Southern California Trusts & Estates Blog

Two new conservation easements

2012-02-07T22:38:00.001-08:00

I've written before about conservation and preservation easements, and I'm pleased to see that the Pasadena Heritage organization has received two new easements--one on the historic Freeman House, designed by Alfred and Arthur Heineman, and the other on a commercial building in the Playhouse Historic district.

I wasn't aware that Pasadena Heritage holds 82 easements, making it one of the largest easement holders in the West. They conduct annual inspections of the properties to be sure the easements are being honored.

There may be tax breaks available, and you can feel good about preserving a piece of history and architectural art.

My talk on estate planning and probate basics

2012-02-02T10:49:00.000-08:00

I'll be speaking this March 28, 2012, on wills, living trusts, irrevocable trusts, estate taxes, trust administration and probate--it's a webinar by LawReviewCLE that I'll be giving with Rhode Island attorney Anthony Mignanelli. Click here for more information.

RIP Bob Burnett, chart-topper and trust lawyer

2012-01-22T20:34:00.000-08:00

I've been a Senior Trust Officer with U.S. Trust in Pasadena almost a year now, after a 16-year career as a trusts and probate lawyer, and am also a fan of folk music. So, I was pleasantly surprised to read the obituary of Bob Burnett, who died last December. It turns out he was a trusts lawyer for U.S. Trust/Bank of America and a folk musician.

He came to Wesleyan University in 1958, and was told by his fraternity to get an entertainment act together. He did, and with Dave Fisher, Steve Butts, Chan Daniels and Steve Trott — became the Highwaymen. In 1961, they had a number one single, "Michael," their version of "Michael, Row the Boat Ashore." More success followed, but they disbanded in 1964 as Bob went to Harvard Law School and others to schools elsewhere.

He went on to work in various bank trust departments, eventually retiring from U.S. Trust. He did take a break to perform with the original group members in 1990 and release more albums--they came out of retirement after settling with Waylon Jennings, Johnny Cash, Willie Nelson and Kris Kristofferson, who misappropriated the "Highwaymen" name.

Not everyone would walk away from a successful music career to work with trusts, but he did, and that's my kind of guy.

Don Schweitzer in San Gabriel Valley Tribune

2012-01-21T17:19:00.000-08:00

Congratulations to a fellow lawyer and great guy in Pasadena! Donald Schweitzer practices family law, estate planning and criminal law, and I've had the pleasure of knowing him for several years now, along with working with him on some cases as well. This article in the San Gabriel Valley Tribune profiles him.

If you have questions about planning and protecting your estate, both now and for future generations, contact me at U.S. Trust.

Found money!

2011-03-16T17:00:00.000-07:00

You never know what you'll find in the probate process, or in this case, the trust administration process. After much searching for a client, today I found the contact information for a corporation that the client's father had shares in--shares they'd written off as worthless decades ago. Part of the problem was that letters and phone calls to the company's last known address and phone numbers went unanswered for years. Web sleuthing uncovered better information, and now they'll get $30,000 for their "worthless" stock! That's better than laminating the shares for use as place mats.

I always include searches in unclaimed property databases as part of a probate or trust administration, but sometimes I have to dig deeper, as in this case. If you're in the middle of the administration process, it also means hang on to whatever worthless stuff you find until you verify it's worthless.

For probate or trust administration questions, please contact me at (888) 503-7615 or cjohnson@christopherbjohnson.com.

Why is probate a bad thing?

2011-02-14T09:56:00.000-08:00

Avoid Probate! Norman Dacey's 1960s book started the living trust revolution, and people took away at least this much of his message: don't go to probate court. Beyond that, most people aren't really sure why they're supposed to avoid probate.

The main reason is its cost. The court costs and other costs are not too high, maybe $1,500 to $3,000, but the main expenses are the fees for the attorney and the executor. They're based on the size of the gross estate (debts and liens are not subtracted from the total) and are $7,000 each to the attorney and executor for the first $200,000 of gross assets, 2% each of the next $800,000, 1% of the next $9,000,000, and 0.5% of the next $15,000,000. The court rules on the fee for estate amounts over $25,000,000.

The court can also allow "extraordinary fees" in addition to the fees above, usually for more complicated matters like selling assets, tax planning or dealing with disputes.

Probate is generally required in California when one dies with or without a will, and the assets outside of trusts or beneficiary accounts are more than $100,000 in value.

By contrast, the fees involved in settling living trusts are usually less. Trustees, whose role is similar to that of executors, typically charge 1.5% to 0.75% on a sliding scale, with the percentage charged decreasing as the estate gets larger. Attorneys can charge hourly or on a percentage basis, and their fees average between 0.5% and 1% of the value of the estate, with most being on the lower end of that scale. Given the size of most estates in California, the administrative costs and fees for a trust will be less than those for a probate.

The other advantage to trust administration is that it usually takes less time than a probate to settle. There are still statutory waiting periods, but trustees can move faster without having to be tied to the court's schedule in getting hearings or waiting for orders to be approved and entered.

So, probate is not a bad thing, and I've handled hundreds of probate matters, but given the choice, I'd say trusts and trust administrations are better, with less cost and stress for clients in most situations.

Conservation easements

2011-02-07T18:12:00.000-08:00

Image by prozac1

One tool for estate planners is the conservation easement, by which a landowner voluntarily restricts his or her land from being developed, restricts the amount of development or protects existing features, like a building facade with historic value.

This may be particularly useful for families with a valuable family retreat they'd like to pass on to future generations, but whose value might mean a large estate tax. With a conservation easement, the restrictions reduce the value so the estate tax is lowered, but the family members can still use the land as they always have and leave enough leeway for their future needs.

It can also be useful for owners of historic properties concerned about preserving them for the future--something like this may have saved one of my favorite properties, the Maslon house in Rancho Mirage, California, by architect Richard Neutra. The original owners' children had to sell after the owners' deaths, and raised the price above market to attract what they thought would be an appreciative owner. Indeed, the buyer swore he was truly in love with the house and would be a good steward, but less than 30 days later, he'd bulldozed the place to put up the Palm Springs equivalent of a McMansion. I guess "good steward" is open to interpretation. Actually, I've seen the same set of facts many times in my own practice--the buyers can promise all they want, but rarely are promises like keeping a house intact enforceable.

Had the original owners used a conservation easement, they may have been able to prevent the sale in the first place (as the need for cash to pay estate taxes would have been less or none at all) and also future destruction. Trust, but verify.

The easement may also qualify for other tax benefits, but it should be carefully considered, as it's a permanent restriction on the land.

To determine the easement value, the land would be appraised at its fair market value without the easement restrictions, and also at its fair market value with the easement restrictions.

On a different note, those living in historic properties in California should see whether they qualify under the Mills Act for lower property taxes--if so, they may see large reductions in their property tax.

For more information about conservation easements or other estate planning and probate questions, contact us today at cjohnson@christopherbjohnson.com or (888) 503-7615.

New estate tax law

2011-02-04T18:37:00.000-08:00

It came, later than expected--there's a new estate tax and gift law, and it was worth the wait. Estates under $5,000,000 will pass to beneficiaries estate tax free, and married couples can give double that amount. The top tax rate has also been reduced, so if you're fortunate enough to have over $5,000,000, the tax rate has been lowered to 35%.

The other big news is that the gift tax exemption is once again unified with the estate tax, meaning the $5,000,000 limit applies to gifts you make during your lifetime as well, which means we'll probably see some large gifts being made over the next couple of years.

The only bad news is that these amounts are only in effect through 2012, when Congress will presumably agree on extending them or offering something even better. If not, we'll be back to a $1,000,000 limit.

The new law means that very few people will be paying any estate tax. Alan Rothschild, who chairs the American Bar Association's real property, trust and estate law section, estimates that less than one-half of one percent of people dying this year will leave estates owing any estate tax. Back in 1977, 10.5 percent of estates paid estate tax.

Even if your estate is taxable, we still have plenty of options to reduce or eliminate it, and with the new limits, it's even easier to do so.

For the majority of people who don't have taxable estates, planning is a bit simpler now, but just as important as it's always been--a well-drafted plan avoids high probate fees, high conservatorship fees from incapacity and the wrong people getting what you have. Contact us today at (888) 503-7615, cjohnson@christopherbjohnson.com or at our website to see how your plan can work with the new law.

Heirlooms

2010-07-13T13:50:00.000-07:00

Ellen Lupton writes in the New York Times about "How to Lose a Legacy." In part, it deals with the heirlooms passed on from generation to generation, and the sentiment, or lack of it, that passes as well.

Where your treasures go is an important part of the estate planning process, as these items can lead to fights, or just outright theft--I'm aware of one estate that was plundered by a daughter who backed the U-Haul truck up to the house and emptied it while the rest of the family was at the funeral.

If dispositions aren't clear, there may be several people claiming "She told me she wanted me to have it!"

It helps to have someone like an executor or trustee with the authority to decide where things go in disputes, and under recent California law, you can leave a memorandum with instructions for where items should go--unlike a will or trust, the memorandum is simple to update as you gather more (or give away more) stuff.

It seems every third estate has a coin collection that was promised to multiple people, so be sure your plan is clear about your stuff!

What if I have uncollected child and spousal support from 1960?

2010-07-07T10:45:00.000-07:00

Can I still collect it? Yes! If uncollected, and the order mandating it hasn't been modified, the law protects you, even after all these years. There are some defenses to paying the spousal support, but not the child support, and we're filing a case on this issue. For various (and good) reasons, they had not tried formally collecting until now, shortly after the man's death.

His death means the claim needs to be acted upon within a year, but the law does have several protections and priorities for child and spousal support claims, so don't give up!

The interest accrues from the date of the order, so that helps too, especially if it's from 1960.

Special Needs Trusts

2010-07-07T10:20:00.000-07:00

I had dinner a couple of weeks ago with a terrific trust officer from Wells Fargo trust services, who was frustrated that a personal injury settlement of several million dollars was divided into a large structured settlement and a very small special needs trust. Her client, the injured party, wanted to have a house, which would disqualify him from benefits he needed. There wasn't enough money in the trust to purchase it, and the structured settlement funds, if used, would disqualify him. If the settlement had been placed in the trust at the beginning, they wouldn't have this problem, and it was now too late to fix it.

People understand the power of special needs trusts much more than they used to, but it's a tricky area and not yet understood. I'll be speaking in August about this issue for parents, whether the funds are from themselves or from a settlement, at the NAPA Center in Los Angeles. If you'd like to know more, please contact Cassandra Hanson in our office at (626) 683-8869.

Eyes wide open: The key to effective estate planning and asset protection

2010-06-17T16:39:00.001-07:00

Here's the text of an article I wrote that appeared in today's Los Angeles Daily Journal, with some advice on where not to put your money (or your heart):

One of our firm’s maxims is “Don’t marry a stripper.” You may laugh, but we’ve seen a number of men (and women) come into our office after waking up to find their car, cash, bank account, collectibles and new wife or husband have all mysteriously disappeared. The once-besotted and now justifiably infuriated victim may have thought the object of his or her infatuation had a heart of gold and could be trusted, but experience in the law, let alone human history, tells us otherwise.

Another of our maxims is “Money’s not safe in a safe.” Sure, our banking system has taken some hits lately, but it is still quite surprising how many people squirrel away tens or even hundreds of thousands of dollars under the mattress, in linen closets and beneath floorboards. We’re not just talking gang bangers here, but people from all walks of life. And while a massive black safe in the garage may offer greater protection than a cookie jar during its owner’s lifetime, what about after the owner passes away or becomes incapacitated?

Unfortunately, the owner has typically informed a “trusted” family member or friend about the stash of cash, and in the case of a safe, provided the combination. When the rightful heirs open the safe, everyone is stunned to find the money, jewelry, coins, baseball cards and (gasp) the Star Wars action figures long gone. Even if the heirs have a good idea of who took everything, the burden of proof is on the executor, trustee or heirs themselves to not only prove who took it, but also how much was taken. Without a paper trail, it’s almost impossible.

So if a spouse turns out to be unreliable and a safe isn’t safe enough, who or what can an individual trust? Who can help ensure hard-earned wealth is protected and wishes carried out regarding the administration and/or distribution of assets in the event of incapacity or death? Can the trustee even be trusted?

You have to trust someone, don’t you?

Estate planning is often viewed as one of the gentler practice areas of the law, and perhaps it is. However, you still see plenty of tragedy. I probably see more of this than the average estate planning attorney because our firm is large, highly diverse and focuses on a variety of practice areas, including family law and probate litigation. Our attorneys often represent clients who did not come to us for estate planning initially, but are now seeking counsel because they are in danger of losing many or all of their assets to divorce, a contested will, improper administration of a trust, probate problems and more. For example, one of our litigators had a prospective client come in seeking redress from a sibling who had been named trustee of the family’s estate, and had even been allowed to create the trust herself. This trustee used the proceeds from the trust to open a restaurant, which subsequently folded, taking all of the siblings’ money with it. Since she lacked insurance, and had filed for bankruptcy herself, the money, sadly, was gone for good.

Or consider this: a kindhearted divorcee with young children wills his well-educated brother the family’s homestead. After the divorcee’s passing, his brother transfers title of the home to himself and then borrows against the equity. Unfortunately, the brother suffers several business setbacks, loses the money he borrowed and the house eventually goes into foreclosure.

Given that situations like these happen quite often, who can someone trust to manage his or her affairs in the event of incapacity or after death? This is one of the most difficult questions facing any individual or family. Many of our clients initially think of a close family member, particularly a son or daughter. This choice gives rise to a number of questions, which we invariably raise with our clients. Does the son or daughter have the time and knowledge to administer a trust, let alone a large estate? What about the daughter or son-in-law—can they be trusted? In the event of a child’s divorce and remarriage, will the client’s wishes still be carried out with respect to grandchildren? If you name one child as executor or trustee, how will the other children feel about it and what might they do to contest it? If you name all of the children as executors or trustees, will they get along?

Questions like these, and many more, are critically important to ask and very difficult to answer. The fact is, choosing an executor or trustee is a tough decision, particularly when you consider the financial stakes involved.

The rise of the professional fiduciary.

Professional fiduciaries have been around for many years, but they have not been widely used until fairly recently. Why? One of the primary reasons is that professional fiduciaries have earned, rightfully so, a reputation for undue prudence in the management of assets. To put it bluntly, in an attempt to avoid liability, professional fiduciaries have historically made extremely conservative investments and failed to obtain reasonable returns. (Of course, one could argue that a son, daughter, brother, uncle, etc. is not necessarily going to achieve stellar returns either. But hey, they’re family, right?)

The problem of professional fiduciaries being far too conservative in their approach to asset management began to change with the passage of several pertinent laws in California. One of the most important was the California Prudent Investment Act, which made professional fiduciaries liable if they did not achieve reasonable returns. Not a bad incentive for a individual or family to expect sound administration of a trust or estate. Another advantage of professional fiduciaries is that they must carry insurance, thereby providing greater protection to trust and estate assets. Combine these benefits with the numerous problems mentioned above in choosing a family member as executor or trustee, it is not so surprising that professional fiduciaries are becoming more and more popular.

So can a professional fiduciary be trusted? Well, at least their track record can be fully investigated. And even though, as any prospectus will tell you, “Past results do not guarantee future returns,” the professional fiduciary may very well be a sound choice to help ensure assets are protected, returns on investment are reasonable, wishes are carried out and legacies endure. In any case, it sure beats turning everything over to Uncle Fester. Like everything else in estate planning and asset protection, keep your eyes—and your ears—wide open.

Chris Johnson, Esquire, Co-Founder and Partner with the Law Firm of Russakow, Ryan, and Johnson, focuses on advanced estate planning, trusts and business succession. For more information visit www.rrjlaw.com.

Death is the ultimate tax-planning tool

2010-06-09T10:30:00.000-07:00

June 2010, and still no estate tax. Since I (and most other tax and estate professionals) believed we'd never see a no-estate-tax year in 2010, and were proven wrong, I'm more hesitant in my predictions these days. Still, I'll say that I doubt we'll see the House and Senate agree on any estate tax legislation this year, especially in what is becoming an election year where the incumbents are running for cover.

That leaves us with an estate tax of 55% that starts on estates over just $1,000,000 in 2011. This tax will affect far more families than it has before, so I believe there will be much more pressure next year to enact a "better" estate tax. There's a lot of support in Congress and the White House for the tax to start on estates over $3,500,000, so this may be the magic number. We'll see, but will likely have to wait until at least next year to see.

In the meantime, some people are taking advantage of 2010's tax-free possibilities by dying. I doubt they mean to do so, but it's beneficial nonetheless. It looks like the largest recipients so far are the family of the Texas oil pipeline billionaire, who left $9 billion to his heirs with no estate tax. They will pay capital gains tax on that $9 billion as it's sold, but I imagine they'll still have enough left to get by.

For those worried about the high estate taxes next year, we've put some aggressive plans in place, including one that reduced $750,000 of potential estate tax to zero! There are things you can do.

Close, but not enough...

2010-05-25T21:40:00.000-07:00

A lot of people ask me what the difference is between using us or an internet company to do their estate planning. My answer is that I make a lot of money fixing the mistakes made on those sites, as you really won't know the plan isn't quite right until it's too late. You can do quite a bit of research on the internet, but that research can't match the knowledge that an experienced attorney has.

My award for the "close, but not close enough" research this week goes to NBC News anchor Ann Curry, who gave the commencement address to this year's graduating class at Wheaton College in Massachusetts. She began the address by congratulating them on some of their famous alumni, including evangelist Billy Graham, horror movie king Wes Craven and 9/11 hero Todd Beamer. The problem is that they're distinguished alumni of the other Wheaton College, in Illinois. D'oh! That might explain the quizzical looks she got. She did at least get 60 Minutes host Lesley Stahl right. If Curry didn't do the research herself, I hope she fired the person who did. Apparently the Massachusetts Wheaton has some other notable alumni too, like Oscar nominee Catherine Keener and former New Jersey governor Christine Todd Whitman.

As a graduate of the Illinois Wheaton College, and as one who followed in Wes Craven's footsteps as the editor of the college's newspaper, I think our alumni beat their alumni. In fact, I support fellow alum Dave Vanderveen (of XS energy drink fame) in his efforts to promote a Wheaton vs. Wheaton Alumni Battle.

To bring it back to estate planning, though, Ann Curry thought she was prepared for the speech, and she did indeed have some background facts on famous Wheaton alumni, but she was still wrong and didn't discover it until it was too late, and the "mortified" Curry had to issue an apology. Having a good team behind you, whether in research or estate planning ensures no "oops" moments.

Why is a trust worth $5,000?

2010-05-11T10:57:00.000-07:00

Our estate planning at Jan Copley and Russakow Ryan Johnson tends to cost a bit more than other firms in the area, so we're sometimes asked why it costs what it does. An illustration may help.

Think of your valuables, scattered around your house. Your jewelry is in your jewelry box, your watch on the dresser, your cash in the nightstand drawer, your stock certificates in a file somewhere in your desk, and the deeds to those rental properties you have are in that pile in the closet, you think....

Now imagine there was a document that represented your hopes and dreams for your children, your grandchildren, your favorite causes. That's lying around somewhere too.

How can you protect all of that? What do you need?

You need a safe.

And what strategy will you use in buying that safe? "I want the simplest safe I can find. I think I'll go to the toy store and buy one of those child's safes?" No, even though they may be labeled "Fort Knox."

How about, "I think I'll buy the cheapest, flimsiest safe I can find--something someone can break into easily, something that will burn nicely in a fire; something that anyone could carry out the front door!"

To protect everything you have accumulated over a lifetime of hard work? You want something strong, secure.

That's why a well-made trust is a bargain at $5,000. It protects everything you have--now and into the next generation.

One more comparison--the average price of a new car in the United States is $24,764. A very conservative estimate of the cost to insure that car would be $85 a month, or slightly over a thousand dollars a year. That's four percent of the value of the car, but you pay it every year!

Let's say you have a net worth of $1,000,000--not very large if you own a home in California. A $5,000 trust represents one-half of one percent! And that's paid once, not every year like the four percent you're paying for your car insurance. So why would you pay that kind of money to insure your car, but not to protect everything you own and value?

Probably because you have to have that car insurance, but you don't have to have a trust, right?

And that's true, you don't have to. But being a grown-up means you don't do things just because you have to. You do them because they are prudent, wise and smart.

That's what makes a trust worth $5,000.

Note: the author, Chris Johnson, also keeps a large and difficult-to-move safe for his items, in addition to his trust.

More on planning with no estate tax

2010-03-22T15:17:00.000-07:00

It looks like we're heading toward some major health insurance law changes, which may free up some of Congress' time to deal with our estate tax problem--if they do nothing, capital gains taxes (this year) and a large estate tax (next year) will affect a lot more people than they ever have before.

While we're waiting for some action, your current trust and/or will may not deal with the situation very well, including having some unintended consequences like disinheriting people you actually like.

This letter from Jan Copley and I explains it a bit further: letter to clients posted at Jan Copley/Russakow Ryan Johnson website.

We'll be reviewing a lot of estate plans over the next few months here at RRJ, and I'd be happy to review yours as well, so please feel free to call.

Should I waive bond in probate?

2010-03-16T08:47:00.000-07:00

In the often mysterious probate process, the conventional wisdom says "Don't waste your money on a bond!" New probate clients often tell me this, then ask, "What's a bond, anyway?" It's a type of inexpensive insurance, paid for out of estate funds, that pays beneficiaries when the executor steals or loses money. People assume they'll never be victims, but it happens often enough that I'm not comfortable advising people to waive the bond requirement as a matter of course. Here are a few examples from my own clients' experiences where bonds came in handy:

--the executors, a father and son team, who disappeared with $1.5 million of their siblings' inheritance.

--the conservator for several U.S. military veterans who lost or stole hundreds of thousands of dollars of her clients' funds and gave her personal assets away to avoid repayment. She was also part of the inspiration for a series of L.A. Times articles on conservatorship abuses and later legislation designed to prevent such abuses--sadly, the bill was not named after her.

--the executor who helped himself to his parents' house, borrowed the maximum against it and lost it to foreclosure. In his defense, he thought he needed it a lot more than his equally destitute brothers did.

--the administrator who let the estate's house go to a property tax sale while he was in prison. Before he went to prison, he joined some family members in a treasure hunt at Grandma's house, looking for the cash she often stashed away, leaving holes in the walls, floor, ceiling and even the yard.

Two things to take away from this: 1) bonds are usually a good thing, and 2) you meet the nicest people working in probate.

Can't I just file bankruptcy if I can't pay my student loans?

2010-02-16T16:34:00.000-08:00

We know the cost of higher education is going up, and lately going up two to three times faster than inflation. I'm not sure whether that extra money is for better facilities, better food, higher professor salaries or fumigation for rooms like some of my dorm-mates in college, but the high cost means a lot of students are graduating with huge debts they didn't plan on having.

Here's the story of one recent medical school graduate with $555,000 of debt! Her story is extreme, but we can learn a few things from it:

1) Save early, if possible, for school--529 college savings plans make it even easier and more advantageous.

2) Read the fine print on the loan documents you sign, especially if you're co-signing for someone.

3) If you need a deferral of payment, try negotiating this with the lender and using their procedures, or you may double your debt like the unfortunate doctor above.

4) Find ways to spend (and borrow) less, like a less expensive school.

5) See an attorney about negotiating the debt--there are options, but they're limited, and the possibility of discharging through bankruptcy is very limited.

How not to get divorced - tips from another attorney

2010-02-11T13:27:00.001-08:00

Here's a post from a Dallas, Texas, family law attorney with some good advice, especially before Valentine's Day (click here). Having been through the painful divorce process myself, I'd certainly recommend doing what you can to avoid it. Michelle May O'Neil's advice may not be revolutionary, but it's worth reminding ourselves before little hurts become big ones and the people we love feel taken for granted.

What up with the estate tax in 2010?

2010-02-08T15:12:00.000-08:00

I've been to a few lectures this year where attorneys and tax professionals, like me, are looking for the answer to what will happen with the estate tax this year and beyond. We're unsettled because none of our expectations has come to pass--we're left with no estate tax, for this year only, and instead have a step-up in basis for capital gains limited to $1.3 million per estate, and $3 million for assets passing to a spouse. And next year, we're back to a (now small) $1 million estate tax exemption.

There were many ideas about what legislation Congress would pass to avoid this result, but none have yet passed, and the longer this drags on, the less likely a solution will come until after the November election this year. Here's an article in Forbes that discusses it further.

In the meantime, the language in most trusts needs some patchwork to make it work well. I know that very few of us plan on dying this year, but just in case, have your attorney review your trust and prepare a short amendment to "2010-proof" your trust. Trusts are structured differently, so a one-size-fits-all amendment won't work, but the amendment that fits your trust shouldn't be too complicated.

You may not be able to just walk away...

2010-02-03T14:25:00.000-08:00

There are a lot of homeowners, and income property owners, who are having to seriously consider "walking away" from their properties by letting them go to foreclosure or by doing a short sale. What they may not understand is that depending on their state's laws, and whether there are second and third mortgages on the property, they may still be on the hook later for a "deficiency judgment." This article on Yahoo's site explains the problem.

Many times the lenders don't bother getting such a judgment, but if they do in California, it's good for up to 20 years, and can attach as a lien against your other real estate. You may not have equity in your other properties now, but if you manage to hang on until you do, and there's a judgment, you'll be paying that off years from now at 10% interest, so it's worth investigating now to see what you can do about it. Bankruptcy and debt negotiation are among your options. I can remember a client from several years back who went through this situation in the early '90's, then discovered a deficiency judgment in 2003 when he was in escrow to sell his formerly "worthless" property and had to negotiate quickly with the bank.

So, if you're in the unfortunate position of considering foreclosure or a short sale, talk it over with an attorney first.

And, if you're in the unfortunately position of holding a note secured by property that's now underwater, talk to an attorney about preserving your rights to a deficiency judgment--it could pay off years from now.

What can we learn from watching "Roadhouse"?

2010-01-25T16:18:00.000-08:00

I'm not sure why it took this long, but I finally saw "Roadhouse" for the first time the other day. While it may not match "Point Break", it comes awfully close, with emphasis on the word awful. What a classic! Beyond the entertainment value, I learned some valuable things that should help in the practice of law:

1) "Nobody wins a fight." Well said. You can fight to the death, but it will cost you money, time and stress, so reaching a settlement is preferable. Even so, Patrick Swayze still had to do a lot of roundhouse kickin' before he made his peace with the bad guys, and you may have to as well.

2) "It gets worse before it gets better." Even if this isn't really true, it sure feels that way. Taking your case to court and confronting the bad guys in your life will usually unleash their fury. They may not bring their kung fu grip, pipe bombs, tire irons or semiautomatic machine guns to the fight, but they can still inflict pain and it's best to expect it and be prepared.

3) "Pain don't hurt." This one I'm still trying to understand. He was the philosphy Ph.D., though, while I only took a few units, so I'll let you know when I reach enlightenment. His practice of carrying his medical records with him, though, makes a lot of sense, and I'd suggest carrying an advance health care directive and HIPAA authorization as well. In our advanced technological age, a wallet card allowing medical providers access to this information would suffice.

He doesn't mention his trust and powers of attorney in the movie, but if your profession is cleaning up dive bars and bringing justice to evil land barons, keeping your estate plan up to date is highly recommended.

Help! My grandma's marrying her prison boyfriend!

2010-01-12T22:02:00.000-08:00

Here's my favorite article of the day, from Slate magazine--it's not too far from the kind of calls I get every day: "Grandma's Prison Pal."

Astor elder abuse sentencing

2009-12-21T11:18:00.000-08:00

Not even the rich and powerful can get away with elder abuse--Brooke Astor's son was sentenced today. It's a minimum sentence, but he's also 85 years old, so 1-3 years is a long time for him. My guess is that he couldn't say no to his wife, who unfortunately was not prosecuted. He was set to receive a large inheritance anyway, and was receiving money from his mother also, so if he (or his wife) could have been content with what they had, he would not be facing this. I'll be anxious to see what kind of sentence his attorney receives, but in the meantime, you can find the story here.

Justice

2009-10-18T16:06:00.000-07:00

A couple of thoughts and my observations about our justice system, inspired by today's sermon at church...I think the system ought to be about finding the best resolutions to problems, hence RRJ's slogan "Providing practical solutions."

One of the things I've noticed, and I know I'm only one of many in a long line of past observers, is that the poor are denied access to the justice system--the system, for the most part, requires a good deal of money for access, in fact. This means, then, that the "haves" take advantage of the "have-nots", and I was particularly repulsed by an example of this a couple of weeks ago--a couple of attorneys and their client went way beyond the bounds of decency and the Probate Code, apparently figuring their victim wouldn't have the resources to fight it. We found a way to help, but there are plenty of others I can't.

I'm encouraged by the Hon. Aviva Bobb's efforts to improve self-help access in the downtown Los Angeles probate court--now that she's retired, I hope it continues. It's made a tremendous difference in helping those with conservatorship needs who didn't have much money or had cases where it wouldn't have made sense to pay attorney fees.

The rise of mediation has also helped in giving clients a forum to voice the emotional aspects of a case, not just the legal ones, which usually means faster and cheaper settlements. Once they feel their concerns have had a fair hearing, they're more inclined to agree to a solution that addresses them--these concerns may not have ever had a chance of being addressed by the legal system. It reminds of me of my disillusionment on the debate team in college--my professor stressed that it was a truth-seeking activity, but it seemed much more a truth obfuscation activity to me...an adversary system in court doesn't always, and can't always, produce accurate and just results, so finding a solution with the help and true understanding of those involved in a lawsuit has a better chance of producing a just result.

Estate planning for your online accounts

2009-09-07T21:46:00.000-07:00

I read something on this subject the other day, and realized it's something that ought to be mentioned in every estate planning session with clients--planning for online access to your accounts, and listing the accounts, for the right people to access after your death.

There are services to keep the information, and who to allow access to it, after proof of your death, like Legacy Locker and Deathswitch. It's important, as many accounts might not even be found without them--I can think of several of mine that have no paper trail--even the tax information is sent online.

I remember being interviewed for a TV news story a few years back on the family of the Marine killed in Iraq, who had to sue Yahoo (successfully) to gain access to his email account--I was asked (before the family won in court) what else the family might do, and I suggested hiring some hackers. I still laugh at the reporter's horrified expression, and she asked, "Really?" It turns out that's what a lot of people do, and have to do, if other options aren't available--perhaps the most famous case was that of a museum in Norway, which put the call for help out to hackers after one of its employees died, taking some passwords with him to the grave.

Michael Jackson will

2009-07-01T11:06:00.000-07:00

I won't be the only estate planning & probate attorney writing this, but I have to wonder why Michael Jackson's attorney wrote up a plan that ensured probate. The will provides that his estate be given to the Michael Jackson Trust--why didn't he just skip that step and fund the trust during Jackson's lifetime? It would have ensured the privacy that Jackson seemed to want. Now his financial details, the beneficiary details and creditor claims (there will be some strange ones, I'm sure) will all be public record.

With the large size of Jackson's estate, I don't think probate fees would be much higher, if at all, than trust administration fees, but now the whole family drama will play out in a public way. For most people, including Michael Jackson, a revocable living trust is the best foundation for an estate plan.

Another opinion on how long our frugality will last

2009-05-20T08:59:00.000-07:00

I came across this on one of my favorite sites this morning, The Oxford Club's Investment U:

Will Frugality Remain?

I tend to agree, that those forced to be frugal will not make it a habit any longer than they have to. I do think some people have been shaken enough to build up large reserves, but how many?

How long will the new frugality last?

2009-05-04T08:54:00.000-07:00

In talking with my financial advisor on Friday, he said he and his company believe this recession will take longer to get out of than the common wisdom says, based on their belief that people have learned from this crisis and will not go back to their free-spending ways.

Despite my home's, investments' and 401k's low values, I'd like to believe him, but I told him my experience with my own clients in probate and bankruptcy cases says otherwise. I'd really like to see people living within their means, and saving enough to continue living their current lifestyles or better in retirement, and I'll continue trying to convert people to this way of living.

On the other hand, most people have a hard time delaying gratification, so I have to believe that when money's available to them, they'll spend it.

I remember people sewing and mending their own clothes in the 70's, and growing their own alfalfa sprouts and vegetables, and then replacing the vegetable gardens with pools in the 80's. I remember a lot of articles announcing the end of the extravagant 80's during the early 90's recession, yet extravagance came back in style awfully quickly.

At best, I think some peoples' lifestyle deflation changes will become permanent, and that's not a bad result.

Customer service--law firms need it too

2009-03-30T11:29:00.000-07:00

I remember talking to a friend in 2007, as the economy was starting to turn, and him saying he was ready for a downturn, because that's the only time he can get some good customer service. I have to agree--people are much more solicitous of me now, but I have to wonder what they're thinking when they're the same ones who had no problem taking advantage of me when times were better.

The real estate agent who took advantage of one of my clients for a bigger fee and wants more listings like nothing's happened...the lender who continually gets my social security number wrong and makes me a non-person when I call to correct it and can only call back to solicit a new loan--this was especially good, as they told me to access my account online to fix it, but I can't access it because it's under a social security number I know nothing about!...my bank, after being bought for the third time, wondering why it's losing existing customers after they deny our business loan for their mistake! They could admit the mistake was theirs, but not to their underwriters, who think I'm a deadbeat. And yet I run into their employees who ask, every time, why I don't bank there anymore--I'm tired of explaining the story except to say that the new bank gets it, and has for many years. Bless them, the old bank employees still end their conversations with "Why don't you come in about a loan or an investment account?" When I'm ready for some abuse, I guess I will.

I think Geico's on the right track with their new ads regarding their customer and claims service--we as customers and lawyers have gotten used to insurance companies being in the business of denying claims, and believe me, I've heard some wild justifications from insurance adjusters for denying claims--it's why we still have lawyers to get people the money they rightfully deserve.

Ahhh, lawyers. I know we don't have the best of reputations for customer service either, but here at Russakow Ryan Johnson, we're trying. I do empathize with own clients who have faced similar problems, whether with other attorneys or perhaps even our own. If it's here, the problem should be solved quickly, as I'm reminded every time I'm on the wrong end of bad service.

Lawyers are here to find a solution to your problems, and to do so in a way that financially benefits you--why would you spend more to solve the problem than it would cost to ignore it? And you should have the peace of mind that comes with someone working on a solution to your problem. The legal system is stressful enough without your own lawyer(s) adding stress to it.

Retirement planning

2009-03-26T10:25:00.000-07:00

With the huge beating we all took last year and this in the stock market, I've been wondering how much I'll need to adjust my savings to still retire by 67. I'm still on track, but it certainly helps to know just how much I'll need to live how I'd like to live.

Apparently, it may be less than I thought. I heard Clark Howard on the radio yesterday say that he could live on $8,500 a year! He qualified that by saying that he does spend more now because of his wife and daughter, but I'm wondering how the $8,500 would be spent? Does that include a paid-off house, with just maintenance, taxes and utilities? Eating soy with grass clippings for nutrients? Even public transportation costs are going up, so perhaps that would allow for walking/biking with occasional $5 Metro day passes. And it would probably involve the thrill of finding great buys at thrift stores--I'm still using a broiler I found in college at the Eisenhower Hospital thrift store in Rancho Mirage. I'll have to dig deeper at his website, though, to find out where the $8,500 would go--your comments and suggestions are welcome.

Am I bondable?

2009-03-19T15:29:00.000-07:00

There's another reason for paying attention to those Fico score and credit report commercials--your credit history and past judgments, not to mention jail/prison time for fraud, can make it difficult to qualify as an executor or conservator in probate court. (By the way, the truly free credit report is at www.annualcreditreport.com.)

When a probate is filed to transfer assets at death, or a conservatorship to take care of an incapacitated person's assets, the person in control (executor, conservator, trustee, fiduciary) in most cases has to post a bond with the court to ensure that the beneficiaries are covered in case that person steals or loses the assets. Asset losses don't happen often, but when they do, the bond's a great thing!

It's an expense of the estate, along with insurance, taxes, attorney fees and court costs, and is calculated as a percentage of the estate.

Here's what the bond companies look for: your net worth (to recover against if the bond is paid to the beneficiaries), your work history, judgments against you, tax liens, bad credit marks and charge-offs, and convictions if they relate to financial impropriety. If you have any of these in your past, and you're seeking appointment as a fiduciary in probate, let your attorney know up front that you may have a problem so you can find solutions before the hearing.

Some solutions may be co-signers on the bond, blocked accounts and joint control accounts if you have minimal assets or a questionable credit history.

Boring is the new sexy

2009-03-04T17:21:00.001-08:00

That's the headline from Trusts & Estates magazine, normally a boring (yet highly informative) read. It seems anyone who didn't lose nearly as much money as everyone else is now exciting. I don't know if I'd go as far as "sexy," but then again, money has throughout history made people more attractive--if you happen to have any left, expect some flirtatious behavior from others. A local trust company is proud to point out it lost only 25% for its clients last year, not 40%. And my condolences for having to sell your Ferrari if you were in a hedge fund last year, as some last 90% of their value!

I think the same holds true in estate planning--a return to the fundamentals is in order, as peoples' main concern has always been making sure they're taken care of when they're disabled, their spouses are taken care of, and their family is taken care of. We attorneys and advisors often get caught up in the excitement over new and different ways to lessen taxes, but clients rightly want these only if they are part of taking care of them and their families. Someone was asking me about captive insurance companies the other day, which are a useful planning tool for some, and in my research I found far fewer of these actually exist than I would have thought. This seems true for most things--when I ask attorneys how many exotic plans they've actually done, they usually need one hand or less to count them.

That won't stop me from recommending items beyond the most fundamental for many clients, but more important is making sure the fundamental planning is in place--do you know what happens at your disability? At your spouse's disability? At your deaths? Is your family protected from creditors? From unscrupulous trustees? From spouses who don't like to work? From government entities looking for ways to cut costs by denying benefits? Are your assets in your trust to make it work? Most of the plans I review can't even get past these initial questions, so it's important to know that the basics are covered. It's not sexy, but it is reassuring at night.

Mediation

2008-12-01T14:33:00.000-08:00

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

2008-11-03T14:29:00.000-08:00

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

2008-10-29T14:19:00.000-07:00

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

2008-09-29T22:40:00.000-07:00

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

2008-09-21T20:34:00.000-07:00

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

2008-08-18T13:48:00.000-07:00

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

2008-08-11T22:21:00.000-07:00

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

2008-08-11T15:02:00.000-07:00

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

2008-02-29T08:51:00.001-08:00

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

2008-02-27T21:47:00.000-08:00

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...

2008-02-12T12:36:00.000-08:00

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

2008-02-07T16:06:00.000-08:00

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!

2008-01-29T16:32:00.000-08:00

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