Estate Rage: Inheritance Disputes Are on the Rise

James and Virginia Null were always fair, dividing everything equally among their three daughters. They worked hard at avoiding any hint of favoritism—going so far as to buy three sets of everything—china, crystal and jewelry—so there would be one to pass on to each daughter.

But fairness took a nosedive when Virginia Null died in 2000 at the age of 62. Within weeks of her death, her husband changed his financial arrangements.

• He designated his middle daughter Amy as a joint tenant on his financial accounts with the sole right of survivorship.
• He added Amy to the title to his house.
• Upon his death in June 2002, almost all of Mr. Null’s assets, estimated at several hundred thousand dollars, went directly to Amy. Her two sisters received next to nothing.

This article in The New York Times, Personal Business; A Legacy of Rancor: Estate Fights Rising, illustrates a battle that’s becoming increasingly frequent.

Mr. Null’s Will, written in the early 1980s, stated that his estate was to be divided equally among his three daughters, but “the right-of-survivorship clause and joint tenancy upstaged the will completely,” said Adam Gaslowitz, an Atlanta lawyer who is representing the two other sisters who are contesting the estate.

Litigation more common as family strife over inheritances increases

Lawyers say this is typical of suits contesting Wills, often filed by baby boomers whose parents are now in their 70s and 80s. Mr. Gaslowitz has written on this topic for law journals, and he has seen a steady increase in estate fights among the children.

“A lot of people are living off the parental dole. As their parents near the end, these children grab as much as they can and are far less willing to share it with their siblings.” An uneven economy, layoffs and shrunken retirement plans have hurt many. A huge number of baby boomers have done nothing to prepare for retirement, and accumulated assets from their more frugal parents become a critical part of their retirement planning. When things go badly, people realize that they need their inheritances.

The huge transfer of wealth was misstated

”There had been some papers in the early 1990s that suggested there would be this large transfer of wealth from the current retirees to the baby boomers,” said John Gist, the associate director of the AARP’s Public Policy Institute. ”But we concluded that this was not going to be the huge windfall that everybody had thought.”

Amy stepped in after her mother died

In the case of the Null estate, the two sisters argue that Amy Osborne–who lived ten minutes away from their father and handled many of his financial affairs after their mother died–persuaded him to change his financial arrangements. The sisters believe he had no idea what he had done, that he was vulnerable and dependent, recovering from complicated heart surgery.

Amy’s lawyer assures us that he knew exactly what he was doing

“If elderly parents favor one child over others because of that child’s contribution to the parents’ wellbeing”, they have every right to leave their estate to those who are most deserving.

As the family planned the funeral, the other sisters began to realize that something was wrong. Shortly thereafter, Amy served them with papers—they had ten days to contest the distribution of the estate. Blindsided by the turn of events, the sisters contacted a lawyer. Said one sister, “I thought this would never happen in my family. I was so naïve.” The bottom line: When there’s money involved, funny things happen in even the closest families.

It’s important to note that even with a Living Trust, assets that have a named beneficiary, such as a life insurance policy, an IRA or a 401(k), assets held in joint tenancy, and those that are Payable or Transferable on Death fall outside a Living Trust.

Is a Living Trust something you keep putting off? Make an appointment today by contacting us at one of our three Bay Area offices. Our dedicated team is helpful, compassionate and affordable.

9 Things That May Surprise You About Probate

John’s father died unexpectedly in 2012, and he never quite got around to creating a Will or documenting his assets and their locations. The result? Five years later, John, our client, is still trying to finish probating his father’s estate. It has required a monumental detective effort to identify his father’s assets and their locations. As John unraveled the puzzle, he discovered that his father’s assets spanned countries and continents—each requiring a separate Probate procedure.

When someone dies without a Living Trust that identifies how his/her estate will be distributed, the estate goes into the court-supervised process of Probate. It can seem daunting, but thankfully, it is rarely as complicated as John’s father’s estate. Probate is actually a very methodical process, and California Document Preparers assists our clients through every step of the process.

Here are 9 frequent questions and misperceptions about Probate that you may not know:

1. An estimated 50% of estates in the U.S. go through Probate

If you’re facing Probate, you’ve got lots of company. More than 50% of Americans do not create a Living Trust, and their families are left to deal with Probate at what is already a very difficult time of loss and mourning. The Probate process can be time consuming and expensive.

2. Not all assets are subject to Probate

Assets that have a named beneficiary, such as a life insurance policy, an IRA or a 401(k), assets held in joint tenancy, and those that are Payable or Transferable on Death are not subject to Probate.

3. Probate typically takes 9-12 months

Probate allocates a four-month waiting period for creditors to file outstanding claims. In Contra Costa County, for instance, the Probate process generally cannot be administered in fewer than nine months. The times can vary by county, and the complexity of the estate can have a significant impact. If the deceased has made large gifts/donations during his/her lifetime, is a beneficiary of a Trust, owned a business and/or a significant amount of real property—especially if it’s in another state or country, as is the case with John’s father—the process will take much longer.

4. There is a time limit for creditors to file claims

One of the primary responsibilities of the Administrator is to properly notify all creditors of the estate. Once properly noticed, creditors must issue their claims to the court within the creditor claim period, generally four months.

5. The estate’s personal representative manages the Probate process

A decedent names an Executor in a Will. When there is a Will and an Executor, the court likely will name that person the Administrator of the estate for the Probate process. If there is no Will, or the Executor is unable to act, the court appoints an Administrator. It’s important that this role is filled by someone who is able to deal with sometimes complex financial matters.

6. Property owned outside California is a separate Probate

If the decedent owned real property outside the home state, a separate Probate must be opened in that state, called Ancillary Probate.

7. The Administrator may collect fees

In addition to out-of-pocket expenses for managing and settling the estate, Administrators may earn fees for their services, typically from 2-4% of the estate’s value. Probate can be very time consuming, especially for complex estates.

8. The Administrator can be held liable

The Administrator can be held personally liable for improper management of the estate. The Administrator also can be removed if an action is brought by a beneficiary or other person that clearly demonstrates mismanagement.

9. Heirs must be notified about proposed actions

California law requires that heirs and beneficiaries be properly notified when the Administrator desires to take certain actions, such as sale of real property, occur. Failure to properly notice or handle issues regarding the estate may result in legal action from beneficiaries.

While the Probate process is fairly straightforward, it can quickly become complex when there are multiple beneficiaries and complicated assets. We assist our clients through each step of the process.

Probate is a growing service for us

We are now featuring Probate at one fixed price: $4,500. No surprises. Contact California Document Preparers at one of our three Bay Area offices to schedule an appointment or find out how we work with our clients.

Baby Boomers: Learning Lessons in Estate Planning from Their Parents

While many baby boomers have made alarmingly few plans for retirement, others are immersed in a kind of geriatric boot camp as they help their parents navigate their final years. One adviser recommends using your parents’ experience as a training manual: Healthcare considerations, life insurance, Living Trusts and funerals are the building blocks of end-of-life planning.

Learning the hard way: A Living Trust means that your family will avoid Probate

The long-term implications of not having a Living Trust are significant. Without a Trust, your estate will need to go through the expensive and time-consuming Probate process. Baby boomers who have been left to Probate their parents’ estates have vowed to leave their own children better prepared.

Something to think about: Prepaid funerals or burial expenses

While the estate can be used to pay for funeral expenses, you will need liquid assets to pay for funeral expenses. If a parent has been in hospice, nursing care or assisted living for the last few months of his/her life, there likely will be bills from a wide range of healthcare providers that will need to be paid.

It’s not unusual that assets are tied up in Probate or otherwise inaccessible. Not all baby boomers can front the money needed to pay for their parent’s burial expenses and the inevitable healthcare bills that trickle in. As part of long-term planning, many families set aside money or prepay for at least a portion of these inevitable expenses.

Planning for health complications

Many seniors look forward to their retirement as time to pursue second careers, volunteer, travel and enjoy their friends and families. Unfortunately, unexpected health issues and their related costs can completely derail plans for a blissful retirement.

Boomers learn from their parents that health care is an important part of retirement planning

• An estimated 70% of Americans can expect to use some form of long-term care at some time in their lives.
• Statistics for 2018 show that 5.7 million Americans are living with some form of dementia.
• More alarming, 200,000 people under the age 65 have early-onset Alzheimer’s. At this time, there is no treatment or cure for this insidious disease.

Escalating insurance costs

Today’s medical advances mean that we can make smarter decisions about our healthcare needs. We’re living longer, but depending on our health, that may not mean that we’re living better. If life or disability insurance is part of your plan, it’s important to know that rates increase as you get older. Many life insurance policies bundle long-term care into their plans. Researching family history for heart disease, diabetes, dementia, cancer or other hereditary illnesses may help you make informed healthcare decisions.

Learning from our parents: Plan for the worst and hope for the best

Don’t wait until there is a crisis; figure this out while you’re healthy and able to make thoughtful, informed decisions. Everyone who’s had to cope with the loss of a parent knows the importance of careful estate planning and the benefits to surviving family members. Baby boomers whose own parents have left them with a poorly planned estate are learning from this experience and leaving their own families better prepared.

There’s still time to create your Living Trust in 2018. Our comprehensive Living Trust package includes a Power of Attorney and Advanced Healthcare Directive. Contact us at one of our three Bay Area offices to schedule an appointment. Our dedicated team is helpful, compassionate and affordable.

Divorce and the New Tax Laws: What You Need to Know

As if Divorce weren’t stressful enough, the GOP Tax Cuts and Jobs Act that was signed into law last December may be creating additional anxiety for divorcing couples. If you’re getting divorced or thinking about Divorce, you should absolutely be paying attention to these changes. Not understanding how they will affect your Divorce can be a very expensive mistake.

 1. Tax rates got lowered and the standard deduction got higher

• The new tax law lowered the tax rate for most taxpayers–generally good news, right? It also doubled the standard deduction that every taxpayer who didn’t itemize deductions used to get. That may make you think your income taxes will drop in 2018, but like everything this Congress does, there’s more to the story, and it’s rarely good news.
• Fewer people are likely to itemize next year because the standard deduction–what you can subtract from your income before figuring out how much taxes you owe–is nearly doubling to $12,000 for single filers, $18,000 for heads of households and $24,000 for married couples that file jointly.
• Despite lower tax rates, some filers who usually itemize could see their taxes rise because many popular deductions are being reduced or eliminated. State and local income taxes, sales taxes and property taxes were fully deductible under the old tax law. Now they are capped at a combined $10,000 annually. There are also limits on how much interesthomeowners can deduct on new mortgages.

2. Personal exemptions

• In the past, when you filed your taxes, you claimed yourself and each of your kids as dependents on your taxes. Known as “personal exemptions” or “dependency exemptions,” these tax breaks allowed you to subtract a certain amount of money from your taxable income for every dependent you claimed. The more dependents you claimed, the more money you could subtract.
• When couples divorced, they often argued over who got to claim the kids as dependents on their taxes. The new tax law has eliminated all of these personal exemptions. Beginning in 2018, and continuing through 2025, no one will get a tax exemption for claiming the kids as dependents.

3. Child tax credit

• Before 2018, the child tax credit lowered the amount of taxes that parents paid by $1,000.00 per “qualifying child.” In the new tax law, Congressincreased the amount of the child tax credit to $2,000. They also dramatically increased the amount of money that parents could make before the child tax credit gets phased out. That’s the good news.
• A child only qualifies for the child tax credit for the parent who can claim him/her as a dependent. In your Divorce settlement you still need to negotiate which parent can claim each child as a dependent. If you don’t identify who can claim the child as a dependent, you risk losing the child tax credit. That can be a big deal because the child tax credit directly reduces the amount of income tax you pay. It doesn’t just reduce your taxable income. It reduces your taxes. And really, who wouldn’t want to pay $2,000 less in taxes per year?

4. Education expenses (529 Plans)

529 Plans are special tax-advantaged savings accounts that parents could create to save money for college educational expenses.

• In the past, 529 Plans could only be used to fund “Qualified Higher Education Costs”–college tuition and certain other college expenses.
• Now, if your kids are going to private school, you or your spouse could use the kids’ college money to pay for it. That will save you from having to pay the private-school tuition yourselves.
• Under the new tax laws, parents can take up to $10,000 per year out of a child’s 529 Plan and use it to pay for that child’s elementary or secondary school tuition.
• Deciding what to do with your kids’ 529 Plans is now one more thing you can negotiate in your Divorce.

5. Moving expenses

When a couple divorces, someone has to move out. In many cases, the person who moved out also gets a new job.

• Before this year, if you were moving because of a new job, you could deduct your moving expenses from your taxable income.
• Now, you can’t, and moving can be expensive—this may be something you negotiate in your Divorce settlement.

6. Mortgage interest and HELOC payments

Under the current tax law, you can deduct the interest you pay on your home mortgage. You could deduct that interest if it was on any kind of a mortgage or home equity loan. It didn’t matter if you actually used the money to pay for your home or pay off your credit cards.

• That’s all changed now. The new tax law limits the mortgage interest deduction to interest paid on the first $750,000 of your loan—not $1,000,000.
• To be deductible, the loan must also be used to buy, build, or substantially improve the home that secures the loan. That also applies to home equity loans and lines of credit.
• The IRS has now closed a potential means of cash flow that often made settling your Divorce easier.

7. Medical expenses

The changes to the medical expense deduction are positive. Before, you could only deduct medical expenses that exceeded 10% of your adjusted gross income. Now you can deduct medical expenses that exceed 7.5% of your income. There’s a bigger chance that you’ll be able to deduct medical expenses on your taxes. Congress made this change retroactive to 2017 so that you can take advantage of this tax deduction immediately. But before you get too excited about this, be aware that there’s an insidious component to this tax change.

• From 2019 on, the deduction threshold goes back up to 10%. But get this: Congress just gave us a two-year reprieve on the medical expense deduction.
• In order to deduct medical expenses at all, you must itemize your deductions. Since fewer people will be able to itemize their deductions in 2018, fewer people will be eligible to use this deduction.

8. A repeal of the deduction for alimony payments

In a previous article, we discussed the repeal of a deduction for alimony payments, effective 2019. Potential divorcees have the rest of 2018 to use the alimony deduction as a bargaining chip in their negotiations with estranged spouses. Many believe that removing this deduction will make Divorces more acrimonious, that people won’t be willing to pay as much alimony. Since it is women who tend to earn less and are most often the recipients of alimony, many believe this tax change could disproportionately hurt women.

Consulting a tax professional

Even if you are just thinking about Divorce, it’s wise to consult an accountant or financial planner who can identify problems and opportunities for deductions that may not be apparent to you.

We’ve assisted hundreds of couples with their uncontested Divorces

If you and your spouse are in agreement about your Divorce—including division of property and a parenting plan–we can assist you and help you save a significant amount of money. Contact us at one of our three Bay Area offices to schedule an appointment. Our dedicated team is helpful, compassionate and affordable.

Another Gap that Divides America: When Mothers Give Birth

Rather than identifying ways to unite us, the current administration seems to be finding ways to divide us. It’s not just the haves and the have-nots anymore, but the 1% and the rest of us. The middle class, that hardworking backbone of our country, continues to diminish. The proud values that have defined and united us as a nation are in jeopardy. It appears that a new gap further divides our country; this one based on the age that mothers give birth. But it’s not just about age; rather, it’s what women learn, what they experience and what they accomplish in those critical years between high school and the time when they start bearing children.

Sociological divide starts at birth, shaped by the age that mothers have babies

A recent New York Times article, The Age That Women Have Babies: How a Gap Divides America, by Quoctrung Bui and Claire Cain Miller, discusses education as a fundamental driver of a rift that has long-term implications for kids, for families and for our country.

Becoming a mother used to be seen as a unifying milestone for American women. But a new analysis of four decades of births shows that the age that women become mothers varies significantly by geography and education. The lifestyles into which children are born dramatically affect their future prospects.

First-time moms are older in big cities and coasts

First-time mothers are older in big cities and on the coasts—yes, that’s the liberal elite, but not entirely. It probably won’t surprise anyone that mothers are younger in rural areas, in the great plains and the south. Not surprisingly, San Francisco tops the chart at 31.9; Manhattan is next with 31.1. In Todd County, SD and Zapata County, TX., first-time mothers are just 20 and 21.

The biggest differentiator? Education

It all comes down to education–the single biggest factor that influences when women start their families. Women with college degrees have children an average of seven years later than those without. Those with degrees use these years to build their careers and incomes. They go to grad school, travel, gain new experiences that they will share with their children to enrich their lives.

Education: Investing in a cycle of upward mobility

Those who stay behind and have babies can claim emotional fulfillment, status in the community and a path to adulthood. Yet a college degree is becoming a passport to earning a middle-class wage. Those parents with college degrees and good jobs have money to invest in the violin lessons, math tutoring, summer camps and college savings accounts that will set their children on their ownupward paths that will help them get into good schools, preparing them for good jobs of their own. These parents are investing in a cycle of upward mobility.

Education patterns help drive inequality

“These education patterns help drive inequality because well-educated women are really pulling ahead of the pack by waiting to have kids,” said Caroline Hartnett, a sociologist and demographer studying fertility and families at the University of South Carolina. “But if going to college and achieving an upper-middle-class lifestyle seems unattainable, then having a family might seem like the most accessible source of meaning to you.”

The age of mothers follows red and blue political alignment

The education gap aligns with other disparities in the way Americans live, including differing attitudes about the role of women. Law professors June Carbone and Naomi Cahn described how red and blue families were living different lives in a book in 2010. The biggest differentiating factor, they said, was the age that mothers had children. Young mothers are more likely to be conservative and religious, to value traditional gender roles and to reject abortion. Older mothers tend to be liberal, and to split breadwinning and caregiving responsibilities more equally with men, they found.

At UCSF: Less fear and stigma about having babies after 35

“It feels like no one here has babies under 35 anymore,” said Mary Norton, interim chair of maternal-fetal medicine at the UCSF. Because of fertility treatments and genetic testing, there is less fear about health complications and less stigma about having babies after 35, she said.

The wage penalty for women who have children is high, so many try to advance in their careers before giving birth. They are more likely than young mothers to be married, and less likely to divorce. They’re also less likely to live near their children’s grandparents, or because their parents are older, they juggle child care with elder care. And they might have fewer children than they had hoped, because fertility declines during a woman’s 30s.

3/4 of first-time mothers under 25 are unmarried; many can’t afford birth control

This demographic tends to live in areas where they are surrounded by extended families. They are less likely to have significant savings, a college degree or a career. Their pregnancies are more likely to be unintended, and a shocking three-quarters of first-time mothers under 25 are unmarried. This statistic helps profile the growing population that lives in poverty. They may be working several jobs, trying to make ends meet. There is little time or money for the extras that the children of older, educated parents receive.

Natalia Maani, an obstetrician at Starr County Hospital in Rio Grande City, TX, where the average age of first birth is 22, said that very few of her pregnant patients are married, and she can count on two hands the number of pregnancies that were planned. Many can’t afford birth control, she said. Most wouldn’t consider abortion, and there is no provider nearby. Ironically, the cultural norm remains starting families young—even when there is no way to provide for those children.

Where children start in life influences where they end up

Research has shown that where children start in life strongly influenceswhere they end up. Providing resources for young mothers and children, and policies like affordable child care and college, can help smooth the differences.

So what does this have to do with us?

We think it has everything to do with all of us. We’re living in a time where we all need to be critical thinkers, able to make informed decisions that are based on facts. We need to be sharing the best of ourselves with our children to help them learn, to make the most of the opportunities that may be presented to them. As this study shows, the lifestyles into which children are born influence their future prospects.

California Document Preparers has been helping Bay Area residents with uncontested legal matters since 2003. Our services include Divorce, Business Formation and Probate. We also do Notaries and Deed transfers. Our comprehensive Living Trust package includes a Power of Attorney and Advance Healthcare Directive. Contact us at one of our three Bay Area offices for more information.

Grandma and Guns: Families Confront Dementia and Firearms

Dee Hill begged the 911 dispatcher for help. “My husband accidentally shot me in the stomach". A few feet away, her 76-year old husband, Darrell, a former police chief and county sheriff, sat in his wheelchair with a discharged Glock on the table in front of him, completely unaware that he’d nearly killed his wife of nearly 60 years. Darrell had been diagnosed two years earlier with a form of progressive dementia that had quickly stripped him of reasoning and memory. His wife needed 30 pints of blood, three surgeries and seven weeks in the hospital to survive.

Shesold her husband's car when it became too dangerous for him to drive, yet never removed his guns

Many of us these days are helping our aging parents with a wide range of issues, and a troubling problem that's getting more attention is aging gun owners with dementia. This scenario describes a disturbing situation that may be more common than we think. Gun owners steadfastly refuse to part with their weapons, even as they lose the ability to reason and make sound decisions. 

Darrell Hill was unaware that he'd nearly killed his wife

“He was almost obsessive about seeing and caring for his guns." Darrell accidentally knocked the pouch that had held the revolver to the floor. When Dee bent to pick it up, he grabbed the Glock and fired. “My concern had been that someone was going to get hurt. I didn’t in my wildest dreams think it was going to be me.” The incident was classified as an assault. Dee was outraged at the suggestion she consider pressing charges. Gun advocates insist that guns are not to blame. 

America's tragedy of gun violence kills 96 people/day 

There's a vast cache of firearms in the homes of aging Americans with impaired/declining mental faculties. When Darrell Hill died in 2016, he joined the estimated 9 percent of Americans 65 and older diagnosed with dementia, many of whom are gun owners and fierce supporters of Second Amendment rights.A 2017 Pew Research Center survey shows that 45% of people 65 and older have guns in their homes. 

No one tracks the potentially deadly intersection of these groups

A four-month Kaiser Health News investigation uncovered more than 100 cases across the U.S. in which people with dementia used guns to kill or injure themselves or others. Kaiser's research found 15 homicides and more than 95 suicides since 2012.The shooters often acted during bouts of confusion, paranoia, delusion or aggression — common symptoms of dementia. They killed people closest to them--their caregivers, wives, sons or daughters. They shot at people they happened to encounter--the mailman, a police officer.

Keep in mind that these statistics do not begin to tally incidents in which a person with dementia waves a gun at an unsuspecting neighbor or a terrified home-health aide.

Few topics are as polarizing as gun control and second amendment rights

Gun control is a politically polarizing topic. Only five states have laws allowing families to petition a court to temporarily seize guns from people who exhibit dangerous behavior. 

What families can do: Take a gun owner to court to evaluate competency

Federal law prohibits people who are not mentally competent to make their own decisions, including those with advanced dementia, from buying or owning firearms. Unfortunately, a diagnosis of dementia does not disqualify someone from owning a gun. If a gun owner were reluctant to give up his/her arsenal, the family would typically have to take that person to court to evaluate competency.

We’re seeing a small change. Since February's school shooting in Parkland, Fla., more states are taking action to make it easier for families to remove guns from their homes. 

Changes ahead for the NRA?

The NRA, traditionally one of the most powerful lobbies in Washington, is experiencing tougher times. Many big brands are severing ties with the company. If the Democrats take back the House and Senate in the midterm elections, gun reform well may become a reality. 

Can California lead the way? 

California has some of the most stringent gun laws in the country and is intent on eliminating severely restricted weapons by making their transfer nearly impossible. 

Anyone found by the courts to be mentally defective or those committed to a mental institution cannot own firearms. 

This includes those deemed by a court to be a danger to others, mentally disordered sex offenders and those found not guilty of a crime by reason of insanity or found mentally incompetent to stand trial. 

It also includes those in custody because they present a danger to themselves or others, individuals undergoing intensive treatment for mental illness and those placed in a conservatorship.

Ultimately, it's up to every family to take away the guns

In my own family, it was the car keys. Our stepfather was a terrible driver and had been for years. Some of us wouldn't ride with him. Yet none of us would stand up to him and take away the keys. We could have found a way, but we didn't want to create an incident. In retrospect, a family fight is nothing compared to the chaos and tragedy of an accident. 

Helping family members with end-of-life planning is a challenge for many Bay Area families.

California Document Preparers assists families with our comprehensive Living Trust package that includes a Power of Attorneyand an Advanced Healthcare Directive. Contact California Document Preparers at one of our three Bay Area offices to schedule an appointment or find out how we work with our clients. We’re helpful, compassionate and affordable.