The Thatcher Law Group

Archive for the ‘Estate Planning’ Category

There are various types of property that transfer without probate.

Right of Survivorship

This type of property can either be held as joint tenants or as community property.  Essentially when two people hold title (“own”) property together as joint tenant or community property with rights of survivorship, when one owner passes away, the other owns all of the property.  No court action is required, although a form must be submitted to the county clerk with a copy of the death certificate.

While both owners are alive, each has an equal (undivided) ownership interest.

Transfer on Death

In a transfer on death account (or property) one person owns the property, but registers an instruction with the account holder to transfer the property to a selected individual upon the owners death.

Bank accounts can be held as transfer on death.  Also, in California (as well as other states) vehicles can be registered with a transfer on death clause.  The process is explained here.

While the owner is alive, the beneficiary does not “own” the property.

Beneficiary Accounts

There are many different types of beneficiary accounts.  Essentially all share a common feature, the owner will designate someone to whom the account is to be transferred on the owners death.

Two examples of beneficiary accounts are life insurance and retirement accounts.

Assets held in trust

The most common type of trust is a revocable “living” trust.  A simple analogy for a trust is a toy box in which people keep their stuff.  The “toy box” comes with a list if instructions on what should be done with the stuff in the box.

Probate. n. The process of legally establishing the validity of a will before a judicial authority.

Source:  YourDictionary.com

In law, the process of proving in a court (probate court) that an instrument is the valid last will and testament of a deceased person. The term also refers broadly to the process of administering an estate. Unless it is contested or shown to contain obvious anomalies, a document purporting to be a will requires little authenticating proof for certification (admission to probate). Probate courts also often supervise the administration of estates by executors and oversee the guardianship of minors and others lacking capacity under the law.

Probate can be a long, tedious process.  Not to mention expensive.  In California, the probate fees are determined by statute and are based in the GROSS vales of the assets in the deceased’s probate estate.  Only certain types of property are included in probate, and if an estate is valued at less than $150,000, the fees below do not apply.

Typical fees in California (as of June 1,2013)

Fees paid to the Court $435 to file the Petiton for Probate

Publish Notice of Probate You are required to use only certain newspapers, and their charges will vary. Expect the notice to cost anywhere from $100 to $450.

Attorney Fees.  Attorneys fees for probate are set by statute in California.  California Probate Code §10810

4% of the first $100,000

3% of the next $100,000

2% of the next $800,000

1% on the next $9,000,000

0.5% on the next $15,000,000

A reasonable fee thereafter

Many of my clients often tell me that the only thing they own is their house, and it has little equity.  However, according the California’s probate statute, their estate is valued WITHOUT taking the mortgage into account.  Thus, the following is a typical example of probate fees:  the only asset in an estate is a $500,000 house, and there is a $400,000 mortgage on it. The statutory fee would be $13,000 based on the full $500,000 value:

4% of the first $100k = $4,000

+ 3% of the next $100k = $3,000

+ 2% of the remaining $300,000 = $6,000

Total: $13,000

Fees paid to the executor.   The executor is entitled to charge the same fee as the probate lawyer charges, although this fee can be waived by the executor who is frequently a family member.

The good news is, as mentioned above, only certain types of property are included in a probate estate.  In addition, there are a number of ways to minimize the transfer of probate though the probate process.  Non probate property transfers will be discussed in our next post.

In the coming weeks, we will be reviewing many options in our Wednesday Words series.  In the meantime, if you have any questions, or would like to discuss your estate plan, please contact Laura L. Thatcher, or a qualified estate planning attorney in your area.

Intestate Succession  The method by which property is distributed when a person dies without a valid will. 

Source:  Nolo Plain English Legal Dictionary

Each state’s law provides that the property be distributed to the closest surviving relatives. In most states, the surviving spouse or registered domestic partner, children, parents, siblings, nieces and nephews, and next of kin inherit, in that order.

If there is no next of kin, then property will “escheat” or revert to the state.

Only “probate-able” assets (that would have passed through your will) are affected by intestate succession laws.

How your assets are distributed in California depends upon who your closest relatives are when you die.  California Probate Code §§6400-6414 determines the order of inheritance.  The following some of the more common examples are illustrated here:

Parents and siblings survive you, but you have no spouse or children  — Parents receive 100% of all property[1]

Siblings survive you, but you have no spouse or children – Siblings split equally 100% property[2]

Spouse and parents survive you, but you have no children – Spouse receives 100% of community property[3] and 50% of separate property and your parents receive 50% of separate property[4]

Spouse and siblings survive you, but you have no children or parents — Spouse receives 100% of community property and ½ of separate property and your siblings split equally 50% of separate property[5]

Spouse and one child survive you –  Your spouse receives 100% of community property and 50% of separate property[6]

Spouse and multiple children survive you –  Your spouse receives 100% of community property and 1/3 of separate property AND you children split 2/3 of separate property[7]

Children, but no spouse –  Your children split 100% of all property[8]

There are some additional factors that affect intestate inheritance as well,

Survivorship period. To inherit under California’s intestate succession statutes, a person must outlive you by 120 hours. So if you and your brother are in a car accident and he dies a few hours after you do, his estate would not receive any of your property.[9]

Half-relatives. “Half” relatives inherit the same as if they were related by whole blood. [10]

Posthumous relatives. Relatives conceived before (but born after) you die inherit as if they had been born while you were alive.[11]

Immigration status. Relatives entitled to an intestate share of your property will inherit whether or not they are citizens or legally in the United States.[12]

There are numerous estate planning options that can be used to change the “default” intestacy rules.

In the coming weeks, we will be reviewing many options in our Wednesday Words series.  In the meantime, if you have any questions, or would like to discuss your estate plan, please contact Laura L. Thatcher, or a qualified estate planning attorney in your area.

Last week’s Friday funny was a bit delayed, but hopefully, when it comes to humor, better late than never.

Turkeys need estate planning too.  Especially the week before Thanksgiving!

Happy Thanksgiving!

Sunday is Veterans’ Day, so I searched for a military themed joke for this week’s Friday Funnies.  There are lots of great ones.  However, as you might imagine, most of the jokes out there are just a bit raunchier than would be appropriate for this site.  After searching many sites, I came across Vetfriends and found the perfect joke – it even has estate planning references!

As unlikely as it seems, a Marine and a Sailor were friends and decided to go on a ski trip.

Along the way, they had car trouble and broke down by a farm on one of the coldest nights of the year.  They knocked on the farm house door and a beautiful widow stood before them.  The widow told them they were welcome to spend the night in the barn, but she could not allow them to stay in the house for appearance sake.

The night seemed to go uneventfully and the next morning the guys continued and finished their ski trip.  Nine months later the Marine was contacted by a lawyer.

The Marine caught up to his Sailor buddy and asked him, “Hey Mack, you remember that beautiful widow we met on our ski trip”?

The Sailor replied rather sheepishly, “Yes.”

The Marine said, “You didn’t happen to get up in the middle of the night and pay her a visit did you?”

The Sailor again said, “Yes.”

The Marine asked, “And by the way did you use my name instead of yours”?

The Sailor again said, rather red faced, “Yeah Buddy.  I’m sorry.”

The Marine replied, “That’s okay, she died and left me a million bucks!”

Anderson Ware, YN1, USN RET

Wishing you peace!

Estate planning is often associated with death.  But it’s just as important for your plan to address incapacity associated with illness, injury, advanced age or other circumstances.

Unless you specify how financial and health care decisions will be made in the event you become incapacitated, there’s no guarantee that your wishes will be carried out.  Plus, without a plan, your loved ones will be saddled with the difficult task of seeking a court-appointed guardian.

On the financial side, planning tools you should consider include:

• A revocable living trust. You transfer your assets to the trust, retaining control over your financial affairs by serving as trustee.  In the event you become incapacitated, your chosen representative takes over as trustee.
• A durable power of attorney. This document authorizes your representative to manage your financial affairs and control your assets, subject to limitations you establish.
• Joint ownership. Holding title to property jointly with another person allows him or her to manage the property in the event you become incapacitated.  It’s a simple, inexpensive strategy.   But it produces two results that may or may not be desirable: 1) It provides your co-owner with immediate, unrestricted access to the property, and 2)  the property will pass to him or her when you die.  Joint ownership also may trigger negative tax consequences.

On the health care side, planning tools you should consider include:

• A health care power of attorney. Also referred to as an Advance Health Care Directive, Durable Medical Power of Attorney or Health Care Proxy, this document appoints a representative to make medical decisions for you in the event you can’t make them yourself.
• A living will. A living will communicates your preferences for life-sustaining medical intervention — such as artificial nutrition or hydration — under specified, life-threatening circumstances.
• A Guardian Nomination. A stand-alone Guardian Nomination allows you to designate a guardian (and temporary guardian) for you minor children.

Your attorney can help you prepare the documents necessary to implement these estate planning tools.

If you have any questions, please contact The Thatcher Law Group or another qualified estate planning attorney.

Wishing you peace.

A guy walks into a bar.  He recently found out that his elderly father will be passing away in a few years and leaving him a very large inheritance.  Using this new information as leverage in the dating market, he decides it’s time to find someone to settle down with.

So guy looks around the room and locks eyes with this stunning young woman.  He figures she’s probably out of his league, but walks up to her with his new boost of confidence and says, “I may not look like much now, but in a few years my father will pass away and I will have millions.  Would you be interested in going to dinner sometime?”  She’s interested, and gets his name and number.

A week later, she became his step-mother.

The text below is one option for language to include in your living will:

I, __________________________, being of sound mind and body, do not wish

to be kept alive indefinitely by artificial means. Under no circumstances should my fate be put in the hands of pinhead politicians who couldn’t pass ninth-grade biology if their lives depended on it or lawyers/doctors interested in simply running up the bills.

If a reasonable amount of time passes and I fail to ask for at least one of the following:

______ a Beer

______ a Bloody Mary

______ a Margarita

______ a glass of wine

______ a Martini

______ a Vodka and Tonic

______ a Steak

______ Lobster or crab legs

______ The remote control

______ a Bowl of ice cream

______ The sports page

______ New shoes

______ Chocolate

______ Sex

it should be presumed that I won’t ever get better.

When such a determination is reached, I hereby instruct my appointed person and attending physicians to pull the plug, reel in the tubes and call it a day. At this point it is time to call the New Orleans Jazz Funeral Band to come do their thing at my funeral, and ask all of my friends to raise their glasses to toast the good times we have had.

Signature: ___________________________

Date:      ___________________________

Continuing the zombie lawyer theme from last week.  I found this old cartoon from The New Yorker and had to laugh!

I was trolling the ‘net for an entry to the Friday Funnies file and I came across this oldie but goodie from The Onion on various important items to keep in mind while preparing a living will.  My favorites:

• It’s important to have a lawyer present when you draft a living will, as it makes the desire to be dead that much more tangible.
• Explain in no uncertain terms that, should you die and return as a zombie, loved ones must shoot you in the head without hesitation.
• A living will is a great way to meet a notary public, if notaries public are your thing.
• If you choose to remain on life support indefinitely, make sure your family is legally restricted from dressing you up as a corporate mascot and renting you out for parties.