan that will determine where you live. If you give up driving, you may want to live where you’re able to walk or take public transportation to services and activities.
The more work you do now to prepare for the possible eventualities of old age, the easier it will be for your children.
Do you need to create or update your Living Trust? Life changes mean that it’s often necessary to name a different Agent for your Healthcare Directive or Power of Attorney.  Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. We’re helpful, compassionate and affordable.

Tuesday, November 28, 2017

CDP Works Remotely for Those Living Outside the Bay Area

For many people these days, working remotely is the way business gets done, and California Document Preparers is able to accommodate clients who live outside the greater Bay Area. We frequently get calls from those who are located in different parts of California or even different states who would like our assistance in creating legal documents.

Last month, “Jo” called to inquire about our Living Trust package. We provided a brief explanation of our services, detailed the pricing and suggested that she come into our office so we could show her samples, review the process, and answer her questions. As it turned out, Jo lived in Calaveras County and driving to our office represented two-plus hours each way. We further explained our process and the documents we would be preparing. She gave us her email address and we sent her our Trust overview, workbook and price list.

Barely one week later, Jo emailed us the completed workbook

She was very impressed with our customer service, paid us by credit card and scheduled a meeting to review and sign the Trust and other estate-planning documents because she had decided it was worth the long drive.
We are always happy to work remotely with our clients by answering questions, forwarding materials and transacting as much business as possible by phone and email. Most of our clients are from the greater Bay Area, so we develop a face-to-face relationship while working on their documents. We look forward to clients from the Central Valley, Southern California and northern counties coming in to complete the signing of their Trusts. It gives us the opportunity to meet them in person, walk them through the contents of the Trust and explain the funding process.

Remote clients can arrange for the Trust’s signing in a convenient location

In those cases where our remote clients cannot meet in our offices for the signing, they can arrange the signing with a local notary. We send detailed instructions for the signing process, highlighting those areas of the Trust and other estate-planning documents that require signatures, initials and dates.

Because of our personal attention and service, Jo’s brother and friends have become Living Trust clients as well. We believe our thoroughness makes a difference. We do not charge for our time and are happy to answer questions. We want our clients to be informed and comfortable about the decisions they are making. Ask any small business owner: the best compliment he/she can receive is a referral of new business from a happy client.

Creating a Living Trust is an important part of your retirement planning

Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. We’re helpful, compassionate and affordable.

Sunday, November 19, 2017

Consequences of Lost Wills and Trusts; Where to Keep Your Trust

We get a lot of questions about what to do if a Will or Living Trust is lost. Unfortunately, this question generally arises after a loved one has died and the heirs have begun the process of settling the estate.

If you think you’ve lost your Will

  • You can only have one Will, and the one with the latest date will supersede all others.
  • If an attorney prepared the Will, contact that attorney to see if he/she has the original.
  • Contact your Executor(s) to see if you gave it to him/her.

In the eyes of the law, if a Will is lost, it is presumed to be revoked

If someone finds a copy after you die and your heirs are willing to sign an affidavit that you did not intend to revoke your Will, the court will accept the copy. If neither the original nor a copy can be located, your estate will go to your legal heirs, regardless of what was in your Will.

What happens if you have lost your Trust?

Families also contact us about what they can do if a Living Trust is lost or they can’t find it. If you lose your Trust and die, not only will your Successor Trustees be missing valuable information about how you wanted your estate distributed, but they may be faced with moving assets that are titled in the name of the Trust into your Probate estate.
If a Trust is lost, and the decedent has assets titled in the name of the Trust, the court will require that the heirs/Successor Trustees spend a significant amount of time and money searching for the Trust and documenting the search process. This process involves Probate court and all of the expenses and fees associated with Probate—exactly what you hoped to avoid by creating a Living Trust in the first place!
Once any Trust assets are moved into the Probate estate, the full Probate case begins to distribute the assets. All of this translates to more time and more money. This scenario is extremely labor-intensive and expensive. We encourage our clients to keep their Trusts in a secure location and to share that location with at least one other family member.

If you lose your Trust or Will while you are still alive

If you’ve lost these legal documents while you’re still alive, California Document Preparers can assist in creating a new Last Will and Testament and/or Living Trust. You can restate your entire Trust, creating an updated Trust with the same name and origination date as your initial Trustwhich will replace your old Trust.

Where should I keep my Trust?

We always caution our clients to keep the original Trusts in a secure place in their homes or offices. As a backup, you can give a copy to your successor Trustee and/or another trusted friend or family member.

Is a safe deposit box the answer?

A safe deposit box may not be the best solution, as it could require a court order to open the box if it’s in your name without a joint owner. This means your Trustee wouldn’t have immediate access if you became incapacitated or died.
  • Don’t want to name a joint owner? Title the safe deposit box in the name of your Trust. In this way, your successor Trustee could gain immediate access to your safe deposit box if needed.
  • Keep your Trust in a fire/waterproof safe in your home or office. Share the combination with someone you trust.
  • If these other options are not realistic, keep your documents on a high shelf—away from floods, children and animals.

Most importantly, make sure your family knows the location of your Trust

Make sure your family knows you have prepared your Living Trust. In addition to the bound copy of your Living Trust, we can provide an electronic version, and many families share this with their heirs. Remember that many years may elapse between the time the Trust is prepared and the time it is needed to settle an estate, and circumstances can change. Successor Trustees themselves may die or become incapacitated. It may be advisable to share the Trust with several trusted family members. Most of all, don’t hide it —if people can’t find it now, there’s little chance they can find it when they need it.

Creating a Living Trust is an important part of end-of-life planning

If you’ve lost your Will and/or Trust, or you would like to create one, contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. We’re helpful, compassionate and affordable.

Wednesday, November 8, 2017

Summary Dissolution: A Simplified Divorce Process

Remember the old thing about “what happens in Vegas stays in Vegas?” 

Our client, “Matt”, spent a wild weekend in Vegas and ended up married. He and his wife, “Zoe”, realized that whatever happened in Vegas clearly stayed right there. By the time they got home, Matt and Zoe knew they had made a very bad mistake.
Annulments are granted in very limited circumstances, and the court does not consider short-term marriage as grounds for annulment, so they were exploring their options. Zoe was leaving for Mexico in two months, and they wanted to complete any necessary paperwork before she left.

Summary Dissolution: A simplified Divorce process

Fortunately, the California courts offer a Summary Dissolution, a simplified Divorce process. If the parties meet the qualifications, the Summary Dissolution involves fewer steps and less paperwork than a Divorce. The couple submits a joint Petition to the court, and the court sends them a filed judgment order approximately six months and one day from the day the Petition is submitted. (By California law, a Divorce must take at least six months and one day to finalize.)

Qualifications for Summary Dissolution are fairly stringent:

  • Fewer than five years between the time the couple got married and the time they separate.
  • No children have been born to the two of them before or during the marriage.
  • They have no adopted children under 18 years of age.
  • Neither is pregnant.
  • Neither owns any part of any land or buildings.
  • Their community property is not worth more than $40,000 (excluding vehicles).
  • Neither has separate property worth more than $40,000 (excluding vehicles).
  • The total of their community obligations (other than vehicles) is $6,000 or less.
  • At least one of them has lived in California for the past six months or longer and has lived in the county where the filing is occurring for the past three months or longer.
  • They have prepared and signed an agreement that states how their possessions and debts are to be divided (or they have no community property or community obligations)
  • Both are willing to sign the joint Petition and all related documents to carry out the agreement.
Fortunately, Matt and Zoe qualified for a Summary Dissolution, and they completed our workbook together. We prepared the legal document, the Joint Petition, within a few days, and they came in to sign it and have it notarized. After paying our fee and the county court’s fee, we took the Petition to be filed with the court. After the required six-month window had passed, we called Matt and Zoe and confirmed that they had received their order from the court. Their Dissolution was final, and their brief marriage was officially over.
Family law is an important legal document assistance area for us. We’ve helped hundreds of couples get divorced. For those who may be contemplating Divorce, we are happy to answer questions and explain how we work with our clients. Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. We’re helpful, compassionate and affordable.

Wednesday, November 1, 2017

Complexity of Blended Families Creates Need for Multiple Trusts

“Julie” came in to our Oakland office to get more information about creating a Living Trust. She and her husband headed a blended family, and theirs was a complex scenario. Wanting to avoid going to an attorney, she was hoping we could help her. She and her husband, “Jerry”, had both been previously married, and each brought children and assets to their relationship.

Julie and Jerry owned two properties together, and they agreed that these properties would go to Jerry if she passed away first; after he died, they would be divided among their collective five children. Julie also owned four properties that were in her name only, and she wanted these properties to go directly to her three children when she died--not to Jerry or his two children.

After carefully reviewing her estate and options, she decided to prepare two Trusts:

  • A Joint Trust would be created to hold their community assets, including the two properties that Julie and Jerry owned together. They agreed that the surviving spouse would inherit these assets. After he the surviving spouse died, these assets, including the properties, would be equally distributed among the couple’s five children.
  • An individual Trust would be created just for those four properties Julie owned as her separate property; upon her death they would be distributed among Julie’s three children only.

This was a clever way to separate assets, allowing for different distribution strategies

  • We would help Julie and Jerry transfer title of their jointly owned properties into the Joint Trust, and these assets would go to the surviving spouse. After the death of the survivor, these would go to the beneficiaries they named in their Joint Trust.
  • We would also help Julie transfer title of her separate properties to her Individual Trust. Since their Joint Trust can be amended by the surviving party, Julie took the extra precaution of segregating these properties because her Individual Trust becomes irrevocable and unamendable after she dies. Julie wanted to avoid any confusion about wanting to distribute the four separate properties among her three biological children.
While Julie and Jerry could have stated in the Joint Trust that these properties were to be given upon Julie’s death (rather than after the death of both of them), sometimes spouses worry that circumstances may change after their deaths and their wishes won’t be followed. These Trusts are now structured so that Julie’s wishes will be carried out.

Creating a Living Trust is an important part of end-of-life planning

Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. We’re helpful, compassionate and affordable.

Thursday, October 26, 2017

Estate Planning: Wait Until 70 to Draw Social Security?

Many of the clients who come in to our offices are either creating or updating their Living Trusts. They’re often older, and if not retired, they’re thinking about it. As a result, we hear many concerns about healthcare, social security, disability insurance and hospice.

Jane Bryant Quinn discusses timing of Social Security payouts

Jane Bryant Quinn, the personal finance expert who writes for the AARP, discusses when to start taking your social security payments in her article, Don’t Rush Social Security. Many people start at 62 because they need the money; others wait until they’re 67. But Quinn encourages people to wait until they’re 70 because their monthly payout will be a whopping 76% higher than if they’d begun receiving their payments at 62. For those who are married, waiting will also provide the surviving spouse with a larger survivor’s benefit.

What about the strategy of drawing social security at 62 and investing the money?

Let’s say your circumstances and investments allow you to make a choice: Would you be better off drawing Social Security at 62 and investing the payments? One expert, Bill Reich­enstein, a professor of finance at Baylor University, has created a powerful Social Security calculator that allows him to apply filters, such as the effect of taxes on the additional income, probable return on investments, and cost-of-living increases. He created various scenarios, taking into account the average life expectancy of a 62-year-old, and found that it’s better to wait until you’re 70.
For instance, if you take your Social Security benefit at 62 and start growing the funds through investments, how long would it last if you then started drawing from that fund at age 70 at the monthly amount you would have gotten if you’d waited? Unfortunately, not long enough. Your fund would be gone by the time you reached age 81. That may be average life expectancy, but 40% of people live longer than that and half of those will live into their 90s. With the fund now spent, you will have to do with the reduced benefit you took at age 62.

A valid case for drawing Social Security at 62

If your health is failing and you are not worried about a spouse getting a larger survivor’s benefit, the best decision may be to start drawing at age 62. If you are not going to need the benefit and want to start drawing and investing it, you could leave a fund for your heirs. Yet for most of us, good judgment and Bill Reich­enstein prevail; it’s difficult to beat the system. Investing those Social Security benefits taken at 62 will not beat the lifetime return of those benefits you draw at age 70.
Creating a Living Trust is an important part of your retirement planning. Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. We’re helpful, compassionate and affordable.

Wednesday, October 18, 2017

Distribution of Assets: Beware Property Tax Consequences

A recent experience with a Living Trust client brought up an issue that frequently surfaces for those who are dividing their estates among their children. “Joe” and “Marilyn” were planning to gift real property equally to their son, “Tony” and daughter, “Sarah”. In the beneficiary section of the Trust, they also were granting the residue (the remaining assets after all specific gifts have been made) of their Trust estate to Tony and Sarah equally.
In each case they named an alternate beneficiary in the event something happened to either Tony or Sarah. For both the property and the residue, the alternate beneficiary was the other sibling. This seems straightforward, but it creates potentially significant property tax ramifications for Tony and Sarah.

Background: Prop 58 excludes transfer of real property from reassessment

In 1986, voters in California approved Proposition 58, which excludes real property from being reassessed when it is transferred from parent to child. When the primary residence is transferred, there is no limit on the value of the property. For property other than the primary residence, there is a limit of $1 million per transferor.
This means that instead of reassessing the property at its current value, the assessment of the current Prop 13 value results in significantly lower property taxes. For Joe and Marilyn and their family, this means that when the property is transferred equally to Tony and Sarah, there will be no reassessment at that time (if they wish to exercise their exemption).

Sarah and her family are living in the primary residence

The situation gets a little more complicated with this family, as it does with many of our clients. Sarah and her own family are currently living in the property and plan to remain there after Joe and Marilyn die. Sarah can buy Tony out, but the assessor will treat the transfer this time as that of one sibling to another—which means that this time it will be without the exemption, so that 50% of the property would be reassessed at current values. In today’s inflated real estate market, this could result in an increase of a few hundred thousand dollars in assessed value and skyrocketing property taxes.

This scenario caused our clients to reconsider

Joe and Marilyn began rethinking how they would split their estate between their children. If they included the property as part of the residue of the estate, this gave Tony and Sarah additional options. If the Trustee valued the total of the estate and then split the estate, one half could include the home that one child wanted and the other half would include a total of equal real and liquid assets. With this scenario, the transfer of the home to Sarah would qualify for the exemption on the entire value of the home. No buyout would be required and no transfer from one sibling to the other would be necessary—avoiding the potentially huge property-tax burden. Tony could receive real property and assets equal to the value of the property that Sarah was inheriting.
California Document Preparers assists clients with the creation of Living Trusts, transferring property into the Trusts, and assisting Successor Trustees in transferring properties to beneficiaries. We also can assist in transferring property to your children now. The implications of the Parent-Child Exemption should be considered in any Deed transfers between parents and children.
Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment or to get more information to help make informed decisions. We’re helpful, compassionate and affordable.

Tuesday, October 10, 2017

We helped a Berkeley couple, “Brad” and “Sonya”, get a Legal Separation four years ago. They’d been married for eight years and had two young children. Their relationship had become increasingly troubled, yet they were not ready for Divorce; rather, they believed that taking the steps to legally separate was the right solution for their family at that time. Just as with Divorce, a Legal Separation requires division of property and a parenting plan. Brad and Sonya were both professionals generating good incomes, and they agreed that Sonya would get the house, and be responsible for refinancing it in her name alone. They shared custody of their two children, but since the kids spent 70% of their time with their mother, Brad agreed to pay child support.

Four years later, they were ready to get a Divorce

The four years of Brad and Sonya’s legal separation did nothing to repair their relationship, and they agreed that it was time to get divorced. Over the period of their separation, both spouses had been promoted, increasing their salaries. Both had made investments, and Sonya had inherited her grandmother’s Tahoe cabin. They had never executed a Deed transferring the home to Sonya, so we immediately prepared a Deed transferring the property to her, enabling her to refinance the family’s home.

Once a legal separation is finalized, the case is closed . . . but a couple is still married, with the responsibilities of a married couple

Legally separated couples need to keep in mind that even if they are officially separated, they’re still married. If, like Brad and Sonya, they decide to divorce, they must start a brand new case and prepare new documents. If a couple wants to keep their agreement the same, the documents can reference their previous judgment, but if they want to make additions or changes to the division of assets or the parenting plan, they must submit a new agreement.
While a separation can take just a few months (effective as soon as the judge signs the document), California legally requires a minimum of six months and one day from the date the spouse is served for a divorce to be official. Some legally separated clients who proceed with a Divorce are surprised that they can’t simply sign off on the change of status, and Brad and Sonya’s case clearly illustrates why this wouldn’t be the best course of action, even if it were possible. Circumstances can change dramatically over the course of an extended separation—for better and for worse, which necessitates revisiting a couple’s collective assets and debt and how they plan to share in the raising of their children.
If you’re considering a Legal Separation or if you’ve decided that it’s time to go through with a Divorce, contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. We’re helpful, compassionate and affordable.

Thursday, October 5, 2017

Trust Update: 25 Years Later, a Completely New Document

Oakland resident “Henry” came in to update his Living Trust after his wife died. Their Trust was amendable by the survivor, and he wanted to make some changes. Henry and his wife had created their Trust 25 years ago, and while it named their five children as beneficiaries, it did not address the fact that two of their now-adult children had special needs.

A lot had changed in 25 years, including the addition of new grandchildren

Henry wanted to add his five grandchildren as beneficiaries—all had been born after the Trust’s creation. Henry was active and in good health, but his wife’s death had made him aware of his own vulnerability, and he wanted someone to help him manage the Trust’s assets immediately. His son, John, was a CPA, and while Henry was closer to his artist daughter, Kate, he knew that John would be the better choice to help manage his estate.

As often happens, we discovered real property that had not been moved into the Trust

There’s a reason why we urge our clients to review their Trusts periodically or after important life events. A lot changes in 25 years. When we investigated the status of his real properties, we found that they were no longer in the old joint Trust. Since these were the only assets they had originally deeded into their Trust, and they were no longer in it, Henry decided that the old trust was so dated that it made sense to start from scratch, creating a new Trust and moving all of the appropriate assets into it. He would also address the life changes that had taken place since the first Trust some 25 years before, including adding his new grandchildren and making accommodation for his two special-needs children. Henry completed the appropriate workbooks for us, including those to establish two Special Needs Trusts as well as the transfer of his three properties into the Trust.

Another obstacle: Incorrect Deeds which needed to be unraveled

When we were preparing the Deed transfers to go into his new Trust we could see that the property descriptions for two of the properties were incorrect. After exploring this with him, we found out that more than 20 years ago, he had split one property into two. No new property descriptions had been written, and the last recorded Deeds were incorrect. With the help of the county assessor, we were able to discern what needed to be done to help him correct the property descriptions and transfer the properties into his Trust. This was important because Henry was leaving one of those properties to his son.

Important features of the new Living Trust

  • John was immediately named as co-Trustee; if Henry became incapacitated or simply needed help with Trust assets, his son could take over without requiring the involvement of doctors.
  • Two Special Needs Trusts put the beneficiaries’ shares in the hands of the Successor Trustee to manage so his children did not lose the public benefits to which they are entitled.
  • After Henry’s death, shares for Henry’s five grandchildren will be controlled by the Successor Trustee who, at his discretion, can use the funds if needed for their welfare or education until they reach an age Henry designated.
California Document Preparers prepared the new Trust, an updated Power of Attorney, and Advance Health Care Directive and called Henry when it was time to sign them. He was immensely relieved to have these documents brought up to date.
How long has it been since you prepared your Living Trust? Like Henry, there’s a very good chance that there have been significant changes to in your life. Call California Document Preparers at one of our three Bay Area offices today to schedule an appointment to amend your Trust. We’re helpful, compassionate and affordable.