7 Reasons to Have a Pet Trust

January 29, 2009

Last year we posted a blog about cats living it up in a retirement home in Spring Valley thanks to a pet trust. Wherever you are in San Diego County, do you consider your pets part of the family? You are not alone if you do. 87% of Americans consider their pet a family member. Do you need estate planning for this family member? If you have a number of family members or friends that will step in to care for your pet, then maybe not. If any of the following are true, however, you might consider having a pet trust.

1. You have pets with a long life expectancy. Some pets are almost sure to outlive you. Birds and reptiles have exceptionally long lives. Some turtles can live almost 100 years. A macaw for example can live to be 80. Horses have a life expectancy of twenty to thirty years.

2. You live alone. If you live alone with your pet, you need to consider who would step in and care for your pet if something happened unexpectantly to you.

3. You have a chronic illness or your life expectancy is shorter than your pet. If you pet is likely to outlive you for some reason, you may need to consider making arrangements for care after you pass away.

4. Your pet is one that not just anyone can care for. Horses for example have to be cared for by someone that has experience with horses. An expensive show horse requires someone who can manage the training, feeding, and showing of the horse. A dog that is a Great Dane cannot be taken in by just anyone. Perhaps your grandson or daughter live in a apartment or have a new baby.

5. You have multiple pets. If you have a bird aviary, a stable of horses, a petting zoo perhaps, it may be difficult to find a family member or friend that can care for them. To keep your pets together, you may want to consider a pet trust.

6. Family members would not be good pet caretakers. There are many reasons why a family member may not be a good choice to care for your pet. Maybe they are allergic to cats, hate dogs, or maybe they just don’t have the time to give your pet the love and attention it is used to.

7. You have a guardian for your pet but the guardian needs assets for the pet’s care. Maybe you have a wonderful pet lover in mind to care for your pet, but that individual doesn’t have the resources to take care of the pet for the pet’s lifetime. In that case, a pet trust can solve the problem by setting aside assets in trust for the care and maintenance of your pet.

Read more about pet trusts and contact us at Law Office of Scott C. Soady, A Professional Corporation for a free consultation. We can help you estimate how much should be set aside for your pet and decide who will be the human trustee to manage the trust.

Financial Elder Abuse on the Rise

January 26, 2009

As the population of people over 65 increases, so does the incidence of elder abuse and neglect. Elder abuse can be physical, emotional, or financial. The San Diego Police Dept. reports that San Diego has over 300,000 seniors. One out of every 20 elders will be a victim of elder abuse sometime in their lifetime however many incidents go unreported.

Financial abuse is the taking or using of an elder’s money or assets contrary to the elder’s wishes or needs. It can be as simple as taking money from someone’s wallet or using an elder’s credit card to identity theft or telemarketing scams. In the area of estate planning, financial elder abuse may be misusing a power of attorney or using undue influence to cause an elder to change a will or a trust or a beneficiary designation. Financial abuse is particularly devastating to an older person as it can drain the victim of their life savings and cause them to feel helpless and worried about their future.

What are some of the warning signs that someone you know may be the victim of financial elder abuse?

1. Unusual bank withdrawals from an ATM or unusual checks written to strangers or containing signatures that do not look like the elder’s signature.

2. Missing checks or credit cards or unusual activity on a credit card.

3. The sudden appearance of a stranger who becomes close to the elder and seems to want to take over the elder’s financial affairs.

4. Home improvements or items purchased which seem unnecessary.

5. Changes in account beneficiaries or new signers on an account.

6. Execution of a new power of attorney.

7. Changes in property title, deeds, or new mortgages.

8. Changes in wills or trusts if the elder seems incompetent.

9. The elder seems confused about his or her financial affairs.

The experienced estate planning attorneys at Law Office of Scott C. Soady, A Professional Corporation handle elder abuse cases and can advise you about issues of elder abuse. Contact us for a complimentary consultation. Also look for later blog posts on steps to make the elder less vulnerable and remedies for elder abuse.

Accidental Disinheritance by "Ademption"

January 22, 2009

When people give particular assets to someone upon their death, what happens when that asset is no longer in the estate at the time of death? "Ademption" is the term used in the area of wills and trusts to describe a situation where property left to a beneficiary is no longer in the estate when the decedent dies. In that case, the property is "adeemed", i.e. the gift "fails" and the beneficiary does not receive it.

As a example, a father leaves a condominium to his daughter- maybe because she lives in the state where it is located or he wants to keep it in the family and she would be most suited to inherit. He provides in his will or trust that his other two children divide the rest of his estate. Years later he decides to sell the condo but forgets to update his will or trust. When he dies, the condo is not part of his estate and since the daughter isn't mentioned anywhere else in the estate plan, she is accidentally disinherited.

Another example is where a woman provides in her trust that she wants her 1000 shares of XYZ stock to go to her grandson. The rest of her estate is to be divided between her two children. She decides to sell the stock (or the company dissolves) but she forgets to update her trust to leave her grandson some other asset or cash bequest. When she later dies, the stock is not in her estate and the grandson gets nothing.

These are examples of unintended results caused by failing to update a will or a trust. Accidental disinheritance can occur in other ways too. Look for a later post on not coordinating your beneficiary designations with your will or trust. If you need your will or trust updated, contact us to set up a complimentary consultation.

Obama to Keep 2009 Estate Tax Level

January 19, 2009

Last week the Wall Street Journal reported that President Obama wants to freeze the current estate tax level to $3.5 million which is the estate tax exemption amount for 2009. Currently only estates with more than $3.5 million ($7 million for couples) have to pay estate tax. Obama intends to set forth his estate tax proposal in his budget next week. If the legislation is passed by Congress it will mean that the estate tax which was set to expire in 2010 would remain at $3.5 million.

The estate tax was enacted in the early twentieth century as a levy on wealth and inherited assets. It was later modified to provide that one spouse could leave an estate of any amount to the other spouse without any tax. In 2001 under President George W. Bush, Congress approved a gradual increase in the amount of the estate tax exemption with a total repeal in 2010, only to have the estate tax return in 2011 with an exemption amount of $1 million.

With the estate tax level set a $3.5 level, it is estimated that less than 2% of all deaths in this country will result in the payment of estate taxes. The vast majority of us do not have to worry about our heirs and beneficiaries having to pay estate taxes. That does not mean however that we don’t need estate planning. Even if taxes are not an issue, most people need to create a revocable living trust to avoid probate and insure that their estate is distributed to their beneficiaries on the terms they specify. If we can help with your estate plan, call us or email us at Law Office of Scott C. Soady, A Professional Corporation.

Do I need a trust if I just have a home and not much else?

January 15, 2009

People with little assets other than their home many times need a living trust more than individuals with more assets. Why? Picture this scenario: With the high cost of housing in the San Diego area, many couples both work to pay the mortgage on their home. They don’t have a will or a trust but own their home in joint tenancy. Husband is involved in a serious accident and has a brain injury which makes him unable to work and incompetent. They need to sell their home because of the loss of husband’s income. How is the wife going to sell the property?

Since the title is held in both their names, the wife cannot sell the home because the husband is incapacitated. The joint tenancy with right of survivorship only applies if the other joint tenant is dead. The husband is not dead and they both need to sign the escrow documents. Even if they had wills, a will would not be of any assistance because the husband is still alive. The wife’s only alternative is to have her husband declared incompetent and become his conservator. Conservatorship is costly and takes time. With mounting medical bills and loss of husband’s income, there is no money to pay for a conservatorship. Also a prospective sale may be lost during the time it takes the court to appoint the wife as conservator.

A revocable living trust would have avoided this problem. With a revocable living trust, there are incapacity clauses contained in the trust. Both spouses are usually trustees but one can serve as sole trustee in the event of a incapacity. There are also durable powers of attorney which enable you as your spouse’s agent to take over the finances and sell the house. In addition, powers of attorney for health care are included in our revocable living trust package that allow you to make decisions about your spouses’s health care including life support and other measures. Contact us at Law Office of Scott C. Soady, A Professional Corporation,LLP to set up a free consultation about living trusts.

Trust Administration in San Diego

January 12, 2009

Living trusts save beneficiaries thousands of dollars in probate fees, however, upon the death of the Trustor, there are still steps that need to be taken by the Successor Trustee. These steps are called trust administration and often require some assistance from an experienced attorney. If these actions are not taken or done incorrectly, the Successor Trustee may be held liable to the beneficiaries.

The California Probate Code requires notification by the Successor Trustee to the beneficiaries and heirs of the person who has died. A copy of the will must be filed with the County Clerk. Notices should be sent to the Dept. of Health Services to determine if the person received Medi-Cal benefits as there may be a lien against the estate for reimbursement of those benefits. A similar notice of death should be sent to the Social Security Admiistration, Veterans Administration (if applicable) and the credit bureaus. Creditors may need to be dealt with. The issue of estate taxes needs to be considered.

Trust assets need to be inventoried and valued as of the date of death and decisions made as to how the assets will be distributed to the beneficiaries. Will assets be liquidated to provide cash to the beneficiaries or will the assets themselves be divided up in a manner which fulfills the trust's provisions?

Trust assets consisting of real property need to have the title changed so they can be distributed according to the terms of rhe trust. A Notice of Affidavit of Death needs to be prepared along with new deeds recorded with the County Recorder. If the transfer is from parent to child, a claim for exemption from property tax reassessment should be filed with the County Assessor's office.

As a final step, the administration should be completed with a final accounting of the estate or a waiver of such accounting by the beneficiaries.

These are just some of the steps which are necessary in a trust administration. If you are a Successor Truste and need assistance with trust administration, contact us at Law Office of Scott C. Soady, A Professional Corporation. Your first consultation is always complimentary.

Even Famous Lawyers Don't Provide for their Death

January 8, 2009

You would think that people who have practiced law would know the benefits of a well drafted estate plan. I guess it is like the old adage that “the cobbler’s son has no shoes.”

Who knows how many lawyers in this country do not have a will or a trust. Abraham Lincoln, a lawyer before he became President, died intestate (without a will). Maybe like most of us he wasn’t anticipating dying at the age of 56.

Some judges have died without an effective estate plan. In 1910 a Judge of the New Jersey Court of Appeals left no will with an estate of between $100,000 and $500,000.

Supreme Court Justice Warren Berger, a former Chief Justice, left a short one page will which did not have any specific powers granted to his executor and didn’t say anything about debts, expenses, or taxes. He was a lawyer who had practiced law and taught law school. He served as an assistant Attorney General in the Justice Department before becoming a Supreme Court Justice.

So you are not alone if you don’t have a will or a trust, but nonetheless it can be a costly omission for your heirs. Furthermore, the Probate Court, which writes your estate plan for you in the event you don’t, may not have the same ideas you do about where your money should go. See our prior blog post (August 2008) about all the things you can’t do without a will or a trust.

Contact us at Law Office of Scott C. Soady, A Professional Corporation if you would like a free consultation about an estate plan.

Strange Bequests in Wills and Trusts

January 5, 2009

If you create a will or a trust, you can make any kind of gift you want to whomever you want. You can also make stipulations that a certain event must occur for the beneficiary to receive the inheritance. Some people, for example, provide for distributions to children or grandchildren if they graduate from college or they stay off drugs.

Some more outrageous bequests or conditions have been:

A Finnish business man left 780 shares of a rubber boot company to the residents of a nursing home in Finland. That company later became Nokia, which makes cell phones, making all the nursing home residents millionaires.

George Bernard Shaw, the Irish playwright, left his fortune to the person who could create a new English alphabet. The money was ultimately shared between 5 people who created phonetic alphabets.

You’ve probably heard of Leona Helmsley, the Queen of Mean, who left $12 million in trust for her dog excluding two of her grandchildren.

Comic book writer Mark Gruenwald provided in his will that his cremated ashes be mixed with ink and used in a comic book.

In 1862 Henry Budd bequeathed money to his two sons on condition they never grow mustaches. (How would that be enforced?)

Star Trek creator Gene Roddenberry’s ashes were flown into space and shot out as the satellite orbited the earth.

But strangest of all - Juan Potomachi left over $50,000 to the Teatro Dramatico in Buenos Aires, on the condition that his skull be preserved and used in the production of Hamlet.

We can help you with whatever bequests you want in your will or trust although carrying out similar ones to those here might be difficult. Call us or e mail us at Law Office of Scott C. Soady, A Professional Corporation if you need a will or a trust drafted or updated.