My profession is estate planning. Clients come to me for help on how to preserve their life’s accumulations of wealth and how to pass it on to their loved ones.

What I do for a grandfather and grandmother through legal documents will hopefully convey through transfer of financial assets, a lasting memory of their love and appreciation in the eyes of their children and grandchildren.

But the greatest material wealth my clients possess is not nearly as vast as the richness of knowledge, morals, and wisdom that they hold in their hearts for their families.

A person’s legacy is not solely in the assets they leave behind, and one tradition dating back to biblical times – the ethical will – lives on to provide a vehicle for an individual’s intangible fortune.

An ethical will, or legacy letter, is a document designed to pass on ethical values or life lessons from one generation to the next. It is drafted by you, not me or any other attorney. There are examples of early ethical wills written throughout the Christian Bible, the Jewish Torah, and they are even contained in the oral traditions of Native Americans.

Ethical wills often contain meaningful family stories, personal values and beliefs, statements of faith, blessings, advice, and expressions of love. They may even share regrets, apologies, and final requests. There are no rules or laws about the length or content of an ethical will. It can be a few lines, or paragraphs or many pages in length…this is a case where it really is the thought that counts.

Your ethical will may be kept in a separate document with your last will and testament. However, as much as you hope your heirs follow your sage words and honor your legacy, there is no binding legal authority behind the contents of your ethical will.

Every ethical will is unique. And, while there is no standard format for writing one, there are resources available (books, audio CDs, DVDs and podcasts) to help you write your own.

I urge you to provide for the security of your family by crafting a solid estate plan. But, I also encourage you to be just as generous with your life experiences and values, leaving your loved ones more than just your material possessions.

James D. Perry

A few weeks ago, I wrote about the expected death of the “death tax” due in 2010.

The $1.35 trillion tax cut package passed in 2001 included provisions for the estate tax rate decrease and the estate value exemption increase over time with the estate tax disappearing entirely in 2010. However, it would return in 2011 to a 55% tax rate and an exemption only on the first $1 million of an estate.

The question still remains, though, as to what Congress plans to do about it.

Congress could allow the law to stand meaning anyone who dies in 2010 doesn’t have to pay taxes on their estate. But, this doesn’t seem likely because of the tremendous impact it would have on the Treasury’s coffers.

Congress could pass legislation in the next two months to prevent the repeal from taking place, either extending current tax rates and exemptions, or putting forth a new plan. President Obama proposes a permanent estate tax of 45% exempting the first $3.5 million of an estate ($7 million for married couples).

Or, they could let 2010 come and pass a law that will be applied retroactively. Estate taxes aren’t due until nine months after the date of death making September 2010 the latest Congress has to make a decision. However, that could mean that the government may show up at your door, hat in hand looking to collect on the dearly departed’s estate long after you’ve filed the final tax returns.

There is a great deal of criticism against this tactic – most noting the difficulty of such retroactive tax collection on a deceased individual’s divvied up estate. It may even be unconstitutional.

Whatever Congress decides, it’s a decision best made sooner than later.

James D. Perry

 Where should you keep estate-planning documents prepared by your attorney?  Where should people expect to find your living trust, will, durable power of attorney and advance health care directive? You want to be sure that those documents stay safe and can be easily found when your family needs to find them.

For those of you in California, I suggest that you do not keep them in a safe deposit box at the bank.  They will be safe there, but not accessible when urgently needed.

Your safe deposit box won’t be easy for your friends or family to open it if you’re not there. This is true even if they are co-owners of the box. Having the key isn’t enough to get the bank to open it up for them — the bank wants you to prove that you have the legal authority to require them to open it up. So here’s the conundrum: the document granting your friends or family the right to act on your behalf as an executor or as the power of attorney/agent is inside the box, and until the box is opened, they can’t prove that they have the authority to get the bank to open it…etc.

Safe deposit boxes are often inside a bank, which may be closed over the weekend. If a durable power of attorney or advance health care directive is needed over the weekend, no one will be able to get to it until Monday. In a medical emergency, the advance health care directive should be easily accessible.  If you insist on keeping your documents under lock and key either at a bank or at home, make copies of your durable power of attorney and advance health care directive, which can easily be located.

Most estate attorneys agree that the best place is in your home where the documents can easily be found when they are needed. Some suggest that you don’t lock them into a box for safekeeping inside your home, because that would be as difficult to penetrate as a safe deposit box.

My advice, simply leave them in a file cabinet or drawer, or inside a desk, on a shelf or binder somewhere else that is obvious to anyone looking for them.  

James D. Perry

My sisters and I celebrated my Dad’s 94th birthday last week.  Although he has lost a few steps, my Dad is still living with his wife in his own home with a  daytime caregiver. 

Last year he had to give up driving, which meant he could no longer deliver Meals-on-Wheels, take day old bread to the homeless shelter, and other volunteer activities that took him out of the house and into the community.   He is mostly house bound now, but still wants to contribute to causes and charities he believes in. 

Like many of my elderly clients, Dad  has often been sucked into direct mail scams and telephone sales scams.  Thinking he will have a great deal more money to send to his charities, he sends the money or unwittingly gives his authorization to his bank to debit his account in response to mail order sweepstakes offers and other promises of riches or worthy causes. 

In recent years, lottery crooks and others have added a new weapon in their rip-off arsenal: They send checks — fake, of course — as advance payments on purported winnings to come. Unsuspecting victims are guided to deposit the seemingly real check and then to wire most of the money to scammers as soon as it shows up in their accounts. When the counterfeit check actually bounces some days later, the victim is on the hook for the money — and often bank fees as well.

In my father’s case, and some of my clients, considerable money is lost before the accounts are closed or payments are stopped.

On this subject, I recommend to you a supurb article in the June 17th Wall Street Journal by Karen Blumethal, “A Family’s Fight to Save and Elder from Scammers”.   I urge anyone with an elderl parent or relative to read this article and do what you can to help.

Noted in the article are several strategies to stop the scammers:

  Sign up cell phones and land lines with Do Not Call Registry
 
  Put a short script by the phone for answering telemarketers such as
  “I’m very busy, I can’t talk now, thank you for your call.”

  Change the victim’s phone number. Consider having mail sent to
  a P.O. Box or other address where so that someone looking out
  for the victim can screen for scams

  Help the victim find activites to fill the time spent  talking to scammers
  and opening mail.

All of these are worth a try…but I’m still the son and he the father.  I try keep his checking account balance pretty small, but taking his phone number away and trumping his selection of worthy causes is tougher love than I have been capable of so far.  

James D. Perry

As times have changed, so has the field of estate planning. When I started out in the field 22 years ago, people and their lives seemed to be less complicated.  As the years went by, it seems like the issues my clients shared with me became more complex.  Perhaps as I gained experience and felt more competent as a counselor, they were able to open up and tell me what was really on their minds.

Planning for the 21st Century Family

Today, clients who have been married for 40+ years and have two well-adjusted children and four well-adjusted grandchildren are in the minority.  Ozzie and Harriet don’t live here anymore, perhaps they moved to the midwest.

Instead, experienced estate planning attorneys are faced with planning for informed and sophisticated clients who come with “baggage” - singles (either by choice or through divorce), same sex couples, unwed couples, blended families, and dysfunctional families.

This change in family dynamics has led to a significant shift in how estate planners help their clients plan for incapacity and death. Today we have to listen and counsel more and offer insight and guidance on a case by case basis instead of just providing basic information and a generic solution. We are collaborators with our clients instead of sellers of estate plans.

This is why it’s so important for you to find an estate planning attorney who you feel comfortable enough with to tell everything - about your grandson who is addicted to drugs; your sister whom you haven’t seen in 20 years; your daughter-in-law who has turned your son and other children against you; your daughter and only child who has turned her back on you.

Without this information, your attorney won’t be able to work with you to develop an estate plan that will really work for you and your family. Your estate planning attorney needs to hear it all - the good, bad, and ugly - and then help you put together an estate plan especially tailored to your current situation. And as time goes by and your life changes, you’ll need to go back to your trusted estate planning attorney again and perhaps again and again to tweak, fine tune, and revise your plan.

If you view your estate plan as a static set of documents that you do once and then forget about, then you’ve been greatly misled. That’s why you are better off  committing to a long term relationship with a trusted advisor, someone who takes the time to understand you and your family dynamics now and also understands that those dynamics can and will continue to change.

The son who you have been estranged from for 20 years comes back into your life, and you have to ask your heart if you want to take him back after the hurt you have felt for all of those years 

As your life changes, your estate plan needs to change. Don’t procrastinate on making the changes.

James D. Perry

When people retire, or decide to move to be closer to family often times it involves a move to a different state.   So when you move to a different state, are your estate plan documents still valid in your new state of residence?

The answer is maybe.

Under of the U.S. Constitution, every state shall give full faith and credit to the laws of every other state. So as long as they are not contrary to California law, documents that were completed and valid in another state generally are valid in California and vice versa.

This is especially true with contracts. If you signed a contract in California that is governed by California law, the contract generally is effective in any state and still could be governed by California law.

Living Trusts generally are completely portable throughout the United States. You can choose which state law governs your trust.  In all of most of my trusts I insert a clause that says that this trust is governed by the laws of the state of California.

Contract law generally does got govern other estate planning documents such as wills or financial or health care powers of attorney. These documents more often will be governed by the laws of your state of residence or the laws of the state in which you are located when you are trying to enforce them.

Most states have specific statutes governing wills and durable powers of attorney for health care. Property Management powers of attorney are often governed by a state’s laws of agency, but if they have typical estate planning features, such as remaining effect upon your incapacity, they may be governed by probate law as well.

Most states have laws similar to California for these documents, but there are differences between states.

If you moved from another state and have estate-planning documents that were prepared in your old state, there may be portions of your documents that are unenforceable in your new state. Whenever you move to a new state, at a minimum you should have your old estate planning documents reviewed to make sure they comply with the laws of your new state. Better yet and often times more economical, you could have new estate planning documents prepared by an attorney in your new state.

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

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

A large percentage of California nursing facilities for the aged are cited each year for instances of abuse.  Unfortunately, the majority of nursing home abuse and neglect cases are never reported. When we put our elderly loved ones in a nursing home or assisted living facility, we’d like to think that they will receive the same standard of care that we would provide, but that is often not the case.  The reality is that even the so called “upscale assisted living residences” often abuse and neglect the basic needs of their residents.  

The terms “abuse” and “neglect” are used together and sometimes used synonymously, but they are really two very different things. Abuse of an elderly person may take the form of physical abuse, sexual abuse, or emotional abuse. Some signs and symptoms of elder abuse include: bruises, cuts, broken bones, fear, depression, burns.

Signs and symptoms that your loved one is being neglected may include: malnutrition, dehydration, sores that don’t heal, unsanitary living conditions, soiled clothing, and dirty linens.

As the number of the frail elderly increases each year, so do the number of cases of elder abuse and neglect.  in this environment, you need to know how to take legal action you can take if you suspect your loved one has been the victim of elder abuse and neglect.

In the case of nursing home problems, any person can file a complaint about a California nursing home with the Licensing and Certification Division of the California Department of Public Health (DPH). DPH is the state agency that enforces nursing home laws and regulations through regular inspections and complaint investigations.

You can file a complaint about abuse, neglect and any other matter protected by law. For example, you can file a complaint about violations of the patient’s rights, poor care, lack of staffing, unsafe conditions, mistreatment, improper charges, transfer and discharge concerns, and a failure to readmit the patient you after a hospital stay

For more information on how to report or pursue a claim for nursing home elder abuse you can contact my office, or get further information from the California Advocates for Nursing Home Reform Website.

Not long ago I received a call from Mary, a client of mine who lives in a large Orange County retirement community. My client’s 87 year old brother Bill lives in the same community, a few door down, and is having some health problems. (As they used to say on Dragnet, the names have been changed to protect the innocent.)

At the time Mary set up her estate plan about ten year ago, she nominated her brother’s son, her nephew, as her successor trustee, and agent under power of attorney for property and health care. Mary and her brother live in the same retirement community a few doors away from each other.

It turns out that the nephew was also the person nominated by Mary’s brother to serve as his trustee and agent, and according to my client, the nephew is doing a very poor job. The nephew used to live nearby in Long Beach, but is now retired himself and has moved about 20 miles away. He constantly complains to Mary about all the time it takes him, and what a burden it is for him to be looking after his father. He rarely visits or calls Bill to check on him. “I just want time to enjoy my own life”, the nephew told Mary. My client is lucky that she had the opportunty to see her future trustee, and health care agent in action and to see his real motivation. Most of us aren’t this lucky.

Seeing the nephew’s performance on behalf of Bill, my client told me to revise her estate plan immediately and to remove any mention of her nephew. This time she choose a private professional fiduciary to do these jobs for her.

We all want someone who cares about us and for us, and who will make our financial and physical well-being a high priority, not a burdensome afterthought.

I believe that the most important estate planning decisions that most people make have to do with picking the right people to take over the management of their health care and financial affairs when they are no longer able to do so. I shudder to think of the treatment my client would have received at the hands of the nephew given the way he neglects the needs of his father.

Moral to this story - take out your estate documents every few years and review your choices for successor trustees, and power of attorney agents. Chances are you maybe surprised when you see who you named five years ago.

Tune in next week for some tips on how to pick a trustee, health care agent or power of attorney agent.

James D. Perry