Estate Planning Practice Blog

Ever Wonder How Thick Are the Documents?

For those of you who do not have estate planning documents in place -- I want to describe to you how thick the documents are. This way you can get a sense of how important and complex it is to draft them in accordance to California law.

A Will is around 9 to 15 pages.

A Living Trust is 28 to 34 pages with disclaimer provisions only and 40 to 50 pages with additional A-B provisions.

A Durable Power of Attorney authorizing broad powers is about 15 pages.

An Advance Health Care Directive is about 10 pages.

Certainly the page limit is really arbitrary in the whole scheme of things and vary from client to client.

I mention it only because clients are surprised at the review and execution meeting how many pages there are to review and explain with respect to their estate plan.

Do not, however, get alarmed!

If you work with an estate planning attorney in preparing your estate plan -- your attorney can make the entire process easy and pain free. Heck, I do not think it is as bad as going to the dentist. Read this post on the process and this post on the happy times.

Holographic Wills -- a Quickie Alternative.

Sometimes I hear from a frantic friend: I am leaving tomorrow to go on a trip. What happens if I die?

Kind of leaves no time for estate planning, eh?

Well, there is an option recognized in California and about 25 other states. It is called a Holographic Will.

The requirements for a valid Will in California is rather straightforward, but can be mind-numbing to a non-attorney.

There are two different types of Wills:
1.  A Witnessed Will
2. Holographic Will

A Witnessed Will is typed up, signed by the testator and also signed by two witnesses.

A Holographic Will is a Will that is either prepared entirely in your handwriting or with material portions in your handwriting, signed and dated by the testator.

(The testator would be you -- the person creating the Will.)

So, it is the night before Christmas. Wait, I'm off by exactly 300 days.  But it is the night before your trip and you worry about life and death matters literally.

Please whip out a pen and a piece of paper. Lined paper would be nice so we can read your handwriting horizontally.

Write out in long hand who is getting your possessions, name who should serve as guardian for your children and who should manage your children's money until they turn of age.

For example, write the words: this is my last Will... I hereby revoke any and all Wills made by me... I am not married... I have two children... I give my entire estate to be divided equally to my daughter Missy and my son Biffy... I name my close friend Barbara to be  guardian of my children to include their person and estate... I want Barbara to be the guardian of their estate until they reach the age of 21... oh, and I also give my father's watch to my co-worker Evan because I think he is cute.

Sound silly? No, not really. If this Will were done in your penmanship, signed and dated by you -- the Courts would likely consider it a valid Holographic Will. And, Evan would likely get that watch if it were easily identifiable. You might want to be more specific about that watch -- it is a Timex or a Patek Philippe -- so that there's no question about which watch you are referring to.

Then when you get back from your trip rested, tanned and wealthy from winning the jackpot, call your attorney for proper estate planning. Of course, your attorney will revoke your Holographic Will after you execute a new Witnessed Will and corresponding Trusts (remember, you won the jackpot and are thus newly wealthy).

If you are serious about creating a Holographic Will, please google the requirements for your state or check the nolo.com website on Wills & Estate Planning for more information.

Term Insurance Is Your Best Bet.

If you have a child, you need term life insurance. You also probably need an outside term life insurance policy separate from any life insurance provided through your employer.

You want to have a basic 20 year term life insurance policy with a guaranteed death benefit. If you pass away before your child turns of age -- your life insurance policy will give your child a head start in life. (Think funding for college at the minimum...)

Term insurance is cheap. A policy that provides for a guaranteed death benefit of $300,000 costs around $20 to $40 a month depending on your health. This is a very small price to pay for a peace of mind.

I am not comfortable recommending life insurance agents in my practice. I find that most insurance agents are pushy and want to upsell to a different policy other than term. Stick with term. Buy your life insurance through a reputable company. Do your homework before selecting an agent and a company.

If you have a life insurance policy, be sure to set up a Living Trust as well. You will want to name the Living Trust as the beneficiary for your life insurance policy. This way if your child is not yet 18 when you pass away, a trusted person will manage the proceeds from the life insurance policy for your child until they turn of age. You can select the age -- whether it be 18, 21, or 25 for instance.

Analysis on Mother Re-Writing Daughter's Will & Omitting Her Son-in-Law

A very interesting post from Stan Rule who practices law in British Columbia, Canada...

Last month, he blogged about a recent case in the Great State of Texas where a lawyer drafted a new Will for a daughter who already had a Will. The catch was the new Will was drafted on behest of the mother and gave her daughter's assets to herself (the mother) and not her husband as was in the daughter's original Will.

Estate Planning Appointments with Your Attorney.

You always hear about why estate planning is so important and other aspects relating to it. But do you ever hear how exactly estate planning is accomplished? What does an attorney do? What do you do as a client?

In my practice, this is how I handle it...

First, remember that estate planning is a happy time as explained in my post here.

I start the process when I am contacted by a potential client who either calls my office or sends me an email or internet inquiry. If the potential client indicates that they would like to set up an appointment to meet with me regarding estate planning, I will send them my confidential estate planning questionnaire. (I typically do not charge for the first appointment.)

This confidential estate planning questionnaire asks questions about you, your spouse/partner, children, your wishes as you know them and lots of information about your assets.

By assets, I mean describe your real estate ownerships, your bank accounts, your retirement accounts, life insurance policies and so on.

I ask potential clients to bring their completed questionnaire to our first meeting.

The first meeting is in my office and typically lasts an hour. After initial introductions, I will tell you that I am going to spend some time reviewing your questionnaire answers before we get started. I want to get a feel for your family, your wishes and start spotting issues that may affect your estate planning.

Then I either address your questions right away or segue into my estate planning monologue with the help of my trusty four "talking points" charts.

After I explain what estate planning is and how it can help you -- I ask you if you would like to proceed. At this time I also give you my quote for fees. If you agree to my fee and feel comfortable with me, I will transition into asking you very detailed questions about how I should prepare your documents and determine your wishes while delving into many aspects of your life.

And so the dialogue begins...

After we both feel comfortable ... you with the process and me knowing as much as I can about you as relevant to estate planning, we end the meeting by scheduling another meeting within one or two weeks depending on the complexity of your estate plan.

This second meeting is a combination of reviewing the documents I have prepared, explaining the documents to you and executing the documents if you are comfortable.

If you are not comfortable executing the documents during the second meeting then we schedule a third meeting.

Executing the documents means signing them in the presence of a notary public, having me make copies for my files and presenting you with your original documents in a binder for you to take home.

There is much more to it then what I just described, but this gives you an idea of how it works logistically.

Funny Item About President Clinton's Wife...

It's been a long week for me. How about something funny for today instead?  May be old news, but it made me chuckle.

A 100% bipartisan political bumper sticker from New York:

Run  Hillary, Run or printed backwards here.

Democrats put it on the rear bumper.

Republicans put it on the front bumper.

Deed Transfers in California.

More on transferring your home or other real property into your Living Trust.  Goody.

It is rather easy once you have the procedure in place.

First, you will need to draft a grant deed changing the vesting of the real estate from the current vesting to the name of your trust. It will go like this:

John and Jane Smith, husband and wife as community property hereby grant to John and Jane Smith, trustees of the Smith Family Revocable Trust dated January 1, 2006.

On your grant deed, you will want to include the statement that there is no documentary transfer tax due with this sentence: This conveyance transfers an interest into a Living Trust, R & T. Then you will want to sign your name next to this as a declarant of the tax transfer agent stating that there is no documentary transfer tax owed. Sounds confusing, I know.

Next you will include a legal description of your property.

The easiest way to accomplish all of this is to find the grant deed from when you purchased the property in the first place. It will have all of the pertinent information.

After your grant deed is properly prepared, signed and notarized.... you will want to mail it to the county in which the property is located for recording.

You will need to complete a Preliminary Change of Ownership Form (PCOR) along with your grant deed.

Mail the deed, the PCOR, a letter requesting recording, and a blank check with the words not to exceed $50.00 above the signature line -- and send it off.  Recording fees actually do vary depending on which clerk that opens your envelope. That's the best explanation I can come up with.

Los Angeles County takes about 8 to 10 weeks to complete recording. Orange County is about 2 weeks, but often quicker. Riverside County is about 3 to 4 weeks. Smaller counties like Shasta County is about 2 weeks.

For more information about where to mail it -- check with the county clerk-recorder's website.  Here's a list of clerk-recorder offices in all counties in California and their websites: BINGO.

Of course, seek the advice of an estate planning attorney on preparing deeds for your Living Trust if you are unsure of the procedure.

Here's a caveat -- a good estate planning attorney will take care of these deed transfers for you! I do all deed recordings for my clients -- for every property in California. And I do them for my clients if they refinance their homes or purchase additional property.

Significant Others: Joint Tenants or Tenants in Common and Living Trusts...

Hey, like my title? It's another one of my mouthfuls.

The issue is you are not married, but you own property with someone else. That someone else is your significant other.

If you and your significant other own property as joint tenants then if either one of you dies the entire property automatically goes to the survivor of the two. Pretty simple.

If you and your significant other own property as tenants in common then if either one of you dies your significant other's portion of the property will pass directly to his or her heirs. Heirs are determined at the time of death. So, say in California as an example, if your significant other has a parent living at the time of his or her death -- the parent or parents would inherit the portion of the property owned by their child (your significant other).

You ask: Ok, wait, I am understanding this.... by why are you saying portion?

The segue: Well, sometimes when you hold title to property as tenants in common, you may not own a one half interest. The ownership interest can be any sort of portion -- one half, one third, one quarter, 1/312th interest and so on. Well, 1/312th is pushing it, but is rather common to have a very small fractional share in a property if it were a timeshare for instance.

Back to what I was talking about.

If your significant other owns property with you as tenants in common and does not have estate planning in place... you ... will ... find ... yourself ... in ... hell. That portion will have to pass through probate to determine who your significant other's heirs were at the time of his or her death. Once probate closes, you may find yourself owning your property with a heir (a quasi-mother-in-law?) of your significant other. Another scenario is that your significant other dies with debt and the significant other's portion of the property needs to be sold to cover the debts. Yikes. This means that you could be forced to sell your property or buy out your significant other's portion of the property to avoid the sale.

Lots of ramifications here.

Why am I talking about this? Well, a client came in yesterday thinking she owned property with her significant other as tenants in common. The client and the significant other were willing to draft Living Trusts for each of them stating the distribution of their respective portions of the property if either of them died. Before we could even go there, I reviewed the deed and discovered that they owned the property as joint tenants.

First, be sure you understand the vesting of your property before you close escrow or sign the final purchase paperwork to understand all the legal issues.

Second, be sure you and your significant other have estate planning documents in place to avoid probate nightmares if you own property as tenants in common.

Third, if you own property as joint tenants -- know that you cannot create separate Living Trusts to deed this interest in your own Living Trust. At a minimum, doing a transfer like this to respective Living Trusts would sever the joint tenancy.

Fourth, just realize that there are many many issues here that need to be addressed. Talk to an attorney to make sure you understand the issues and make sure you are covered with estate planning if worse comes to worse.

Deed Transfers to Your Living Trust.

If you have a Living Trust and own real estate outside of California, you will want to have that out of state property transferred into your Living Trust. Your attorney can work with attorneys in other states to assist with the deed transfers.

If you decide to take care of these kinds of transfers on your own, The Law Offices of Long H. Duong has prepared a small compliation of out of state attorneys that can assist you. Check it out here.

Cheryl Stephens -- Mentor, Muse and Blogger.

Cheryl Stephens is a mentor and muse to attorneys across the country. She has many interesting blogs set up. I especially like her plain language blog. See her lists of blogs here.