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

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.