Mediation

I thought I'd start the first of future entries on mediation with my write-up from several years ago about my very first mediation. The case involved the auto accident case of one of my estate planning clients--she was a particularly tough nut, proud of her Italian heritage and her skills at the card club table. As you'll read, the case involved some low numbers, so it was a good training exercise, but the higher number cases I deal with now have much of the same dynamics. People are intensely and emotionally involved with their cases, opposing attorneys often have strange and indefensible positions and are exceedingly acidic to boot and the good mediators do a heroic job of finding common grounds for possible settlement between the parties.

I can also tell you that my client, referred to as "Bitter Old Lady" below, went on to do several estate plans which angered various of her heirs, resulting in some colorful litigation and eventual settlement after her death. I'm sure she kept attorneys busy long before she met me. I do miss her, and we still quote some of her wisdom around here, including some I can't print.

With that, my account follows--the names have been kept confidential, and some language has been removed:

We arrive at Expensive Law Firm’s 36^th floor office at Something Towers. Counsel for Insurance Company’s in-house legal department is there, Bill R, wearing his usual 3-piece suit with a bright yellow tie with giant smiley faces all over it, except some of the faces are angry. This is a sign. Mr. R won’t smile, won’t respond to your hello, except to acknowledge your presence. As my Partner Y said, it’s obvious this job of his is the latest in a rapidly falling career trajectory. Before I got there, Partner Y asked our Associate attorney X to “schmooze him up,” but even gregarious Associate X couldn’t crack him.

The insurance adjuster was 20 minutes late, apologized, and when Partner Y introduced himself as having formerly worked for her, she had no idea who he was. At least he remembered her, so he knew what sort of thinking was going on in her icy head. Oh, and the large mother and semi-large driver defendant were there too, but didn’t feel like talking.

I gave my opening statement, and then the mediator asked the wrong question: “Mrs. Bitter Old Lady, do you have anything to add?”

“You bet I do. Just that I’ve been living with pain since the day that girl hit me. Pain in my ___. My rectum. Can’t hardly walk. Doctor says I need surgery, but I’m too old. TOO OLD! No way I’m doing it, I told him. And I’d like that girl over there and her mother to feel the pain I’m feeling EVERY DAY. And there was a hair dryer in the seat behind me, a big one like they use in the hair salons, you know what a hair dryer is? Do you?

This went on and on until he finally stopped her. He did not make this mistake again. By the way, the medical records show no indications for surgery, no crushed vertebrae she insisted were there, no current injury, no arthritis, no osteoporosis, just some narrowing of the joints due to age, but she still carries those records with her as if they’re evidence of her condition delivered by God Himself, but I digress.

Then, Mr. Smiley Tie looks at Ms. Adjuster (by the way, his nose is covered with oil at this point, and somehow a lot lighter than the rest of his face, which is not oily), gets up and throws four pictures on the table with a flourish. “This is the car they were driving in. No damage. THAT’S my opening statement!”

“Could you show us the pictures of their car?” I asked. Well, he had those too, the ones with $2,400 in damage. Maybe I should have thrown something on the table with a flourish, but that seemed like a good time to break off, as nothing good could come from all of us being in the same room.

The mediator took us down to a small conference room with a downtown view, and it took some tapping on every window to convince Bitter Old Lady she couldn’t open the 36^th floor windows for a smoke.

The mediation dance then took place, with the final result being $3500 for Bitter Old Lady’s Friend and $4500 for Bitter Old Lady, with a large cut in our own fees so that we wouldn’t have to see her again—Partner Y was ready to take this to trial and watch Smiley Face beat up on an old lady in front of the jury, but then again, she may not make the most sympathetic witness if you have to take more than 10 minutes of her. Still, $10,000 to12,000 was possible at a trial It would be good experience, if not economically sensible.

The highlights: the inevitable fight between Bitter Old Lady’s Friend and Bitter Old Lady, which provided plenty of entertainment for the office staff (Associate X bonded well with the secretary who had a hula girl on her desk just like the one in Associate X’s car (“Really? I had it my car too! It just didn’t stay up, so I had to take it in here!”). I believe this started when Bitter Old Lady’s Friend tried to tell Bitter Old Lady that settling would be a good idea, because the best result at trial wouldn’t put any more cash in her pocket than today’s settlement.

“Bitter Old Lady’s Friend, you’re nothing but a cheapskate and a _______ liar![1] You took that $50.00 off my breadboard, and I had to call the police on you. Your husband tells me you’re a cheapskate too. You tried to lie about the hair dryer, and you don’t care about me now. You’re a piece of _____, and nothing but a liar!”

Bitter Old Lady’s Friend rises (slowly) out of her chair now. “How dare you, Bitter Old Lady! How dare you say that! Associate X tried to intervene and calm Bitter Old Lady’s Friend down—I tried the same with Bitter Old Lady, but it was no use. They were both yelling, and in each other’s face, putting on a good show in front of the conference room’s glass wall like a zoo exhibit.

Bitter Old Lady: “Oh, you want the truth? You want the truth?[2] You’re a conniver, and a liar about the hair dryer, and you lied about your chiropractor, but I’m in terrible pain every day. EVERY DAY! I got crushed vertebrae, my spine curves into my stomach and out my ______, my chiropractor won’t touch me, I got electric shocks goin’ up in my shoulders. Ten thousand is not enough, and that’s all them cheap S.O.B.’s want to give me? What? Not even that? You gotta be kiddin’. Well Bitter Old Lady’s Friend can take hers, but I want no part of it.”

Partner Y gets Bitter Old Lady’s Friend out of the room, where she agrees to her settlement—with some more work, Bitter Old Lady does the same, but not until gasping that she’s got papers that will blow this case wide open: “I got a ……foot ……locker in my house, locked with a key, you can’t get it open ….no way. ……” This then trailed off, and we were left with the mystery.

I forgot to mention that earlier Associate X and Bitter Old Lady were trading notes on which are the better local casinos, as both have been known to play five-card stud. On the way home, Bitter Old Lady wanted to let me know that Bitter Old Lady’s Friend’s no-good son just got out of prison for "stealin’." He is gainfully employed as a truck driver, however.

Last note: part of the final agreement was that Bitter Old Lady would never contact the defendants again, ever. She kept her promise.

---

[1] Her pronunciation of “liar” is much like “lawyer.” Thus, when she earlier accused Partner Y of being a liar, he said he was indeed a lawyer, even though she mistook him for a “whatchamacallit, one of them paralegals” at first.

[2] Here is where I heard “You can’t handle the truth!” from Associate X. Thankfully, the two ladies were too engrossed to see us smiling.

Stock market's silver lining

Here's a short but important thought...someof the most powerful estate planning tools involve giving away your assets now, whether outright to beneficiaries or more likely in structured vehicles that move them out of your estate but still give you some (or a lot of) benefit. If your estate is one that is likely to see estate tax when you die (currently estates over $3.5 million net value), using your lifetime gift tax credits to make gifts now instead of later is often a good idea. It works well because the assets continue to appreciate but their values for gift/estate taxes will be the values at the time you make the gift.

It works well in good times, but now, with stocks at 50-60% of their previous values, and homes and investment properties at 60-80% of their previous values, the gifts you make give you more bang for your buck.

The names for some of these types of strategies are: Grantor Retained Income Trusts (GRITs), Qualified Personal Residence Trusts (QPRTs), Grantor Retained Annuity Trusts (GRATs), Grantor Retained Unitrusts (GRUTs) and Intentionally Defective Grantor Trusts (IDGTs). Yes, "defective" is part of the name, but in this case it's the kind of defect that's good for you. There are also still opportunities with Family Limited Partnerships (FLPs).

Review your estate plan with an experienced attorney (ours are always available) and get a list of all the planning opportunities you have--you'll be pleasantly surprised, and happy you did it before you lose this valuable opportunity.

Dr. Bob Pierce

One of the things that reminds me I'm getting older is being reminded that my parents are getting older. They were in town last weekend for my dad's 50th high school reunion--he's part of the class of 1958 from Pasadena High School. In fairness to them, they don't seem nearly that old. He brought old photos from then, with some great slicked-up hair. Another one was a photo of my mom's 1959 Arcadia High School class. We were able to find her, so she hasn't aged much either, I guess. She pointed out some of her friends in the class, including Sharon Pierce. I'd heard her name before as someone she remembered fondly. I'd wondered, though, why they weren't in touch now.

Sharon Pierce's father, Dr. Bob Pierce, is indirectly responsible for my being in the estate planning and probate field. After a tour of impoverished parts of post-World War II Asia, he was determined to alleviate the suffering he saw there, and founded the World Vision charity to accomplish this in 1950. He was a dynamic man, and traveled the world looking for more people to help--his famous quote is "Let my heart be broken by the things that break the heart of God." His truly was, and his work has today has reached tens of millions of people. My grandfather Lee Bernard was anxious to work with him and asked for a job--Pierce told him the only one available was as director of planned giving/estate planning, something Grandpa knew nothing about. Pierce was nothing if not dynamic and persuasive, and told him he'd be perfect for it. It probably helped that Pierce was a spiritual giant to him, much like Billy Graham, another man he'd worked for.

With a lot of early learning on the job, he indeed turned out to be perfect for it, left Kansas City for Arcadia in 1958, and stayed with World Vision until 1972, when he formed his company to do the same type of work on a freelance basis for charities. It was the family business until my parents retired from it. I had a difficult time figuring out what the business was about until I worked there in high school and college, but the family conversations and numerous charity banquets had their effect, as I didn't (and still don't) find any legal work more interesting than probate and trusts--whether families are fighting or harmonious, finding solutions is very satisfying work.

The discussion last weekend led me to look up more about World Vision's early days, and I came across a book written by Pierce's daughter Marilee, Man of Vision. It helped bring the man and his incredible work to life, but also dealt with the pain to his family by his being away from them so much doing that work. It led to the deterioration of his marriage, and his three daughters needing more love and approval from a father they didn't know very well. One of them, Sharon, took her life in 1968 after keeping much of her personal pain from her family. My mother has never talked about this part of her friend's life. A few days before he died in 1978, the Pierce family reunited for the last time with an open, honest, healing discussion to help heal their wounds. The reconciling came too late for Sharon. It didn't for the rest of the family, and is a further inspiration for other hurting and broken families--I see hurting and broken families every day.

Think about your gifts

Before I was old enough to know who the architects behind it were, I was an enormous fan of modern architecture. Later in my reading I discovered the names: Wright, Le Corbusier, Johnson, Lautner and especially Neutra. Glass walls retracting to bring in the outside, fountains and pools inside and out, houses on the edges of hills--these were the kinds of things I wanted to have, build and live in. Their clean, simple lines were turned into works of art by the photographer Julius Shulman. His camera seemed to love the architecture of Neutra, and over the years I've collected many books with his photos of Neutra houses.

Most of Neutra's work was for clients building their personal homes, so photos were as close as I thought I'd come to seeing his work (except for a few nondescript facades in the Valley, mostly covered with foliage). His remaining houses are in private hands, and more are destroyed as the years go by. And my dream of owning one is probably out of reach now too, as the recent modern craze has people restoring them (which I appreciate) and purchasing them at stratospheric prices (which I don't appreciate). I am fortunate to live in a historic landmark somewhat inspired by Neutra, but was lucky enough to purchase it before its value soars stratospherically (wishful thinking).

I was excited to see, then, that this year the architect's own home, the VDL Research House II, in Silverlake, would be open for tours on the weekends, with just a $10 charge. The house was left to Cal Poly Pomona University in 1990 by the architect's widow with the hope that it would be open to the public and used for architectural teaching and study. It has occasionally been open on tours since then, but access has, to my understanding, been mostly for private university functions and use by the architecture faculty/students.

I took the tour, and it was an amazing experience. Mostly because it wasn't the roped-off, limited access, Plexiglas-covered historical house tour, but it was a walk through the house with complete access, in the condition it pretty much was when he lived there. Once the tour was over, we were free to stay and wander around the house and take it all in. Maybe another Neutra-geek's thrill has matched mine that day, but I doubt it.

At the same time, it's a bit sad, seeing all the work the house needs--it has the same maintenance issues our houses all have...there hasn't been water in the reflecting pools for a long time because they leak. The roof leaks in several places, evidenced outside by the blue tarp and inside by the loose plaster on the ceiling. The elaborate lighting systems are off. The floors are stained. The giant louvers at the front haven't worked for years. All those fantastic machined metal surfaces could use some polishing.

The website devoted to the house explains why, and perhaps the reason for the new public access--the $100,000 left by the widow to cover expenses ran out quickly, and the school's administration (not its faculty or students) has apparently seen the house as more of a bother than an asset. It survived on a small $10,000 budget per year, with architecture professors fortunate enough to live in the guesthouse and maintain the home. Then that funding dried up, and "Friends of the VDL House" have been scrambling to raise funds to prevent its sale to a private party. They've raised the initial $30,000 to keep it open, and are now working on the $1,000,000 needed by the end of next year to fund the endowment to keep it open perpetually and make the necessary repairs. I've already donated, and I'm sure they'll get more money from me too. It's one of L.A.'s treasures--take a look at www.neutra-vdl.org. Even if they're not successful in raising the money, it's all the more reason to get a look before it's sold to a private collector for an unheard-of price.

As an estate planner, I wished I could have had the input on the original plan by the architect's wife, Dione Neutra. She had the best of intentions, and most likely talked them over with the recipient, but somewhere the plan went wrong. It's planning for the "Plan B" what-ifs that distinguish a good plan from a great plan, as life has a way of working out differently than your plans. Just ask the families of the people who left their treasures to the state parks system and now hear we have to prepare for wide-scale park closures. By the way, I didn't get my law degree and license until four years after Mrs. Neutra's death, so I wouldn't have had the opportunity to advise her anyway, and my youthful inexperience wouldn't have helped either.

Speaking of youthful inexperience, I can remember one of the first wills I drafted where the client was so happy to leave his house to his granddaughter and her new husband. Shortly after he died, I found out they didn't really want it because he'd mortgaged it to the limit to buy cars, home additions, a gi-normous pool, and the list goes on--they felt they couldn't afford the monthly payments that came with the otherwise humble house. And then there was the recently released (from prison) son, who thought he should have the house, moved in, and didn't want to hear otherwise. I didn't have the guts then to ask him what he'd been in for, but I knew he'd been away a long time, he was a big guy and the rest of the family was afraid of him. He was civil to me in my office, but he also didn't understand that the money to pay the mortgage had to come from somewhere, and now that his father died and the pension was gone, there was no money to pay it. The house was lost to foreclosure, and the family split up the client's once-fancy cars by then dessicated in the hot L.A. sun.

Then there's the island off British Columbia left to Orange Coast College in 2002. They held classes there for a time, and thought of a research facility, but soon worried about the $200,000 in annual maintenance costs and the logic of having a campus "1,200 miles away in a foreign country" as they put it. It was sold this year for $2.19 million to some Canadians excited to have it.

Fans of Huell Howser (aren't we all?) may remember the show he did at the Petersen Automotive Museum which included a peek at all the cars in storage that may never be displayed.

With careful planning, these results can be avoided--not always, but often.

Fulfillment of the law

I came across a verse today in church that stayed with me all day, from Romans 13:9, 10: "The commandments, 'Do not commit adultery,' 'Do not murder,' Do not steal,' 'Do not covet,' and whatever other commandment there may be, are summed up in this one rule: 'Love your neighbor as yourself.' Love does no harm to its neighbor. Therefore love is the fulfillment of the law."

For me there's no better way to sum up the ultimate advice: Love does no harm to its neighbor. If people lived by that, or at least made better efforts to do so, what a much better place this world would be. That cuts out quite a few of the things we do, our governments do, our religions do, our societal structures do. There's a lot of justifications made for harming our neighbors, but in the end they're justifications for actions that lead to more violence, hatred, greed and heartache.

They also give me a job. I can't believe some of the awful things people do to each other, especially family. I'm still amazed when I hear stories of trusted family members looting others' inheritances, or even stealing it while the owner's still alive and wasting away under shockingly awful care. Love does no harm to its neighbor. And there's not much wiggle room, as "neighbor" pretty much includes everybody. Whatever one's religious belief, if any, it seems difficult to argue with this idea.

Once damage has been done, and redress is sought in the courtroom, lawyers prepare the case for trial, as they should. However, the best solutions are reached before trial, especially in mediation, after both sides consider the position of the other. If respect, and the possibility of reconciliation, are given, resolution is possible. With the idea of doing no harm to your neighbor, the best, and even the most advantageous, solutions happen.

Grandma

This entry's a bit more personal--we've been dealing with our own end-of-life issues and trust administration in my family, with my grandmother dying this June. In addition to being a loving grandmother who always encouraged me, she was a great example of love and generosity to the community. She outlived almost all of her many friends, and her ability to volunteer at her Bethany Church in Sierra Madre (attending since 1948), and even her regular visitors from the church to pray with her didn't know her before they came to visit.

We sometimes wondered why she fought so hard to stay on Earth as long as she did, seeing as how life could be so difficult in her last years. She stayed optimistic until the end, and lucid and engaged until the end. The 24-hour caregivers required over the last year came to value her energy and optimism as much as the family did. I think she was hoping to be around for her fifth great-grandchild's birth, and she almost made it.

I also think she appreciated life quite a bit--she had a difficult childhood but I had no idea until hearing her stories much later as an adult. Instead of making her pessimistic and bitter, it made her stronger and more compassionate.

Below is the column my cousin Jeff Girod, her third grandchild, wrote shortly after her death.

09:42 PM PDT on Saturday, June 28, 2008

JEFF GIROD

Evelyn Margaret Millett Johnson saw the dawning of 90 winters, springs and summers -- longer than any of us had the right to ask for or imagine.

She far exceeded the expectations of even her own mother, who reflexively scoffed when Evelyn, still a child, asked, "Mommy, will I live to the year 2000?"

That's when Evelyn's mother, still reaching to put something in a cupboard, hesitated, turned and thoughtfully reconsidered.

Story continues below

Special to The Press-Enterprise

Columnist Jeff Girod helps his grandmother Eveyln Johnson celebrate her 90th Christmas last year.

"Well," she said. "Maybe."

There were very few "maybes" in Evelyn's long and steady life. She would either find a way or she'd make one.

Evelyn was a "women's libber" long before anyone thought to invent the term. She drove a taxi, led Bible classes at her church and ran the tightest of ships as the business manager of a local medical center.

It was about this time I met Evelyn, or "Grandma" as I started calling her, once I was old enough to form the word.

The bigger I grew, the smaller Grandma seemed. No longer was she the authoritarian and last-minute baby-sitter. Slowly she morphed into a smiling white tuft of hair crooked inside an arm in Christmas and graduation photographs.

Then, after she was diagnosed with breast cancer, I made a point to visit her kitchen at least one hour every Saturday, taking advantage of "what little time we had left."

Find a way or make one.

Fifteen years, five more bouts with cancer and countless medical treatments later, I was still traveling every weekend to visit that kindly old face with the dancing blue eyes. And something unexpectedly wonderful happened along the way.

She wasn't just "Grandma" to me anymore. She was Evelyn, a funny, intelligent, insightful, spiritual, courageous, compassionate, beautiful, graceful woman and one of my closest and most cherished friends.

Every trip to see Evelyn was a journey through the 20th century. There was her first memory of her father, when she was just a toddler standing in the front yard, eyeing a weary serviceman, fresh from the Great War.

Or the 5-cent piece, melted and jagged, she saved all those years until recently, a memento from the night she found a 2-year-old stunned but unharmed, reaching distance from a short-circuited electrical outlet.

"I thought for sure that should've killed you," she said.

Granted, there were things we didn't agree upon -- she remained convinced the world was ending and saw no use for a device that could store 20,000 songs -- but we always found common ground.

We agreed Santa Barbara was one of the most beautiful places either of us had ever seen. And we even enjoyed watching the occasional Lakers and UCLA game. "How do they make that ball go in the tiny hole?" she marveled.

Toward the end of her life, Evelyn was weaker and frailer but her determination never wavered. Just a few months ago, a doctor gave her the choice of hospice care or another round of ravaging chemotherapy, unthinkable for a woman of 90.

Find a way or make one.

Evelyn chose the chemo.

And there was another, softer moment, shortly before Evelyn moved into an assisted living facility, when she feared our weekly visits might come to an abrupt stop.

She tugged at my shirt sleeve, drew me near and whispered, "Please don't forget about me."

I promise, Grandma. That will never happen.

Contact Jeff Girod at 951-368-9585 or jgirod@PE.com or log on to www.myspace.com/jeffgirod

Dreams vs. reality

I'm not so good at keeping up with the email I get on Facebook, but it's been fascinating hearing from people I haven't heard from in years. One of them used to work with me on the (non-world famous) Wheaton College Record. She's now the religion columnist for the Chicago Sun-Times, and has a book coming out--Sin Boldly: A Field Guide for Grace, by Cathleen Falsani (I guess she's dropped the "Cathi").

But that's not what I'm writing about. In looking for the book to order, I came across her name in another book, written by a colleague of hers at the Sun-Times, Neil Steinberg. I saw he'd written a book with an irresistible title: Complete & Utter Failure: A Celebration of Also-Rans, Runners-Up, Never-Weres & Total Flops. That's part of what makes the web so great--the serendipitous stuff you find while looking for something else. It's out of print, but I found a copy and read through it quickly. It's amusing and profound, and a refreshing look at success and its opposite.

One of my favorite passages comes at the end of a chapter, setting us up for the author's disappointment in the next chapter, but it in some ways describes us all pretty well:

"The last day of my participation in any sort of organized educational institution came on June 19, 1982, when I graduated from Northwestern University, nearly seventeen years after that first day of kindergarten at Fairwood School. The college had issued us the standard black robes and mortarboards, and I was so impressed with mine that I wore it the entire day, even during the break between commencement and convocation ceremonies, when I strode into the Pali Kai Lounge, a cheesy bar on Davis Street I frequented at the time, and let the barflies buy me drinks.
To an impartial observer, I must have seemed like a character from Eugene O'Neill--the young idiot in a bar spouting socialist philosophies and railing at the world. Only I didn't even have misplaced, pent-up anger to spout at the world. I sat happily at the bamboo bar and soaked up the booze, confident that the spheres were in order. Properly fortified, I toddled off to get my diploma. On the way to the auditorium, I broke into a run, holding onto my mortarboard, rejoicing in the feel of my academic gowns flowing around me in the wind. I thought myself a wonderful creature, blessed by education, separated by an enormous gulf from the pedestrian workers tossing me a gape as I flew by. I thought the world was about to be jolted by something new and fresh and fantastic, and that the difficulties of life which face most people would dissolve in deference to me. I thought wrong."

He goes on to describe his obscure jobs and eventual success, which of course was not as "new and fresh and fantastic" as he expected. This early 20's hubris takes a while to get over, but it's part of the aging process discussed in my last entry. The older folk who think it's only part of this generation are suffering from selective amnesia, and today's young'n's will shake their heads at tomorrow's know-it-alls with a strong sense of entitlement.

'Twas ever thus

I was reading my pastor's thoughts on the novel The Emperor's Children (Have No Clothes) by Claire Messud. You can find them at :

http://drtscott.typepad.com

Part of the discussion is about young 20 and 30-somethings trying to make it in the world, and how the deck may be stacked against them like never before, along with the fear that our greatest generations are behind us and the current and future ones are too selfish and spoiled to rise to the previous levels. I'm paraphrasing because I haven't read the book--the review just inspired my thoughts below:

I heard (and can still occasionally hear) the same thing said about my generation, the "slacker" Generation X. I did believe some of it, and gave some credence to the excuses X-er's gave in advance for not making it in this world, including the economy, high prices of everything, job exports, etc. And yet, on the verge of 40, I and most people I grew up with are providing for themselves and their families, and some are wildly successful. I can't think of anyone living in their parents' basement, but I know they exist. I just don't think they exist in greater numbers than they used to.

I think we're taking longer to be independent because education seems to take longer these days, so more people are opting for college and post-graduate degrees than they used to.

As a side note, someone told me this weekend that in his family, the degree of success among the siblings turned out to be inversely proportionate to their grade point averages. This doesn't mean slackers will always win, but it does mean you probably shouldn't bet on the "most likely to be successful" polls in high school.

I also heard when I started that the Baby Boomers weren't saving enough, so there'd be a huge retirement crisis looming. And yet I also read the next 30-40 years will be the greatest transfer of wealth the world has ever seen, from those same Boomers. The truth lies somewhere in between. And my 15 years of working with peoples' estates shows me that there are savers and spenders in each generation, and that each generation worries about the irresponsibility of the younger ones.

In our estate planning, it's difficult to know best how to pass down the parents' values to their children, especially with a wealth-transfer plan. The easier answer is that if the values haven't been passed down by the time of the parents' deaths, it's probably too late. We can help in crafting a plan that will help achieve objectives, like funds for education of the family, encouraging certain prudent investment strategies, preserving the wealth for children while allowing them freedom to start a business or freedom from large house payments, and guarding the wealth during substance abuse problems and other crippling addictions while allowing it to be used for treatment. We can also plan to avoid the wealth, if it's large enough, to help enhance beneficiaries' lives without demotivating them from working and the loss of self that comes from that demotivation.

I may still tell my children they don't know how good they have it, but I also know they probably won't realize it until they're much, much older, and I can forgive them for that--I didn't realize it myself until I was a father. I'll remind them of this when they're subjected to whatever the "slacker" term is for the class of 2016.

What Casey Serin can teach us

There's a lot of suffering to go around these days with real estate--maybe you're trying to refinance your adjustable rate mortgage before it resets to three times your current payment, or your home equity line of credit has been capped due to your declining home value, or you just escaped your first real estate "flip" deal with $5 profit (which was better than losing your shirt). My firm is retaining a lot more bankruptcy clients these days, who got in over their heads with loans they didn't understand and credit card debt they could never hope to repay.

One person out there makes most of those problems look entirely manageable: Casey Serin. You may have heard of him, but if not, he's a 24-year-old community college dropout (he figured education was beneath him) who had some modest internet fame (or infamy) after his plan to fix and flip 10 homes and make huge profits instead left him with $2 million in debt and a lot of foreclosures. His ingenious plan involved borrowing more than the houses were worth, at rates of up to 14%, and then resell the homes at huge profits. Instead, he lost some money to unscrupulous contractors, spent $30,000 on get-rich-quick seminars, went to Hawaii, and lost the homes to foreclosure. OK, he did sell one, for a modest profit, whose buyer then actually upgraded the home and made the profit Casey was expecting to make. Where did he go wrong? There are a lot of factors, including his laziness (he considered himself an "ideas guy" who could direct others to make his ideas reality), lack of any business plan, geographic problems (the houses were spread out over several states), lack of experience and hubris. And, had he done the buying even a year or two earlier, the market may have continued rising enough to at least covered his losses.

Once he realized he was not the entrepreneur he thought he was, he started blogging at http://www.iamfacingforeclosure.com. I credit him with opening himself up to the criticism he received, especially because some people on the internet use the cloak of anonymity to say incredibly cruel things. He's gone quiet now, and sold the blog (I'm not sure how much, but maybe around $30,000, so he's still deep in the hole). He also didn't seem to be learning as quick as he should, as his last posts dealt with his plans to make big money in penny stocks and look for investors for new real estate purchases. If you'd like to know more about him, just try a Google search on his name--he inspired a lot of writing and even a Dr. Phil appearance.

I mention Casey 1) to make you feel better about your own real estate investments or lack thereof, and 2) consider your current estate plan. Just as someone reminded us years ago that we all have a little Elvis in us, I'd say we all have a little Casey in us too.

So, how much Casey is in your successor trustee? Some of the things I've seen trustees lose colossal amounts of money on include restaurants, real estate, technology stocks and loans to "friends." Consider a more prudent person as trustee, or a professional trustee.

How much Casey is in your beneficiaries? Many of them have big plans for the money, with no experience to guide them. I've seen many benes lose their inheritance to cars, bad business deals, overleveraged real estate and even the Nigerian scams. Giving them the income while keeping the principal in trust may be a good idea, or at least breaking up the distributions over time to allow them to learn life's hard lessons with a little money instead of a lot.

How much Casey is in your beneficiary's spouse? How strong is your beneficiary when it comes to saying no to their spouse's bad financial ideas/fabulous home expansion plans/72% annualized return investments? Remember, Casey's (now ex-) wife is also on the hook for his dreams-turned-$2 million debt.

Your Legacy

I just finished watching "My Father, the Genius", a documentary film. The project began when Glen Howard Small, an architect, shared his will with his daughter, Lucia Small, a television producer and documentary filmmaker. In it, he asked that she write his biography to ensure his lasting architectural legacy. She instead asked if she could film it instead, and have it cover the whole of his life, not just his architecture. The result was a healing and learning experience for both of them--his leaving the family at a young age and his subsequent relationship problems with women had left her with many questions, and he had no idea how conflicted his daughter was about him. In making the film, she explored his early prominence as a forward-thinking architect and founder of a now prominent architecture school, as well as his stubbornness and refusal to play "office politics," which led to his ouster from the school, three failed marriages, five estranged children and begging for work. You'll have to see it to see what happens, but I can say it brought the family closer together and was excellent in forcing discussions about issues that he may have otherwise taken to his grave.

While we're not all documentary filmmakers, it's a good example of why I like the entire family to be involved, in some aspect, in the estate planning process. (As an aside, there are companies that prepare documentaries to capture family histories.) I realize that the people leaving the money have the complete freedom to do what they choose to do, which is as it should be. I just think there's a much higher chance for success of the plan when the reasons for making it are explained. Otherwise, children and other beneficiaries can be hurt when they don't understand why they're getting what they're getting, or why they have to wait to get it, or why charitable gifts are involved. The best estate plans allow for the goals, hopes, dreams and aspirations of their makers, and they communicate them as well. Some explanation of the reasoning behind decisions can turn a potential trust contestant into a trust proponent.

It also can lead to some creative solutions for taking care of everybody. People aren't always aware that they can leave money to their children while also providing for their spouse. They aren't always aware they can leave funds in a special needs trust to provide for disabled beneficiaries without disturbing their government benefits. They may not know they can protect their children's inheritance from creditors, tax liens, spouses or even the children themselves. As a consequence, they may cut out people entirely, causing needless hurt feelings and heirs who stop talking to each other.

Openness also helps when disability or death strikes--the designated people will know who to call and what to do, and the others will not feel left out of the process wondering whether the trustee is up to no good.

One last note: have your attorney keep a copy of your estate planning documents and leave the attorney's information with your important papers and with beneficiaries. That way, people will have access to the current documents (only when they're needed), and heirs who happen upon the will/trust first and don't like what they see can't "lose" the will/trust. This happens more often than you'd think, so have a backup plan.

That will never happen to me...

I used to be confident of many things when I was a younger lawyer: trust companies cost too much and give bad service, I would live a conflict-free life and not have to worry about Alzheimer's disease and my family would never have any soap-opera type of drama. Now that I've lived a while, I realize the error of my ways. I see trust companies providing much better service than they used to while providing better overall returns for beneficiaries than family members. I see that if I make it past 80 years old without a massive stroke, some type of dementia is a real possibility. I've also seen some drama in my family that I would have expected on "Melrose Place." And now I'm not surprised to see drama in the families I counsel now either.

People like to say that money is the root of all evil. I'm familiar with hearing that in the church--it comes from people who take pride in "depending on God for all my needs," which often is said with an open palm extended, because they don't mind other people having that evil money. After all, who else will God direct to them to supply their needs with that evil money? But I digress. The correct phrase, from the book of Timothy in the Bible, is "the love of money is the root of all evil." Money isn't the bad thing, especially because it's necessary to survive. However, we all know that what we have doesn't usually feel like enough, so then what do we do to get more money? Unfortunately, many people faced with that question choose "evil" shortcuts.

In my area of practice, trusts and estates, the shortcuts usually take the form of finding people with money and taking it from them somehow. People anoint themselves as Robin Hood and also anoint themselves as the "poor" who get the money. Finding these schemes and unraveling them is a good part of what makes my job rewarding (and fun). Preventing these schemes is also a great part of my job.

The first step in prevention is knowing that if you have assets, people will want to take them. You may think you're not related to anybody who would even think such a thing, or would never allow people in your life who could do such a thing. You may be right, but if you're wrong and haven't protected yourself, getting your money back is expensive, if still possible.

So, who would do such a thing? The cut-rate, unbonded caretaker who thinks he/she deserves more. The helpful neighbor who slowly gets access to all areas of your life and slowly cuts off your access to other people. The son on disability who may or may not be recovered from his drug problem and has a girlfriend who'd really like a new car. The not-so-bright daughter who gets her investment advice (for your money) from dubious sources on the internet. The son-in-law who needs funding for his future real estate empire. The former student whose business ventures are forever just around the corner from sure success. The caretaker "mother/nephew" team who turn out to be lovers and writing their paychecks for $10,000 per month each. The "mother/daughter" wanting to be added on title to your property, who also turn out to be unrelated and lovers--incredibly, this one, like all the previous examples, is true, and happened to one of the nicest, most down-to-earth guys I know. Not all these Robin Hoods were professional scammers, but you can bet their skills get better with each victim. And the victims cover the economic, intellectual, racial and psychological spectrum--everyone is a potential target. These Robin Hoods look for people who are at a vulnerable place in their lives, and we all have the potential to be in that situation.

Once recent case concerns a possible heir who was born to a married couple but was most likely not fathered by the husband. That in itself is not uncommon, but then it's complicated even more in that it looks like the "heir" trying to claim the estate is not really her at all, but one (or perhaps several) imposters! It appears three different people claiming to be her have shown up at three different court hearings. She may be disqualified in more ways than one.

Thus, if you're fortunate or foresighted enough to have accumulated some wealth in this lifetime, someone (who may appear completely genuine and loving) wants to take it. How do you protect it? First, know that you can take of people without making them owners of your stuff. They can be in your will, or beneficiaries of insurance polices/retirement plans/bank accounts, or trust beneficiaries--these are good options because they're all revocable. You can change them later if you want to, and you maintain control while you're alive. You should consider naming professionals as your successor Trustees. They'll charge the same fees as your friend/relative/CPA would, but they're licensed, insured, bonded and have become very good at what they do. And if they're not doing a good job, the trust can provide mechanisms to remove them easily and replace them with professionals who will. If you don't name professionals, at least consider who the "watchdog" of your trustee(s) will be.

Also, your advisors (financial advisor, accountant, insurance, and even your pastor) should know you well enough to try and get help when they suspect something's not right. We're all used to managing our assets ourselves, but my work has taught me that there will come a day, if I live long enough, that I am no longer able to do so. I've planned for that day, and you should plan for that day too.

As for protecting your beneficiaries, you can leave money to your children in trust--they can receive a nice chunk of income, and distributions for specific purposes, but the principal assets will be locked safely in a trust from their creditors and predators. This doesn't even have to deprive them--they can live in a house owned by the trust, drive a car owned by the trust, and live off income from the trust. They can even have a hand in investing the trust assets.

I hope you'll never need the safety measures, but please see an attorney about making sure they're in place. And if your new girlfriend's daughter looks a bit older than you'd expect, and is just a little too close to Mom, you have a right to be suspicious.

Getting the best results in probate/trust litigation

For anyone who hasn't seen it yet, "Celebrity Rehab" on VH1 is an intense experience. It's much more serious than "Flavor of Love," and much more real. What struck me the most after watching it were the moments of truth--the patients stopping the minimizing of their addictions and revealing the traumatic experiences in their pasts that seem to lead to the addiction. The patient must drop his/her facade and admit some ugly truths, which leads to recovery. It also reveals that taking care of the addiction means taking care of the root problem that caused the addiction. These are people who fooled the rest of the world, for years, into thinking they had their lives under control and had no demons.

In probate litigation, getting to the root of the problem is key. Still, when clients first come in, they may present a completely different set of concerns. They also tend not to reveal any ugly truths about themselves. I've developed a pretty good radar over the years, after being misled by so many people. If the first story I hear doesn't make logical sense, there's going to be more and it's most likely not flattering--this could be their past/current jail/prison time, the restraining order against them for crazy threats, misappropriation of funds or their desire to misappropriate some funds. It's a lot like a first date--you won't know what that person's really like until several dates later.

Most people don't want to admit that a large part of what they're seeking is money--they think they'll sound greedy. In this arena, it's perfectly OK to talk about money, as the best result in a probate court case is a fair division of the money and other assets. It doesn't make you a bad person, just a normal one. And I'd rather not be surprised at mediation to find out you really in fact do want your fair share of the estate. Actually, after this many years of practice, I just operate on the assumption that you want your share. If some evil caretaker/brother/sister/stepfather/stepmother/tennis pro took my parents' estate, I'd want it back too!

The other hidden motives may have nothing to do with money, but are important to understand when trying to reach a fair settlement. People often find themselves fighting in probate court over years-old problems: a missed invitation to a Christmas dinner, not enough respect shown to a new spouse, not sharing a limousine at the funeral, feelings that a sibling received too much in gifts/help over the years, the husband who didn't let his second wife know he was still in love with and intimate with his first wife, the secret illegitimate children (who are full and legitimate heirs under the law), adopted vs. natural children, and in one case, the theft of a coin collection 20 years prior that mother decided to let go. These injustices smolder for years, and then explode after someone's death. They may have been keeping the peace until Mom dies, then all of a sudden it's "You owe me for that @(#)$*@#)*$ coin collection, you @#)($*@#)(*!"

Unfortunately, litigation will not right these wrongs. Nor do judges have any patience for, or interest in, these wrongs. The mediation process, however, does allow for some airing of grievances--this often proves cathartic and leads to a good settlement. People pretend they're above such feelings, but they're not. I hope I could forgive my brother for getting a better bike than me for Christmas in 1977, but I may not be able to. And like most children (adult or otherwise) I see, both my brother and I are sure that our parents loved the other one more. We're probably both right.

In the end, I wish professional therapy was part of the process. I'm wanting to involve it as part of my process, at least in some cases, precisely because the legal system can't fix emotional hurts. But addressing the emotional hurts means a better chance at resolving the legal dispute.

One final thing: it also helps to be veeeeeeeeeeeeeeeeeeeery honest with your lawyer when you're preparing your will and trust. Try to anticipate what the problems will be after your death. Don't worry about scaring or offending us, we've most likely heard worse. And it means an estate plan that's less likely to wind up in court later. It can seem daunting when you have second (or eighth) spouses, drug-addicted children, tax evaders, gamblers and reality-TV stars as beneficiaries, but there are excellent ways to take care of all of them.

www.rrjlaw.com

Don't put your money in a safe!

I'm not sure where to begin this blog, so I'll start with a topic that's been on my mind because it's come up in yet another case. There are a few maxims we've learned from years of practice here at Russakow Ryan Johnson, one of them being "Do not marry a stripper." You can laugh, but the guys who do it, thinking they've found the one with a heart of gold, who truly understands them, are always disappointed. They usually show up at our office after they wake up with their car, cash, bank account and even a few collectibles gone. If they're lucky, they're not also facing a false spousal battery charge.

Another maxim taking shape here is "Your money's not safe in a safe." For whatever reason, people find comfort in keeping cash away from the bank. It may be up on a high closet shelf, behind the old linens, in a Kleenex box, under the mattress, under the floorboards, or more likely in a very strong-looking safe in the garage, built like Fort Knox and looking like something from a Bonanza episode. Or, perhaps they go one step further and put it in the bank, but in a safe deposit box. Ordinary people keep tens of thousands, even hundreds of thousands, like this. When they do, they tend to let "trusted" family members know. The problem is that at their death, or incapacity, one or more of those trusted family members helps themselves to what's in the safe/safe deposit box. When the executor/trustee finally gets the safe open, they're completely surprised to find it empty and ask "How could this happen?"

The executor's next question is "How can I get it back?" The answer, unfortunately, is not a good one. Even if they're fairly certain regarding who took the money, the burden of proof is on the executor not only to prove who took it, but also how much that person took. With cash (or even jewelry, coins, baseball cards, Star Wars action figures), it's almost impossible. At least with a safe deposit box, there's a record showing who went to the box, and when. Still, cash doesn't leave a trail.

Thus, I highly recommend keeping your cash in bank/savings/money market accounts. There's still some risk, of course, but I'm sure more people have lost money from their safes than they have from bank failures. Once it's in the bank account, or some other form of ownership that has your name on title and leaves a paper trail, make sure your trust, will, powers of attorney and conservatorship nominations are up to date so that the right people can get their hands on your money when the time comes.

I realize that even with some safeguards, the "right people" can still take your money, so I'll deal with that in a later post, along with the rise of professional trustees.

www.rrjlaw.com