Revocable Transfer on Death Deed? A Better Solution: Living Trust

A woman, “Joan”, recently came into our Oakland office to talk to us about adding the names of her longtime partner and her daughter to the Deed for her home. As with many of our clients, health issues had caused her to think about succession planning. Joan had recently had a heart attack, and while she was recovering, it had been a sobering experience, and she was making lifestyle changes now to avoid further stress on her heart.

Joan was 72 years old and the home in which she and her longtime partner, “Jim”, lived was completely paid off. The title was in her name only, and she wanted to add Jim and her married adult daughter, “Claire”, so they wouldn’t have to go through Probate if something happened to her. Her neighbor had told her about revocable transfer on death deed. California offers this option so that real estate can bypass Probate. Joan would retain ownership of the home until she died, at which time it would pass to the people she designated in the death deed.

Bequeathing a home to two people who aren’t related: proceed cautiously

People should be thinking carefully about bequeathing a home to two people two who aren’t related or married. In this case, there are several things to be thinking about. Joan might have intended for Jim to stay in the home until he died, when he would pass it on to Claire. Relationships change when there’s money involved. The daughter, for instance, might have other intentions. She might have been more interested in the money she would make from the sale of the house in today’s inflated real estate market than Jim’s wellbeing. There are other issues associated with dual ownership. Maintaining a home is expensive. If Jim continued to live in the home and it required expensive repairs, such as a new roof, would Claire be responsible for half the costs?

A better way to avoid Probate: A Living Trust

A better way to avoid Probate is to create a Living Trust that identifies the process for the home’s succession. A Living Trust details the distribution of all assets, along with other items that may be of monetary or sentimental value. Joan would be able to specify that Jim would live in the home until he died, at which time the property would transfer to Claire. The home’s Deed would be moved into the Trust.

For Joan, our Living Trust package provides other benefits and some peace of mind that she needs at this point in her life. Our Trust package includes a Power of Attorney and an Advanced Healthcare Directive. In this way, Joan would be naming Jim or Claire to make decisions for her in the event she became incapacitated and no longer able to do this herself.

Are you still putting off creating or updating your Living Trust? We prepare the legal documents and notarize them--most of our clients tell us they’re surprised at just how easy it was! Make an appointment today to get started on your Trust. We’re Helpful, Compassionate and Affordable.

After 10 years and 5 Employees, Sole Proprietorship Gets Upgrade

Many of our business formation clients are like “Joan”, who came in to our Oakland office to talk to us about incorporating her bookkeeping business. Joan was in her late 50s and had had a good job in the accounting department of a large corporation for more than 20 years. As a manager, she had autonomy, enjoyed her team and her 401k and benefits. She had planned to work there until she retired at 65.

Employer’s involvement in housing market resulted in loss of job

Unfortunately, Joan’s employer was peripherally connected to the housing industry, and the company was affected by the market failure of 2008. Joan never saw it coming when her boss called her into his office and told her that her job was being eliminated. Her six-month severance package helped, but the fact remained that she was a single mother with a mortgage and two kids in college, and now she was jobless in a very bad economy.

Joan updated her resume and began applying for jobs, but they were few and far between. She had a few interviews but never made it to the second round. Within a few months, she faced the reality that she might not find another job, and she couldn’t afford to continue looking. She knew she needed to start her own business. Accounting was what she knew, so she created a website, formed a Sole Proprietorship and launched her new bookkeeping practice.

Ten years later . . .

Joan’s business is thriving. She has two fulltime employees and several part-time people who help out during tax seasons. She knows that her Sole Proprietorship is no longer robust enough to address the needs of the business she owns today. She wanted to create an LLC because of the liability advantages.

The benefits of an LLC

• Protected assets.LLCs provide limited liability protection to their owners (members), who are typically not personally responsible for the business debts and liabilities of the LLC. Creditors cannot pursue the personal assets (house, savings accounts, etc.) of the owners to pay business debts. Conversely, in a Sole Proprietorship or General Partnership, owners and the business are legally considered the same—so that personal assets are vulnerable.
• Pass-through taxation.LLCs typically do not pay taxes at the business level. Any business income or loss is “passed-through” to owners and reported on their personal income tax returns. Any tax due is paid at the individual level.
• Heightened credibility.Forming an LLC may help a new business establish credibility with potential customers, employees, vendors and partners because they see you have made a formal commitment to your business.
• Limited compliance requirements.LLCs face fewer state-imposed annual requirements and ongoing formalities than other forms of incorporation, such as S or C corporations.
• Flexible management structure.LLCs have become popular in the last few years because they may have a simpler organizational structure, unlike corporations which have a board of directors who oversee the major business decisions of the company and officers who manage the day-to-day affairs.
• Few restrictions.There are few restrictions on who can be an LLC owner or how many owners an LLC may have (unlike S corporations).

LLCs may have some potential disadvantages:

• Transferable ownership.Ownership in an LLC is often harder to transfer than with a corporation. With corporations, shares of stock can be sold to increase ownership. Typically with LLCs, all owners must approve adding new owners or altering the ownership percentages of existing owners.
• Less precedent.Because the LLC is a newer type of business structure, there is not as much case law or legal precedent for LLCs as there is for corporations.

Have you been considering changing your business structure to a corporation or an LLC?

We can help you make informed decisions about which business structures are right for you. Make an appointment today at one of our three Bay Area offices to get started. You can also jumpstart the process by purchasing our business formation package from our secure online storefront. We’re available by phone and email to help you through every step of the process. At California Document Preparers, we’re helpful, compassionate, affordable.

Case Study: CDP Helps Ease the Stress of Conservatorship

“Maureen” came in to our Walnut Creek office to inquire about our assisting her in becoming the Conservator for her mother. Her mother was 72, but her family had begun noticing her forgetfulness a decade earlier. They had laughed about it at first—her habit of frequently misplacing her keys, then finding them in the unlikeliest of places, including the refrigerator or the shower stall. Maureen’s mother’s forgetfulness was worrisome for her family as it became more progressive. The father was also in poor health and was not able to help or monitor the mother’s behavior, and it became increasingly erratic; she was carelessly charging things to their credit cards that they would never use.

She drove to a local event one night and couldn’t find her way home. She drove around for three hours before being pulled over by a policeman for reckless driving. The policeman drove her home and talked to Maureen about her mother. It was at this point that the family faced the reality of their mother’s dementia.

Dementia means it’s time for conservatorship

When a neurologist confirmed her condition as advanced dementia, Maureen knew it was time for an intervention. Maureen and her husband lived with her mother and father in their Brentwood home, and they had been acting as their caregivers. She wanted our assistance in creating and filing the legal documents with the court that would make her and her father Co-Conservators for her mother. She felt that her father would be more comfortable with what she was doing if they shared the Co-Conservatorship role.

Filing documents with the court and scheduling an investigator

Maureen filled out our Conservatorship workbook and took it home to review with her father. We created the legal documents and filed them with the court. Part of the Conservatorship process involves scheduling an investigator who goes to the home to ensure that everything is in the best interests of the mother. The investigator then reports back to the court. This critical step verifies that the person for whom the Conservatorship is being created is not being exploited in any way.

Conservatorships can be trying for all concerned—generally the family members who take this legal step so they can manage the care and finances of a family member who can no longer do this for him/herself. Having California Document Preparers prepare and file legal documents can take a huge burden off the family.

A final note: Maureen was realistic and looking ahead; she knew that she was ultimately going to be responsible for both of her parents. She asked about the process for becoming her father’s Power of Attorney. She realized that her father’s declining health meant that soon she would be paying bills, dealing with finances and making other decisions for both of her parents. We gave her the workbook for her father to fill out for his Power of Attorney.

If you’re considering a Conservatorship for someone in your family, contact one of our three Bay Area offices today to talk to one of our specialists. While this can be an emotional time, we help our clients through this process. Helpful. Compassionate. Affordable.

Thinking About Divorce? 7 Things Not to Do

Regardless of how troubled a marriage may be, most couples want to be divorced; they rarely want to go through it.

At California Document Preparers, we assist our clients with uncontested divorce, what we call amicable divorce–where couples agree on division of property and a parenting plan. Yet, given the emotional upheaval and the mountain of details that are inevitable parts of every divorce, it’s not surprising that many couples wind up making critical mistakes. Here are a few things to be thinking about if you and your spouse are contemplating divorce.

1. Don’t forget to update your Living Trust

If you want to prevent your soon-to-be-ex-spouse from receiving the assets you had identified during better times, you need to update these legal documents. If you die before your divorce is final, and you have left your spouse nothing, he or she can sue and recover part of your estate.

2. Don’t take it out on the kids

Children need a supportive environment to deal with divorce. Professionals suggest that you talk about divorce as little as possible, yet answer questions and be truthful; let them know what’s going on and what to expect. Attend school and after-school events, help your kids with homework. Spend time with them. When you’re relaxed, they will be too. Kids are remarkably resilient and savvy; they’re surrounded by other kids whose parents are divorced. They get it.

3. Don’t refuse to see a therapist

Seeing a therapist can help you get through the fluctuating emotions that you will experience. Take care of yourself and think about getting help before you become depressed or angry. A professional therapist is trained to help you and your children through the process. For those who have been married for a long time, a therapist can help you cope with being single again, learning to be self-sufficient.

4. Don’t forget about taxes

Typically, the person who has primary custody of the children lives in the house with the children. But the house may not be the best deal. Maintaining a home is expensive. If you can’t afford the mortgage, taxes and upkeep on the house, you may want to ask for the investment portfolio of equal value instead. You’re now a single person, and the tax landscape changes. A single people is not allowed to shelter as many capital gains from taxes. Stocks can also be at issue. Newly purchased stocks may be more desirable because they will cost you less in capital gains taxes. Not good at this stuff? Talk to your financial adviser or accountant. If you don’t have one, ask us for a referral. It’s a worthwhile investment.

5. Don’t increase your debt

No question about it; divorce is expensive. If you are the spouse who is moving out, you will need money to set up a new household. Whether you’re buying or renting, you’re going to need a large initial payment. Try to get used to having less now. It may seem stressful, but the freedom you’ll enjoy down the line will be well worth the struggle.

6. Don’t wait until after the holidays

There’s no good time of year to get divorced. We traditionally think of the holidays as Thanksgiving, leading up to Christmas and the New Year. But here in our multicultural community, holidays fall on a wide range of calendar dates. For many families, vacations have special meaning—trips to the lake or mountains, family reunions, etc. It’s a lot easier to get used to an empty home before the holidays, and if you’re one of those people who promised yourself you’d never spend another holiday with your spouse, commit to this—it won’t be any easier next year.

7. Don’t forfeit your financial security just because you want out

Just because you want out of your marriage ASAP doesn’t mean you should forfeit your financial security. Be thorough; consult a financial adviser or CPA if you need help. Make copies of important financial documents: pension statements, tax forms, brokerage and mutual fund statements, credit card statements and other records. Be aware of what you own and what you owe. Make sure that you and your children will continue to have health insurance during and after the divorce proceedings. While you are still married to your spouse, an illness or accident can alter the division of property.

Is uncontested divorce right for you? 

California Document Preparers has helped more than 2,000 couples with uncontested divorces.

• It’s necessary that couples agree on division of property and a parenting plan.
• We use attorney-approved workbooks and other materials to collect the necessary data, including information about financial accounts.
• We prepare the legal documents and file them with the court.
• Our dedicated family law specialists are helpful and sympathetic, available by phone and email throughout the process.
• Best of all, we’re affordable—just one flat fee.
• Jumpstart your divorce by purchasing our documents from CDP’s secure online storefront.

Have you been putting off your Divorce? Most of our clients tell us they’re surprised at just how easy it was! Make an appointment today at one of our three Bay Area offices to get started on your Divorce.

Do I Really Need a Trust or is a Will Enough?

We get a lot of questions from our clients about whether or not they really need a Revocable Trust or whether a Will, a simpler legal document, is enough. Trusts are an increasingly popular estate-planning tool for a number of reasons. Trusts are private while a Will is a public document, available to anyone who wants to search public records. If your privacy is important to you, you want a Living Trust.

Let’s look at the case of the late North Carolina basketball coach Dean Smith

Smith died in 2015 and left $200 each to an estimated 180 players he’d coached over the course of his 36-year career. The small payouts come from his Revocable Living Trust—not a Will. Smith had set this up because he didn’t want attention on himself; rather, it was about his players, as it had always been. Coaching and mentoring young men, including Michael Jordan and James Worthy, was his legacy, and he was widely admired not just for his winning record but for running a consistently clean program with a high graduation rate; an estimated 97% of his athletes received degrees. Smith also helped promote desegregation by recruiting the university’s first African-American scholarship basketball player and pushing for equal treatment for African Americans by local businesses.

For Smith, each of his players was special and important

Each of Smith’s players who lettered received a check for $200 and a letter, suggesting he “enjoy a dinner out, compliments of Coach Dean Smith.” Because this was set up as part of a Revocable Trust, each transaction was completely private; it only became public when former players posted their letters and checks on social media and they went viral.

Other advantages of a Living Trust

• Revocable means that if you change your mind and want to dissolve the Trust at some point, you can do so without a problem or penalty.
• Assets that you transfer into the Trust don’t go through Probate when you die. Without a Living Trust, your heirs must go through Probate, and your Estate becomes a matter of public record. Probate can be time-consuming and expensive.
• Many of our clients are concerned that they will have forgotten to include some of their assets in their Living Trusts. For this purpose, there is a safety net that California Document Preparers includes in our Living Trust package called a Pour Over Will. It essentially transfers any remaining assets or property not previously transferred into the Trust—they “pour over” into the Trust so they may be distributed according to the terms of the Trust.
• As part of our comprehensive Living Trust package, we also include a Power of Attorney and Advance Healthcare Directive. We want our clients to be thinking about the full range of end-of-life document requirements and needs. Whom would you appoint to make healthcare decisions for you if you were no longer able to make these decisions for yourself and who is the best person to help with paying bills and managing your everyday needs.

One more thing: A Living Trust is meaningless if it’s not funded—your assets, including real property, must be moved into your Trust. Your Trust should also be updated with important life events—births, deaths and important investments.

Are you still putting off creating or updating your Living Trust? We prepare the legal documents and notarize them–most of our clients tell us they’re surprised at just how easy it was! Make an appointment today to get started on your Trust.

Divorce Finalized Within Six Months of Initial Office Visit

Sally and John came into our Walnut Creek office on a Saturday morning, seeking more information on uncontested divorce, what we call our friendly divorce. They knew their disintegrating relationship was affecting their two teenage sons; they’d tried both individual and couples counseling, but after 15 years, they had grown apart. While they hated the idea of shuttling their kids between two homes, they knew that it was better for their sons than the environment in which they were now living.

This couple had good jobs and assets

Sally was a nurse practitioner at Kaiser and John was an executive at Chevron. They had a home in Pleasant Hill, retirement accounts and other assets. They had tried do-it-yourself divorce packages, but quickly realized that they had neither the time nor the knowledge to properly prepare and file the legal forms. They heard about California Document Preparers from one of their neighbors, and because theirs was an uncontested divorce—they were in agreement about division of property and a parenting plan–we were a good fit for this family.

They had already identified division of assets and a parenting plan

Sally and John’s case was easier than many because they had already agreed on an equitable division of assets, and they’d worked out a parenting plan that fit their schedules, yet allowed for some flexibility as their family adjusted to the new normal. Both parents were prioritizing the wellbeing of their children, and it influenced all of their decision-making. Sally was keeping the family home in Pleasant Hill, and their sons would live with Sally during the week so they would stay in the same neighborhood and go to the same school. Sally and John believed this would provide the most continuity and least disruption for their sons. John planned to buy or rent a condo in the Pleasant Hill/Walnut Creek area so that he’d be close by to pick the kids up from sports and other activities. The boys would be spending weekends and some holidays, as well as half of their summer vacations with their dad.

Our family law team helps our clients identify financial responsibilities

John was keeping his Chevron retirement and 401K, which was nearly double Sally’s retirement plan. We ran the numbers for them, so John knew his child support would be $1,800/month. Sally was getting a substantial promotion in a few weeks, and they agreed that $1,500 would be enough. They also agreed to split 50/50 all other expenses for their sons, including school and sports activities, clothing, summer camp, music lessons, etc.

Sally became the petitioner and John would be the respondent

• Within two days, we had Sally’s first documents and the disclosures completed and Sally came in to sign them.
• We took everything to court and filed the documents the following day.
• John came in to be served just one week from the day they had first visited our office.
• Within seven dayswe had everything established with the court.
• One month later Sally and John came in together to sign their settlement agreement.
• When Sally and John left our office they each hugged each other—they were happy to be finalizing their divorce, remaining on good terms to share parenting responsibilities.
• They were legally divorced six months after their initial visit to our office.

Best of all: our one flat fee is inclusive. No surprises. 

Follow-up: A Living Trust for Sally

As a single mother, Sally felt new responsibilities, and she came back into our office to create a Living Trust to protect her assets for her children, and she had encouraged John to do one as well.

Divorce is never easy, but our family law specialists are compassionate and accessible. We’re available by phone and email throughout the process, and most of our clients tell us they’re surprised at how easy it was. If you have questions about getting an uncontested divorce, contact one of our three Bay Area offices today. Helpful. Compassionate. Affordable.

Mom’s Sudden Death Results in Probate

A client came into our Oakland office in late January to ask if we did Probate, and we assured him that we do. His father had died of cancer in 2015 and his mother had died over the Christmas holidays--a long, sad holiday for the entire family. His mother was just 75 and vigorous—always busy and active. She still lived alone, exercised regularly, loved to travel and get together with her many friends. He had often talked to his mother about creating a Living Trust and a Power of Attorney in case he needed to be making decisions for her, and she always added it to one of her many lists—but she never followed through.

She tripped and slammed her head on the railing

In December, she was on one of her daily walks when she tripped on debris, slammed her head on the iron railing of a bench and crashed to the sidewalk. Local schoolchildren saw her fall, ran over and called 911. She was rushed to the hospital, but she never regained consciousness and died in late December.

Facing both the loss of a loved one and Probate

Now our client was facing both the loss of his mother and the time-consuming, expensive prospect of sorting out her estate in Probate court. He knew it was going to become complicated; while his parents weren’t rich, over the years, they had acquired assets, and they had prepared for a comfortable retirement. The Piedmont home where he and his sister had grown up had appreciated significantly in value. There was a life insurance policy, and they had invested in artwork. There was an expensive car, antiques and jewelry. To complicate matters, his parents had owned a timeshare in Hawaii—the whole family looked forward to their yearly vacation together.

Uncontested Probate--no heir is seeking a larger portion of the estate 

California Document Preparers helps our clients with uncontested Probate—that in which no heir is seeking a larger portion of the decedent’s estate--which saves them a significant amount of money on legal fees. In this case, our client and his sister were the heirs and neither was contesting the estate.

The Court-appointed administrator’s role

As part of Probate, the Court appoints a personal representative, or administrator, to settle the estate, so we work with that administrator throughout the Probate process. In this case, the son became the administrator, who is responsible for:

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

Access to the decedent’s accounts

The Court-apppointed administrator will be able to gain access to all of the decedent’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 the administrator must obtain a federal identification number and open a bank account in the name of the estate, from which 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 state law. In California, as in most states, the first priority is given to the deceased’s spouse, followed by the deceased’s children.

If you’re facing Probate, call one of our three Bay Area offices today to schedule an appointment. Better yet, avoid Probate and get started on your Living Trust! Most of our clients tell us they’re surprised at how easy it was. Make it even easier by purchasing this from our secure online storefront—we’re still available by phone and email when you have questions.