Attorney Nicole Y. Newman specializes in estate planning, dedicating her practice to guiding clients through the complex and often confusing process of balancing family protection, wealth preservation, and family values. In this webinar, you will learn how to avoid 10 common estate planning mistakes to protect your assets and legacy.
Outline
- 00:00 – Intro
- 0:31 – Mistake #1 Dying Intestate
- 12:12 – Mistake #2 Having an “I Love You” Will
- 18:30 – Mistake #3 Owning Real Property Jointly
- 41:48 – Mistake #4 Giving Property Outright to Heirs
- 1:00 – Mistake #5 Not Having the Right Trust
- 1:05 – Mistake #6 Not Funding the Trust Properly
- 1:06 – Mistake #7 Not Updating Your Estate Plan
- 1:07 – Mistake #8 Doing It Yourself
- 1:09 – Mistake #9 Believing a Trust Alone is Enough
- 1:10 – Mistake #10 Believing the Biggest Enemy is Uncle Sam
Transcript:
Kathryn: We would love to welcome you to the Estate Planning webinar. And we have Nicole Newman from the Newman Law Group.
Nicole: So what I’m going to be talking about today is all I do day in, day out, 6 days a week. So, what I’m going to do is I’m going to walk us through the 10 most common mistakes that I see come through my office when it comes to estate planning.
Mistake #1: Dying Intestate
My first mistake that I see come through my office is when somebody has died intestate. So when a person dies intestate, that’s just a legal word for you died and you did absolutely nothing to plan for what should happen to your assets when you pass away. Well, if you pass away and you fail to make a plan, California gladly has a backup plan for you. And the backup plan for California plays out in probate court. So probate court is just the California court process of one, retitling your assets because you died with those assets in your name, two, making sure your creditors get paid back if you had any, and then 3, identifying who your beneficiary should be. So here in California, we win the award for having the longest and most expensive probate process in the entire country. So what will happen is somebody would have to petition the court to become administrator of your estate. Now, most people think of this as an executor or they’ve heard the term executor. They’re only an executor if you had a will. If you didn’t even bother putting together a will before you died, then they’re just going to be an administrator. Once they are appointed as administrator, they’re going to be in court for about 12 to 18 months. Now, that 12 to 18 months was prior to COVID, and that would be a very straightforward, absolutely no issues popped up type of a probate. Since COVID, it’s been more of a 2 plus year timeline. But still, when it was a 12-to-18-month timeline, that was still a very long time for a loved one to be tied up in the court process. As the process is happening, it’s public. So that means anybody can pull the probate docket to see what you owned at your death, what you owed at your death, who your beneficiaries are going to be, what their names are, ages are, addresses are. So it’s a lot of information, that makes it out into the public, when we allow our assets to end up in probate. Once the court gets to the end of this long, expensive public process, the court’s going to do two major things. One, the court is going to identify who your beneficiaries are going to be. So this is called intestate succession. This is California’s order of who they think should inherit from you. So this is a word that I’m going to refer back to quite a bit today. So the court is going to identify who those beneficiaries are going to be. But before the court turns the assets over to those beneficiaries, the court is going to determine what the fees are going to be. And here in California, the cost of a probate comes out to about 5% of the gross value of the assets going through probate. So the key word there is gross. So that means if the only asset you had, as an example, was a house, worth $500,000 and you owed $500,000 on that house, the probate fees are still going to be right around $25,000, so they do not subtract off any debt when, when calculating those fees. Now, if that same house were instead owned by a trust, which I’m going to get into trust later, into detail about trust later, but to give us a sneak peek, if that same house were instead owned by a trust at your death, probate could be avoided and technically the only thing that has to happen to transfer those assets to transfer that house to a beneficiary would be recording two new deeds, which would be right around $200. And technically the property could be transferred as soon as death certificates are issued, which is 3 weeks after your death. So you’re typically going to find a huge cost difference and time difference between transferring your assets through a trust versus allowing them to go through probate. Now, the other one that has a backup plan for us is the IRS. So the IRS’s backup plan comes in the form of estate taxes. So basically what happens every year is the federal government sets the federal estate tax exemption amount. So they set a number where they say, all right, folks, you get to die with this level of a net worth this year, and we won’t tax your estate. But if your net worth exceeds that number, they do tax it. And their tax rate has historically been between 40% and 55%. So it can be a pretty big haircut on our way out of here. So we always want to be aware and prepared for if our estate is going to be subjected to federal estate taxes. Now, on a side note, California does not have a state estate tax. We used to, but it was phased out a long time ago, which actually shocked a lot of people. Because there are several other states that do have a state estate tax, but we’re not one of them. But again, the feds still have their estate tax, so you want to be on top of that and aware of that to make sure that your estate is not going to be subjected to that at your death. Now, before I go on to mistake number two, do we have any questions, about probate or estate taxes?
Questions
So I’m going to go ahead and open up the Q&A. So the first question here is what documents and data do I need to bring to an attorney to have a will drawn up? What should I not provide? Okay. So that’s a really great question. So it’s what you’ll usually find that many estate planning attorneys, myself included, before our initial meeting together, we will send you the information of what we would like you to bring, prepare, fill out, prior to the meeting, and, you can just, you can just bring what is asked or fill out what is asked. You don’t need to bring anything extra. And during my planning process, I slowly get everything that I’m eventually going to need out of you to get your, your estate plan properly drafted up. So great question there.
Next question here. So for any bank accounts, checking accounts, CDs, money, brokerage, is it enough to have it set up as a transfer on death with beneficiaries or not? Is it advisable or preferable to have it in the trust name? Okay, so this is a really great question, and this is a case-by-case basis. And so I’m going to go into, on a later slide, I’m going to go into a lot more detail on funding the trust. So funding the trust means actually transferring the assets into the trust and using beneficiary designation. So I’m going to actually get this question covered on a later slide.
Okay, so I don’t know about that one. If the, if the presentation would be available for later viewing, I’m going to assume it is.
Next question here. If you have a living trust in California, what happens if you move and die in another state? What does one need to do if one moves to another state? Okay, so that’s great. So if you created your trust in California and you move out of state, the states have to recognize each other’s documents. So your trust is able, and your estate planning documents are able to change jurisdiction with you. What I do recommend for when my clients do move out of state is to check to see if the state that they’re going to move to has a state estate tax. And if that state does, then I do make a referral to them to meet with an attorney in that particular state because part of their plan may have to change to account for the state estate tax, whereas we didn’t have to address that in your California estate plan.
Does Colorado have an estate tax? You know, I don’t know off the top of my head, but a quick Google search will let you know that. You just want to say, be specific to say a state estate tax so it doesn’t actually pull up the federal estate tax.
Okay, how would you assess if the IRS charges for estate taxes? So you would determine that if, for so every year, the number sets. So the federal estate tax exemption changes every year. So if in the year you die, if your estate exceeds that number, then it is going to be subjected to the estate tax. So, this year the estate tax exemption is set higher than it’s ever been set before, at over $13,000,000 per person. So it’s very high this year, but it is set, and predicted to come down at the end of this year. So we are waiting to hear on that. But like I said, it’s always changing every year. So it’s something that you would want your estate planning attorney to keep an eye on for you.
And then the next question here, is probate needed if you have a will, I’m actually going to answer that on my very next slide. So that’s a great lead in right there.
And, if me and my wife are both owners and one of us pass away, do we need to go through a probate? So that’s a good question. So that is going to depend on how your assets are titled. So most people assume that when they’re married and they own their assets jointly, that when the first one of them dies, Everything just goes very easily to the surviving spouse and no probate is needed. Most of the time that is true, but there are situations where surviving spouses will find themselves in probate court. And that- we’re going to usually find that when one of the accounts or assets is only in one spouse’s name, and it was assumed it was in both, or maybe you knew it was just one spouse’s name, and that kid ended up in probate, a lot of times we’re going to see that on a piece of real estate. Maybe just it was the one spouse to qualify for the loan, so then they’re the only one on the deed, that spouse dies, and now the surviving spouse finds themselves in probate court. It’ll happen when a spouse forgets to designate a beneficiary on their retirement account or their life insurance policy. If there’s a blank, then it ends up in probate. So those are the two main ones or on titling on the real estate if it’s tenants in common. So yeah, surviving spouses definitely can find themselves in probate court. That’s why it’s very important when you’re working with your estate planning attorney that your estate planning attorney goes individually over each and every one of your particular assets to make sure that it’s going to avoid probate, that your estate will in fact avoid probate because it is different for everybody. But again, like I said at that upper question, I do have a slide later where we’re going to go really in detail about funding. So I’ll pick that back up on that slide.
Okay, so with that said, it looks like, oh, it looks like we got some more here. If you want a house to be in a CRUT but not the entire proceeds from the sale of the house, is there a way to split the capital gains? So that is a question that, I will answer privately for you because that is going to be a more complicated answer beyond the scope of what most people are listening today. But I will, I’ll be more than happy to answer that question for you privately.
So please talk about 401(k), IRAs, taxable accounts, being used for funding the revocable trust. Yep. I’ve got a whole slide on that. I’m going to definitely address that later.
And am I able to DIY for my own Oregon estate planning, like online, e-forms, free documents, better than Legal Zoom? I know estate planning, costs thousands. Do I need a living trust? Okay, I’m going to get all into this. I have a whole slide on this one later about funding and doing it yourself, how to do it yourself.
So will we get the recording after the meeting? I’m going to assume so.
And do you only provide services to California residents? Yes. I’m only licensed to practice in California.
Mistake #2 Having an “I Love You” Will
So with that said, those were great questions. I’m going to go ahead and jump into mistake number two and mistake number two is dying with just a will. So people that die and they only put a will in place are only one tiny little step above people that died and didn’t do anything at all. Now, the reason why you’re a little step ahead is because at least in your will, you named who you want your beneficiaries to be rather than leaving it up to the court to decide. But other than that, everything else is exactly the same as far as probate goes. Because a will does not avoid probate. So that is one of the most important things that I want you to take away from today, because people get this mixed up all the time. And that is because people love to use the term will. They like to say, oh, I got to get my will drawn up, or I have my will, or even a lot of my own clients will call their trust their will. So you’ll have folks that will get a will in place and they think they’re in good shape. Also, in some other states, probate is very easy, and it’s only some, but there are some where probate is very easy. So you’ll find folks in those states still using wills quite a bit. But here in California, the two triggers when it’s time to get a trust where there’s absolutely zero downside to having a trust here in California is one, when you have real estate in your own name. Or two, you have, and what I mean by in your own name, I used to just say when you own real estate, which is okay to say that as well, but I had some people take that literal and say, well, if I have a mortgage, I technically don’t own it, the bank owns it. No, if you have a name on a deed, then you need to have a trust. Or two, you have, or you have assets in excess of $185,000. Those are going to be the two triggers for probate. So that is when you’re going to want to use a trust here in California and not use a will. Now, the other big problems that I will find with wills is most folks don’t truly understand what their will says. So these typical, I love you wills, this is when we have a married person that has a will that says, okay, when I die, everything goes to my spouse. And if my spouse is dead, everything to my children. Well, the problem is when you die and everything goes to your spouse, your will is done. Your will is over. So that whole part about going to your children is gone. It is now going to depend on what your specs is going to do, is what’s going to dictate what happens to the assets. The other issue with wills is a lot of times people don’t truly understand what their will says. Now, an intestate succession sneaks into wills all the time. An intestate succession, remember, that’s California’s order of who they think should inherit from you. So, for example, in my own law firm, I had an I love you will cause a lot of problems for one of my estate planning paralegals. So she had been in estate planning paralegal for over 20 years, so she really knew her stuff when it came to estate planning, and she was taking care of her elderly grandmother who had substantial assets. And her grandmother always told her, listen, Teresa, when you die, I want you to get all of my assets because you’re the only one that takes care of me. Well, Teresa’s just like the rest of us, and who wants to have that conversation with mom or dad or grandma or grandpa to say, Okay, well, what have you done, then, to make sure I get everything? It was an uncomfortable topic. Teresa avoided it. So, of course, when grandma died, she had nothing in place. Well, intestate succession gave everything to her, to Teresa’s dad. Well, Teresa’s dad, they had a very close relationship and he told her, listen, Teresa, I know your mother wanted you to have everything, so I’m going to make sure that that happens. Well, a few months after that conversation, he suffered from a brain aneurysm and died. So it was completely unexpected, and an unexpected death. And when he died, he had two things. One, he had a wife that was only eight years older than Teresa, and two, he had an I love you will. So what happened is grandma’s entire estate went to dad, and then dad’s entire estate and grandma’s entire estate went to the new spouse. Well, this woman, took her two kids and she hightailed it out of California pretty quick. But he didn’t have to go anywhere because there was absolutely nothing Teresa could do about it. Because it was a valid will. Even though it was not what grandma wanted, it was not what dad wanted, and it was certainly not what Teresa wanted. It’s what happened. Now, the other thing, the other area that I’m going to see a lot of problems with wills popping up, these little cute I love you wills, are in nursing homes. So a lot of people, they’ll put mom or dad or grandma or grandpa away in a nursing home and they think they’re in there, whittling away. And they’re not. They’re in there dating. And this is where we’re going to see these I love you wills pop up quite a bit. We’ll have, you know, grandpa, he’ll get a new love interest and he’s like, okay, I’m going to take care of her when I die. And then when she dies, then it can go on to the children. And a lot of the times his go to way to do it is going to be a good old fashioned will. Okay. So, the problem with that is once everything goes to the new love interest through the will, the will is over. So that whole part about going to his kids is now gone. So we want to be very careful about using wills because wills do not avoid probate and intestate succession, meaning California’s order and idea of what should happen to assets sneaks in all the time.
Okay, so with that said, that’s the end for mistake number two, so I’m going to take a peek at the questions here and before we go on to mistake number 4, what if you have property in a state other than your resident state vacation home? I’m going to address that question. It’s a great question. I actually answered that on a later slide.
Mistake #3 Owning Real Property Jointly
Okay, so with that said, let’s go ahead and go on to mistake number 4. So mistake number 4 is owning real property jointly. So I’ll have a lot of folks, that’ll say, you know what, when I die, I just want my house to go to my son. So you know what? I’m just going to stick him on the deed as a joint tenant because joint tenancy avoids probate. Right, Nicole? And I always have to say wrong. Joint tenancy does not avoid probate. A probate will eventually happen on that property. It’s just going to be delayed because of the joint tenancy. The other big problem with joint tenancies or sticking people that we ultimately want to inherit our property on the deeds is the liability exposure. So my recommendation for most of my clients is you want as few people on your deed as possible. Because when you start adding people to your deed, you’re now exposing your property to any issues that they might run into. So you add Junior to the deed, and he gets in a car accident and gets sued, he starts having financial trouble, he starts going through a divorce, he starts having any type of issue, guess whose property is getting pulled into his problem? Your property is. And at that point, it is too late to remove him off the deed. Because at that point, if you try to remove him off the deed, that would be a fraudulent conveyance by you and it would be a fraudulent conveyance by anybody that helps you get his name off the deed. So my advice is let’s not stick him on there in the first place. Now it’s not to say that I never use a joint tenancy, but I only use joint tenancies for very strategic purposes. It’s never as a quick and cheap way to try to avoid probate. It has to be very well thought out. Now the other issue that we’ll run into are the tax issues. So I used to volunteer in a lot of elder law clinics, around Orange County. It’s been about 20 years since I’ve done so, but I used to do it quite a bit. And I had an elderly lady that came in, she was well into her 90s, and she wanted her Newport Beach property home to go to her grandson. So she deeded, she signed a quitclaim deed, deeding the entire property to him. So she skipped the joint tenancy and she went right for it. And, she needed him the property already. And so she was just coming in to confirm, hey, if I die, will that avoid probate? Well, the answer was yes, it would avoid probate when she dies because as far as for that property, because she already gave it away. It wasn’t even her property anymore. But that wasn’t even the big issue. The big issue were the tax consequences. And there were several tax consequences. And I’m just going to go over a few for today, for today’s, for time purposes. The first one is, when she beaded that property over to the grandson, he took her tax basis in the property and I’m not talking about property taxes. I’m going to get to that in just a minute. So your basis in your property, generally speaking, that is what you paid for your property. So, and so he had purchased this property decades prior for $26,000. So when she deeded that property over to the grandson, He took that $26,000 tax basis. So that means when he goes to sell the property in the future, he’s going to pay taxes on the difference between what he sold it for and that $26,000 basis. And at the time, the property was worth right around $2,400,000. So he is going to get an absolute whopper of a tax bill. Whereas if instead she would have left him that property through her trust, he would have received what’s called a full step-up in the tax basis on the property. So what that means is, is whatever the property was worth on her date of death, that would be his new tax basis. So let’s say when she died, the property was worth $2,400,000. That is now his new tax basis. So when he sells the property, he’s going to pay taxes on the difference between what he sold it for and that $2,400,000 number, not that, $26,000 number. So if he sold it shortly thereafter, he would actually pay zero taxes. So this is a big problem that I see quite a bit here in California when we have properties with so much appreciation. We do not want to be gifting or deeding that property away before we die. We want to let our beneficiaries get that full step-up in the tax basis. Now, the other issue that they ran into were the property tax issues. So, they went online and they found the grandparent grandchild exclusion form. So they assumed that the grandson would be able to keep her low property tax basis, but they didn’t read the fine print. And the fine print said the grandchild only gets to keep the low property tax basis if the grandchild’s parent was dead. And in this case, the parent was still alive. So the property taxes ended up getting reassessed. They got reassessed while grandma was still alive, and it was a substantial reassessment. Now, at the time, since this was 20 plus years ago, there was also some gift and estate tax issues that happened as well. So, but I’m not going to go into that for time purposes. So we just want to be very, very careful dating properties. The other issue with joint tenancies are when spouses own their properties as joint tenants. So if you are married and you are purchasing property, ideally you want to purchase it in the name of your trust, but if you don’t have a trust yet, or if even if you do have a trust and you prefer to purchase in your own name and then transfer into the trust, if you are married, you are going to want to take title as community property with right of survivorship, not joint tenancy. Okay, and the reason why is for the tax benefit of the survivor of you. Because if when, so when the, when the first spouse dies, if the property was community property with right of survivorship, the surviving spouse is going to receive what’s called a full step-up in the tax basis on the property. So that means if let’s say you purchase your property for $100,000. So generally speaking, that’s going to be your basis. But when the first one of you dies, the property is now worth $1,000,000. Well, if it was community property, then community property with right of survivorship, the basis will step up to that $1,000,000. Well, since it’s a spouse, the spouse will also be able to keep the low property tax basis, but they’ll get that step-up. So if the surviving spouse decides to downside and sell, they’re only gonna pay the taxes on the difference between what they sold it for and that $1,000,000, not the $100,000 that you paid for it. If the property is joint tenancy and titled as joint tenants, the basis will only step up halfway for the surviving spouse. There will not be a full step-up in the tax basis. Okay. So that’s really important to understand that. So a lot of folks will ask me, well, wait a minute, Nicole, we’re in California. I thought California was a community property state. So don’t, wouldn’t all my assets get that full step-up? Without getting out into the weeds on the difference between community property and separate property, let’s just say yes, California, marital assets are community property. So yes, California will respect that, but the IRS looks at title. Okay, so if the title is joint tenancy, they are not going to allow that full step-up of the tax basis. Now, the other way to own property here in California is as tenants in common. So, the two most common ways where I will see people take title as tenants in common is one, when they’re in a business transaction on a property and, so they’ll take title as tenants in common. And then the other is when people will do their own deed, they’ll prepare their own deed and they forget to specify how title is held. The default in California is tenants in common if it’s not specified on the deed, how title is being held. The problem with tenants in common is as each tenant dies, their portion will go through probate. So we can have one property end up in multiple probates as each tenant starts to die. So we want to make sure that if we do in fact own a property as tenants in common, and we want it that way, that we have our portion owned by our trust, and hopefully the other tenants will have their portion owned by their trust as well, so that that way if they happen to die before you, you’re not having to sit back and watch this property get pulled through a probate. And then the other way that we are able to have a deed here in California is on what’s called the transfer on death deed. So transfer on death deeds are fairly new here in California, and this is where you can name a beneficiary right there on the deed. So when you die, this is who you want the beneficiary to, this is who you want the property to transfer to. I don’t do transfer on death deeds. If somebody comes to me and they want a transfer on death deed and they’re very insistent on having one, I will refer them to someone else to do it for them. And the reason why that I don’t do a transfer on death deed is because I can’t guarantee that the transfer on death deed is always going to work upon your death. And what I mean by that is there’s several, there’s several elements that have to be met to make that transfer on death deed a valid, to make it valid. And one of the elements that has to be reached is, is we have to rely on the county recorder’s office to meet that. And, sometimes they’re not the most reliable bunch over there. They get very busy, they get very backed up, and they’ll still record the deed. But the problem is, is most people don’t realize the error. It’s not realized until after you have died, and it’s usually the title company catching it when the beneficiary is trying to transfer the property to themselves or sell it. And then it would be invalidated and then it will end up in probate and the intestate succession beneficiary might not be the same person that you were trying to name on the deed. So I have to tell people the cost difference between doing a transfer on death deed versus doing a trust is so minimal, to me it is not worth the risk. Because, I can give a much higher guarantee that with a properly drafted trust and the property properly transferred into the trust, I could almost guarantee you that that property is going to end up with the beneficiary that you named in your trust, can’t always guarantee that with a transfer on death deed. So myself personally, I don’t think it’s worth the risk. The other problem with the transfer on death deed is if we had the homeowner end up using MediCal during their life. And sometimes people get on MediCal right towards the end of their life there. The medical expenses are adding up, and their loved ones put them on MediCal, so that way the medical expenses don’t deplete the estate. Well, the problem is, is you can easily qualify for MediCal with owning a property. But the problem is, is when you, if you die and that property is in your name, including, using a transfer on death deed, well, then the state of California gets to very easily recover against that property on your debt to pay themselves back. Whereas if that property were owned by a trust, they would not be able to do a recovery. So we want to be careful with those transfer on death deeds.
Questions
All right, so that is, the end for me for mistake number 3. I’m going to take a quick peek at the questions here. Next one here, I already have a trust. As I build assets like stock accounts and other related investments, should I list those in the trust updates? Yeah. So is what you’re going to want to do is once you already have a trust in place, then, when you do open a new account in the future, or you buy a new property, ideally, you just want to open the account in the name of the trust from day one or purchase the property in the name of the trusted day one. Then that, so then that way it’s already considered owned by the trust. Technically, you don’t have to make any changes to your trust unless of course you wanted that particular asset to go to someone else, then the beneficiary you already named in your trust. But yes, and I’m going to go into more detail on this actually on later slides.
Okay, so, next question here, how often should trust be updated for changes in the law? That’s a good question, and I actually have a whole slide on that. I’ll cover that when the slide comes up, so I don’t accidentally repeat myself later.
Okay, so next one here, if a parent is trying to help an adult child buy a home, essentially by paying cash, how should title be listed such that the child has ownership, but minimize parent legal exposure? Okay, Tim, so this is something that you’re going to want to talk, and this is something that I would talk to you privately about, or you would want to talk to your attorney about, because this is very common, and especially these days where it’s harder and harder for the for kids to be able to purchase properties and so a lot of parental help is needed these days. So it’s very important that we get that structured, that we, we get that structured, carefully and especially if your child is married or it looks like they’re going to be married in the future. So yes, that is definitely something that, I or, or your state planning attorney would definitely advise you on.
Okay, can you explain per stirpes on a bank account? Yeah, per stirpes is the legal word for what should happen if the named beneficiary dies. So basically what per stirpes is going to mean is that if the beneficiary that you named is dead, then the, account or the asset will pass down to their children.
Okay, so what if we have international assets? Should we make a will in each country that we have assets? Yes. So unfortunately, foreign assets are not able to be added to a US trust. We just can’t force a foreign country to respect a US legal document. And it can also cause adverse tax consequences. So yeah, so with my clients with foreign assets, we do recommend reaching out to counsel in that country to find out what you need to do to be able to pass those assets on.
Okay. Inherit property through trust and splitting with 6 siblings. How does that work out? Oh, well, that can work out really great. And it can, depending on the quality of the trust and the main component is the relationship between the siblings. So, whenever I start out a trustee administration and I’m meeting with the beneficiaries, the kids and the trustee, I will always tell the beneficiaries, listen, either you guys are going to inherit this estate or I’m going to inherit this estate. And which one of us gets it depends on how well you guys all get along. Because the minute that beneficiaries start fighting with each other and bickering with each other, the attorneys make out with all the money. So because fights get paid out of the trust. So we want to be careful that we have a bit of a- if we have a bit of a rocky relationship with our siblings, just suck it up during the trust administration process. Do not have the trust administration be your final battleground. Unfortunately, way too many siblings do this. And then the attorneys walk away with, with basically the estate. So if we’ve got 6 siblings that get along great. The trust administration should go very smooth.
Okay, what if the house was purchased before marriage by one of the spouses? What needs to be done? So if the house was purchased by marriage, by one of the spouses, it’s going to be that spouse’s separate property going into the marriage. But what needs to be done is that spouse definitely, a trust definitely needs to be created because if that property is still owned, is still titled in the name of that spouse, then if that spouse died, then the other spouse is going to end up going through probate. And if that spouse died with, without a trust or a will in place, then intestate succession will control and the surviving spouse will end up having to split that property with that, with, with kids. So and it could be step kids or joint kids. So yeah, when we have these blended families, and I’m going to get into blended families a lot here, in a later slide.
Okay, will we get copies of the slides? I’m not sure, but I’m certainly willing to provide them, and I’m sure Pure will as well.
Okay, so what types of assets should not be included in your trust? I actually have a whole slide on that, so I’ll get to that later.
If you are married, can you have one trust for both of us or do we, do we need a separate trust? No, so married folks will do a joint trust together here in California. The only time that I will, have that we’ll see a married person have a separate trust is if they have separate property assets and they want to keep that, they want to keep it totally separate from their joint trust, we’ll usually do a separate property trust for them. But, you can put separate property assets in a joint trust and it still stays separate property. So, just because you have separate property does not mean you have to have a separate property trust. But, married folks are typically almost always going to have a joint trust together.
And yes, this will be available as a recording.
Daughter, husband, and granddaughter live with us. We have two other children. What is the best way to allow daughter and her spouse to stay in the house after death, but still allow equal distribution later on when the house is sold? Oh, yes. this definitely needs to be spelled out as rule inside your trust. Very common situation. And we need to have those rules laid out. So that way, they don’t find themselves kicked out shortly after your death, okay. or conflict between the siblings of what should happen. So those are very common rules that we put in trusts.
If my wife and I live in the US and went to will property and assets to her family in a foreign country on death of the wife, what should we do? You can absolutely, there’s no problem with, naming foreign beneficiaries in a trust. The one little thing that I do though, when I have foreign beneficiaries named at a trust is I definitely make sure to add a clause in the trust that gives the trustee flexibility on how those foreign beneficiaries are going to receive the assets. So for example, in your trust, we’re going to lay out the rules for how you want your beneficiaries to receive the assets. Okay? So you’re going to decide, in a perfect world, this is how those foreign beneficiaries would receive the assets. But I do like to give your successor trustee flexibility on, on maybe, on maybe to change that up after you die. And the reason why is, is because when we have foreign beneficiaries, when we’re administering your trust, we’re going to consult with a council in that foreign country to find out what is the best way to transfer these assets. And sometimes just based on the country, the way that you said you wanted it in the trust is not the best way to do it for that country as far as tax purposes or whatever. So, we want the trustee to be able to, working with the council in that country, to be able to alter that to get the best tax result, for the beneficiary. So we don’t let the trustee be able to cut that beneficiary out or change anything like that. We only give the trustee flexibility to make any changes to enhance what that foreign beneficiary is going to receive.
Hey, hi, we are gay women who married legally in 2008. Can we have a trust together? What if like Roe v. Wade, gay marriage is overturned? Yes, you certainly can have a- you certainly can have a joint trust. And yes, this is something that we’re always having to keep a lookout on and, and stay on top of, which I will, this is why, which I’ll talk about in a later slide, the importance of continually, you know, having a regular review of your trust. But as of right now, you absolutely can have a joint trust together and you’re treated like a married couple, opposite sex, married couple.
Okay. So how do we keep the in-laws out of the trust asset and pass to the grandchildren when the child passed? Oh yes. I’m good. I have a whole slide on that. So don’t you worry. I’m going to get to that ,Wilma.
Okay. So I missed the first 10 minutes. Can I get your contact information? Yes. I’d like to learn more about helping the child at purchase home and titling. Yes, absolutely. They will be providing my contact information for anybody that wants to meet with me after this, recording.
Okay. So what are the biggest red flags with a live in non-married partner if you agree to keep your assets separate while you are alive? Can he or she get any of the assets intended for my kids if I don’t have a will or trust? Yeah, you definitely want to make sure that you have the rules spelled out. Most of the time, non-married couples, non-married partners, I should say, usually don’t get, they’re usually left out in the cold, in the cold because California does not recognize common law marriage. But there is what’s called the Marvin Claim that they can try to make. So that is something that I could talk to you privately about and it’s actually when I do meet with folks that are, not legally married, I definitely go into a lot of detail on how to properly get things set up so there, there are no pitfalls.
Okay, so our lawyer who drafted our trust can’t be the lawyer my beneficiaries ask for help in executing the trust. How do we find some, find someone to help them when we pass? Yeah, you could just find a new attorney. I take over a lot of attorneys firms, that are retiring or passing away. A trust is basically a rule book. So basically, any attorney, any estate planning attorney is going to able to read that rule book and, and assist the beneficiaries. For myself personally, which I talk about on a later slide, but a little sneak peek here, I like to keep a lot of communication over the years with my clients. I, we offer for the kids to come in and meet, meet with me, talk about their role in the estate plan. So I do like to establish that relationship. So they know that there’s someone that they can call, if the parents die or become mentally incapacitated. But let’s say you never did that, your beneficiaries would be able to take that trust that was drafted by a different attorney and, the estate planning attorney would be able to administer it for them, or help them administer, I should say.
Does everything you are talking about regarding married couples apply to registered domestic partners? In some ways, yes. In some ways, no. So that’s something that, like I, I mentioned earlier, when I’m meeting with people privately, depending on their status, their marital status, I definitely cover all the bases and details for how things differ and, kind of some, traps that we need to watch out for.
If a trust was prepared in a state outside of California, but now trustee resides in California, will the trust need to be completely redone from ground zero or just modified to conform with California state laws? Yeah. So, yeah, the trust would just need to be amended. So you, the trust would just be amended, to update it.
Mistake #4: Giving Property Outright to Heirs
Okie doke. So great. Those were great questions. I’m going to go ahead and go on to mistake number 5. So mistake number 5, is giving your property outright to your heirs. So this is when you pass away and your assets are just going to transfer to the beneficiary in their own name. They can go do whatever they want with them. You’re dead, you’re gone. There’s 3 ways where we’re going to see outright distributions pop up. One, when someone has died intestate. So that’s when you didn’t make a plan. The default is always an outright distribution to beneficiaries or in wills. Wills typically give outright to, beneficiaries. And then of course with trust that have outright distribution clauses. So this is where your trust will say, okay, when I die, or when we both die, everything goes into the kids, equal shares, outright and free of trust. Or if you did the trust back when the kids were younger, you may have done the old stages where you said, okay, the assets are held in trust. When the beneficiary is 25, they’ll get a third. When they’re 30, they get another third and 35, they get it all. That’s essentially an outright distribution eventually. Well, the problem with outright distributions are certain types of beneficiaries. And our first problematic beneficiary is one that I’ve had to deal with far too often in my career. And these are our Frankies. So, our Frankies are our children, that just have not been motivated by life yet. And it’s looking like at Frankie’s age, it’s never going to happen. If you die and you have a Frankie and you leave him his share outright, I’m telling you it’s not going to go well. They say the average time that it takes for a beneficiary to blow through their inheritance, no matter how large or small, is 18 months. I’m here to tell you from a lot of personal experience and dealing with thousands of beneficiaries, it’s much quicker than that. 18 months would be forever in Frankie’s world. So if you have a Frankie and you love your Frankie and it pains you to think that he’s going to be broke within months after your death you would not want to leave him his share outright. Or maybe you have a Frankie and you’re fed up with Frankie and his deadbeat ways, but you don’t have the heart to disinherit him. But it pains you to think that he’s going to blow through your hard-earned assets within months after your death, you would not want to leave a Frankie his share outright. Our other type of problematic beneficiary are our Marvins. S o our Marvins are our children who are the polar opposite of Frankie. These are our children who have been too motivated by life. These are children who have gotten themselves in every bad business deal possible. They have creditors after them, they have the IRS after them. You’ve had to bail them out. If you die and you leave a Marvin his share outright, not only is he going to be able to continue to blow it on bad business deals, his creditors are just going to be able to levy his inheritance, oftentimes before he even sees it. So if you don’t want to have your hard earned assets just being used to pay back Marvin’s creditors, you would not want to leave him his share outright. Our other type of problematic beneficiaries are our son-in-laws. Now, our daughter in laws are problems too, but I’m just going to pick on the son-in-laws for today. And this is how people, when they come and meet with me, they can be honest with me about how they feel about who their child married. Some people will say, I love my son-in-law. My daughter couldn’t have done any better. Some people will let me know they can’t stand their son-in-law. But no matter which side of the fence they fall on, they almost all always agree that if they, if their daughter were to die, they would want that daughter’s inheritance to go down to their grandchildren, not to Fred here. Well, if you die and you leave your daughter her share outright, and then she dies, guess where the assets are going? They’re going over here to Fred. They’re not going down to your grandchildren. Now, Fred here could be the greatest guy on the planet, but if he decides to go get remarried, which they almost always do, and then he dies or divorces, the assets are going to end up with his new spouse, not down to your cute little grandchildren. So if we have grandchildren or predict that we’re going to have grandchildren in the future, we want to make sure that they in, inherit rather than, our child’s spouse, then you would not want to leave their share outright. Our other type of problematic beneficiaries are our children from a prior marriage. Now if we are in a blended family situation. You absolutely need to get a trust in place, you’ve got to get the rules laid out, because the law does not favor blended families, okay? So if we have, we could have a situation where you die and your new spouse gives your children a hard time, or your children give your new spouse a hard time, or even if we have a Brady Bunch situation where everybody loves each other, the law will cut out one half of the family. Okay. So we’ve got to be careful of that. So if you’re remarried and you die and everything goes to you and you fail to make any rules. So upon your death, everything goes to your new spouse. If you’re when your spouse dies and she failed to plan, everything is going to her children, not your children because your children are not her heirs. Okay, so we got to be very careful of this. You can go sit in probate court for one day and you’re going to see this same case come up over and over. And it’s very painful for the beneficiaries that get cut out. Because it’s always seems to be Murphy’s Law that the kids that get cut out are the children of the parent who brought all the assets to the marriage in the first place. So a lot of the times, the pain that is experienced has nothing to do with the actual money. It’s just the principle. It’s just, it’s the principle of it. If we are in a blended family situation, we want to make sure we get those rules laid out. Because the other type of really painful situation I’ve had to deal with far too often is when we have a very close stepchild stepparent relationship. And that stepparent does have a biological child or biological children, but they don’t have any contact with them. They haven’t talked to them in 20, 30 years, but they have a very close relationship with their stepchild. And that stepchild is the one taking care of them till the end. Well, if that stepparent dies and they didn’t have a plan in place, intestate succession is going to give it to their biological children, not the stepchild. And that is painful. We’ve had to hire private investigators just to have to go find those biological children. So if we are in a blended family situation, you absolutely need to get a trust in place. You’ve got to get the rules laid out so nobody is accidentally getting cut out. Our other type of problematic beneficiary is one that strikes fear in a lot of hearts. People will bring this one up to me. I don’t have to bring it up to them. And this is the worry of, hey, if I die first, is my spouse going to go get remarried and then leave all the assets to the new spouse rather than to your kids? Well, if you and your spouse do not put the rules in place before the first one of you dies, this absolutely could happen. It could happen if a slickster like Elaine here steps in and makes sure that it happens. Or it can happen because of intestate succession, almost very similar to the blended family situation. You die. You failed a plan, make a plan before you die. Your husband goes get remarried to Elaine here. They fail to make a plan. They just keep on living. And then, he dies. Everything ends up with Elaine. Well, even if Elaine was the sweetest lady ever and she loved your children. If she continues to live and not make a plan when she dies, it’s going to her heirs, not your children, because they’re not her heirs and related to her. So we definitely want to get that plan in place. And of course, our other problematic beneficiary is Congress, always changing the laws. So this is why we want to stay on top of it, or you have your estate planning attorney staying on top of it for you to make sure you’re not leaving more to the government that then needs to be left. Or you’re, the government’s not able to step in and make decisions for you. So people will say, okay, Nicole, if I’m not supposed to leave my assets outright to my beneficiaries, how should I leave it? Well, for spouses, if you’re the first spouse to die, how to protect it if your spouse got remarried is something that I will talk to you privately about, for time purposes today. But for our children, or for our ultimate beneficiary, beneficiaries, my advice to most of my clients is we do not want to use outright distributions, even if we have very responsible children. Instead, what we would want to do is leave it to them in what’s called a Lifetime Asset Protection Trust, or what I call it, LAPT Trust. So what this looks like is your trust is going to say, okay, when we both die, or when I die, everything goes equal between the kids. But at that point, a trust is automatically going to be formed for each one of the children. And these trusts that are created, are born out of your trust. A trust will be created for each beneficiary and the assets that they receive from you will be put inside of their respective trust rather than in their own name. These trusts that get created have the ability to last for the beneficiary’s lifetime. So just like your trust has the ability to last until you die. Their trust has the ability to last until they die. What that’s going to do is it’s going to create an asset protection trust for the beneficiary. So that means if your beneficiary got sued, their creditors would have a difficult, if not impossible, time accessing those assets. If they were to go through a divorce, their spouse would not be entitled to those assets. And since the trust is lasting for the lifetime of the beneficiary, you can decide, if you want to, what happens to those assets when the beneficiary dies. So for example, you could say, all right, when I die or when the child dies, I want whatever’s left in their trust to go to their children if they have any. And if they don’t have any children, it’s going to go over to the other siblings. So people will use this structure when they want to keep assets in the family line to the best of their ability. And, they want to provide their beneficiary, their children, with some asset protection. The type of asset protection that they would never be able to create on their own. Well, the big question becomes, is who should be trustee of that child’s trust. So every trustee has to have a trust, or every trust has to have a trustee, I should say. As a trustee, that is just the person who’s in control of the assets inside the trust. They’re not considered the owner, they’re just considered in control. They’re in control of the investment decisions, the distribution decisions. Well, if we have very responsible children, we just let them be their own trustee from day one so they can manage their own share. If we have a Frankie or a Marvin, we have a third party be their trustee. So we have a third party that is responsibly managing the assets inside the trust for them and giving them proper distribution so that way they don’t blow it. The reason why I will recommend for my clients to do it this way, to structure their trust this way, rather than an outright distribution, even when we have responsible beneficiaries, is you can never predict what the financial situation of your child is going to be when you die. Any one of us can find ourselves in a lawsuit, no matter how responsible we are, no matter how careful, frugal we are, it can be as easy as a car accident. So if I’m administering a trust and I have a beneficiary in some trouble, in some unforeseen trouble, so they’ve, they’ve been in a car accident, they’ve been sued, you know, have an, they have a creditor after them or they do have a judgment already. Well, if the trust tells me I have to leave them their, give them their assets outright, the creditor just gets to levy that inheritance even before the beneficiary sees it. Whereas if I have these asset protection features inside your trust, I can protect the assets for the beneficiary. Okay. So then the next one here, is the special needs trust. So a special needs trust, this is for our beneficiaries that are disabled and entitled to state benefits or will be entitled to state benefits. If you have this situation, you absolutely need to get a special needs trust structured for that beneficiary before you die. So basically what a special needs trust does is allows you to leave an inheritance to that beneficiary so they are able to inherit from you, but still maintain their benefits. If you do not do this, if you do not have the special needs trust in place, or the provisions for it in place inside your trust before you die and they inherit from you outright, they are going to get kicked off their benefits. Okay? For some of these beneficiaries, it’s very disruptive to get kicked off their benefits. They can’t get kicked off. So what they’re forced to do is they have to go to the court and ask the court to structure them a special needs trust. Well, if we leave it up to the court to structure the special needs trust, well then the state of California becomes the ultimate beneficiary of that trust. So we want to make sure that we form that ahead of time, so then that way you can determine who the ultimate beneficiary is going to be of that trust. And to date, I’ve never had anybody pick the state of California as the beneficiary. Now, in all of my trusts, I always put back up special needs provisions in all of my trusts. Just in case, because just like we can’t predict what the financial situation of your beneficiary is going to be when you die, you can’t predict what the physical condition is going to be. Any one of us could end up on disabled and potentially on state benefits. So if we have a surprise beneficiary that at the time of you creating the trust, was not disabled or was not using state benefits, but that is the case when you die, I want those backup special needs provisions in the trust to grab on. So then that way we can leave it to them at that protected manner.
Okay. So that is it for me on that mistake number 5, let me go ahead and take a look at the Q&A here. Let’s see here. Is a living trust need register or notarized from well title company or County recorder office? No, a trust does not get registered anywhere. That is the beauty of a trust. Is that it’s a private document, so, but you would have the trust notarized when you sign. I’m actually going to get into that in just a little bit. Yes, so the only thing that gets recorded is the deed to your house. If you’re moving your property into your trust, we do a trust transfer deed, transferring the property into your trust, and then that gets recorded with the county recorder’s office.
Questions
Okay. Next question here- at the rate questions are being asked and answered, this could call could last hours? Yes. Yes. We can go- Yeah. Well, I’m, I’m gonna try to shorten up my answers here.
Okay. What is the best way to choose an executor? That is, I have a whole separate seminar on that.
I’m an American living abroad with real estate and assets in the US and abroad. I have adult children. Yes. So then this is something that you would, definitely want to, work with an estate planning about, an estate planning, attorney in both countries.
Okay. I have a community trust with wife. How do I guarantee proceeds going on wife, go to children on her death? That is going to be determined by the provisions in your trust. So I’m going to, I’ll talk about trust reviews at the end here.
Will you provide your contact information? Yes.
Why not have the Trustee administer your trust? What part of the administration requires a lawyer? No, the trustee is technically George, is the one that administers the trust. Just most trustees don’t know how because they’ve never administered a trust. So they’ll usually go to a lawyer to tell them, okay, what am I supposed to be doing here? But do they need to have a lawyer? No.
Kathryn: Nicole?
Nicole: If you reside and own property in California, but own significant properties in other states, can- yes, you can choose the site, you can choose which state to have your trust in.
What is the alternative to leaving assets outright? That is what I just talked about in that asset protection trust.
And then what is the line drawn between your estate planning, client support and Pure’s financial planning? So, yeah, the line drawn is I’m an estate planning attorney only. I’m not a financial planner. Pure Financial, they are financial planners. They are not estate planning attorneys.
Can I leave my assets to my married son and give all the power of decision or will his spouse have any say what can happen to my- or with his spouse? That’s going to depend on the, the rules that you put inside your trust. So your estate planning attorney, if you express that as a concern, they’re going to make sure the rules are spelled out so that doesn’t happen.
Does the beneficiary noted on a 401(k) take precedence over a will? Yes. Great question. Everyone needs to hear that one. Beneficiary designations trump a trust and a will. Okay, so whatever beneficiary is named and if you have someone different in your trust or your will, the beneficiary designation controls.
Are there annual transfers allowed to trust such as one time per year, i.e. $10,000 or $20,000? So for a revocable trust, Shelley, you can transfer assets in and out of a revocable trust, no tax consequences.
How do I find a firm that does good estate planning in Chicago? That was, that’s one that you’ll have to, get a referral to. I don’t know right off the top of my head, but that is something that I could look in my Rolodex, so to speak, to see if I have any colleagues there in Chicago that I would recommend.
Mistake #5 Not Having the Right Trust
Okay, so let’s go ahead and jump on to mistake number 6. And some of these mistakes coming up, folks, are much shorter. So, we’re through kind of the thick of it here. Okay, so mistake number 6 is not having the right trust. So at this point, we all understand that we should be using a trust here in California rather than a will. The question becomes is, well, what type of trust should you have? And there’s two main types of trust. So, and the answer is, the quick answer is, it really depends on your personal situation. But there’s two main types. There’s revocable trust and there’s irrevocable trust. And to preempt the question, can you have more than one trust? The answer is yes. some people have 10 trusts, but for most of us, we’re only going to have one trust and that’s going to be a revocable trust. So a revocable trust is the easiest type of trust to have. It means you can get rid of it whenever you want. You can change it as much as you want to. You get to stay in full control of all your assets and you can move assets in and out of it without tax consequences. Now, the main reason, for people using a revocable trust is the biggest one is probate avoidance. So when you die and you have a properly drafted and a properly funded, meaning the assets are in the trust, probate will not happen. That long, expensive probate process is skipped and your assets get oppressed privately. We’re able to do tax planning. So the type of tax planning that we’re able to do inside the trust is for married folks, for spouses to share their estate tax exemptions. So I talked about the estate tax exemption on the first slide, where every year that the federal government sets that dollar amount that we can pass on tax-free, that estate tax exemption applies to each one of us. But when we’re married, the first spouse’s exemption is lost. Because everything goes tax-free to a surviving spouse. The problem, though, is now when the surviving spouse dies only their exemption applies to exempt the estate from estate taxes, unless we make it so that the deceased spouse can give his or her coupon to the surviving, or his or her estate tax exemption, sorry I call them coupons, estate tax exemption to the surviving spouse. When we do that, then the surviving spouse dies, there will be two exemptions available for the kids to cash in when the surviving spouse dies. The way that we were able to do that, so the way that spouses are able to double up their estate tax exemptions are inside your revocable trust. Now, we’ve had a big change in the law for how spouses can share their exemptions. So if you did your trust more than about 9 or 10 years ago, I would say it’s time to get it out, dust it off, and time for a review. It doesn’t mean that it’s wrong. It just means it might be more complicated based, more complicated than it needs to be based on this new law. In revocable trust, we’re able to do disability protection planning. So with a lot of trusts I review, I will find people spend a lot of time focused on what should happen when they die and they don’t focus enough on what should happen if they were ever declared mentally incapacitated. If you are ever declared mentally incapacitated and incapable of managing your finances, if you do not have the proper documents in place, a conservatorship will be opened over you. So we want to make sure that your trust and the supporting documents to your trust cover incapacitation. And then we’re able to do remarriage and distribution protection. So this is how we are able to protect the assets if you die first and your spouse gets remarried or give that asset protection to the children like I mentioned earlier. Now, irrevocable trusts, irrevocable trusts, generally speaking, cannot be changed. They tend to be more complicated, more expensive, and just require a lot more maintenance than a revocable trust. So, the, the main type of reasons why I, where I will see folks using irrevocable trusts is when they want asset protection for themselves. So these are folks that come in and say, Hey, Nicole, I loved all that talk about asset protection for my children, but what about me? What if I get sued? Are my assets protected? And the answer is, if you have a revocable trust, then no, if you have a revocable trust, your assets aren’t protected in a lawsuit. We’re also able to do protection from estate taxes. So if we total up your estate and we find out it exceeds the estate tax exemption, we’re able to reduce or eliminate that liability through the use of irrevocable trust. And then we’re able to use it for protection against Medi Cal. So if you use Medi Cal to pay for nursing home costs towards the end of your life, we can use irrevocable trust to help qualify you for Medi Cal and then also to help prevent recovery upon your death.
Okay, so that is what I have there for, that slide I have both a California will and revocable trust. Should I get rid of the will? No, you will not get rid of a will. I’m going to talk about, the type of will that you most likely have. I have it in a later slide about you’ll never do a trust just by itself. I’m going to talk about at a later slide, all the documents that you need.
Kathryn: Nicole, can you hear me?
Nicole: Yes? Yeah.
Kathryn: Nicole, I’m sorry. I just want to let you know it is 1:07. So we really need to just for time’s sake, most people thought this was about an hour. So if you just don’t worry about the questions anymore, go ahead and just finish your presentation because I’ve got your information up there and our information for anyone who’s not already a client. But don’t worry about the questions and then people can reach, reach out to, either of us, to get their personal-
Nicole: Perfect. Okay. So, okay, folks. So no more questions and we’ll, we’ll find a way to get those answered for you.
Kathryn: Thank you.
Mistake #6 Not Funding the Trust Properly
Nicole: Yes. So mistake number 6 we only got, I can get through these next ones in a few minutes guys. Okay. So mistake number 6 is not funding the trust properly. So funding the trust just means transferring your assets into the trust. And this is where most folks go wrong. They’ll create their trust, but then they don’t actually transfer their assets into the trust. If you die and you have more than $185,000 worth of assets outside of the trust, those assets will end up in probate. It does not mean all of your assets will go into the trust. And what goes in your trust, what stays out of the trust is different for everybody. So this is something that I can talk to you privately about. The big one though that you will want to put in your trust is your real estate. And if you have real estate in other states, You will want to put those properties in your trust because real estate is dictated by the state that it is in. And so if you die with 4 properties in 4 different states and you don’t have it in a trust, there will be 3 separate probates opened. So you want to make sure that that happens. So, and then again for the rest of the assets, that is something that I will go over with you privately.
Mistake #7: Not Updating Your Estate Plan
Mistake number seven is not updating your estate plan. So we kind of already touched on this. You would not want to just do your trust and stick it on the shelf. My recommendation is to take a peek at the trust every 3 to 5 years. It doesn’t mean that you would have to make changes every 3 to 5 years, but let’s just take a look at it to make sure that things haven’t changed in your life, or laws haven’t changed, or assets haven’t changed. And then mistake number 8, is, and then you can just cut me off whenever, you can just tell me when you have a hard, when you need a hard stop.
Mistake #8 Doing It Yourself
So mistake number 8, is doing it yourself. So this is probably the biggest question that I will get asked. And that is when people will say, you know what, Nicole, I think you were really great. But I think those LegalZoom prices are even better. So why should I use you instead of LegalZoom? Well, there’s, there are certain things that I do like LegalZoom for. And I used to actually recommend LegalZoom for certain situations. I used to say if you have a very straightforward situation, meaning you’ve never been married, you’ve never had kids, and you just have a house and a car and a bank account, just go ahead and use LegalZoom. And I used to make that recommendation, until several years ago when Cindy walked into my office. And Cindy came into my office, because her partner of 30 years had just passed away. And I call him a partner because, like I said earlier, California does not recognize common law marriage. And she was taking care of him while he was dying of a terminal cancer. And when he was dying, the doctor told her, Hey, listen. Cindy, I need you to go get a healthcare directive because if he becomes unable to speak, I will no longer be able to communicate with you. And since this is terminal, you may as well wrap up his final affairs. So they went home, they went online, they did the healthcare directive, they did the power of attorney, they did a will, they went home, they printed it all up, they went to Mailboxes, Etc., and they got it all notarized. They took the healthcare directive to the doctor and it worked beautifully. When he became unable to communicate, she was able to make all his decisions. Everything was going great for Cindy until he died and it was time to transfer the assets. Well, she used a will, so she was headed to probate. Well, she was looking for an attorney to help her on the probate, and I was attorney number 10 that she went to go see. And I was attorney number 10 because the 9 prior attorneys did not want to take her case. And they did not want to take her case because the will was invalid. And I will usually always ask people, why do you think the will was invalid? Well, I’ll tell you, the will was invalid because they notarized it. Here in California, if you notarize a will, it’s automatically invalid. All the other documents get notarized, a will requires two separate witnesses. So I tell you about Cindy not to teach you how to execute a will because I hope you realize at this point you want to trust instead of a will, but to show you that when it comes to estate planning, you don’t know what you don’t know. And your work, when you do it yourself, is not corrected until you die. So ever since Cindy’s case, I no longer recommend doing it yourself. I do recommend using a qualified estate planning attorney.
Kathryn: Nicole. Oh, I’m sorry. I we do probably need to get have a quick stop. So for anybody that’s already still on the call, we really appreciate you. I’m going to have you, if you wouldn’t mind, just kind of quickly show the slides. There you go. I’ve added all of your information, Nicole, so that everybody has how to contact you. They can call our office also. I know we could talk for hours and there’s so much great information and this is actually why we offer these free consultations where you can go speak to Nicole or come into our office and because there’s so much to say and everybody’s got personal situations. So thank you so much for your time. Thank you to everyone who’s joining us for your time and we look forward to seeing you again soon.
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