Charitable Giving: Feeding the Homeless

60 "Poetry is Prayer" bags for Sacred Space

60 “Poetry is Prayer” bags for Sacred Space

It is wonderful, of course, to make a special bequeath in your Will and/or Trust to a charity of your choice or to leave a charity’s name as a beneficiary designation on a retirement plan or a life insurance plan.  Here’s an idea that can be immediately effectuated in any way you choose.  Although this feeding of the homeless is associated with St. Anne’s Episcopal Church in Fremont, California, it’s an idea that could work in any number of ways with any charity or service project.

Here is a photo of lunch bags my kids and I made and then filled with sandwiches, apple sauce, granola bars, chips & drinks for Sacred Space.

Poem by e.e. cummings on a "Poetry is Prayer" lunch bag for Sacred Space

Poem by e.e. cummings on a “Poetry is Prayer” lunch bag for Sacred Space

“Sacred Space” is a growing activist group in both Oakland and Hayward to help feed the hungry after a brief Sunday service at parks in both places.

The once a month that our church participates in Sacred Space, the bags are decorated differently.  The possibilities are endless!

If you are interested in Sacred Space in particular, the Reverend John Trubina is coordinating efforts and can be reached at SacredSpace@comcast.net or by phone at 415-517-5646.

Can Foreign Citizens Inherit U.S. Assets?

Yes!  The United States Supreme Court in Zschernig v. Miller (1968) 389 U.S. 429 affirmed the right to transfer the proceeds of a U.S. estate to an heir or beneficiary abroad.  States may not pass laws restricting the rights of nonresident beneficiaries to inherit.  California Probate Code Section 6411 states:  “No person is disqualified to take as an heir because that person or a person through whom he or she claims is or has been an alien.”  I have always disliked the legal terminology “alien” as they are living, breathing people, but an “alien” under the law means they are not a U.S. citizen nor a permanent resident of the United States.

How Much Does Probate Cost?

HOW MUCH DOES PROBATE COST IN CALIFORNIA?

Attorney & Personal Representative Compensation

For Ordinary Services

 The personal representative and the attorney are each allowed compensation for their services.  Unless the Will makes special provision for compensation, “ordinary” services is fixed by California statute and is based upon the overall value of the estate.  This value generally includes the inventory value of the probate estate and income received, less any losses incurred during the administration of the estate. Compensation is not paid until after the court orders payment.

Fees for ordinary services are calculated on the basis of the amount of the estate accounted for, as follows:

4% on the first $100,000 or fraction thereof;

3% on the next $100,000 or fraction thereof;

2% on the next $800,000 or fraction thereof;

1% on the next $9,000.000 or fraction thereof;

½ of 1% on the next $15,000,000; and

a reasonable fee on the excess over $25,000,000.

Thus, the fee for an estate of $500,000 would be calculated as follows:

4% on $100,000                                  $  4,000

3% on $100,000                                  $  3,000

2% on $300,000                                  $  6,000

Total                                                    $13,000

This amount goes to each the attorney and the personal representative.

 

Expenses of Probate Administration and Compensation

of Personal Representative and the Probate Attorney

 The expenses of administration may include the following:

  • Court fees
  • Publication costs
  • Certification fees
  • Surety bond premiums
  • California Probate Referee’s fees
  • Agency fees
  • Insurance premiums
  • Appraisal fees
  • Expenses of selling assets
  • Accountants’ fees
  • Personal representative’s statutory compensation
  • Attorney’s statutory compensation

The largest costs are usually the payment of compensation to the personal representative and to the attorney.

 Compensation for Ordinary Services

Of Personal Representative and Attorney

 As personal representative you are allowed compensation for your services.  Unless the Will makes special provision for your compensation, the amount of compensation for your “ordinary” services is fixed by California statute and is based upon the overall value of the estate.  This value generally includes the inventory value of the probate estate and income received, less any losses incurred during the administration of the estate.  Compensation is not paid until after the court orders payment.

Courtesy of the Law Offices of Ann Saponara

39510 Paseo Padre Pkwy, Suite 190

Fremont, California 94538

(510) 797-8902

 

 

Fees for ordinary services are calculated on the basis of the amount of the estate accounted for, as follows:

 

4% on the first $100,000 or fraction thereof;

3% on the next $100,000 or fraction thereof;

2% on the next $800,000 or fraction thereof;

1% on the next $9,000.000 or fraction thereof;

½ of 1% on the next $15,000,000; and

a reasonable fee on the excess over $25,000,000.

 

Thus, the fee for an estate of $500,000 would be calculated as follows:

 

4% on $100,000                                  $  4,000

3% on $100,000                                  $  3,000

2% on $300,000                                  $  6,000

 

Total                                                    $13,000

 

The same schedule is used to determine the compensation paid to the attorney for their “ordinary” services.

 

Compensation for Extraordinary Services

Of Personal Representative and Attorneys

 

In addition to the statutory commissions and fees discussed above, the Probate Court may, in proper instances, authorize payment of additional compensation to the personal representative or to the personal representative’s attorney, or to both, for extraordinary services rendered in the administration of the estate.  There is no prescribed schedule of compensation for such services.  The amount in each instance is fixed by the Court on the basis of a Declaration by the applicant regarding the nature and extent of the extraordinary services rendered to the estate.

 

For example, if it was necessary for you to operate the decedent’s business under court order or to participate in litigation involving the probate estate, such services would be regarded as in addition to the ordinary services you are expected to render in administering the estate.  In that case you may be entitled to apply for and receive additional compensation for such services.

 

Similarly, I, as the attorney, am frequently called upon to perform legal services in connection with the administration of an estate that are regarded as extraordinary in nature and are not covered by the statutory fees provided for by the Probate Code.  Such services may include the following fairly common situations:  handling sales or mortgages of real or personal property; contesting or defending litigated claims against the estate; handling litigation relating to property of the estate; arranging for the conduct of ancillary administration in other states where the decedent owned property; and preparing petitions for instructions to determine heirship, etc.

 

My fees for extraordinary services are based primarily on my hourly rate, taking into account the size and complexity of the matter at issue, the results achieved and the benefit ultimately conferred on the estate. I will periodically consult with you regarding the probable fees to be incurred as matters calling for such “extraordinary services” arise.  Of course, all extraordinary fees regarding probate assets must ultimately be approved by the Court.

 

The Court also looks to the amount of time expended by both the personal representative and the attorney in performing ordinary and extraordinary services.  Therefore, it is important to keep track of the specific services you perform and the time you spend performing each service in the administration of this estate.

TIPS FOR TESTIFYING IN A DEPOSITION OR IN COURT

TIPS WHEN HAVING YOUR DEPOSITION TAKEN OR WHEN TESTIFYING IN COURT

  1. Always tell the truth.
  2. Understand the question.  If you do not understand it or if the question is confusing, say so.
  3. Listen to the question and take a moment to consider your answer, and make sure you are answering only the question asked.
  4. Do not get angry.
  5. If shown a document, definitely take the time to read it before talking about it.
  6. Be polite and respectful.
  7. Correct any mistakes immediately.  If you misstate something or remember the answer later, be sure to go back and      correct your response as soon as possible.
  8. If you are in court and an attorney objects to a question, do not answer until the judge rules.  If the judge says      “overruled”, you should answer.  If the judge says “sustained,” you should not answer.  If you are not sure, you can ask the  judge whether or not you should answer.
  9. If you are in a deposition and your attorney objects, you should answer after the objection unless your attorney instructs you not to answer (which could happen, for instance, if your answering would violate the attorney-client privilege).

Litigation often involves your giving testimony in a deposition and/or in court.  Call the Law Offices of Ann Saponara for the support & advocacy that you need and deserve.

Groucho Marx’s estate planning mishaps

Groucho Marx was a great character.  Here in Fremont, his movies are still shown at the Niles Essanay Museum on Saturday nights (http://www.nilesfilmmuseum.org).  Less happy & lesser known is that Groucho Marx got caught up in a conservatorship proceeding in probate court when he became older.

Conservatorships, sometimes also called guardianship proceedings, can happen not just to the elderly but to anyone who loses capacity to manage their own affairs.  But they can be avoided.  It is important to have an updated Durable Power of Attorney for Property Management which designates an agent and an alternate agent to act as your “attorney-in-fact” if you are declared to lack capacity by a doctor or if you give your agent permission to act on your behalf.  It’s a very powerful document because the person can sign their name on your behalf.  So if I had been the attorney-in-fact for Groucho Marx (although I’m not that old!), I would have signed his royalty checks “Ann Saponara as attorney-in-fact for Groucho Marx” and then deposited into his bank account.  This last part is important because the attorney-in-fact has to act in the best interests of the person whose affairs he or she is managing.  I would have had a fiduciary duty to Groucho.  You should pick someone you trust implicitly for a Durable Power of Attorney for Financial Management.  It can allow your family and loved ones to avoid the need to file for a conservatorship or guardianship.

In conservatorship and guardianship proceedings, a court investigator talks to the person to be conserved, he or she testifies, the family testifies, and a judge determines if that person is fit to make their own decisions.  The person appointed conservator or guardian often has to post bond, which can be expensive.  Regular accountings must be done and filed with the court about how the money is being spent.  These are important safeguards and we are fortunate to have the Probate Court oversee this process when there is not already a plan in place and someone very much needs help managing their finances and care.

You can take control now, though.  If you would rather have your spouse or a friend or a professional whom you implicitly trust manage your affairs for you without the need of going through Probate court, I would be happy to prepare a Durable Power of Attorney for you.  Best regards, Ann Saponara

Aren’t I Covered by a ‘Transfer on Death’ Designation on My Accounts?

Not necessarily.  A trust is a better way to control who gets what when you pass away.  A ‘Transfer on Death’ (called a “TOD”) or a ‘Payable on Death’ (“POD”) designation on your checking, savings and brokerage accounts is a good idea if you do not have a trust but having a trust is an even better idea.  Why?  A trust has many more contingencies inherit in it than a TOD or POD can have.  Some do not allow for multiple beneficiaries by different percentages but even when they do, there may not be a provision for what happens if one of your beneficiaries dies before you do.  Grandchildren might be left out.  Or there might be a perception that one child got favored treatment and a bigger share of the estate by being the POD or TOD designee when others were not (or were on other accounts that lost value in comparison). This can be entirely avoided by having a trust, simply re-titling the account in the name of the trust, and have all the assets put in one big “pot” to be divided as you see fit.  Fluctuations in value won’t matter.  Grandchildren will inherit in place of a child if the child predeceases you.  And if you need someone else to manage your financial affairs while you are still living, your trust can provide for this.  A POD or TOD account designation won’t help with that but a trust, in combination with a Durable Power of Attorney for Financial Management, will.

Call the Law Offices of Ann Saponara today at 510-797-8902 to schedule a free consultation about foundational estate planning.

If My Spouse & I Set Up a Trust Years Ago To Avoid Estate Taxes, Should We Revisit That?

Yes, you should.  Many people who established trusts before 2010 have what is called an “A/B Trust” and they do not realize they want to switch to more flexible revocable trust that is less cumbersome on the suriving spouse to adminster.  A/B trusts require the surviving spouse to split the trust into two when first spouse dies and makes the first spouse’s beneficiary elections irrevocable upon his or her death.  Often times, surviving spouses wish to use what they thought were their funds until they died to provide for grandchildren not previously named in the A/B Trust or to adjust for life changes like a child becoming disabled or unable to manage money well for themselves.  With a joint revocable trust that does not contain an A/B provision, the surviving spouse maintains control of the entire trust until he or she passes.  This type of revocable trust is much easier to administer.

Below is a chart that helps clarify why A/B Trusts were so popluar with estate planning attorneys in the 1990s through 2009.  The estate tax exemption is the amount that is exempted from the death tax.  It’s the amount you can pass on to your beneficiaries before they have to pay taxes on your estate.  The exemption amounts were much lower in years past.

Year         Exempt Amount          Top Estate Tax Rate

2001         $675,000                     55%

2002         $1 million                     50%

2003         $1 million                     49%

2004         $1.5 million                  48%

2005         $1.5 million                  47%

2006         $2 million                     46%

2007         $2 million                     45%

2008         $2 million                     45%

2009         $3.5 million                  45%

2010         No estate tax               No tax

2011         $5 million                     35%

2012         $5.1 million                  35%

2013         $5.2 million                  40%

2014         $5.3 million                  40%

A/B trusts were meant to “lock in” the estate tax exemption of the first spouse to pass away.  Without an A/B trust, the deceased spouse’s exemption amout would be lost and the surviving spouse would be left with only exemption.  This was particularly important when the value of many couple’s estates exceeded the estate tax exemption.  At that time, A/B trusts served an important tax-saving function.  This has changed, however, both because the estate tax exemption is now so much higher but also because a surviving spouse can claim a deceased spouse’s estate tax exemption amount for assets they jointly shared as long as he or she files an estate tax return within 9 months of the first spouse dying and claims the “portability election.”  With portability, the surviving spouse now makes an affirmative election to “claim” the deceased spouse’s estate tax exemption as his or her own, thereby avoiding paying the estate tax for estates less than $5.3 million, by filing an IRS 706 return within nine months of the first spouse’s date of death.  So A/B trusts by themselves no longer achieve this objective as they did in the past.  Therefore, if you were motivated to choose an A/B Trust in the past primarily to avoid estate tax, you should reconsider this and update your estate plan to a more flexible, less cumbersome joint trust.  However, if you chose an A/B Trust in the past for non-tax reasons, such as having blended families where each spouse has children from a different marriage, you may not want to amend your trust.  Sometimes the main purpose for an A/B trust is to ensure that the surviving spouse cannot change beneficiary elections after the first spouse dies.  An A/B trust is still useful for requiring that one-half of a joint estate to go to the deceased spouse’s beneficiaries.  An A/B trust can be costly to maintain for many years after the death of a surviving spouse but if the primary concern is fairness as determined by one spouse alone as to beneficiaries, who may be the first to die, then maintaining an A/B trust could be worth it.

Is a Will Good Enough?

Yes, if you have assets that do not exceed $150,000.  But if you have assets that exceed that, your estate will have to be probated.  Probate Court is time consuming and expensive.  It serves an important role in our society of distributing an estate’s assets but most people would like to avoid it if they can.  And your heirs can if you have set up a trust (and if there are no contests to the will or trust after you pass and if assets are appropriately titled in the name of the trust — we give you advice about this).

Almost anybody in California who owns real property needs a trust because the fair market value of property in California usually exceeds $150,000.  A mortgage doesn’t count in determining gross assets of an estate for probate purposes.  So having a will together with a trust is a very good idea.   A will allows you to designate the beneficiaries of your estate (those people whom you want to inherit your assets).  A trust controls your assets and you control the trust for your benefit during your lifetime.  You can revoke the trust or amend it and nothing changes but the names on your deeds and accounts.  When you pass, things are a lot easier on your heirs.  At that point, your choice of successor trustee takes over and he or she pays off debts and then pays for the care of your dependents until the ages you specified and then distributes assets for outright inheritance.  It can be done smoothly, efficiently and privately, without court interference.

Do you still need a will if you have a trust?  Yes.  In conjunction with a trust, we prepare what is called a “pour-over will.”  This has a provision that says ‘anything I forgot to title in the name of the trust pours over to the trust.’  It’s a safety net.  The other reason to have a will even if you have a trust is that is where we make guardianship designations for minors until they reach age eighteen (18).

We can provide you with guidance about all these issues and many more.  Schedule a consultation with attorney Ann Saponara at (510) 797-8902.