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The KRASA LAW, Inc. Estate Planning Blog

Friday, March 20, 2015

Liz Taylor’s Diamond is No Best Friend

Marilyn Monroe famously informed the world that “diamonds are a girl’s best friend” in the 1953 movie, Gentlemen Prefer Blondes.  Apparently fellow Hollywood legend, Richard Burton, heeded that advice: he gave his then wife, Liz Taylor, a heart-shaped diamond known as the “Taj Mahal” for her 40th birthday.  In the aftermath of Liz Taylor’s death, the diamond is proving to be no “best friend” at all and is the center of a legal dispute involving her estate.

According to the LA Times, Taylor’s successor trustees hired Christie’s auction house to sell her personal property at auction.  The diamond was sold for more than $8 million to an anonymous buyer.  However, months later the buyer returned the diamond to Christie’s claiming that it was not from the Mughal Empire as he/she had thought.  Christie’s agreed to cancel the sale despite the fact that Christie’s made no guarantee as to the diamond’s history other than the fact that it was of “Indian origin.”  

After agreeing to cancel the sale in order to appease the buyer, Christie’s then insisted that the trustees return the proceeds from the sale of the diamond.  The trustees countered that the auction house violated its agreement with the trust by canceling the sale and is opposed to returning the proceeds.  Christie’s argues that it upheld its contract by successfully selling over $183.5 million worth of Taylor’s personal property and that the diamond represents a small portion of the overall sale, implying that the trustees shouldn’t have a problem returning the proceeds since the sale of the other personal property was so successful.  

It is up to the courts to determine who will prevail in this dispute.  However, an interesting question arises: did the law require the trustees to file a suit in this case?

The California Probate Code details several duties of trustees that are relevant in this example:   

Duty of Loyalty: a trustee must administer the trust solely in the interest of the beneficiaries.  Regardless of whether the trustees personally feel Christie’s is at fault, the trustees must consider the interests of the beneficiaries in every decision they make.   

Duty of Impartiality: a trustee must deal impartially with all beneficiaries.  If some beneficiaries feel that they should be happy with the proceeds from the sale of the other assets and should return the proceeds from the sale of the diamond but other beneficiaries feel differently, the trustee must take into account the differing interests of the beneficiaries.   

Duty to Control and Preserve Trust Property: a trustee must “take reasonable steps” to keep control and preserve trust property.  “Trust property” would include the proceeds from the sale of the diamond.  The trustee must proceed with caution before simply handing over almost $8 million in proceeds from the sale of the diamond just because Christie’s makes such a demand.   

Duty to Make Trust Property Productive: a trustee must make property productive.  Would returning the proceeds from the sale of the diamond be counterproductive?     

Duty to Enforce Claims: a trustee must “take reasonable steps to enforce claims that are part of the trust property.”  Fighting the insistence from Christie’s to return the proceeds from the sale of the diamond and pursuing a breach of contract suit against the auction house are certainly “claims that are part of the trust property.”  However, what are “reasonable steps” in this scenario?  Do the trustees need to factor in the expense of litigation, the delay of court proceedings, and the possible bad press as a result of a potential court battle?    

Duty to Defend Action: a trustee must “take reasonable steps to defend actions that may result in a loss to the trust.”  Trying to stop Christie’s from taking the proceeds back is certainly defending an action that might result in a loss to the trust.  Is participating in a court battle in this situation “reasonable”?   

This dispute concerning Liz Taylor’s diamond illustrates all the factors that prudent trustees must weigh when determining what action to take with respect to the administration of a trust.  Trustees cannot simply be driven by how they personally feel about the situation.  Instead, trustees have legal obligations to the beneficiaries of the trust and the intent of the decedent’s estate plan as a whole that often limits their options and dictates how they proceed.  

KRASA LAW is located at 704-D Forest Avenue, Pacific Grove, California, and Kyle may be reached at 831-920-0205831-920-0205.

Disclaimer: This article is for general information only.  Reading this article does not create an attorney/client relationship.  Before acting on any of the information presented in this article, you should consult a competent attorney who is licensed to practice law in your community.        


Wednesday, March 4, 2015

A Vocabulary Lesson Reveals an Estate Planning Truth

My four-year-old son, Jonah, inherited my love for ice hockey.  While we patiently wait for a hero or heroine to build an ice rink on the Monterey Peninsula, we must travel weekly to Sharks Ice in San Jose (our closest ice rink) for my son’s skating lessons.  While my wife sometimes joins us, it’s often a father/son outing.  I listen to Gwen Stefani while I drive and Jonah plays his iPad while riding in the backseat.  We have been doing this for over two years now and Jonah is so addicted to the sport that I realized I signed myself up to at least 14 more years of these weekly excursions.

Last year, when Jonah was three-years-old, we were making our weekly drive up to San Jose.  I noticed a beautiful rainbow.  I told Jonah to take a break from his iPad and admire the incredible sight.  He was focused on the screen.  He replied: “No thanks.  I’ll look at it on the way back home.”  As an English major, I always seek opportunities to give Jonah vocabulary lessons.  Here was a golden opportunity.  

I said to him: “Jonah, I’m going to teach you a new word – a very important word I learned from my favorite teacher, Professor Christina Root: ephemeral.  Say it: ephemeral.”  He repeated it in a mumbled way.  I told him: “Ephemeral means something that comes and goes.  A rainbow is ephemeral.  It’s here now but it will only be here for a short time.  It will not be here when we drive back from the rink later this afternoon.  You should therefore look at and admire the rainbow now.”  He relented, pulled himself away from his iPad, admired the rainbow, and returned to the screen.  I wondered whether he fully understood the new vocabulary word and whether he would remember.  I found my answer the next day.

Jonah used to receive a hand-stamp for a job well-done after his ice skating lessons.  The day after the rainbow episode I asked to see his stamp.  He looked at his hand and discovered that the stamp had washed away.  He said: “It’s not here anymore, Dada.  It’s ephemeral!”  Of course I was incredibly proud of my brilliant son.  Not only did he learn a new vocabulary word with superb comprehension, but he also internalized a very important concept: the fact that nothing lasts forever.

We often take for granted the fact that we have the basic civil right to make personal decisions for ourselves such as where we will live, with whom we will associate, what kind of health care we will receive, what kind of environment in which we will surround ourselves, and how we will occupy our time.  We often take for granted the fact that we have the basic civil right to make financial decisions for ourselves such as how we’re going to make our money, how we’re going to invest our money, how we’re going to spend our money, whether and to what extent we will make gifts, and whether and to what extent we will express our values or political beliefs through donations or contributions.  As long as we are living and have mental capacity, we are able to make these decisions for ourselves.  But what happens when we no longer have mental capacity or when we pass away?  How do we maintain control in an ephemeral world?

Estate planning is an acknowledgement of the ephemeral nature of the universe.  It’s a realization that our lives – and in fact the whole world – are like that rainbow.  It’s an effort to maintain a degree of control over these important decisions when we are no longer able to be directly in charge ourselves.  Estate planning allows us to create a legally recognizable and enforceable plan that states how these decisions should be made and designates individuals of our choice with the authority and duty to carry out these decisions on our behalves.  

Estate Planning also allows us to extend the life of our rainbow a little bit longer by creating a mechanism to pass financial security, values, traditions, passions, and nostalgia to the next generation.  

While I hope my formal estate planning doesn’t have to go into effect for a long time, I’ll continue my “informal estate planning” with more vocabulary lessons, more trips to the rink, and more shared experiences – all the while passing part of me to the next generation and stretching the ephemeral nature of my existence a little further.  

“My heart leaps up when I behold
A rainbow in the sky:
So was it when my life began;
So is it now I am a man;
So be it when I shall grow old,
Or let me die!
The Child is father of the Man;
And I could wish my days to be
Bound each to each by natural piety.”  - William Wordsworth (1802)

KRASA LAW is located at 704-D Forest Avenue, Pacific Grove, California and Kyle may be reached at 831-920-0205831-920-0205.

Disclaimer: This article is for general information only.  Reading this article does not establish an attorney / client relationship.  Before acting on any of the information provided in this article, you should consult with a competent attorney who is licensed to practice law in your community.   


Wednesday, February 18, 2015

Treasure in Laundry

Jerry Seinfeld has a very famous routine about the irrational nature of team loyalty in sports.  I love the Green Bay Packers, but what am I really rooting for?  Seinfeld points out that I’m not really rooting for any of the players because they change teams with frequency.  What I’m really rooting for, Seinfeld contends, is laundry.  “I want my team’s clothes to beat the clothes from another city.”  If a player wears a Packers uniform, I love him.  If he signs with another team and comes back to Green Bay, I boo him because he’s now wearing a different shirt!  As Seinfeld says: “Laundry.  We’re rooting, screaming about laundry!”

Despite Seinfeld’s mockery, sports laundry is very important to me.  I love the green and gold uniforms of the Green Bay Packers but my greatest sports laundry weakness is hockey sweaters (true hockey fans refer to hockey jerseys as “sweaters” since the original uniforms were essentially sweaters).   My mother purchased my first hockey sweater for me when I was in Sixth Grade at Pacific Grove Middle School.  This was one year prior to the formation of the San Jose Sharks and I picked the New York Rangers as my favorite hockey team (I still like the Rangers, but the Sharks have emerged as my number one hockey team now).  I wore my Rangers sweater almost every day.  I had visions of collecting a hockey sweater from every team in the NHL.

While I do not have a hockey sweater for every team in the NHL, I do have enough hockey sweaters to wear a different one every day of the month.  I have sweaters from current teams such as the Sharks, Rangers, and Red Wings but my true passion is collecting sweaters of defunct hockey teams such as the Quebec Nordiques, the Hartford Whalers, and the Oakland Seals.  My favorite hockey sweaters include a replica gold University of Minnesota Women’s Golden Gophers alternate sweater (one I had to campaign the manufacturer and the school to reproduce) featuring the legendary Amanda Kessel’s number 8, and a replica U.S. Olympic hockey sweater signed by two-time U.S. Women’s Olympic Hockey Silver medalist Kelli Stack.

My wife tries to limit my hockey sweater purchases.  My defense is that at least I’m not buying game-worn sweaters which are three to four times as expensive or even more.  However, a few recent articles in the news make it seem that spending more for game-used items might make economic sense in the long run.  

Various media outlets, including SB Nation, reported that a couple purchased a vintage West Point sweater at a Goodwill store in the North Carolina mountains for 58 cents.  It turns out that the sweater belonged to legendary Green Bay Packers coach Vince Lombardi when he was an assistant coach at West Point.  The sweater recently sold at an auction house for over $43,000. 

In a similar story, a recent piece from Antiques Roadshow  featured a Chicago Blackhawks sweater from the 1938 season that was worn by Virgil Johnson and is currently owned by his grandson.  The sweater is estimated to be worth as much as $10,000.  

Unlike the many people who likely discarded the Lombardi West Point sweater over the years, at least Virgil Johnson’s family realized that the Blackhawks sweater might have some value and chose to keep it.  How many family members have unwittingly discarded West Point sweaters, Blackhawks sweaters, and other items of tangible personal property from a decedent’s estate?  

These stories serve to demonstrate the importance of detailing any item of tangible personal property you think might have unique value that is not obvious on the surface.  Furthermore, in the administration and settlement of an estate, it is important to verify the value of items that might appear to be junk – there could be a hidden treasure!

Although none of my hockey sweaters are worth anything monetarily, I know that they would be equally valuable to my son as they are to me.  At four-years-old, he wonders why he doesn’t have 30-something hockey sweaters in his collection.  I told him that he needs to stop growing before he amasses his own hockey wardrobe, though he’s already up to six hockey sweaters by my last count!

(Recommended reading: The Hockey Sweater by Roch Carrier, a legendary Canadian children’s story.)    

KRASA LAW is located at 704-D Forest Avenue, Pacific Grove, California and Kyle may be reached at 831-920-0205831-920-0205.

Disclaimer: This article is for general information only.  Reading this article does not establish an attorney-client relationship.  Before acting on any of the information presented in this article, you should consult with a competent attorney who is licensed to practice law in your community.  


Monday, February 9, 2015

More Estate Planning Failures of the Rich and Famous

The best way to illustrate the importance of good estate planning is to share stories of what goes wrong when people fail to address this important topic.  Celebrities give us no shortage of estate planning “counter examples.”  I have several posters in my office entitled, “Estate Planning Mistakes of the Rich and Famous,” published by Insurance News Net Magazine.

There are so many examples that there are now five such posters with different examples of poor celebrity estate planning.  In a previous column, I shared some of the stories from the original poster.  Below are a few more in this never-ending supply of cautionary celebrity estate planning stories as provided by Insurance News Net Magazine.  

Elizabeth Edwards:

Elizabeth Edwards attempted to disinherit her husband, former Presidential candidate John Edwards.  However, North Carolina law does not allow the disinheritance of a spouse.  It became a question of whether or not he could contest the estate plan and if so, whether or not the attorneys who drafted the estate plan would be liable to her intended beneficiaries for malpractice.

Dennis Hopper:
At the end of the famous Hollywood actor’s life, he was battling both cancer and his fifth wife.  In the midst of his divorce proceeding, he attempted to change the beneficiary to his $1 million life insurance policy but was denied due to technical glitches.  He died before he could address the issues with his beneficiary form.  A court battled ensued.  This illustrates the need to update estate planning and beneficiary designations as soon as life changes occur.

Gary Coleman:

The former child actor divorced his wife two years before his death.  After he unexpectedly died, his ex-wife claimed that she was entitled to his estate because of a handwritten will that was executed before his divorce.  Other wills surfaced and there was debate about which will controlled.  

Marlon Brando:

After Marlon Brando died, his housekeeper claimed that he had promised to give her a house that he bought in the San Fernando Valley.  However, it was an oral promise which is not sufficient estate planning.  If this were truly his intent, he should have made it legally effective by formally amending his written estate plan.

Redd Foxx:

Upon his death, Redd Foxx had virtually no assets yet owed the IRS $3.6 million in taxes.  Furthermore, his executor was not able to track his royalties and other income, further complicating the settlement of his estate.

KRASA LAW is located at 704-D Forest Avenue, Pacific Grove, California and Kyle may be reached at 831-920-0205831-920-0205.

Disclaimer: This article is for general information only.  Reading this article does not establish an attorney/client relationship.  Before acting on any of the information presented in this article, you should consult a competent attorney who is licensed to practice law in your community.     


Wednesday, February 4, 2015

The Business of a Legacy

A few weeks ago, Selma opened in theaters across the country.  The movie focuses upon the 1965 voting rights marches led by several civil rights leaders, including Dr. Martin Luther King.  As reported in an article by Gene Demby entitled, “King’s Family Builds Its Own Legacy of Legal Battles,” published on NPR''s website, the film brings to the forefront the business of a legacy.

Most Americans are familiar with Dr. Martin Luther King’s image, his powerful speeches, and the prominent role that he played in society.  However, the makers of Selma encountered many legal obstacles in their efforts to recreate history for purposes of the story.  For example, without being able to secure licensing to use famous King speeches, the film’s writers had to write new speeches from scratch that captured the same spirit but eschewed the exact language King had used.  

Selma is only one example of many.  In recent years, PBS and USA Today encountered legal problems with using King’s image and publishing his speeches respectively without the estate’s permission.  To complicate matters even further, King’s children – the co-owners of his image and intellectual property rights – are not always in agreement about when and for what purpose to authorize the use of their father’s legacy and how much to charge for it.  

There are many other examples of images and intellectual property that have value long after a prominent figure dies.  

Although Marilyn Monroe was only 36 years of age when she passed away, she had the foresight to create a will.  However, she did not put enough thought into her will and left the majority of her estate to her acting coach with the “hope” that he would donate it to charity.  The charitable intent was not legally enforceable due to the manner in which she wrote her will and her acting coach never carried that wish out.  When he died in the early 1980s and left everything to his wife – a woman Marilyn had never met – she claimed that she had the rights to Marilyn’s image.  A court upheld that claim and the person earning millions of dollars per year from Marilyn’s image turned out to be a woman she never even met.  

After Elvis Presley’s death in 1977, his estate encountered legal trouble due to the management of the estate and poor tax reporting.  Presley’s ex-wife and the mother of his only child, Priscilla Presley, was advised to sell Elvis’ famous home, Graceland, in order to avoid bankruptcy.  Instead, she converted it into a tourist attraction which generated a healthy and steady stream of income.  Later, the estate pursued legal battles over the right to control and profit from Presley’s image and pursued acquiring intellectual property rights which created major changes to copyright and trademark law.

Although the average person does not have an image or intellectual property that is as valuable as the examples above, these stories do illustrate some important points that everybody should keep in mind.  First, everybody has an interest in how they will be remembered.  For some like King, Monroe, and Presley, that memory is on a global scale.  For others, it is limited to family, friends, and the local community, but is no less significant.  Second, whatever value a person’s estate has – whether it’s millions of dollars or only hundreds of dollars – most people want to be able to transfer that value to the beneficiaries of their choice in a specific time and manner and want to be able to protect their beneficiaries from unscrupulous individuals.  Finally, most people agree that they do not want their loved ones fighting over their legacy or their assets upon death and want to think about creative solutions to prevent or resolve potential conflict.  A properly drafted estate plan can protect these wishes for everybody, regardless of fame or fortune.  

KRASA LAW is located at 704-D Forest Avenue, Pacific Grove, CA, and Kyle may be reached at 831-920-0205831-920-0205.

Disclaimer: This article is intended for general information only.  Reading this article does not establish an attorney/client relationship.  Before acting upon any of the information presented in this article, you should consult a competent attorney who is licensed to practice law in your community.    


Friday, January 9, 2015

Pour Over Will – Superfluous, Necessary, or Both?

An essential component of a trust-based estate plan is to ensure that all of your assets – with a few exceptions – are titled to your trust.  Picture your trust as an empty basket and all of your assets as eggs: you need to make sure your eggs are in the basket.  One of the many benefits of a trust-based estate plan is the avoidance of a conservatorship in the event of incapacity and the avoidance of probate upon death.  However, if you do not have the majority of your eggs in the basket, you might end up with the very same costly and time-consuming court procedure you were trying to avoid.

It is not possible to over-emphasize the importance of making sure your eggs are in the basket.  However, a thorough estate plan includes a “Plan B” in the event that some of your eggs never end up in the basket during your lifetime.

A “pour over will” is a will that simply names your trust as the beneficiary.  If all of your eggs were already in the basket at the time of your death, then the pour over will is superfluous.  However, if there were some assets that were not transferred to your trust during your lifetime, having a pour over will ensures that those forgotten eggs end up in the basket and your wishes about where your assets should go at death are carried out properly.

If a pour over will puts your eggs in the basket upon your death, why not simply rely on the pour over will to do your trust funding in the first place?  The answer is that there is a limit on how many eggs can be transferred to the basket through the pour over will without the necessity of a probate.  In California, that limit is $150,000 of personal property and $50,000 of real property.  If the total value of your assets that are outside of the trust exceeds those limits, then your estate will be subject to probate and one of the key purposes of establishing your trust – probate avoidance – will be frustrated.

If the total value of the non-trust assets does not exceed the limits described above, having the pour over will in place will allow your successor Trustee to to take control of those “loose eggs” by signing a “small estate affidavit” without the involvement of the courts.  

Retirement plans – such as 401(k) plans and IRA’s – cannot be titled to your trust during your lifetime.  However, if you have a properly designated beneficiary named on such accounts, those assets will be transferred to your beneficiary without the necessity of a probate.  Beware of failing to name a proper designated beneficiary however.  Naming a person who is deceased or simply naming your “estate” will cause that asset be subject to probate if it exceeds $150,000. Furthermore, failure to name a proper beneficiary on a retirement plan often unnecessarily accelerates income tax for your beneficiaries.  

Although your estate will be subject to probate if your “loose” eggs at death exceed the value limitations described, at least your pour over will nevertheless transfers those eggs to your trust upon death to ensure that your wishes are carried out.  This is why a pour over will is both superfluous and necessary: it is superfluous if you properly title all of your assets to your trust during your lifetime; it is necessary in the event that you accidentally leave some of your eggs outside of your basket at the time of your death.

KRASA LAW is located at 704-D Forest Avenue, Pacific Grove, California, and Kyle may be reached at 831-920-0205831-920-0205.
Disclaimer: This article is for general information only.  Reading this article does not establish an attorney / client relationship.  Before acting on any of the information presented in this article, it is essential that you consult a competent attorney licensed to practice law in your community.     



Friday, December 26, 2014

Putting your Virtual Eggs in your Basket

Most comprehensive estate plans center upon a revocable living trust.  However, drafting and executing a detailed and thoughtful revocable living trust is only part of the planning process.  Another key part is making sure that your assets are titled to your trust.  This process of re-titling your assets to your living trust is often referred to as “trust funding.”  You could have the most beautiful, precise, and detailed trust, but if it is not property funded, it will create the same unnecessary adverse consequences that you were trying to avoid by drafting your estate plan in the first place.

I often use the “eggs in the basket” analogy.  Picture your trust as an empty “basket” and all of your assets as “eggs.”  It is critical to put your “eggs” in your “basket” in order for your estate plan to function properly.  

As I wrote in my last column, some “eggs” are more obvious than others.  Most people can easily think about their checking and savings accounts, certificates of deposit accounts, brokerage accounts, stocks, business interests, and real property.  Other “eggs” might be more abstract such as equity in club memberships or even your spot on the incredibly long waiting list for Green Bay Packers season tickets.  

In the last decade, an entirely new category of “eggs” has emerged: digital assets.  Digital assets include sent and received emails, email accounts, digital music, digital photographs, digital videos, gaming accounts, software licenses, social-network accounts, file-sharing accounts, financial accounts, domain registrations, Domain Name System (DNS) service accounts, blogs, listservs, web-hosting accounts, tax-preparation service accounts, online stores, online auction sites, online accounts, Bitcoin accounts, and other digital assets that don’t even exist yet!  

Digital assets are sometimes referred to as the “new frontier” in estate planning.  In the last several years there have been court battles over parents’ access to their deceased son’s email accounts and the ability of family members of a decedent to shut-down certain social networking sites.  Although this is still a new area of the law, there are two key steps you can take to give your loved ones more control over your digital assets in the event of incapacity or upon death.  

First, you should sign a document that assigns all of your right, title, and interest in your digital assets to your revocable living trust.  The act of executing such an assignment should effectively transfer your digital assets to your trust, putting your virtual “eggs” in your “basket.”

Second, both your revocable living trust and your financial power of attorney document should include specific language that expressly gives your fiduciary the right to access, use, control, modify, archive, transfer, and delete your digital assets.  The language should also expressly give your fiduciary authority over your physical devices – such as desktop computers, laptop computers, tablets, storage devices, and mobile telephones – as well as access and control of digital assets stored on the cloud.    

Working with a qualified attorney to make sure that your estate plan addresses your digital assets can help to avoid unnecessary barriers and expense for your loved ones in the event of your incapacity and upon your death.      

KRASA LAW is located at 704-D Forest Avenue, Pacific Grove, and Kyle may be reached at 831-920-0205831-920-0205.

Disclaimer: This article is for general information only.  Reading this article does not establish an attorney/client relationship.  Before acting on any of the information presented in this article, it is essential that you consult a competent attorney who is licensed to practice law in your community.  


Friday, December 12, 2014

"Hidden Assets" - The Green Bay Packers Teach an Esate Planning Lesson

Even though I grew up on the Monterey Peninsula and have no family connection to the Midwest, I have been a genuine “Cheesehead” Packer Backer since I was in elementary school.  I always enjoyed watching football in the elements, I liked the idea of a major professional sports team in a small town, and I appreciated the history of Vince Lombardi and the “frozen tundra” of legendary Lambeau Field.  On the other hand, my wife is a big Patriots fan because she grew up in New England.  We both originally competed to influence our four-year-old son to root for our respective teams and I ended up being far more successful than my wife in “brainwashing” him (her term).

We recently took a trip to Lambeau Field to watch the Packers play the Patriots.  (The Packers were victorious!)  On the night before the game, we took a tour of the famous football stadium and our guide mentioned that if we were to put our son on a waiting list for season tickets, he would be eligible in approximately 1,200 to 1,500 years!  

Our guide explained that the reason for the unbelievably long wait is due to the fact that the Packers allow fans on the season ticket waiting list to transfer their spot in line through their estate plans.  As a result, the vast majority of spots on the season ticket waiting list never become available to the team to be given to the next person in line.  Our guide mentioned that the Packers have very specific rules about how fans on the season ticket waiting list can transfer their spots in line upon death and limitations on who may receive a spot in line through an estate plan: only certain members of the immediate family.    

While most people are aware of their “obvious” assets such as real property, bank accounts, stocks, and retirement plans, they might not think about “hidden” assets that can be transferred such as club memberships, intellectual property rights, and apparently even a spot in a long and coveted line!  

These “hidden” assets could be inadvertently neglected in even the most detailed and complete estate plans.  Furthermore, just as with the Packers season ticket waiting list example, often organizations in charge of such “hidden” assets have very specific rules about how such assets can be transferred at death and to whom.  Such rules cannot be found in the Probate Code or other public resources and are therefore often overlooked.  

In planning your estate or reviewing an existing estate plan, you should think about whether you have any “hidden” assets and double check with the organizations governing such assets to make sure your estate plan is in compliance with the organization’s rules about the transfer of such assets upon death.

KRASA LAW is located at 704-D Forest Avenue, Pacific Grove, and Kyle may be reached at 831-920-0205831-920-0205.

Disclaimer: This article is for general information only.  Reading this article does not establish an attorney / client relationship.  Before acting on any of the information presented in this article, it is imperative that you consult with a competent attorney who is licensed to practice law in your community.  


Monday, December 1, 2014

Sentimental Estate Planning

In Tim O’Brien’s famous novel about the Vietnam War, The Things They Carried, the soldiers all carry physical trinkets that have symbolic meaning, each revealing deeper truths about their personal stories.  The novel illustrates the fact that items of tangible personal property often have high sentimental value regardless of their actual fair market value.  As a result, items of tangible personal property can be an important component of an estate plan.  There are several methods for distributing items of tangible personal property through an estate plan.

1.  Part of the Residue
If you are not sure how to divide up items of tangible personal property, or if you do not feel that any item has a particular significance to a specific beneficiary, then you may want to consider allowing items of tangible personal property to be distributed as part of the “residue” of your estate.  For example, if you decide to leave your estate to your three children in equal shares, your Fiduciary will be instructed to distribute your items of tangible personal property as evenly as possible.  Rather than cutting into thirds your piano, your hockey sticks, and your Gwen Stefani poster, your Fiduciary and beneficiaries might agree that Ray gets the piano, Gordie gets the hockey sticks, and Pharrell gets the Gwen poster.   

2.  Specific Method
You might be concerned that your Fiduciary and beneficiaries will have trouble in determining how to evenly or fairly distribute items of tangible personal property.  In order to prevent arguments and ill will, another option is to set forth a specific method for allowing the beneficiaries to choose items of tangible personal property in a fair manner.  For example, your Fiduciary might ask each of your beneficiaries to draw straws or pull a name out of a hat to determine an order of selecting items of tangible personal property.  

3.  Specific Gifts
If you are pretty sure that a particular beneficiary should receive a specific item of tangible personal property, you may specify such a gift in your will or trust prior to your Fiduciary distributing the remainder of your estate.  For example, you could specify that Ray is to receive your piano, Gordie gets your hockey sticks, and Pharrell gets the Gwen Stefani poster regardless of their particular value and that the rest of your estate is to be evenly divided.  If you choose this method, you’ll want a specific instruction in the event that your named beneficiary pre-deceases you.  If you think any such item might have a high value (such as the Gwen poster), you’ll want to consider whether to include a provision that states whether the specific item of tangible personal property is subject to death taxes.

4.  Separate Writing
When drafting your estate plan, you might not be sure whether you want to direct specific items of tangible personal property to certain beneficiaries.  Instead, you might decide that you prefer to make a list in the future instructing your Fiduciary on how to distribute such items.  With this method, if you later change your mind, it would be rather simple to execute a new separate writing rather than going through the expense and effort of formally amending your estate plan.  

For years, the California Probate Code did not permit reference to a separate writing that was not in existence at the time the estate plan was executed.  The concern was that a devious person after the death of the testator might create a false writing naming a different beneficiary. However, utilizing a later-created separate writing proved to be a popular for its flexibility and simplicity.  Finally, the California legislature passed what is now Probate Code Section 6132 which allows for the disposition of tangible personal property by a later writing under certain conditions.  The conditions include limitations on what types of items and the value of such items that may be distributed in this manner.  

Some observers worry that these limitations could inadvertently invalidate a testator’s wishes.  As a fail-safe, for trust-based estate plans, you might want to consider specifically allowing for the disposition of tangible personal property by a separate signed writing and instructing that such a signed writing shall be considered a valid trust amendment.  

KRASA LAW is located at 704-D Forest Avenue, Pacific Grove, California, and Kyle may be reached at 831-920-0205831-920-0205.
Disclaimer: This article is for general information only.  Reading this article does not establish an attorney / client relationship.  Before relying upon any of the information included in this article, you should consult a competent attorney who is licensed to practice law in your community.  


Friday, November 14, 2014

Is it Really Possible to "Cruise Off into the Sunset"?

Seniors and their families often worry about affording the high costs of long-term care.  By many estimates, the average cost of a nursing home is now more than $80,000 per year.  Naturally, many people hope for better alternatives.

An idea that has been floated in chain emails, blogs, and chat rooms for years has been the concept of “cruising off into the sunset.”  The premise is that the average annual nursing home is more expensive than the average annual cost of booking back-to-back luxury cruises.  When faced with a choice between being “stuck” in a dreary nursing home or traveling the world in style on a fabulous ship, the latter certainly seems more appealing and empowering.  

A popular anonymously-written argument in support of this idea sounds convincing on the surface:

“Gratuities will only be $10 per day.

You will have as many as 10 meals a day if you can waddle to the restaurant, or you can have room service (which means you can have breakfast in bed every day of the week).

Cruise ships have as many as three swimming pools, a workout room, free washers and dryers, and shows every night.

Cruise ships have free toothpaste and razors, and free soap and shampoo.

The crew on cruise ships will even treat you like a customer, not a patient.  An extra $5 worth of tips will have the entire staff scrambling to help you.

You will get to meet new people every 7 or 14 days.

Is your T.V. broken?  Does your light bulb need changing?  Do you need to have the mattress replaced?  No Problem! The crew will fix everything and apologize for your inconvenience.

You’ll have clean sheets and towels every day, and you don't even have to ask for them.

If you fall in the nursing home and break a hip you are on Medicare; if you fall and break a hip on the ship, they will upgrade you to a suite for the rest of your life.”

Adding legitimacy to this argument, in 2004, physicians Lee A. Lindquist and Robert M. Golub published “Cruise Ship Care: A Proposed Alternative to Assisted Living Facilities” in the Journal of American Geriatrics Society.  They argued that for some seniors, a cruise ship could be a better alternative to traditional assisted living.  Furthermore, many stories surfaced in the media of seniors who lived on cruise ships for years, most notably Bea Muller, who was a permanent resident on Cunard’s Queen Elizabeth 2 from January 2000 until it was retired in November 2008.

Unfortunately, when carefully examined, the cruise-ship-alternative to traditional long-term care does not withstand scrutiny.  Sarah Stevenson in her blog, “Is a Cruise Ship Retirement Cheaper Than Assisted Living?,” which was posted on www.aplaceformom.com on February 22, 2013, points out many of the “impractical realities” of cruise ships as substitutes for long-term care.  Her arguments are paraphrased below.  

First, the logistics are difficult.  Your private area on a cruise ship is a small room typically only large enough to fit a bed.  You have no place to keep any possessions other than a suitcase full of clothes.  Furthermore, you often are required to disembark from the ship at least every thirty days and you will constantly have to book new cruises, hoping to continually find good deals.  These constant arrangements can be burdensome and unsettling.

Second, most seniors who need long-term care need help with activities of daily living such as bathing, dressing, and grooming.  No matter how much you might be willing to tip the crew on a cruise ship, you’re not likely to find staff willing to act as your personal attendant.  

Third, many seniors have mobility problems.  The narrow hallways and multiple levels of cruise ships are not conducive to passengers with mobility problems, particularly in bad weather when turbulence could be an issue.  

Fourth, many seniors need constant access to physicians.  Although cruise ships often have a doctor on board, they are not prepared to deal with the wide assortment of medical issues that a passenger might possess.  Furthermore, being stranded at sea is the worst time to need the urgent medical care of a specialist.  In an emergency, you might need to be airlifted off the ship which would not only result in significant cost, but could also create further medical problems.

Finally, being an oceanic vagabond means that you will not be able to see your family and friends with any regularity.  Furthermore, any acquaintance you meet on the ship will likely be off the ship by the next week.  Therefore, it would be impossible to establish and maintain in-depth human contact which would likely lead to isolation and depression.

KRASA LAW is located at 704-D Forest Avenue, Pacific Grove, and Kyle may be reached at 831-920-0205831-920-0205.

Disclaimer: This article is for general information only.  Reading this article does not establish an attorney/client relationship.  Before acting on any of the information presented in this article, consult with a competent attorney licensed to practice law in your community.


Tuesday, November 4, 2014

Taking Control of Your Health Care

 

A key aspect of estate planning is to plan for health care decisions in the event of incapacity.  Below is an overview of the most common health care planning documents.  

Advance Health Care Directive

An Advance Health Care Directive (“AHCD”) has two main features.  First, it allows you to name an agent to make health care decisions on your behalf if you are unable to do so.  Commonly referred to as a “health care power of attorney,” it is essential to name an agent and at least one or two alternates in the event that the first agent is for any reason unable or unwilling to act.  In selecting a health care agent, it is important to consider whether a particular candidate will be able to make difficult decisions in a crisis, will be available and responsive, will be a strong advocate on your behalf, and will be able to carry out your wishes even if they differ from the agent’s personal values.  

Second, an AHCD allows you to instruct your agent on how to make your health care decisions.  Often referred to as a “Living Will,” this feature allows you to give guidelines such as the use and extent of artificial life support, measures to alleviate pain even if such measures might hasten your death, decisions regarding organ donation,  and decisions related to the disposition of your remains.  

The statutory California AHCD form allows you to give general guidelines whereas other versions of an AHCD, such as the “Five Wishes” form, allow you to go into great detail with regard to health care instructions.

An AHCD should also list the name and contact information of your primary physician in the event that the health care providers need your medical records or need to consult with your doctor regarding your care.

In order to be effective, an AHCD in California must either be notarized or witnessed.  Furthermore, if the AHCD is executed in a skilled nursing facility, an additional signature by a “patient advocate” or “ombudsman” is required.   

POLST Form

A POLST (“Physicians Order for Life Sustaining Treatment”) form is an optional additional document that you should review with your doctor.  It allows you to create even more specific instructions than the AHCD and is used for specific purposes such as:

(1)  Whether or not to administer CPR in the event that you have no pulse and are not breathing;

(2)  Whether you desire “full treatment,” “selective treatment,” or “comfort-focused treatment” in the event that you    have a pulse and/or are breathing;

(3)  Whether to administer feeding tubes on a long-term basis, a trial basis, or not at all.

In order for a POLST form to be effective, it must be signed by a licensed physician.  The purpose of requiring a physician’s signature is two-fold.  First, it forces you to have a discussion about the ramifications of these various choices with a medical professional.  Second, by having a physician’s signature, health care professionals are required to follow the order and are less likely to hesitate when executing difficult decisions.  

HIPAA Waiver

HIPAA, the “Health Insurance Portability and Accountability Act,” protects medical privacy by restricting health care professionals from releasing your health information.  While the concept of medical privacy is generally a good idea, it can become a problem if your agents are unable to access key information about your health and therefore unable to make informed decisions about your care.  By signing a HIPAA Waiver, you are authorizing health care professionals to disclose your otherwise protected health information to your health care agents and releasing the health care professionals from any liability for doing so.  Although it is a simple document, it is essential.  

KRASA LAW is located at 704-D Forest Avenue, Pacific Grove, and Kyle may be reached at 831-920-0205831-920-0205.

Disclaimer: This article is for general information only.  Reading this article does not create an attorney/client relationship.  Before acting upon any of the information presented in this article, you should consult a competent attorney who is licensed to practice law in your community. 



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KRASA LAW assists clients with Estate Planning, Elder Law, Pet Trusts, Asset Protection, Special Needs Planning and Probate / Estate Administration in Pacific Grove, CA(93950), Monterey (93944, 93940, 93943, 93942), Salinas (93901, 93905, 93906, 93907), Hollister (95023,95023) Pebble Beach (93953), Carmel By The Sea (93921), Seaside (93955) and Carmel (93923, 93922) in Monterey County and San Benito California.

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