Three Months and Counting: What We’ve Learned During the COVID Lockdown

It’s been three months since we began sheltering in place. We assumed we’d be back to our happy little routines within a few weeks. How naïve we were. We now know that our happy little routines will be disrupted for a long time to come.

Along the way we’ve learned that:

There’s a deep well of generosity and a strong sense of community among us

• LVMH shut down perfume production and began producing hand sanitizer. Cable companies offered free wifi for homebound students.
• In my own community, volunteers organized grocery runs for those who couldn’t drive or get to the stores.
• Wellness checks included neighbors dropping off care packages and casseroles. For the elderly, this virus quickly could become dangerous and isolating.
• In Ohio, the Cleveland Clinic was struggling to find protective face masks for its 55,000 employees. A call to Abe Troyer, a local Amish community leader, resulted in 60 home seamstresses teaming to sew 12 thousand masks in two days. “If there is a need, people just show up,” said Mr. Troyer.

We really are all in this together

This disease freely roams the globe. It won’t be over until everyone is vaccinated. Our government talks about a vaccine by year’s end, but this virus mutates. Will the virus we develop today work on the virus that evolves tomorrow? No one knows, though the government has committed $1.2B to drug company AstraZeneca to develop a vaccine.

Expertise and government matter

There’s a reason why we have government and policies. It’s important to hire smart, experienced people, to build teams who know how to execute in a crisis. We really can’t underestimate the importance of strong leadership, experience and expertise. We’ve learned an important lesson: Crisis is inevitable, it’s how you deal with it that matters.

We can learn from others

What if we took a page from New Zealand, a tiny country whose population is less than that of the Bay Area? New Zealand is cautiously COVID-free, thanks to smart leadership. They’re all over renewable energy–79% of their electricity comes from renewable, and their goal is to be 90% renewable by 2025. Think about that. An entire country working toward an environmentally conscious goal. What if we did that? What if America’s collective creativity were directed toward renewable energy? We could own this and lead the world.

Some amazing things are emerging from this crisis

We’ve learned about our own resilience, resourcefulness and ingenuity. We’ve:

• Gotten to know our families again and hopelessly spoiled our pets.
• Reduced pollution. We can do this. Venice’s canals are clearer than they’ve been in 20 years.
• Learned new languages. My neighbor can’t stop baking. It’s endless–gardening, knitting, sewing, painting and canning. These close-to-the-earth kinds of activities are somehow life-affirming.
• Rediscovered our creativity and inventiveness. Skype book clubs, Periscope jam sessions, live-streamed yoga classes and worship services. We’ve Zoomed everything imaginable—from art classes, happy hours and dinner parties to weddings and memorial services.
• Gone back to using the internet as it was meant to be used. A way to connect, share information and come up with creative solutions to pressing problems. There’s a kind of pioneer spirt about this—the kind of thing that surfaces when the power goes off for an extended period.

We’ve found inventive new ways to transact business, but something is missing

Many of these activities represent positive change that will transcend COVID. But we all want our lives back. We want to be around people again. To be in a crowded restaurant or bar, to go to movies, concerts and events. To have the freedom to hop on an airplane and travel. To meet new people, to be free to reach out and shake hands. To connect. We want to hug our friends again! Despite our agility and reliance on our online channels, we’ve learned that the need for human connection remains a powerful, driving force.

And that’s one of the good things to emerge from our lockdown. We’ll get through this. Stay safe.

The uncertainty of this disease leaves many people scheduling appointments to create or update their Living Trusts 

Our Trust includes a Power of Attorney, an Advanced Healthcare Directive and a Pour Over Will. For those with children under 18, it provides the opportunity to name a Guardian. For most of our services, we charge one flat fee. We’re helpful, compassionate and affordable. Schedule an appointment today at one of our three Bay Area offices in Dublin, Walnut Creek or Oakland.

Working with California Document Preparers

The safety and wellbeing of our own team and our clients are important to us. For many of our clients, we are working completely virtually using ZOOM and phones. We’ve instituted stringent sanitation procedures in our offices, so our clients can feel comfortable about meeting with us. Everyone is wearing masks and gloves; hand sanitizers are distributed throughout the space. We limit the number of people in the office so that we can maintain proper social distancing.

We service the entire East Bay and North Bay areas

Berkeley, El Cerrito, Richmond, Pinole, Alameda, San Leandro, Castro Valley Newark, San Lorenzo, Concord, Alamo, Danville, Lafayette, Orinda, Moraga, Pleasant Hill, Martinez, Pittsburg, Antioch, Brentwood, Oakley, Discovery Bay, Pleasanton, San Ramon, Livermore, Tracy and Fremont. Our clients also live in the Napa Valley, Benicia, Vallejo, Martinez, Fairfield.

When You Know It’s Time to Move to a Retirement Home

A New York Times article regarding one couple’s discussions about moving to a retirement home brought back memories of my own parents’ ongoing dialog. My folks were in their mid-eighties, still healthy and active, but their three-bedroom home on a Florida lakeshore was becoming a burden. After a lifetime of shopping for groceries, planning and preparing meals, my mother had run out of steam. More important, she was feeling increasingly isolated and lonely. Her friends were either dead or living out their final days in nursing homes with dementia. My stepfather, of course, was completely comfortable having my mother cook and care for him. The subject of time to move to a retirement home was not something he entertained.

I don’t remember the catalyst, but they finally put their house on the market

My folks finally sold their house and moved to a retirement community overlooking a little lake. They had their own little unit, with a provision to move to assisted care and the nursing facility when/if it became necessary. My mother was thrilled. A very social person, she immediately made friends, played bridge three-four times/week, helped out in the library one day each week. There was always something going on and the staff were wonderful. My mother had cooked her last meal. This was exactly where she needed to be at this point in her life.

In the Times article, John and Dawn Strumsky had the same debate as my folks did. Dawn’s ready to pack it in. After a lifetime of caring for others, it’s time to be a “princess”, unburdened by the demands of cooking, cleaning and gardening. Her husband hated the idea of a leaving their longtime home and being surrounded by a bunch of strangers—a bunch of old strangers. He finally relented and they moved to a senior community outside Baltimore. He learned to embrace his new environment and subsequently wrote a 365-page history of the facility that they use in their marketing.

Dealing with seniors’ resistance to moving to a retirement home: It’s a journey

Seniors fear giving up their independence. It’s difficult to leave the home where they’ve raised their families. They don’t like confronting their own mortality. The key to convincing a parent to move to a retirement community is to be patient, said Tom Neubauer, executive vice president at Erickson Living, which operates 19 retirement communities. “Inherently there’s a sense of denial, particularly as it relates to aging, and you’re trying to defeat that.”He likened the process to helping a high school student choose a college: “You can’t just hand them a brochure and say, ‘This is where you’re going.’ It’s a journey.”

Neubauer’s strategy was to get his mother to recognize that the stairs in her house were steep, that cold weather affected her ability to get out and do things. That she was limiting herself because she wasn’t driving at night. It ended up being very easy. Collectively, all of these arguments persuaded his mother that it was time to move.

Go for a visit; stay for a meal or an overnight

Experts advise visiting retirement communities and trying to get a feel for what the experience would be like. Meet the residents, talk to the staff, stay for a meal. Some facilities will allow potential residents to spend a few nights.

Specialists in senior moving help seniors recreate their lives in smaller environments

We all love our stuff. Seniors may have spent decades in the same home, and it can be very difficult to leave all that is comfortable and familiar. A cottage industry of specialists in senior moving has sprung up, and the National Association of Senior Move Managers has more than 1,000 members.

These consultants do more than move boxes. They create digital floor plans to show clients how everything will look and fit in a smaller environment. They’ll ship leftover items to relatives or to auctions. As much as possible, they recreate the old space to make the transition as seamless as possible.

My folks lived in their retirement community for nearly ten years

As with many seniors, a health crisis necessitated my parents’ move into assisted living, then nursing care. They both died there within six months of each other. My mom was 94. In the end, we enlisted the support of Hospice, and the women who cared for her were wonderful. I think of my mom so often, and it’s generally while she was surrounded by her many friends in that retirement community where she happily lived out the last decade of her life.

California Document Preparers assists our clients with creating Living Trusts. A Power of Attorney and Advance Healthcare Directive are included as part of this legal document. Make an appointment today at one of our three Bay Area offices. Our dedicated team is helpful, compassionate and affordable.

Divorce 2019: What You Need to Know about the New Tax Laws

The holidays are over, and many Bay Area couples will begin working through the details of their Divorces. January historically has the highest number of Divorce filings. The paperwork, parenting plansand division of assets never get any easier. And this year, the changes from the GOP tax plan could add another layer of stress.

Here’s what you need to know if you and your spouse will be divorcing in 2019 or beyond:

1. Changes in alimony payments 

We’ve talked about this in previous articles. Alimony paid will no longer be tax-deductible and alimony received will no longer be taxable income. The results? This could make the divorce process more acrimonious and emotional. High-income divorcing spouses will fight aggressively to pay less alimony because the government will no longer subsidize these payments via the tax deduction. Many worry that this will penalize women, whose income typically falls sharply after a divorce. Lower-income spouses will likely fight to get as much alimony as possible, since the tax burden will be removed and the payments will go further.

2. Modifications to Divorce agreements: People who are already divorced will be grandfathered in

If divorced couples’ Divorce agreements are modified in 2019 or beyond, they could be subject to the new rules as well. If the modification states that it is to be governed by the new rules, then the new rules will apply. If the modification says nothing, however, the old rules will apply. The bottom line: People should be extremely cautious when modifying Divorce agreements in 2019 and beyond.

3. Children are no longer the tax deduction they used to be

The 2017 tax law eliminated the $4,050 exemption for each dependent, through 2025. The child tax credit, however, has doubled from $1,000 to $2,000. Remember, too, that the standard deduction has almost doubled because of the 2017 tax law. Single taxpayers in 2019 will see a standard deduction of $12,000; it was $6,350 in 2017.

4. Pre- and post-nuptial agreements may be affected by the tax changes

The new rules may nullify many of the items in such agreements, so all pre- and post-nuptial agreements should be reviewed by a financial consultant or legal specialist.

Additional tax strategies if Divorce is part of your 2019 plans

• Consider alternative investment/tax strategies. If you are the higher-income spouse, consider giving an Individual Retirement Account (IRA) to the lower income spouse, if applicable, because that shifts the tax burden to the receiver when that IRA is accessed. If you’re the lower-income spouse, you would inherit that burden when you cash out your IRA. Both parties should carefully consider their total tax equations and find the most comprehensive way to benefit financially over the short- and long-term.
• Tax-deferred strategies. Financial planners say some spouses may choose to forgo alimony payments and explore alternativessuch as lucrative real estate, larger shares in tax-deferred retirement accounts or some complex combination of the two that maximizes tax advantages. Options include a Qualified Domestic Relations Order (QDRO) that sets up future payments to a lower-earning spouse from a higher-earning spouse’s retirement account, taxed at the lower earner’s rate.
• Wait for your advisers to get up to speed on new laws and trends.This isn’t a contest; you don’t have to be the first couple to file for divorce in the new year. Your financial adviser will discover patterns and trends and be better prepared to advise you on financial issues if you wait a few months. Let someone else be the guinea pig!
• The benefits of cashing out. You might consider taking (or giving) a lump-sum Divorce payment instead of monthly payouts. This provides the opportunity to invest, pay for home repairs, or simply the ability to move on quickly and have a fresh start.

If your Divorce is uncontested, we can assist you and help you save a significant amount of money. Schedule an appointment today by contacting us at one of our three Bay Area offices. Our dedicated team is helpful, compassionate and affordable.

Routine Deed Transfer Turns into Probate for Oakland Homeowner

“Jason” came in to our Oakland office to change the title on a deed–a routine procedure that sometimes can be completed in a single day. Jason co-owned a home in the Oakland hills, and his name was on the deed along with those of his father and uncle, both deceased. Jason was considering selling the property, and he knew he would need a deed showing that he was the sole owner.

The status of Jason’s deed would be determined by the kind of ownership that had been set up in the original deed. We needed to pull the deed to find out whether they were joint tenants with rights of survivorship or tenants in common.

• Joint tenants with rights of survivorship. If the names of the three owners are followed by the words “joint with rights of survivorship”, Jason would have to obtain certified death certificates on his deceased co-owners by going to the deeds office and filing an affidavit to remove their names from the deed.
• Tenants in common. If their names are followed by the words “tenants in common”, Jason's deed change suddenly got a whole lot harder. In order to change the deed, both his father’s and uncle’s property needed to go through Probate.

What happens to the property when one of the owners dies?

A key difference between these two types of shared ownership is what happens to the property when one of the owners dies. When a property is owned by joint tenants with survivorship, the interest of a deceased owner automatically gets transferred to the surviving owners. For example, if four joint tenants own a house and one of them dies, each of the three remaining joint tenants ends up with a one-third share of the property. This is called the right of survivorship.

If, on the other hand, the owners were tenants in common, the deceased person’s shares pass to their heirs through a Will or Probate.

The three owners were tenants in common

Unfortunately for Jason, the deed showed that the three property owners were tenants in common. Rather than executing a relatively simple deed transfer, Jason now needed to Probate both his father’s and uncle’s share of the property. Unfortunately, we see a fair number of these kinds of situations. If the family had changed their ownership from tenants in common to right of survivorship while his uncle and father were still alive, the deed change would have been a routine process.

A few more details about deeds

• Deeds always contain the names of the old and new owners, a legal description of the property and the signature of the person transferring the property.
• Having an updated title is a critical to buying or selling real property.

Understanding joint ownership is especially important for married couples

If you’re married and have other heirs besides your spouse, such as children from a former marriage, then your spouse may not automatically inherit the property you want him/her to have. On the other hand, your spouse may become the beneficiary of property that you intended to go to your children. Updating accounts and deeds is a relatively simple process that will ensure your beneficiary designations reflect your current preferences.

A final note on Probate

Probate is a growing service for California Document Preparers. If it’s uncontested, we assist you through the entire process—all for one flat fee of $4,500.

California Document Preparers assists our clients with deed transfers by filling out all the necessary forms, notarizing them and filing them with the county. Our website has more information about specific types of deeds. Contact us at one of our three Bay Area officesto schedule an appointment to change or transfer your deed. We’re helpful, compassionate and affordable.

Power of Attorney to Curtail Dad’s Spending

We’ve all read disturbing stories about elder abuse, and it may be these stories that contribute to a reluctance by many seniors to create a Power of Attorney. The Agent you name as your Power of Attorney will be responsible for determining where and how you live out your life. It should be someone with integrity, someone you trust to make good decisions about your healthcare and finances. The following story an example of how one daughter’s getting Power of Attorney was absolutely in the best interests of her father.

Meet Christine and her father, Dick

Christine and her husband, Bill, weary of long, rainy Seattle winters, retired in sunny Florida. Within two years, Christine’s parents, in their early 80s, moved to a nearby community. A pragmatic RN, Christine knew that she had just become her parents’ caretaker. She also knew she would get no help from her only sibling, a sister who lived in Chicago and hated Florida.

Within five years of their move, Christine’s mother died. Her father, Dick, stayed in their home, but his health was declining. He wasn’t taking his medications or eating properly, and the house was more than he could manage. Christine helped him sell his home and move into a very nice retirement community where he had his own unit, was surrounded by friendly people with numerous activities to keep him busy. Dick, however, remained in his unit, didn’t socialize or participate in any events and became increasingly isolated.

He began buying new cars, including a sexy convertible

Dick became obsessed with buying cars. Once he drove the car home, he’d find a reason to sell it. It was too big, too small, too expensive, guzzled too much gas, etc. Within a single year, he would easily have three-four car transactions, always with a different dealer. The irony was that he drove to WalMart once/week; Dick had no need for a car. He also began investing heavily in coupon sweepstakes, convinced that Publisher’s Clearinghouse was going to make him a millionaire.

The problem: Her father was running out of money

Between the car and the coupon fetishes, Dick was depleting his resources. Christine wanted to get a Power of Attorney to control her father’s spending, but he refused. It took Dick’s totaling his latest car, a sexy convertible, and ending up in the hospital, for him to finally relent.

As her father’s Power of Attorney, Christine was able to manage her father’s life

Christine:

• Paid his bills, giving her father a weekly allowance and putting an end to his car purchases and restricting the number of sweepstakes he could enter.
• Arranged for a healthcare aide to visit three times/week to monitor his health and make sure he was taking his medications.
• Helped Dick update his Living Trust and Advanced Healthcare Directive while he was still mentally competent.

Power of Attorney makes decisions in the best interests of the Principal

The Agent under a Power of Attorney has a fiduciary obligation to make decisions that are in the best interests of the Principal. In most cases, the Agent is an adult child who has been named by a parent, but a Power of Attorney can be a trusted friend, financial adviser or a professional fiduciary. In this case, Christine was acting in the best interests of her father. Becoming legally empowered to manage his money meant that Dick would not have to move in with her and Bill. Call it enlightened self-interest, but Bill and Dick hated each other, so avoiding this situation was clearly in everyone’s best interest.

Powers of Attorney all terminate on death or incapacity

• The Agent can engage in legal business on behalf of the Principal until that person dies or is mentally incompetent to act on his/her own behalf. Once either of those events happens, the power of attorney is no longer valid.
• A Durable Power of Attorney can survive mental incapacity, but not death. A durable power of attorney allows the agent to continue to act on the Principal’s behalf even if the Principal is mentally incompetent.

Creating a Power of Attorney is part of our Living Trust package

We encourage everyone to think carefully about whom they appoint as their Agent. Being a Power of Attorney can become time-consuming, and it may require dealing with financial accounts, so your Power of Attorney should be comfortable managing financials and dealing with attorneys, accountants and government agencies such as social security. If you need to create or update your Trust, contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. Our dedicated team is helpful, compassionate and affordable.

Forget the Drama; Probate Court is a Methodical Process

Abby’s mother died in a tragic automobile accident in January. She had never prepared a Living Trust because, like many people, she assumed that this was something she’d have plenty of time for when she grew old.

An only child, Abby would be the Administrator of her mother’s estate

When Abby came in to our Oakland office, we reviewed the Probate process and her responsibilities as Administrator. On the day of our Probate hearing, Abby showed up at the courthouse, and she clearly had prepared for her day in court—she was wearing a suit and heels, makeup and she’d had her hair done. She confessed that she wanted to look professional, but there was another reason. “There were going to be all those good-looking lawyers in the courtroom.” Abby was turning her mother’s Probate hearing into a drama. Hearing her description of how she scanned the courtroom for witnesses, the judge and prosecutor, we couldn’t help thinking that she’d watched too many old episodes of Law & Order.

There’s no prosecutor or jury in Probate Court

Our client was in the courtroom specifically to get the judge’s permission to proceed with the Probate of Abby’s mother’s estate. “The judge will review your petition and grant Letters Testamentary, the document that authorizes the Executor of a Will to take control of a deceased person’s estate.” When the required paperwork is completed and submitted to the court, the judge is most likely to review and approve it without any discussion.

California Document Preparers generally manages this process for our clients. We answer our client’s questions and ensure the Probate process continues to move forward after the hearing. Disputes and objections are rare. Settling an estate is a straightforward, orderly process.

Probate can be intimidating, yet it’s a very methodical process

As part of Probate, the Court appoints a personal representative, or Administrator, to settle the estate, so we work with that person throughout the Probate process. The Administrator is responsible for:

• Collecting all Probate property of the decedent.
• Paying all debts, claims and taxes owed by the estate.
• Collecting all rights to income, dividends, etc.
• Settling all disputes.
• Distributing or transferring the remaining property to the heirs.

Access to the decedent’s accounts

As the Administrator, Abby will gain access to all of her mother’s records–bank statements, savings accounts and income tax returns–to fully understand the financial landscape. This may include valuing assets, taking physical custody of assets and selling assets, as necessary, to pay off debts or expenses.

During Probate, the deceased’s estate becomes a separate tax entity, so Abby will need to obtain a federal identification number and open a bank account in the name of the estate to pay creditors. It is also necessary to file the estate’s tax return and a final individual tax return.

Distribution of remaining assets

Once all taxes and debts have been satisfied, the Court will then distribute any remaining assets according to the Decedent’s will, or according to state law when there is no Will. In California, as in most states, when there is no will, the first priority is given to the deceased’s spouse, followed by the deceased’s children.

In Abby’s case, her father died in 2013, and she was an only child. Once all debts are paid and the estate is settled, the remaining assets will be hers.

We encourage everyone to create a Living Trust

We all hope to live long, happy lives, but sometimes circumstances intervene. Creating a Living Trust is one of the most thoughtful things you can do for your family. Our dedicated team is helpful, compassionate and affordable. Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment

7 Ways One Can Benefit from Divorce!

Whether you’re in the process of getting a Divorce or still just thinking about it, you understand the toll that it will take on you and your family. Divorcing couples are faced with the stark reality that they will be starting a new life as a single person, often a single parent, and on a single income. As couples divide their lives, property and parental responsibilities, they are relieved to be ending what is generally a troublesome relationship, but that ending can leave them with significantly fewer assets and retirement savings.

Most of the articles about Divorce are endless discussions of the negative effects on budgets and families. But here’s a look at seven financial benefits that could help make a sad situation a little brighter.

1. Easier budgeting and more control over money

The end of a marriage can mean the end of fights over money. If one spouse is a carefree spendthrift and the other is thrifty, the relationship will inevitably run into serious conflicts. The expenses you and your partner prioritize and the way you spend money are fundamental to a relationship. If this is one of the issues that has driven a wedge between you and your spouse, and ultimately caused your Divorce, you are looking forward to freedom from having to plead with your spouse to rein in spending.

Nancy Hetrick, a senior financial advisor with Better Money Decisions in Phoenix is an example. In the six months after her Divorce to a spendthrift husband, she accumulated $20,000 in savings, while her ex racked up tens of thousands in debt over the same period. This is a dramatic example of different priorities about how to spend money. In this case, it drove a couple to Divorce.

2. Early access to a retirement fund, penalty-free

A Divorce is one of the few times a person can pull money out of a retirement account early and not be slapped with an early withdrawal penalty. If a Qualified Domestic Relations Order is reached as part of a Divorce, it allows for an early withdrawal from the account. This money is exempt from the typical 10% penalty assessed to those younger than age 59 ½. Note that income tax still needs to be paid if the money is not rolled into an IRA.

Cashing out part of a retirement account can be a risky move, and should only be considered after receiving sound financial and tax advice, but it gives the newly divorced some much-needed cash-flow flow at a difficult time when money may be tight.

3. Potentially better investment returns

Divorce could mean better investment returns, at least for women. Men usually take a more aggressive approach to investments and take more risks. After a Divorce, women have the opportunity to take over their own retirement planning, which ultimately can be advantageous.

4. More college financial aid for the kids

Divorce can be hardest on children, but there is one place where they come out ahead–college financial aid. The Free Application for Federal Student Aid (FAFSA) only requires financial information from the custodial parent rather than both parents. However, child support and alimony received from the noncustodial parent must be included on the FAFSA application. Additional financial aid is a little-known benefit of Divorce, but one that can be significant.

5. Social Security perks for older divorcees

Divorced spouses may be eligible to file for Social Security spousal benefits at retirement. If you were married to your spouse for at least ten years, you’re entitled to these benefits. This is something the ex-spouse doesn’t know you’re doing, and it has no impact on the benefits the ex-spouse receives.

If you were 62 by Jan. 1, 2016, you can file a restricted application for Social Security spousal benefits once you hit full retirement age. No longer allowed for younger workers, this application will allow you to receive half of your spouse’s benefit, while you defer your own and let it grow until age 70. For married couples, this only works if a person’s spouse has already started his/her benefit. For divorced couples, you don’t have to wait until your ex-spouse turns on Social Security.

6. Opportunity to reset financial priorities

Many divorced couples end up resenting the lifestyle changes necessitated by their Divorces. Divorce often means selling the family home; membership in the country club may no longer be affordable. Moving to a more modest neighborhood or apartment may be unsettling. Financial experts point out that a Divorce gives people the opportunity to rethink their priorities. It well may be that giving up a family home is a good thing—families are often significantly overextended with huge mortgages, spending more than they can afford, constantly challenged to keep up with their neighbors. Downsizing and living an affordable lifestyle can be a relief.

7. A better bottom line

Divorce doesn’t have to mean a depleted bank account. Even on a lower income, divorced people can build wealth by making smart use of their resources. Not everyone’s financial situation will improve with Divorce, but some people are surprised to learn that it does.

Getting a Divorce isn’t something to rush into, but if you find yourself in the midst of a crumbling marriage, don’t despair. You can still come out ahead. While it is always disruptive and emotionally draining, many couples enjoy new lives that are free of constant tension and bickering.

Are you contemplating Divorce? 

If it’s uncontested, we can help you. Our dedicated team is helpful, compassionate and affordable. Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment.

When their father died, Allison was surprised to learn that she had been named Successor Trustee of the family Trust. It seemed like a stretch—her brother, Oliver, was a banker, and her sister, Zoe, a lawyer. She, on the other hand, was a wife and mother with an unused elementary education degree. “Why would Dad name me Trustee?” Allison wondered. She had no qualifications and wouldn’t know a Trust from a greeting card. Both of her siblings were far more qualified for this role.

Their father had named Allison as the Trustee because he trusted her

Zoe and Oliver suggested that their father may have felt that Allison had the time to devote to the Trust’s administration and would rely on her siblings for help. But there was a likelier reason. “Allison was always Dad’s favorite. He trusted her. I am not sure he always trusted us.” Allison remained anxious about the new role that she had inherited. She had just started working as a substitute teacher and needed the money, with her kids headed off to college.

“As the administrator, you do get paid from the Trust.” Zoe told her. “Perhaps the fee will be sufficient to cover your lost income, and it’s not a full-time job, so you can still work. Track your hours and we can decide what’s reasonable.”

As usual, Allison was skeptical of advice from her brother and sister “Unfortunately, what may be reasonable to me may not be reasonable to you. I’m going to be facing a big learning curve, and to make this realistic, I need to be able to charge for the time that I spend researching and learning what I need to do. It might be more economical to just hire a professional.”

“Don’t do that,” Oliver said. “They’re expensive and that fee will eat into our income. Let’s agree on a reasonable hourly rate.” Allison promised to talk to her husband and make a decision that was right for her family. Her domineering siblings had always tried to interfere with her decisions and it clearly wasn’t going to stop with their father’s death. “I don’t want to get so bogged down with this that I can’t take care of my family and my job.”

When it comes to Trusts and inheritance, family conflicts have a way of surfacing

The selection of a Trustee is an important, and often difficult, decision. As the previous scenario illustrates, longtime family conflicts have a way of surfacing—especially when there’s money involved. Selecting a family member as Trustee can alleviate Trustee fees, if that person agrees to waive the right to be compensated.

But volatile family situations can make Trust administration difficult. While appointing a third party, such as a trusted friend, a financial adviser or a fiduciary may sustain a fee, it does circumvent family politics. If it’s a complex Trust, a professional trustee may be better qualified to administer it.

It’s a Trustee’s job to administer the Trust according to the instructions set forth in the legal document. They may include monitoring investments, assessing property and other resources, managing the sale of assets, paying taxes, making distributions to beneficiaries, complying with reporting and accounting requirements and responding to beneficiary requests for information. If the Trust is a simple one, these tasks can be managed fairly easily without a significant commitment of time. For more complex Trusts, however, settling the estate can become very time consuming.

Under California law, if a Trust does not specifically identify a fee for trust administration, a trustee is entitled to “reasonable compensation” that may be set by a probate court or the approval of the beneficiaries.

The Trustee’s fee is considered taxable income

Because the fee is taxable, a Trustee who is also a beneficiary may choose to waive payment of a Trust administration fee. An inheritance passed on through a Trust is generally tax-free. In addition, by waiving a fee, more resources remain in the Trust, gaining interest or otherwise accumulating value while the estate is being settled—and if it’s a complex estate, it can take a significant amount of time.

Trust administration requires careful documentation

Trust administration requires careful documentation. It means creating descriptions of tasks performed and saving receipts for administrative expenses. When it comes to naming a Successor Trustee, the primary consideration should be focused on that child, friend or professional who will ensure that the Trust is administered impartially for all, in accordance with the grantor’s instructions.

In our case, their father well may have appointed Allison for a very good reason. While he knew that Oliver and Zoe were far more qualified to be dealing with legal and financial records, he wasn’t convinced that they would be honest and impartial in distributing his estate among the three children. But he knew he could trust Allison to do what was right.

Is creating a Living Trust one of your plans for the New Year? Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. We’re helpful, compassionate and affordable.