Michael Jackson was laid to rest in Glendale last week, and after much controversy surrounding the costs of the funeral – initially, the City was going to foot the bill, to the dismay of the taxpayers – it was finally decided that the estate would pick up the tab.

And apparently, it was a big tab.

The Los Angeles Times wrote that attorney Jeryll S. Cohen urged Probate Judge Mitchell Beckloff to approve the expenses for interment at Forest Lawn Memorial Park amongst lavish decorations saying the costs “may not be appropriate for an ordinary person, but Michael Jackson was not ordinary.”

Under probate law, all the debts of an estate must be paid before beneficiaries get their share. And, in California, there is a general rule as to how much of an estate will go toward the funeral expenses.

The law specifically states that appropriate funeral costs include the reasonable cost of interment, family plot, and endowment care. Those costs though, are to be calculated “proportionate to the value of the estate and in keeping with the standard of living adopted by the decedent.” Any outrageous bills may require additional justification and judicial approval.

Judge Beckloff OK’ed the payments.

Jackson lived enormously, and he will rest in peace as such surrounded by statues and stained glass windows.

An attorney representing Jackson’s children did not appear concerned that the funeral costs would overburden the estate to the detriment of her clients.

James D. Perry

 Young or old, after the financial devastation of the six months, we have more reasons than ever take a fresh look at our financial and estate plans. Most of us planned for increased financial assets in the future. Very few of us has planned for less money

Those who are retired or plan to be in a few years don’t have a lot of time to sit tight and hope for a recovery.  In light of the steep declines in our fortunes, here are some questions to think about:

“How are you doing financially?” Falling stock prices, lower interest rates and reduced dividends at many stalwart companies may also have sliced retirees’ monthly income.  Besides causing sharp cuts in spending, it is wise now to consider new ways to get income out of existing assets.

Elderly parents may need your help revising their budgets, or they may need to rework their investment mix. Others may need to explore ways to tap their home equity. If that isn’t your strong suit, you may want to help them find a good independent financial adviser.  

From an estate planning point of view, if your assets have been substantially reduced, consider making changes to you estate plans.  As an example, one strategy would be to reduce or eliminate specific cash gifts so that the amount set aside in the will for children isn’t eaten up by the once smaller gifts earmarked for distant relatives, charities or grandchildren. 

Others may need to take a closer look at their children’s current and future needs in making changes to the estate plan.  When one child has lost a good job, or had other financial setbacks, the best approach may not be to leave the entire estate to all children in equal shares.

In these days of financial scandal we all need to be aware of people trying to sell financial products.  Among the possibilities: telemarketing scammers promising sweepstakes and lottery winnings in return for initial payments, and slick salesmen selling seniors products or services they don’t need. Senior citizens particularly need to beware of investments that may sound good — offering regular income or guaranteed returns — but that may be inappropriate for retirees.

Many annuities, for instance, come with steep expenses and “surrender” fees, which prevent the holder from withdrawing their money for several years without a huge penalty, making the funds inaccessible in an emergency.

Adult children should ask their parents that question if anybody is trying to sell them something. If the answer is yes, encourage them to talk with adviser before they buy anything.

James D. Perry

The judge overseeing the probate of the hotelier Leona Helmsley’s will has ruled that, contrary to her wishes, the billions of dollars that will flow into the charitable trust she created do not have to be spent solely for the care and welfare of dogs.

Experts in trusts and estates had warned that Mrs. Helmsley’s order that her fortune be spent promoting canine well-being may not have been legally binding. The two-page “mission statement” that contained her instructions also gave the trustees discretion in spending the money, and it was never incorporated into her will or the trust documents.

A spokesman for the trustees, said they planned to begin making grants from the trust next month in such areas as health care, medical research, human services, education and various other areas.

Over the years, bequests made for the purposes of furthering animal welfare generally have a hard time surviving the probate process.

However, in California pets are no longer treated like any other piece of property. California probate law provides that a trust for the care of a designated domestic or pet animal may be performed by the trustee for the life of the animal.

With the adoption of this code, setting up a trust to care for pets became a recognized estate planning technique. This law enables pets to become the beneficiaries of your will or trust.

Pet trusts are typically of two types: a testamentary trust which is designed to provide care after your death, and living trusts which provides care when you still living but no longer able to care for your animal. Living trusts can be useful if you are incapacitated or living in an assisted-living facility.
 
You actually have a number of options in planning for your pet. The first is to contact a pet retirement home and fully fund your pet’s care while you are still living.

Another plan would be to skip the trust altogether and donate your estate to a local animal care sanctuary with the stipulation that your pet receive care for the remainder of its life.

I have drafted plans that limit the size of the bequest to something on the order of a few thousand dollars per year for each year of the pet’s remaining lifespan. 

If you have multiple pets, one way to address the challenge of keeping them together and cared for in the manner of your choosing is to include real estate as part of the trust. The designated caretaker lives rent-free as long as he or she cares for the animals.

Remember, pet care is expensive. A pet trust will give your relatives or other caretaker the means to provide for your animals in a manner consistent with your wishes. To fund such desires, some people have designated their pets as the beneficiaries of substantial life insurance policies.

James D. Perry

The New York Times ran a story this week on bill collectors who call relatives of the dear departed asking  if they want to settle the balance on a credit card or bank loan, or perhaps make that final cable tv bill or cellphone payment for the deceased person.

The next of kin on the other end of the line often have no legal obligation to assume the debt of a spouse, sibling or parent. But they often pay for it anyway.

Dead people are the newest frontier in debt collecting, and one of the healthiest parts of the industry. Improved database technology is making it easier to discover when estates are opened in the country’s 3,000 probate courts, giving collectors an opportunity to file timely claims.

The law varies from state to state. In California, survivors are generally not required to pay a dead relative’s bills from their own assets. In theory, however, collection agencies could go after any property inherited from the deceased.

Sentiment also plays a large role, the agencies say. Some relatives are loyal to the credit card or bank in question. Some feel a strong sense of morality, that all debts should be paid. Most of all, people feel they are honoring the wishes of their loved ones.

It is likely that most of those who pay a dead relative’s debts are unaware they may have no legal obligation.

I think collections from the next of kin of deceased persons should be better regulated. I doubt survivors are told up front that they are under no legal obligation to pay the debt.

My recommendation:  Unsecured creditors who want to seek payment for deceased persons’ debts should be required at beginning of call, to state that the survivor has no personal obligation to pay debt.  They should also be required to state the only legal recourse the creditor has is against the debtor’s estate.  

In my Orange County Probate practice I have seen many instances of family members paying bills for a deceased person from their own funds.  Think twice before you do this.  If there is a probate estate pending, notice is given to all creditors - they have 120 days to file a claim after the notice. If a creditor fails to file the claim with the court, the claim is barred.  

If your in doubt about a collection claim against a deceased relative, call a probate attorney.   

James D. Perry

Up until last month, Whittier, California was best known for being the hometown of Richard Nixon — and me. It looks like this honor will now pass to Nadya Suleman’s octuplets and her six other kids.

I’m still waiting by the phone for Nadya to call me for some estate planning advice. I assume that in light of the numerous death threats she has received she will want to write a will and appoint guardians to take care of her kids in the event of her early demise.

Nadya, or any parents with young children should name one personal guardian for each child, and an alternate in case the first choice can’t serve.

Under California Probate Law, you may name more than one guardian, but it’s generally not a good idea because of the possibility that the coguardians will later disagree. On the other hand, if you prefer that two people care for your child — for example, a stable couple that would act as coparents – you should name both of them, so that they each have the legal power to make important decisions on behalf of your child.

Here are some things to consider when choosing a personal guardian for your kids:

Is the prospective guardian old enough? The person must be at least 18 years old in most states.
Does the prospective guardian have a genuine concern for your children’s welfare?
Is the prospective guardian physically able to handle the job?
Does he or she have the time?
Does he or she have kids of an age close to that of your children?
Can you provide enough assets to raise the children? If not, can your prospective guardian afford to bring them up?
Does the prospective guardian share your moral beliefs?
Would your children have to move?

If you’re having a hard time choosing someone, take some time to talk with the person you’re considering. One or more of your candidates may not be willing or able to accept the responsibility, or their feelings about acting as guardian may help you decide.

In Nadya’s case, news reports lead me to believe her parents may not want the job of guardian for the octuplets. They have their hands full helping out with their first six grandchildren. Since Nadya is an only child herself, she can forget about sisters and brothers taking the job.

Any volunteers out there?

James D. Perry

On December 29th a California court of appeal upheld a century old law of inheritance. Under the law in intestacy (when you die without a will) your estate is distributed to your “legal heirs” In California if you die “intestate” without a surviving spouse, domestic partner, surviving children or surviving descendents of deceased children, your estate will go to your parents if they are still living.

In this case the facts state that Leslie Shellenbarger was born in 1963, and died in 2005. His only surviving heirs were his mother Laura and his father Clifford, who were married for a short time more than 40 years ago. In 1962 Clifford moved to Michigan, leaving Laura and their one-year old daughter Michele in New Mexico with no means of support. Laura was pregnant with Lesley at that time.

In 1964, Clifford obtained a judgment of marital dissolution and was ordered to pay $10 a week for Michelle’s and Lesley’s support. The order later increased the support to $25 a week per child. The record shows that Clifford had no relationship with his son Les and failed to pay the court order child support for years – the unpaid support grew to more than $35,000.

After Leslie died, his mother Laura asked the Probate Court to award the entire estate to her, based on the theory that it would be unfair that his father should reap a financial windfall after the death of his son, because he never saw his son and failed to pay for his support during the 42 years he lived.

In the end the Probate Court decided that the law is the law. Clifford was awarded half of the estate. The Court of Appeal held that a California Probate Court may not, on principles of equity or fairness, disinherit a natural parent from distribution in child’s estate when child died without a will. Failure to pay child support or lack of a meaningful parent-child relationship does not affect parent’s rights as an intestate heir.

Moral to the story. If you have legal heirs who you don’t like and who always treated you like dirt, give them the boobie prize, write a Will.

James D. Perry

Did you know that even deceased persons can be victims of identity theft? The deceased are easy targets because sometimes it takes weeks or months and in some cases years for financial institutions to find out about a death. The identity of a deceased person can be stolen in a variety of ways. Some identity thieves watch the obituaries, look up death certificates, or obtain private information from health care providers, unknowing relatives, or internet genealogy web sites.

Unfortunately, the thief may also be a family member who may take advantage of the situation or who has already been using that identity. This may be especially true if the deceased suffered from lengthy illness, mental confusion, or if there is disagreement among family members prior to the death.

Financial institutions are not immediately made aware that their customer is deceased. It takes time for the Social Security Administration to transmit the Death Master File to the financial industry. Until the institution receives word that the individual is deceased, the account remains active.

Although the deceased person doesn’t have to be concerned with his or her credit rating, identity theft can cause emotional distress for the family. Identity Theft Resource Center has valuable information about how to protect yourself and your deceased loved one from identity theft. They also have an information sheet with steps to take to decrease the risk of identity theft such as notifying the credit bureaus to put a “deceased” notation in their file, obtaining a copy of the decedent’s credit report, and a list of agencies and companies to notify of the death.

You can also stop the junk mail by contacting the Direct Marketing Association . There you can register to take the deceased’s name off mailing lists with their Deceased Do Not Contact List.

If your loved one had a will which needs to be probated or a trust which needs to be administered after death, contact my office. We can help with trust administration or probate.

In my experience as an Orange County Probate Lawyer, the vast majority of estates are settled without difficulty. Still about twenty percent of all estates have some type of conflict. These estate conflicts are expensive and directly impact the amount of estate assets, including cash, that pass on to the heirs.

Just having an up-to-date will or trust can rather easily prevent almost all of the most common conflicts among heirs and potential heirs.

The most common conflicts arise in mixed family situations. An elderly man or woman, with grown children, begins a new relationship after a spouse of many years dies or after a divorce. The children do not always accept the new partner with open arms. An added complication occurs when both new partners have children.

Absent a clearly defined will or trust, the children and the surviving spouse will seldom agree on a distribution of the estate. This is especially true in California if the parties were married, where, absent a will, all of the deceased’s community property and up to 2/3rds of his or her separate property goes to the surviving spouse. If the children fail to inherit, then they are upset. If the surviving partner fails to inherit, then he or she is upset.

The above situation is made even more difficult, when there is a significant age difference between the partners, where an elderly man or woman suddenly takes up with a much younger partner. In this case, even having a will or trust sometimes is only part of the solution. The children may challenge the will or trust alleging that the older partner was unjustly influenced to leave all of the estate to his or her partner.

Another variation on this theme is where the couple never marries and never registers as domestic partners, leaving the more recent partner entirely without support. Despite what the deceased intended, without a will or trust, general California law will apply to the estate and if the parties are not married, and never registered as domestic partners, all of the deceased’s property will go to his or her statutory heirs and not to a surviving partner.

Although more predominant among the elderly, these problems can arise in any situation where there is an untimely death. Lack of planning will almost always insure some type of conflict. If you find yourself in a situation where your heirs may have a potential conflict, it is absolutely important to have a clearly drawn will or trust that conforms strictly to legal requirements.

James D. Perry