Estate Planning for Your Family

by Michael Hagerty and Judy Vucci 

Michael Hagerty, Commissioner on Aging, County of Marin, Professor Emeritus, UC Davis

Judy Vucci, paralegal and taught Probate Procedure at Sonoma State University

Estate planning” seems like it requires an expensive lawyer, but in most cases you can do it yourself. Because it sounds costly and difficult, many people put it off until it’s too late, leaving their family unprotected. Estate plans transfer your property to your spouse or family in the fastest and least expensive way possible, avoiding the cost and time of probate. Here are three actions you can take that are easy and don’t require a lawyer. (You should consult a lawyer if your estate is especially complex or if you have minor children.)

The easiest step is to update your beneficiaries on your life insurance, retirement accounts, and bank accounts. This is an important way to get cash to your survivors quickly, without going through the time and expense of probate. When you die, the beneficiary you name simply shows the bank the death certificate and personal identification, and the accounts are theirs. There are no risks to you, because during your life you can change the beneficiary at any time or even withdraw all of the money for your own use. The most common mistake is to forget to update your beneficiary when circumstances change. Make sure that your accounts list the beneficiary you want, or you may give an unintended gift to a former spouse or even to a dead person!

Another really simple way to transfer property is a “transfer on death” statement. For example, the DMV allows you to designate a person to receive title on your death, and the banks have a “Transfer on Death” (TOD) form for accounts. Also, many insurance benefits will pass to a named beneficiary without any probate.

The second fastest way to get property to your survivors is to set up a living trust. Your property is legally transferred to the trust when you are alive. Such trusts are called “revocable” because you can revoke or change them at any time and use them for any reason before you die. Thus you still own the property while you are alive and can sell it, spend it, or give it away. When you die, the time and expense of probate is avoided, and your property goes directly to the beneficiaries you name.

To create a living trust, you usually don’t need a lawyer. Nolo Press publishes a great book, Make Your Own Living Trust, by attorney Denis Clifford. We at the Death Forum are placing a copy for you to read in the clubhouse library. You can copy their forms if you wish. The steps are:

(a) name your trust (usually “The Living Trust of [your name]”

(b) name your successor trustee (“After I die, I name … as successor trustee to distribute my property)

(c) list the property you want to transfer and to whom (e.g., “My  photography equipment goes to …)

(d) change the titles of any formal title documents such as real estate replacing your name with “The Living Trust of [your name]”

(e) sign your document in front of a notary public—unlike a will, no  witnesses are required

You should consider a living trust if you know that your trustee is trustworthy. You will be deceased, and no one is supervising to see if that person delivers your property as you requested. For example, your child/trustee may not want to give your second spouse or new partner (i.e., not your child’s parent) what you meant them to have. We have seen this happen twice among personal acquaintances. This is a big problem for gay partners if family is not agreeable, or if the trustee desires to keep a piece of jewelry rather than give it to the person named. No copy of a trust is filed with a court, and no notice to beneficiaries is required by law, so someone not notified of the bequest due to him/her may not know enough to claim it. A will, on the other hand, is submitted to probate; it is public record, and anyone can go to the Superior Court Clerk and ask to see it.

Another reason a trust might not be appropriate: If a testator left lots of debts, it may be better to have probate because that sets a limit on the length of time creditors can make a claim against the estate.

Your will must be witnessed by two people (bring it to Pub some Friday to get plenty of volunteers) and then notarized. DON’T store it in a safety deposit box because your executor can’t get to it. Store it (well-marked) in a top drawer or on the refrigerator with your other emergency forms.

Regarding witnesses: Remember that they should not be beneficiaries of the estate. Notaries are actually not necessary but are good for creating a “Self-Proving Will” so that they don’t have to find the witnesses to make a statement to a court after you die. If your notary does not have one, see a sample “Self-Proving Affidavit” in the Appendix of Nolo’s Simple Will Book. If it is 1:00 o’clock in the morning and you are going skydiving at 5:00 o’clock and feel a desperate need to change your will, you can write a new one entirely in your own handwriting (not typed or printed) and sign it without witnesses. This is called a Holographic Will and is probably best only for short-term, urgent situations­—but it’s definitely better than nothing!

If you want to intentionally omit a person from your will, although he/she would have a right to part of your estate by law if you died without a will, it is better to mention that explicitly rather than to just not mention them. Otherwise they can contest your will in court and sometimes will win. You can just say something like, “I intentionally leave no part of my estate to my deceased brother’s son, John Jones.”

You can cut probate costs in half if you appoint family or a loved one to serve without requesting a fee. If the estate is very simple, it is also possible to negotiate with an attorney for a fee lower than the usual rate. Or you can always buy a Nolo Press book and handle the probate process yourself without an attorney. You don’t have to use Mom’s attorney for probating her estate or to help you transfer property according to her trust; you can pick someone you know and trust instead.

If you have to pick someone to write a trust for you, it is good to ask how much of their legal practice is devoted to probate, trust, and estate matters. Anyone licensed to practice law will be happy to write a trust for a few thousand dollars, but not all of them are expert in the field!

CAUTION: Joint tenancy (JT) property will not pass by your will no matter what the will says. It will go automatically to the person who holds title as joint tenant. This causes lots of trouble when divorced spouses do not change old JT deeds to their property. We have worked with cases at court where fathers refused to give their children the deceased wife’s half of the real estate as specified in her will. Same goes for a bank account where one child is added as joint tenant so he/she can manage the account for an elderly parent. Then:

(a) This joint tenant can take the entire account, stock, etc. that dad thought was going to be divided equally among his kids.

(b) An adult kid as joint tenant can opt to take property before you die, having equal access to account contents. We saw a case where Dad had a new woman in his life, and his daughter was able to convince him to sell his real property and to share the proceeds with her.

(c) If your joint tenant has debts, your property can be reached by their creditors!

Another less expensive and simple option is available for husbands and wives: a Community Property Petition, available in California, which is a community property state. See Chapter 3 of Nolo’s Simple Will Book. Spouses would hold title to real estate, for example, as their community property. Anyone can write a new deed (deed forms are usually available at stationery stores) transferring property “from John Jones and Mary Jones, as Joint Tenants, to John Jones and Mary Jones, Husband and Wife, as their Community Property.” The husband already owns the first half, so the court simply “confirms” the second half to him when his wife dies. Quick and simple. You can find a California Judicial Council Community Property Petition form online or at the Superior Court Clerk’s office. ■

— from the October 2015 Echo, Pg. 8-10