Well, the answer depends on whether or not you have taken steps to write your wishes down in a will or trust, or do any other advanced planning.  Many of us intend to one day set aside the time to get our affairs in order and have an estate plan drawn up to make sure that our assets will go to who we want when we die.

The problem is that many of us don’t make it a priority, and for various reasons: maybe you don’t think you have enough assets to make it worthwhile, or you expect your family to get along and sort it out for themselves, or because maybe you are healthy and young so there is no sense of urgency.  The problem is you never know what might happen.

What do you think will happen?  Well, if you die intestate (which simply means without a will or anything), then your assets will pass to heirs under the California Probate Code.  If you are married or in a registered domestic partnership then your half of any community property will automatically pass to the survivor along with any separate property you own if you don’t have any children.  So, where your assets go will depend on the nature of the property—community or separate, and who survives you.

If you die intestate with assets valued at more than $150,000, then someone will have to go to the probate court to get appointed to manage your affairs and to change title to your assets.  And even if you have a will, it has to go through the probate court too!  One of the few differences being that if you die intestate, then the court will appoint someone (not necessarily who you would have chosen), called an “administrator,” versus if you have a will, then it will be the person you appointed in your will, called the “executor.”

Someone will have to take steps to begin this process by filing a petition in the probate court.  The cost of filing this petition is $395, and the process, which can be quite lengthy, is also expensive because it also involves administrator/executor fees as well as any attorney fees before your assets are distributed to your heirs.  Again, if you die intestate then who inherits depends on the type of property left and who survives you.  If you leave a valid will, then your assets will pass to those named under your will (assuming no one contests or challenges—if so the court will resolve any disputes).

So, a big chunk of your “stuff” may be spent on court costs, administrator/executor fees, and attorneys’ fees before it can be distributed to your family members.  On top of that your estate may be subject to estate taxes, but this will depend on the year you die and the value of your estate.  For people passing away in 2012, the first $5,120,000 will pass free of estate tax, but under the current law this will go down to $1,000,000 in 2013.

Many of you are probably wondering how can I avoid probate?  A living trust can avoid probate not only after you pass away, but also during your lifetime should you become too ill or disabled and no longer able to manage your affairs.  I’ve previously covered some of the benefits of having a living trust versus a will alone, view it here: http://www.falkandcornell.com/blog/2011/10/benefit-living-trust-checks-balances/.  A living trust can also reduce estate tax consequences.

By taking steps now you can save your family a lot of time, money, and aggravation.  And there are other factors you should consider as well.  For instance, if you are a parent of minor children, you may want to designate who would be guardian over your children.  For more information about appointing a guardian, see my previous blog entry here: http://www.falkandcornell.com/blog/2011/09/parent-young-children/.  We’d be happy to answer any specific questions you may have during a complementary meeting to discuss your individual situation.  So stop putting it off, take action now to get your affairs in order.  Your family will thank you for it.

Falk, Cornell, & Associates, LLP is a member of the American Academy of Estate Planning Attorneys.

A durable power of attorney for finances is a simple, inexpensive, way to arrange for someone to manage your finances if you become
unable to make decisions for yourself.  If you become unable to make financial decisions for yourself and you haven’t prepared a durable power of attorney, a conservatorship proceeding will be necessary. Your spouse, children, or companion will have need to petition the Court to be able to manage your financial affairs.  This document is important in a number of matters.   For instance, insurance companies, Medi-Cal, social security and financial institutions will not provide any information to your spouse or children if they do not have a Durable Power of Attorney for Financial Affairs.  This can be very crucial if your spouse or children are attempting to obtain health care services for you when you are ill.

A financial power of attorney can be drafted so that it goes into effect as soon as you sign it. If the Power of Attorney is a Durable Power
of Attorney the authority remains in effect even if you become incapacitated.  You should specify that you want your power of attorney to be “durable.” If you do not state it is “durable” it will automatically end if you later become incapacitated.

Many individuals execute a power of attorney which does not go into effect unless one or two doctors certify that are unable to manage your own financial affairs. This is called a “springing” durable power of attorney. It allows you to keep control over your affairs unless and until you become incapacitated, when it springs into effect.

California has a Statutory Durable Power of Attorney which is a straight forward document which provides your agent with rights to manage your affairs.  It is not a complete and full authority to manage all aspects of your financial matters but provides substantial authority to the Agent.  For instance, it does not allow the Agent to create or modify an estate plan such as a will or trust, but does allow access to financial accounts and communicate with insurance companies.

A Durable Power of Attorney for Financial Affairs should be part of every individual’s basic estate plan.  It is the document which will assist your family in avoiding a  Conservatorship proceeding being necessary if you are no able to manage your own financial affairs.

Falk, Cornell, & Associates, LLP is a member of the American Academy of Estate Planning Attorneys.

Have you ever thought about how many websites you log into in a given week? Have you paid your bills? Checked your medical records? Posted vacation pictures on Shutterfly? Purchased songs on iTunes or posted a video on YouTube? Or what have you logged into just today? Work email, personal email, Facebook, Twitter, Linked in?

In the electronic age, many more people are replacing paper and pen tasks with online access. Many more people are using email and social media websites as daily ways to contact people but most do not consider what will happen to these accounts when they are incapacitated or deceased. Entrustet, a digital estate planning website, predicts 408,000 Facebook users will die in 2011.

In establishing an estate plan, an attorney asks clients to complete their asset booklet. But what is an asset? People generally list houses, rental property, financial accounts and business ventures but nobody
lists digital assets. Can they be inherited? Who should manage them? There have been developing conversations regarding whether digital assets can be treated as “brick-and-mortar” assets and be managed by personal representatives upon incapacity and death.

There are four types of digital assets, although there is some overlap.

1. Personal assets – includes information generally found on a computer, smartphone or
   uploaded to a website. The hard drive of computer likely holds photos,
   important documents, emails, playlists, banking and medical records.
2. Social Media Assets – includes websites like Facebook, Twitter, email and dating
   websites. Most of these accounts include personal information, photos and even
   videos.
3. Financial Assets – most financial companies offer online banking and investing. You
   can go online to check account balances, transfer stock or pay bills. Other
   online financial assets include Amazon, PayPal and maybe online gaming
   accounts.
4. Business Accounts – many people buy and sell goods on eBay, craigslist or Amazon.
   More established businesses may collect customer contact information,
   physicians may provide patient information, or shared documents may be
   available on an FTP site or virtual drop box. Blogs and domains maybe may also
   be valuable digital assets.

All of the digital assets mentioned require a unique username and password to access. But who can access? Some companies have their own policies listed in the fine print which you agreed to when signing up for the account. Some terminate on notification of death while some may not have a policy. Facebook allows a deceased account to be “memorialized” to bring comfort to the decedent’s virtual family while Yahoo! states that accounts cannot be transferred and right to a Yahoo! ID or contents of an account
terminate at death.

As this is a new concept, many states have not enacted legislation to handle such assets. So how do you plan when digital assets are not generally governed by wills or trusts? How does your trusted personal representative access and manage your digital assets?

Some steps you should take include: Inventory your digital assets and provide logins and passwords. As tedious as it may be, it is necessary to update this list whenever new accounts are created or deleted or
when passwords change. In order to protect your privacy, this information should be saved on a CD, DVD-R or USB flash drive and be password protected or in hard copy. Wherever this is stored, please make sure a trusted person knows if its existence and if password protected, make sure they know the password
too.

There are also online databases which assist in planning for how your online life should be handled at such time when you are unable to manage them. Entrustet, http://www.entrustet.com/, and Legacy Locker, http://legacylocker.com/, offer customers the ability to list digital assets, store online passwords,
delete online accounts and provides access to designated beneficiaries in the event of loss, death or disability. These companies state their services are as secure as safety deposit boxes and require security questions be answered by beneficiaries before information is released.

While there may not be a perfect solution to managing the ever changing online life most of us have created, it is very important to consider the management of our virtual assets as we become more and more digital. Relying on online access is convenient while we are capable of using the services but can be frustrating and problematic for our successors. If you would like to discuss planning for your digital assets, please contact us.

Falk, Cornell, & Associates, LLP is a member of the American Academy of Estate Planning Attorneys.

             Savings bonds are an easy way to save, particularly since many workers can use a payroll deduction to purchase them.  However, those bonds are also easy to lose – they get filed away, put in drawers, owners put them in “safe” places but may not tell anyone about them, or they can get destroyed.

             If you suspect you or any of your relatives, living or dead, have savings bonds that were never cashed, you can confirm your suspicions.  You’ll need the social security number of the person whom you believe had bonds.  Then just go to U.S. Department of Treasury website.  After entering the social security number, you can find any bonds that haven’t been cashed.  If the owner of the bonds is deceased, an heir can file a form with the Treasury Department to claim it.  As always, the person acquiring the bond will pay the tax on the accrued interest.

             One last tip – if you have savings bonds as part of your estate plan, make sure you include the information and location in your files so the bonds won’t be lost.

Falk, Cornell, & Associates, LLP is a member of the American Academy of Estate Planning Attorneys.

Your home really is your ‘castle’ as it’s one of your most important investments. Your home can be your biggest investment, especially in California, and as such, needs to be titled in your trust. Our office makes sure that your home is titled in your trust when your living trust is created.

What happens if you sell your house? Your old home will be titled as the new owners wish. You need to make sure that your new dwelling is titled in your trust. Inform your realtor and the title company that you want your house titled in the trust, and provide them with the name of your trust. For ease, we provide our clients with laminated “business cards” which have the formal name of their living trust. We put them in the front of their red Estate Planning Portfolio binder containing the copy of their estate planning documents. Just give the formal living trust name to the institution drawing up your paperwork, and the institution should draw the paperwork up with the house as part of the trust.

What about refinancing? This is can be little trickier. Most homeowners assume, since nothing is changing is terms of ownership, that the house will continue to be titled in the trust. This is not always the case! Some institutions take the house “out” of the trust during the refi process, i.e, the institution will create a new deed transferring the house from “Home Owner, Trustee of the Homeowner Living Trust, Dated January 1, 2000” to just “Home Owner” to make it easier to complete the refi process. However, the house doesn’t always make it back into the trust. You, as the homeowner and trustee, need to be vigilant to make sure your house stays in the trust, or “goes back in” the trust when the refinancing is complete. We have seen a probate case due to a refinance which took the home out of the trust, but didn’t retitle it back into the trust at the completion of the refinance process. Just be vigilant with your realtor and/or banker to ensure your home is kept in the trust, or put back in the trust. We are always happy to help our existing clients with this process.

Falk, Cornell, & Associates, LLP is a member of the American Academy of Estate Planning Attorneys.

When we create a living trust for a client one of the most important steps is to transfer the assets into their living trust, as well as list their assets on the “Schedules”. While it is still necessary to change the ownership of your assets to Living Trust Dated listing the assets on the schedules provides a nice backup to show it was your intent to have your assets in your living trust, as well as a good running list of what assets your own.

With each living trust we include different schedules for different situations. For a married couple there are three schedules. The main schedule is the “Schedule A” for all their join assets, or in California Community Property. Schedule B is for husband’s separate property and schedule C for wife’s separate property. For an individual, or a married couple doing separate trusts or domestic partners there is only one schedule, schedule A. Sometimes a married couple doing a join estate plan will have joint assets, but the husband’s half is his separate property and the wife’s half is her separate property, or if you aren’t married but say you have an asset with your siblings. You could own 1/4th of a rental property, for instance, you would still list that asset and note your portion is 1/4th.

As many of you know we normally say DO NOT WRITE on your original documents, as Amanda discussed in her blog last October ( http://www.falkandcornell.com/blog/2010/10/good-idea-handwritten-living-trust/ ) HOWEVER your schedules are the one exception. In fact we encourage you to write on your schedules as your assets change. Did you recently close a money market account? Make sure you line through the asset you no longer own and date and initial to the side. Bought that beach house you have been eyeing for retirement? Make sure to write the address and what percentage you own, initial and date. The only items you do not include on your assets schedules are beneficiary designated accounts, such as 401(k), IRA’s and life insurance, but if in doubt put it on your schedule it won’t hurt.

Every three years we invite our clients to come in for a complimentary review and at that time we will update your schedules for you so you have a clean copy. If you have been keeping them up to date it makes our job, and yours much easier. Also you can download blank schedules from our website (http://www.falkandcornell.com/estate-planning/forms.htm)

If it’s time for your three year reivew don’t forgot to schedule your appointment!

Falk, Cornell, & Associates, LLP is a member of the American Academy of Estate Planning Attorneys.

Mary Smith got a pleasant surprise when she picked up her mail the other day. Her first husband, from whom she’d been divorced for over 10 years, had left her the proceeds from an insurance policy. The good news for Mary, however, meant bad news for Mr. Smith’s second wife, with whom he’d had 2 children. Although the second wife received other assets, the life insurance proceeds still went to Mary.

When someone purchases insurance, opens an IRA, or a bank account, the institution holding the account asks who should receive the proceeds of the account if you die, i.e., the beneficiary of the account. Normally a form is included with the application for you to indicate the beneficiaries of the assets. You fill in the names of loved ones, or perhaps charities, and think you’re done.

Loved ones pass away, or can become ’unloved’, and even charities dissolve. When beneficiary names aren’t updated or removed, problems will be encountered by the person or institution who administers your estate after your death. If a beneficiary is deceased, the financial institution will usually require their Death certificate. A charity which has dissolved, or can’t be found, is more problematic. Eventually, the money will usually go to the account holder’s estate, and/or be distributed to the account owner’s legal heirs.

Mr. Smith probably didn’t want his ex-wife to receive his insurance proceeds. You can prevent this problem by checking the beneficiaries of your accounts. You may be able to update this information on the institution’s website, or by calling the Customer Service department of the institution. If you’re unsure who to designate, or wonder if your trust should be the beneficiary, you may want to confer with an attorney. And make sure to check your beneficiaries every few years!

Falk, Cornell, & Associates, LLP is a member of the American Academy of Estate Planning Attorneys.

In a previous blog we discussed the importance of the Trust being the record owner of your home. In funding living trusts, many people remember their home, however they often forget undeveloped lots and out of state property.

Though lots may not be developed, they do constitute a valuable asset. Remember that to avoid petitioning the court in California, the total value of real property outside of the trust must be less than $20,000. An undeveloped lot, not titled in the trust, could very well be the reason your Trustee has to petition the court and prove that it was your intention to put the property in your living trust.

Out of state properties must also be named in your living trust. Though we cannot transfer the properties for you, as we are only licensed in California, we work closely with attorneys in other states which can facilitate the transfer for you. If an out of state property is not correctly titled in your living trust, your Trustee will have to file probate proceedings in that state, subject to that state’s laws.

The process of petitioning the court, especially a court outside of California, will surely expend unnecessary funds and be inconvenient for your successor trustees. Make sure all real property in California and outside are titled in the name of your living trust.

Falk, Cornell, & Associates, LLP is a member of the American Academy of Estate Planning Attorneys.

When you are the one entrusted by your loved one to administer his/her estate, many unexpected issues can arise. Certain issues require some additional action, and one of those issues is the proper handling of unregistered guns. Assuming that the guns are not classified as firearms under the National Firearm Act (i.e., machine guns, short-barreled rifles, short-barreled shotguns, etc., in which case, different requirements apply, and you should contact your local ATF office), the following are some guidelines which should provide you some peace of mind.

If you are the trustee of your loved one’s estate, and you come across a gun which you believe to be unregistered, there is no need to panic. The first thing to do is ensure the gun is not loaded and it is placed in a locked, secure location within your possession and control.

Once the gun is safely locked and secured, you can obtain a form from the California Attorney General’s website (www.ag.ca.gov/firearms/forms) called an “Operation of Law or Intra-Familial Handgun Transaction Report.” Once you have completed the form and submitted it to the Department of Justice at the address provided, the gun will be properly registered to you as trustee of your loved one’s estate, which should take approximately 4 to 6 weeks.

What if, once you have registered the gun, your cousin who lives across the country wants it? No problem. After you have given the proper notice to all people entitled to inherit, presuming no one objects to your cousin receiving the gun, you can contact any local Federal Firearms Licensee (“FFL” – a fancy name for a gun dealer) and explain that you would like the gun sent to an FFL in the state in which your cousin lives. (Your cousin should provide contact information as to the designated FFL to which he/she wishes the gun to be sent). Your local FFL will then send the gun to your cousin’s designated FFL for registration in his/her name. There will be a transfer fee associated with the transfer of the gun, so it would be prudent to contact several FFLs to confirm that you’re paying a reasonable fee.

Once your cousin’s designated FFL receives the gun, the FFL can assist your cousin to ensure that the gun is properly registered pursuant to his/her state’s registration requirements.

What if you ascertain, after the appropriate notice, that no one wants the gun? Easy. Save yourself some headache, not to mention paperwork, and simply surrender it to your local police or sheriff’s department, and be sure to request written confirmation that you have done so.

Falk, Cornell, & Associates, LLP is a member of the American Academy of Estate Planning Attorneys.

Financial institutions are always happy to assist people with setting up accounts that require the institution to hold your money. Since it’s your money, you assume it will be just as easy to access when you need it, right?

Not necessarily so. Even when you are trying to get your own money out, an institution may require you to have internet access, an email address, ID numbers or other information that you might not have readily available. However, these same institutions can help you. Here’s some advice that might make it easier.

There’s usually an 800 number you can phone for help. Call and explain to the institution’s representative what you are trying to do. If you’re computer savvy, connect to the website before the call: the representative may be able to direct you to information/forms on the computer. If you have a difficult time with a particular representative, excuse yourself and call back later. Keep doing this until you find someone who is willing to help you, someone you can understand, and who doesn’t mind you asking questions. Persistence will pay off here – eventually you’ll find someone who will help you. (When you find a person with whom you can work, try to get a direct line for them: this will help you in the future).

During the conversation, repeat to the representative what they say, so you know you understand them. At the end of the conversation, go over exactly what you need to have/do again. When you’ve done everything required, filled out any forms, and are ready to send the institution what they’ve requested, Stop! Call the institution again and tell them what you are doing. State you want to confirm you’re including all paperwork that’s required. Don’t be surprised to find there’s additional paperwork they want, or something you have ready to go that isn’t needed. When you finally send your paperwork, include all documents that were requested by any representative – you never know if you’ve received accurate information from each representative with whom you’ve spoken.

It shouldn’t be difficult to obtain your own money. Hopefully this information will make your efforts productive.

Falk, Cornell, & Associates, LLP is a member of the American Academy of Estate Planning Attorneys.