If you are a parent, or a soon-to-be parent, you know the love we hold for our children is unlike anything else. There is nothing I wouldn’t do for my children and I’m willing to bet you feel the same as well. This article is for the parents out there wondering if they have done everything necessary to protect their children if the unthinkable would happen.
We all hope for the natural order of life. Meaning that we will live until old age while watching our children grow and have kids of their own. Unfortunately, tomorrow is never a guarantee and we all know that tragedy could strike at any time. In our final moments of life, the last thing we would want is to worry about who and how our young children will be cared for without their parents.
I recently had this conversation with a parent of young children in my Rocklin office and the concept of establishing guardianship succession had never crossed their mind. That isn’t all that uncommon, primarily for the reasons I just discussed, that we all wish for the natural order of life. My job as an estate planning attorney is to ensure you have thought of and planned for any of the possibilities life could have in store for us, and for our loved ones.
When I draft a comprehensive estate plan, there are a litany of questions I must answer. If you’re the parent of a minor child, or an adult child living with a disability, who will step into your shoes and care for your child? This is one of the most important of those questions. This is often a difficult question to answer because it requires you to think of a world your child could live in without you to be there for their needs. I completely understand this as a father of three minor children myself, but this is why I see establishing guardianship succession as one of the most important documents you can establish as a parent.
Let’s face it, if something were to happen to you, your children are going to suffer from the tragedy of your loss. They will look for their support system to help them through that very terrible experience. If you fail to plan guardianship succession for your kids, that very support system could fight among themselves to determine who will step into the parental role. This leaves your kids with the loss of the parents, and now with the loss of a support system that was supposed to be there to carry them through such an awful experience.
Guardianship succession sounds fancy, but it really is very basic. You will select a group of people, I always suggest at least three, who will serve in the role of guardian for your children. The succession part and the need for at least three is meant to plan for the possibility that the first person you chose is unable to serve in that role. Having a succession plan in place will make it so no matter what happens, there is a list of people who are willing to step in and take care of your kids.
Guardianship allows someone other than a parent to legally make decisions for a child. They take the role of a parent and accept the responsibilities that come with that. Selecting the right person for this role is critical because the only time they will serve, is if your child has experienced the trauma of losing a parent. They will have to carry your child through the worst life could throw at someone. Having the right touch for that is critical.
When you document your guardianship succession in your estate plan, and the unthinkable occurs, the court is likely going to appoint the person designated in your documents. However, there is always the possibility that such guardianship appointment could be contested, and for good reason. If you have designated someone who is later found to be abusive to children, they are probably not the best person to serve in that role, and thus the court would likely look to appoint another person.
The courts, when deciding on whom to appoint, will place a significant emphasis on the instructions left by the child’s parents. However, they also must do what is equitable, meaning what is best for the child, and that may not always match with your instructions. This is another reason having at least three people listed is a wise course of action when creating your guardianship succession.
Establishing your guardianship succession will help limit the possibility that your child’s support system is there for them when they need it most, rather than in court fighting each other. I hope none of us have to experience it, but if some tragedy were to strike, I don’t want those last moments to be filled with worry about who will care for my child. Providing this sense of comfort is what makes what I do special to me.
If you’re a parent of a minor child, or a child living with a disability, I strongly urge you establish your guardianship succession plan today. And if it has been a while since you have established one, this is a great time to revisit it.
Our firm can help you review or establish a guardianship succession as well as craft a comprehensive estate plan to put your mind at ease. Don’t wait because we never know what our next minute has in store for us.
Filippi Law Firm, P.C., provides legal services in estate planning, probate, trust administration, trust litigation, and personal bankruptcy in the greater Sacramento area, with a focus in Rocklin, Roseville, Lincoln, and Granite Bay. Give us a call at (916) 333-7910 or fill out the contact form to get in touch with our office. Consultations are free, and they can be done over the phone, via Zoom, or in person at our office in Rocklin. Prepare for your future and work with the best estate planning attorneys today.
Does medical debt have you feeling blue? It may not seem fair that on top of needing to see a doctor or go to the hospital, you also must deal with some awfully expensive medical bills that most of us could not even dream of paying because they are so exorbitant.
Unfortunately, doctors, hospitals, and laboratories can sue and get a judgment against you. This allows them to garnish your wages, seize your bank accounts and even foreclose on your house. Medical bills can leave you without money and homeless if you allow that to happen.
I have done a lot of work with people who owe medical debt, and there are 4 things I have learned:
Medical debts are a BIG problem for many people.
You are not alone. A federal Consumer Financial Protection Bureau study found that 59% of debt collection calls were related to medical bills [1]. According to the Harvard School of Public Health, more than 40% of American families have gone through major financial stress due to medical expenses [2].
Being in debt can be bad for your health.
A Gallup survey of college graduates from 1990 to 2014 found that those in debt were sicker than those who were not, especially due to the stress related to debt [3].
Given the vulnerable situation, be careful from whom you seek help.
The Federal Trade Commission warns consumers to stay away from debt relief companies that charge fees before settling your debts, make guarantees about getting rid of unsecured debt, and make promises about being able to put an end to all debt related lawsuits and calls.
Be Smart and Strategic
Whether you amassed the debt quickly, after an unexpected medical crisis, or accumulated the debt in a slow spiral, the stress of a lawsuit does not help. Nor does ignoring the situation in hopes that it will go away. It will not, but a qualified, experienced, trustworthy attorney can advocate for your best interests and give you back a sense of control.
There may be a chance my legal team and I can help. Our approach is compassionate, yet strategic. We will work to stop the constant phone calls and debt harassment. You do not have to live under a cloud of debt with no hope of paying it off. This challenging situation can be solved intelligently, and in a way that respects your dignity.
Every debt situation is unique, and we recognize that. We are your resource to improve this situation for you. We will promptly answer any questions you have, and we will make sure you understand the entire process.
Do not deal with this alone. Trust that you will be happy that the Filippi Law Firm was by your side helping you through this situation.
We are here for you, every step of the way!
Filippi Law Firm, P.C., provides legal services in estate planning, probate, trust administration, trust litigation, and personal bankruptcy in the greater Sacramento area, with a focus in Rocklin, Roseville, Lincoln, and Granite Bay. Give us a call at (916) 333-7910 or fill out the contact form to get in touch with our office. Consultations are free, and they can be done over the phone, via Zoom, or in person at our office in Rocklin. Prepare for your future and work with the best estate planning attorneys today.
[1] https://files.consumerfinance.gov/f/documents/201701_cfpb_Debt-Collection-Survey-Report.pdf
[2] https://www.hsph.harvard.edu/news/press-releases/sick-in-america-poll/
[3] https://news.gallup.com/poll/174317/student-debt-linked-worse-health-less-wealth.aspx
It wasn’t all that long ago that we all were dealing with the unfortunate experience of having an asset that was underwater, meaning the value of the asset was less that what was owed on the loan attached to the asset. This can happen to a car, boat, RV, and most commonly, your home.
Home values have experienced a significant increase since the great recession twelve years ago, thus making homeowners pretty satisfied with their purchases. This appreciation of value has also given way to some homeowners using their equity to make large purchases, home improvements, or debt consolidation. This is often done through what mortgage lenders call a cash-out refinance, where you refinance your first mortgage into a larger loan and receive the difference in a cash payment to you.
However, other homeowners choose the lower cost option of a home equity loan or line of credit. These loans are typically junior mortgage liens on your home, sometime referred to as a second, or second mortgage. What this really is referring to is the position in line the loan has in case you default. If you were, the first mortgage would be paid first, and you guessed it, the second mortgage would be paid second.
With the substantial detrimental affects the pandemic shutdown has caused, home prices may, for the first time in nearly a decade, start to turn downward. While the cause and likelihood of this happening is outside the scope of this article, you should nonetheless be prepared should it happen and affect you personally.
There are many solutions to dealing with a home that has mortgage liens that exceed the value of the home. But they are only going to be relevant if you also have experienced a situation that has caused you to be unable to make your monthly payments.
There is a striking difference between what we are currently experiencing and what happened during the Great Recession. While both ultimately resulted in significant job loss, thus making it difficult for anyone to make their monthly payments, the biggest difference is the type of mortgages that are prominent today compared to 12 years ago. Then most homeowners selected adjustable rate mortgages for the affordable payments those initially offered. The problem there was when the initial payment period expired, the monthly payment skyrocketed, making it difficult for anyone to pay, even if you didn’t lose your job.
Today, and most recently, homeowners have been selecting 30-year fixed rate mortgages that don’t have the risk of increasing mortgage payments. This has added a layer of security for many homeowners. Meaning that if you have been fortunate enough to maintain your employment, you likely won’t be affected by fluctuations in the home values.
However, if you have found yourself in a place where your income has shifted downward, and you are struggling to make your payments, there are a few options available to you. You can contact your lender and negotiate a deferment of payments, a loan modification, a short sale, or an exchange of a deed-in-lieu of foreclosure. You can also use the bankruptcy laws to help you through this situation as well.
One of those strategies is to file for Chapter 13 bankruptcy, where you will establish a payment plan for three to five years and have all non-secured debts discharged at the end. This also allows you to stay in your home if that is a goal. A chapter 13 can also allow you to “strip” or remove a junior mortgage if the value of the home is less that what is owed on the first mortgage. Since the junior mortgage is not secured because of the lower value, the bankruptcy code allows for the junior lien to be treated as an unsecured creditor, like a credit card, and for their security interest in your home to be removed at the completion of the Chapter 13 payment plan. This would leave you with only the first mortgage on the home at the end.
This, and the other strategies mentioned, are highly technical legal maneuvers that necessitates a professional to manage for you. This is why you are strongly urged to seek out the assistance of an attorney because your rights and liabilities will be affected.
We can help you navigate all of these issues. So if you, or someone you know, has found themselves in a tough financial situation, we can help. Give us a call today to schedule a no-obligation consultation and let us help you remove the financial stress.
Filippi Law Firm, P.C., provides legal services in estate planning, probate, trust administration, trust litigation, and personal bankruptcy in the greater Sacramento area, with a focus in Rocklin, Roseville, Lincoln, and Granite Bay. Give us a call at (916) 333-7910 or fill out the contact form to get in touch with our office. Consultations are free, and they can be done over the phone, via Zoom, or in person at our office in Rocklin. Prepare for your future and work with the best estate planning attorneys today.
We have spoken extensively in this blog about the importance of establishing a trust to ensure the disposition of your estate is done in accordance to your wishes. Employing a trust as your tool for distributing your estate is by far the easiest method of managing your affairs. But what does that all look like? And is it so easy you can do it yourself? The answer to these questions is exactly what I plan to provide in this article.
When you establish a trust, you do so for a multitude of reasons. Whether it is as a will-substitute to avoid the probate court process, to care for minor children, or to benefit others either directly or through a charitable organization. How you have employed a trust in your estate planning will dictate what the administration of the trust will look like when you pass.
When you established your trust, you named a successor trustee, and more than likely, you named a few in case the person you named is unable to serve in that capacity for one reason or another. This successor trustee steps into your shoes and has the authority to manage your trust in almost the same manner as you did while alive. The biggest exception being they are not allowed to modify the trust since it becomes irrevocable upon your death. Other than that, the successor trustee has the authority to manage the trust in accordance to the instructions in your trust agreement.
The successor trustee is responsible for ensuring the estate is distributed accordingly, whether to beneficiaries, creditors, or the tax collector. There are steps the trustee must follow to avoid getting themselves into trouble, personally. First, there are a number of different notices that must be sent to all beneficiaries and reasonably known creditors. Next, they must follow all of the tax reporting requirements for both the IRS and any applicable state. This is imperative as the successor trustee takes on personal liability for ensuring this is done. The trustee must identify and secure all trust assets, pay any outstanding bills, close any accounts no longer being used, make the proper notifications to various government entities, and keep the beneficiaries informed as to the status of the process.
Winding up a trust estate has a lot of moving parts, and that can be complicated depending on the complexity of the trust as well as the ultimate purpose of the trust. The life of a trust can vary from several months all the way into perpetuity depending on the purpose of the trust. The entire process in itself is not easy and managing the requirements burdened upon a trustee can become overwhelming, especially if serving in this role is not something the trustee is well versed in or has not done extensively in the past. This is why most successor trustees choose to hire an attorney to help manage it all and to help avoid any personal liability for their acts or omissions.
The primary benefit for using a trust as a will substitute is to avoid the probate process in court. Anytime you include the court in any process it will cost more money, slow everything down, and make it all open to the public for inspection. All significant concerns for most families. But establishing a trust is just one step to ensuring this will not happen. Without an attorney, your trust could fail for a variety of reasons, the most common being that you simply failed to fund the trust properly. If this happens, it will add a significant amount of work for your successor trustee, and ultimately will land your estate exactly where you wanted it to avoid, in probate court.
While administering a trust is no easy task, it is fundamentally easier than going through the probate court process. That alone is a sufficient enough reason to establish a trust for yourself. But there is a significant amount of other benefits as well, the topic of which has been addressed throughout the other articles in this blog. However, that should not replace a consultation with an attorney who will customize the information they provide you to fit exactly what you’re looking for in your plan.
Call us today and we can schedule your no-obligation consultation. As we always have, we offer in-person, telephone and virtual consultations to fit your schedule and health/safety concerns. We make this process easy from step one!
Filippi Law Firm, P.C., provides legal services in estate planning, probate, trust administration, trust litigation, and personal bankruptcy in the greater Sacramento area, with a focus in Rocklin, Roseville, Lincoln, and Granite Bay. Give us a call at (916) 333-7910 or fill out the contact form to get in touch with our office. Consultations are free, and they can be done over the phone, via Zoom, or in person at our office in Rocklin. Prepare for your future and work with the best estate planning attorneys today.
When a person creates a trust, they are referred to as the trust grantor. A grantor may set up their trust for an infinite number of reasons. This is what makes a trust so exciting because it can work to accomplish nearly every goal you have with your estate. It can be used as a will substitute to help your estate avoid probate court, it can be used to care for minor children, or those with special needs, it can be used to provide for a surviving spouse, it can be used to benefit a charity, and an infinite number of other possibilities, only limited by the imagination of the grantor. A trust brings flexibility in how you manage and distribute your estate when you become incapacitated, or when you pass on. This brings an incredible level of comfort knowing your affairs will be handled in the manner you desire.
A trust created here in Rocklin and Roseville is typically written under the laws of California, unless for some reason you have chosen another state to be the situs, or the place where legal jurisdiction will belong. This means that the laws of the State of California will govern the trust you establish.
The short answer to the topic question is yes, in California, a trustee can also be a beneficiary, but there are several serious concerns you need to be aware of to ensure your trust doesn’t become legally invalid. To truly understand how this can go wrong, we have to dive into a little property law.
I discussed this in a recent video clip (April 16, 2020 – Difference Between a Trustee and Beneficiary – Link Here), but I will briefly summarize. When you own a property interest, there are two types of title involved, legal title and equitable title. Having legal title means you are the official owner of record for the property, meaning you can do with the property interest whatever the law allows. You are the “owner” in the eyes of the law. Equitable title means you have the right to receive the benefits of the property interest and sometimes means you have the right to legal title at some point in the future. When you own property you typically hold both legal and equitable title, except for when they have been divided for one reason or another, like a trust.
In creating the trust, the grantor has made a decision to split the legal and equitable title into two parts. The trustee will hold the legal title and the beneficiary will hold the equitable title. This division is what makes a trust legally valid. Without the division, the trust will no longer be legally effective.
Under the doctrine of merger, if the sole trustee and the sole beneficiary are occupied by the same person, there is no division of property interests between legal and equitable title. Therefore, this would make the trust legally invalid because the two types of title have “merged”. This makes one must wonder, how is it I can set up a trust, but not lose my current property interests in my estate.
When a grantor sets up a trust, they designate their initial trustee and initial beneficiary in the trust agreement. If the trust is an intervivos trust, or living trust, the grantor is often both the initial trustee and the initial beneficiary, which as we mentioned, brings up the issue of the merger doctrine and the possible invalidity of the trust.
To get around this issue, it is imperative you designate proper successor trustees and proper successor beneficiaries, but not necessarily in that order. A trust is still valid even without a designated trustee since a court of competent jurisdiction can designate someone to serve in this role.
What a court can’t usually do is designate a beneficiary. This is why it is extremely important to designate a proper and valid successor beneficiary. Without one, your trust is likely not going to be legally effective because of merger, as the legal and equitable title interests have not been divided between the grantor and someone else.
This is just another reason why drafting a trust agreement with a professional is vitally important to ensuring your estate plan functions the way you intend it to function. It is also a great idea to have an already existing trust reviewed to ensure it meets the same standard.
Today is a great time to give us a call or send us an email to schedule a consultation.
Filippi Law Firm, P.C., provides legal services in estate planning, probate, trust administration, trust litigation, and personal bankruptcy in the greater Sacramento area, with a focus in Rocklin, Roseville, Lincoln, and Granite Bay. Give us a call at (916) 333-7910 or fill out the contact form to get in touch with our office. Consultations are free, and they can be done over the phone, via Zoom, or in person at our office in Rocklin. Prepare for your future and work with the best estate planning attorneys today.
The answer to this may surprise you. Especially coming from an attorney whose living is made drafting estate plans for families in the Rocklin and Roseville area where many families have made the decision to plan for their future. And the answer is a resounding no. You do not need an attorney to draft your will or trust documents at all.
In fact, you don’t need an attorney to help you with any legal matter. Accused of a crime? Injured and looking for compensation for your pain and suffering? Have a contract dispute? Arguing with your spouse and looking to file divorce? None of these things require an attorney to seek assistance from our court system.
Plenty of people have gone through all of those issues and represented themselves. And even a few even managed to do it successfully. However, the law is a very complex web requiring years of study and experience to insure you don’t put yourself in a worse situation than when you began. It takes an attorney 4+ years just to complete the education and licensing requirements just to call themselves an attorney. And every day working as one brings with it the need to investigate and learn. Its why we practice law rather than do law.
Many of us can do fairly well determining our own arguments in our defense, but what an attorney does is figure out the ten other ways your opponent will beat out the argument you thought was airtight. I often refer to law school as the professional arguer’s academy. Finding arguments and counterarguments is engrained into your mind through the indoctrination of the law school experience. Are there those that have this natural ability without the need for law school? Of course, but most of us aren’t born with it.
When it comes to estate planning, most of the documents you need to have completed can be purchased at an office supply store or downloaded from some open source website online. They’re typically your cookie cutter, fill-in-the-blank documents that leave no room for customization. In fact, you could even have a document preparation business fill in the blanks for you, although I don’t know why you would.
The reality is that you nor the non-attorney document preparation guy do not know the law well enough to understand how certain decisions could affect you or your family in the future. Just having the documents completed isn’t enough. They need to be done right.
Any business is faced with three choices when they offer a product or service to the public. They can be good, they can be fast, or they can be cheap. Sometimes you can even select two of these options, but never all three. It just doesn’t work. Think about it, do you go to eat at a fast food restaurant because its good? No, you go because its fast, and cheap. Do you go to a fine steak house for dinner because its cheap? Of course not, you go because its good.
When you go to the office supply store, the open-source website, or a document preparation business, you’re doing it because you want a deal and maybe because you want it done quickly. They are offering the fast and cheap service options. But they’re most certainly not offering the good option. It’s just not possible.
There are some online legal services websites who use the words “rocket” or “zoom” in their names, which implies they are fast. They are then coupled with the words “lawyer” or “legal”, which are words that tell us the service they’re offering, legal work. Remember our three options from before? Rocket and zoom show they are fast, the next option leaves you wondering if they are good, or if they are cheap. Well, I’m not much of a betting man anymore, but I am willing to bet that people use these types of website service providers because they are cheap. So, if you’re using these services, like a fast food restaurant, you’re doing so because they are fast and cheap, but not good.
Good legal representation is not cheap. As the saying goes, “there is nothing more expensive than a cheap lawyer.” While legal representation doesn’t have to break the bank, you also don’t want to go with the budget options either. You and your family will end up paying for it later. And I’m not just talking about money. The stress involved in fixing an issue created by a cheap and quick fix is never easy.
While you don’t need to have an attorney draft your estate plan, you should certainly consider it. The money you spend today will be well invested for your future. If you don’t have an estate plan established, or it’s been a while since you’ve visited your plan, give us a call to schedule a consultation right away. You never know what tomorrow has in store for you, so don’t delay.
Filippi Law Firm, P.C., provides legal services in estate planning, probate, trust administration, trust litigation, and personal bankruptcy in the greater Sacramento area, with a focus in Rocklin, Roseville, Lincoln, and Granite Bay. Give us a call at (916) 333-7910 or fill out the contact form to get in touch with our office. Consultations are free, and they can be done over the phone, via Zoom, or in person at our office in Rocklin. Prepare for your future and work with the best estate planning attorneys today.
