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  • 19
    Dec 16
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Photo of kayak surfer on river in California. A good kayaker is like a family dynasty that can ride the waves on the open water.

How to Create a Family Dynasty

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I’ve been studying how to create a family dynasty for the last 10 years. It turns out that there are 8 Keys to a family’s long term success. I’ll explain the importance of these 8 Keys by telling this story. In 2012, I was fortunate to spend a couple of days with the adventure photographer, writer, filmmaker and wilderness guide Michael Powers in Half Moon Bay, California – about 40 miles south of San Francisco. Michael is an avid ocean kayaker, and prefers riding the big waves at Half Moon Bay on his kayak—what’s called kayak surfing.

Michael took me kayak surfing at Mavericks where the waves routinely crest at 25 feet but can get to 60 feet! I had never before been kayaking, and I had never been kayaking on the ocean, let alone a destination for extreme surfers. What I learned is that you need to have balance, momentum and persistence to get past the initial waves, which are called “breakers.”

The breakers treated me like a homeless person at a country club brunch. At least once I remember tipping over with my legs still stuck in the kayak and—being the beginner I was—trying to figure out how to extract myself while holding my breath and trying to avoid leaving parts of my face among the submerged sand and rocks.

About 50 feet from shore, the waves turned into giant swells. If you timed it just right, and had your kayak angled just right, you could glide down these swells like you were sledding. If not, well you would be trying to get back on a kayak while the giant waves kept coming at you, without being able to touch the ground.

Here’s what I found most interesting. There is a distinct difference between the area close to shore, where the breakers keep trying to push you back, and the open water. Sure there are dangers in the open water as well. But the rules are different. In the open water, you can focus on having fun. But close to shore, you just keep getting pushed back.

This reminds me of how most families are in terms of being able to preserve and grow their wealth from generation to generation. From a long-term (multi-generational) wealth enhancement standpoint, most families never get past the breakers. That’s why having a family dynasty is so rare. Until fairly recently, it has required a minimum of roughly $50 million for a family to be able to implement all of the systems necessary for a family to prosper indefinitely (especially the family office component). But things have now changed. With the help of new options—multi-family offices, outsourcing companies, and new technologies—families no longer need to hire full time staff to ensure their long-term success.

Most families prosper for a lifetime, and then leave some measure of wealth to their kids. If the family is somewhat sophisticated or owns a profitable business, the second generation may be able to hold onto that wealth for their lifetimes. But the initial wealth rarely survives to the end of the third generation.

At Half Moon Bay, I was able to get past the breakers when I was kayaking for the first time, largely because I had a good coach. And I believe that families can get past the financial breakers and create long-term wealth that will survive more than 100 years—even with less than $50 million in net worth—if they follow the steps of other families that have made it.

In the coming blog posts, I will introduce the 8 Keys to a family’s long term success (i.e., how to create a family dynasty). For more information, go to EachGenerationStronger.com.

  • 17
    Dec 16
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Photo of Donald Trump and his daughter Ivanka at property that will probably go into blind trust

Trump cannot avoid conflict with “Blind Trust”

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There is been a lot of discussion in the news lately about Donald Trump needing to transfer his investments to a blind trust. For example, the Wall Street Journal suggested in a November 17, 2016 editorial that Donald Trump transfer his real estate holdings so he does not have a conflict of interest in serving as President of the U.S. The conflict of interest concern is that Mr. Trump could push for legislation that will benefit his businesses, thus making his family money, whether or not it is good for the U.S.

So, what is a blind trust anyway? A “blind trust” is a common name for a variety of irrevocable trust in which a person names an independent person to manage the person’s assets. Let me start from the basics and explain so you understand.

A trust is a type of legal vehicle roughly similar to a corporation. You can’t feel or touch a trust. But it exists from a legal standpoint. A trust can own buildings and property. It can sue people in court. It can buy and sell things. It can hire and fire people.

You may have heard of a “living trust.” That’s a colloquial name for a trust that is commonly created by people who own a house and investments and want to avoid probate when they die. It is “revocable” because if you create one, you want to be able to make changes. Maybe you want to add a beneficiary. Or maybe you no longer like the trustee you named to take over when you die, so you insert a new person.

A blind trust is a type of irrevocable trust, meaning that (officially) it cannot be changed by the person who created it. I put the word “officially” in parentheses because there are indirect loopholes. With a blind trust, you create the irrevocable trust, but you remain the beneficiary. Here’s how a blind trust basically works:

  • You go to a lawyer (don’t try doing this on your own) to write the trust document.
  • You are the “grantor” or “trustor” or “creator”, which are all words that mean the same thing. They mean that you are creating the trust.
  • You choose a trustee who is a person other than yourself. The best bet is usually to name a trust company.
  • For a blind trust, you would name yourself as the beneficiary. An asset protection trust is a type of blind trust. Otherwise, you could name your children or other people as the beneficiaries; but then it wouldn’t be a blind trust.

All the news media is going crazy over talk about a “blind trust” as a way of eliminating the potential conflict of interest for Donald Trump. I agree that Mr. Trump can’t transfer his assets to a trust naming his children as beneficiaries. That would trigger a gift tax of roughly 50%.

But if Mr. Trump transfers his holdings to a “blind trust”, he is a smart person and will have checks and balances. He’s not going to risk having some independent company in control and making bad decisions. He will name a Trust Protector, which is an (officially) independent person with the power to make changes to the trust, add/remove beneficiaries, add/remove trustees, and so on. This independent Trust Protector will be someone loyal to Mr. Trump. And Mr. Trump will have the ability to replace the Trust Protector. So even if Mr. Trump is (officially) not managing his properties and businesses, he will have indirect control over them. And he will still be the beneficiary.

Again, the only other way for Mr. Trump to completely divest himself of his businesses is to pay a 50% gift tax and transfer everything to a trust for his kids. But a real estate investor has most of his wealth tied up in real estate. He can’t write a check for 50% of his wealth. So Mr. Trump is stuck. He MUST remain at least someone in control of all of his wealth.

He can do the best he can to transfer his investments to a blind trust. But he will still have some sort of control.

Mr. Trump will probably transfer his investments to a blind trust, and everyone will breathe a sigh of relief. He will have (officially) set things aside so he is no longer in control. But he will still have indirect control, such as being able to ask the Trust Protector to ask the trustee to do things he wants. There is no other way.

That being said, keep in mind that what is good for Mr. Trump as a real estate investor is going to be good for other real estate investors as well. Maybe the lesson out of all of this is to start investing in real estate.

  • 15
    Oct 16
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Pretty young lady in her 20s with white blouse is sitting reading a book. Perhaps her parents are helping support her now. But what will happen in the future after her parents have passed away?

Will my kids be able to enjoy the same lifestyle?

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“Will my kids be able to enjoy the same lifestyle as me?” That’s a question that many people worth $10 million U.S. or less have. How do I know this? Because I’ve been an estate planning attorney since 2001. A number of my clients are worth around $10 million. If your net worth is around $10 million, you’re pretty well off. But you’re not quite well off enough to put your children in a position that they will never have to work. (This is mentioned in a 2014 article in The Telegraph.) Also, if you’re living off investments, you realize that there’s always a risk that your investments could shrink in value.

But here’s the good news. There is something you can do. At least help your kids get the most benefit from their inheritance. The fact is that most kids of wealthy families squander their inheritance. However, I do have a couple of practical suggestions for you. Now I’m not a fan of quick fixes because usually they don’t work. But here are a number of specific things you can do to help ensure that your kids will be able to enjoy a good lifestyle after you’re gone:

Don’t give the money to your kids immediately when you’re gone.

It’s so common to have a will or trust that says something like “After I have died, I want everything to go to my children equally.” This might work for a very modest estate. But if your estate is worth over $500,000 I would draft the will or trust so that your wealth remains in trust for your kids’ benefit. They can receive discretionary distributions. You will have a neutral trustee to administer the trust. The trust language will encourage your kids to continue to be productive. This will help make the money last as long as possible. WHY IS THIS IMPORTANT?  Because this is the only way to ensure that your kids don’t (a) squander their inheritance right away or (b) fight over how things are divided.

Be careful of Powers of Appointment.

One such potential landmine is what’s called a power of appointment. These are added to trusts for tax purposes. But they also allow the person with the power to change the beneficiaries. The result is it the love ones you want wanted to receive everything after you’re gone may end up getting nothing. (Obviously, your ability to help your kids enjoy the same lifestyle in the future is hampered if your wealth somehow gets transferred to someone else. You’d be surprised at how often this actually happens.) It’s probably best to have an estate planning attorney who also does probate litigation. Such an attorney is going to have a better idea of what actually works in the real world (in terms of drafting your trust and other estate plan documents).

Third, have an alternative dispute resolution provision in the trust and other documents.

Require that anyone who is to receive any benefits from the estate or trust agrees to at least attempt resolving issues without going to court. This will greatly reduce the likelihood of your loved ones having to hire attorneys to sort out legal issues after you’re gone.

Finally, make sure your trust appoints a trust protector.

his is a neutral person who can make changes as necessary. This is another way of preventing your loved ones from going to court to resolve conflicts. For example, if you choose one child to be trustee, maybe that child will make self-serving choices about dividing personal property (family heirlooms, etc.). This can cause enormous tension in the family. A trust protector can remove that child as trustee and insert a neutral trustee to dissolve the conflict.

This is just a short list of things you can do to help ensure that your kids will enjoy your same lifestyle after you’re gone. Having a neutral trustee is very important. People who suddenly come into money and up usually squandering it. There’s no perfect solution that fits every situation. But these are some steps that I have seen work time after time.

If you have any questions, call us at 602-443-4888 or email me at [email protected].

  • 23
    Aug 16
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Girl holding paper airplane dreaming big about being a pilot. Parenting means teaching a child like this to dream big..

Parenting: Raising children to be motivated

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How do wealthy people raise their children to become self-motivated and resilient? The short answer is that rich parents teach their kids three main things: (1) to dream big and take risks, (2) to guard their money and spend it strategically, and (3) not to be nostalgic, but to focus on the future. In this blog, we’re going to focus on the first part: dream big. Parenting with a focus on these three steps will help prevent kids from becoming dependent on the family’s money.

Teaching kids to be risk takers.

Wealthy people teach their kids something different. The central theme to their parenting style can be summed up in one way: Be A Risk-Taker

This means that wealthy families raise their kids to look at life the way it should be played in a bold and fearless manner; that there is nothing wrong with thinking big.

This, of course, makes their kids grow up thinking that they can be anything they want to be if they become risk-takers. This is why they usually get into the business world not in support-type of positions, but in front-office positions.

In these positions they are at the forefront of making the actual revenue for the organizations and at the same time they make a lot of money for themselves. This also means that they are the kind of kids that will grow up and go for careers that are painful in the beginning, but over time that pain becomes worth it. Those careers include being investment bankers, money managers, entrepreneurs, investors, high-level government positions, etc.

Teaching kids to guard their money and spend it strategically.

This makes the kids of wealthy parents not spend money on short-term endeavors as much as their non-wealthy counterparts. Even if spending that money will provide comfort, they will not spend money easily. Therefore they are more likely to grow up to spend more on long-term endeavors and less on short-term endeavors, which overall helps to keep their family wealthy for the next generation.

This has implications for estate planning. We don’t just focus on simply transferring wealth. Getting a big windfall doesn’t always help motivate a person. Rather, we make the money available in a trust, but without outright distributions. This is what wealthier families do. This parenting advice applies to grown up children as well. I’ve seen too often that middle-aged “kids” get an inheritance, quit their jobs, go on lavish vacations, and then have to go back to work because they have no retirement savings.

Wealthy families raise their kids not to be nostalgic.

This means that they teach their kids not to ponder about better times in the past. Wealthy parents do this in the hopes of making their kids always think about the future and to always have a forward-thinking process. The hope is to make their kids become problem-solvers and improve on other people’s lives so that they can move on into the future and not be nostalgic to the point where problems pile up and the family’s wealth gets jeopardized.
You can read more about how rich parents teach their kids to be rich here.  Do you have any other suggestions? Let us know below.
  • 22
    Aug 16
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One of the Munchkins from Wizard of Oz asks if he can record a Death Certificate

Joint Tenancy: How to Record Death Certificate?

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Do you and your husband (or wife) own a house in joint tenancy and your spouse has passed away? How do you transfer title to just you? Most people will tell you just to record the death certificate. But is that the proper way? How do you record your spouse’s death certificate? Keep reading and find out . . .

Many married couples own their homes as “joint tenants” or “joint tenants with right of survivorship.” That means that if one owner dies, the surviving person is the sole owner. In order to transfer title to real property, you always need to record some sort of document with the County Recorder.

When one of the owners of jointly owned property dies, you need to record a death certificate. This shows that the one owner died. Years ago, you used to have to cross out the social security number on the death certificate. This prevented identity theft. But nowadays the County Recorder automatically makes death certificates private. You have to show that you’re a relative or attorney in order to get a copy of the death certificate.

A more proper way of transferring joint tenancy property is to record an Affidavit of Death. In this, you swear under oath that the one joint tenant has died. The Affidavit also sets out the facts and explains that you are now the sole owner. Even though this is not technically required in Arizona, it’s a good practice. Sometimes there are questions about title. If you have recorded an Affidavit of Death that actually states who owns the property, that can be helpful.

Here’s a sample Affidavit of Death. Even though this is a California form, it would work in Arizona. You will attach a copy of the death certificate to the form.

If you have any questions, feel free to contact us. This information is not legal advice. You should contact an attorney for your particular situation.

  • 19
    Aug 16
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What makes a Special Warranty Deed so special?

What’s a Special Warranty Deed?

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Title companies don’t want you knowing about this trick. For instance, Old Republic Title provides various sample documents on their website. But they don’t provide a Special Warranty Deed. There are different types of deeds: Quit Claim Deeds, General Warranty Deeds, Trustee Deeds. I could go on. Below I’ll explain why Special Warranty Deeds should be used more. So … what’s a Special Warranty Deed?

SHORT ANSWER: A special warranty deed is a transfer to real property and only warrants or guarantees the title against defects in clear title that may have arisen during the period of its tenure or ownership of the property.

TRANSLATION IN SIMPLE ENGLISH: A special warranty deed limits your liability for disputes over title to the real property. If an earlier owner messed things up by (for example) selling the same property to two different people, you aren’t responsible for that.

If you sign a deed to real property, how much liability do you want to assume? That’s the issue with different types of deeds. In order to qualify for title insurance, title companies require warranty deeds. But if you sign a “Warranty Deed” (also known simply as General Warranty Deed) you’re guaranteeing that there are no issues with ownership going all the way back to the beginning of time. Now no  one is going to sue you over something from 4.5 billion years ago when the earth was first formed. But whoever owned the property before you got involved might have done something. Maybe that prior owner promised the next door neighbor that he could drive over a corner of your property. Or the prior owner allowed the neighbor to run a water pipe under your property.

If you sign a (General) Warranty Deed, you agree to pay for any problems caused by that prior owner. That’s right. The current owner could sue you because the owner before you supposedly sold the property to two different people.

Here’s how you know the difference. A General Warranty Deed (aka simply a Warranty Deed) will say “The undersigned hereby warrants the title against all persons whomsoever, subject to the matters above set forth.”

A Special Warranty Deed, in contrast, will say “Notwithstanding any warranty that may otherwise be implied from the use of any word, phrase, or clause herein, Grantor(s) warrant title to the Property, subject to the matters referred to above, only against its own acts, but not the acts of any others.” Notice the underlined letters. That’s the difference.

I don’t know your specific situation, so I’m not giving you specific legal advice. But in most situations, a Special Warranty Deed is the way to go. If you have any questions, contact us. Looking forward to it.

  • 17
    Aug 16
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Young lady is holding an advertisement for a document preparation company

Document preparation company for a probate?

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Document preparers promise to do cheap divorces, bankruptcies … and probates. Is this a good idea? Should you use a document preparation company for a probate?

The short answer is NO (for most situations). I’ve been practicing law for 15 years now. I believe a document preparer could work if you have a very basic situation. Basic situations might be:

  • The deceased person left a valid will that an attorney prepared, and there is only one person in that will who is entitled to everything (and that same person is also named as the Personal Representative).
  • The person died without a will, and there is only one person entitled to everything. For example, the person died with no children and there is a surviving spouse.

Otherwise, I think it’s a recipe for mistakes and a family fight if you attempt to use a document preparation company. Here are some common disasters that can happen:

  1. The document preparer will suggest that everyone sign a Waiver of Bond. Bond is a form of insurance that protects against the Personal Representative stealing assets or mismanaging the estate. It’s surprisingly common for a Personal Rep to not act fairly. Bond protects the other family members from misbehavior by the Personal Representative.
  2. The document preparation company won’t check the Will for ambiguities or read the Will to see if what it says makes sense. If the estate gets distributed contrary to what the Will says, the Personal Rep could be on the hook personally for the mistake.
  3. Creditor claims can be complicated. For example, when should you deny a creditor claim?
  4. If you have a statement from a creditor (like a hospital or ambulance bill), and you send that company a Notice to Creditors, does the creditor need to send you another statement (like the Notice to Creditors says)? If you fail to deny a claim within a certain period of time, it is considered allowed and the estate need to pay it.
  5. The document preparation company won’t think through other issues. For example, how to transfer the property. A Will might way that Personal Representative should transfer the house to the deceased parent’s four kids. But that could turn into a fiasco if the kids can’t agree on what to do with the property. It would be better to have an attorney work with the family. The lawyer will fix such a situation before it turns into a problem.
  6. If a step mom or step dad is involved, you need a lawyer. There will almost certainly be conflict over division of the personal property. What if the step parent refuses to divide any of the deceased parent’s belongings with the children. It’s best to have a lawyer involved for such cases.

These are just some common situations that came to me when writing this. Just remember this: If the probate situation is really, really simple, a document preparer could handle it for you. But most cases these days are more complicated. Especially if you’re dealing with a blended family or multiple brothers or sisters.

If you have any questions, give us a call at 602-443-4888. We promise to talk straight with you. If you don’t need an attorney, we’ll let you know.

  • 14
    Aug 16
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Photo of various pleadings in a probate case gone bad. Someone should have hired a lawyer.

Do I Need a Lawyer for an Informal Probate?

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After a loved one dies, one of the tasks is administering your loved one’s estate. You want to make a smart decision and not give everything to lawyers or the government. I understand. But, here’s the thing. Sometimes you can do it just fine without a lawyer. But sometimes things go wrong. And it’s hard for you (as a non-attorney) to know ahead of time whether you need a lawyer. In asking “Do I need a lawyer for an informal probate?”, consider the case of the Estate of Rogers, which was decided in 2013.

The short version of that case is as follows:

On June 22, 2006, Marion Rogers (Decedent) passed away. He was survived by a husband, Dolores Rogers (Dolores), and three children: Nancy, Gary, and Candace. In September, 2007, Gary filed an application to appoint himself personal representative of the estate and to probate the estate through intestate proceedings. He did this without using a lawyer. Nancy, Candace and Dolores all waived their rights to apply as personal representative and consented to the appointment of Gary. On February 12, 2010 Gary filed a closing statement seeking to close the probate estate. Nancy then filed an Objection and requested a hearing. Nancy also filed a Petition for Removal and Surcharge of Gary as personal representative. A hearing was held in September 2011, and the probate court heard testimony from Nancy, Candace, Gary, and Nancy’s husband.

Note: What could have taken one year and not involved the courts has now blown up. Five years later after their loved one’s death, the family is fighting in court. The trial court eventually dismissed Nancy’s Petition for Removal and Surcharge of the personal representative. And that was eventually upheld by the appellate court. But that’s not the issue. This family spent lots of money on lawyers to fight over the administration of this estate. In hindsight, it would have been much better for them to spend $8,000 $10,000 to have a lawyer handle the estate administration for them. (And that’s probably a high estimate for a really simple probate.)

Moral of the story: Get a lawyer to help you.

At Magellan Law, we have perfected the administration of informal probates. We’ll make sure your loved one’s estate gets processed quickly, efficiently, and correctly … so you can sleep at night knowing that you won’t become like the story above and get served with a lawsuit 5 years after your loved one’s death.

  • 12
    Aug 16
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Trustee sister telling brother that she doesn't want to sell the house

Trustee Doesn’t Want to Sell the House

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We get this a lot: Mom or dad just died. House was in a trust. Now your brother or sister is in charge of the trust (as the trustee). The trustee doesn’t want to sell the house or distribute anything. What are you (the beneficiary) supposed to do? Here’s a checklist.

  1. Do you have a copy of the trust? (I’m not talking about a Certificate of Trust, or a deed to the house. I mean the actual 25 pages or more long trust document.) If you don’t have a copy of the trust, ask for one. If the trustee refuses to give you a copy of the trust, contact an attorney to figure out how to get a copy.
  2. Have a trust litigation attorney read the trust document and determine what is supposed to happen.
  3. Assuming the trust says the house gets sold and you are entitled to a share of trust property, how long has it been? What is in the house? If you have valuable antiques or artwork or collectibles, are those getting inventoried?  Is the house secured? A trust attorney can help you with these details and figure out what specifically needs to happen. In a very simple case, if there is nothing of value in the house, the contents can be quickly liquidated (or donated), the house cleaned up, and the house listed for sale within a month or two. Sometimes, however, it can take longer. It shouldn’t take 6 months in most cases to clean out a house and list it for sale. One year is too long (in most cases).
  4. Figure out if there’s a “No Contest Clause” in the trust. These can be danger, as discussed in a prior blog. You may need to take certain precautions before filing something with the court.
  5. Discuss the next steps with your lawyer. If there is a No Contest Clause, he or she might file a Petition for Declaratory Judgment to get the court to determine that you won’t be “contesting the trust” by seeking to get a new trustee. There are basically two options. First, you can try to get the court to order the trustee to do what is needed. However, sometimes it’s just quicker in the long run to get a more responsible person appointed as trustee. If you decide that’s the way to go, have your trust litigation lawyer prepare and file a Petition to Remove Trustee and Appoint Successor Trustee.

If the trustee is also living in the house, your lawyer will help you file an eviction (called an Unlawful Detainer). This takes longer than you might like. But generally, you can get the person removed within 45 to 60 days.

If you have any questions, call us for a free consultation. We’re here to help!

 

 

  • 10
    Aug 16
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Large black rock will fall on your hand if you try to get to the trust document. Declaratory judgment needed first.

If No Contest Clause, Use a Declaratory Judgment

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A No Contest Clause basically says “If anyone contests what I said in this document, they don’t get anything.” The problem with a No Contest Clause is that no one knows what a “contest” is. If the executor or trustee isn’t doing his or her job, and you file something with the court complaining about that, is that a “contest”? Well, it might be. Below is a short discussion on how to use a Petition for Declaratory Judgment to battle a No Contest Clause.

Allegations of trustee misconduct are too common from our experience. This even happens in the case of a celebrity, such as the allegations that Michael Crichton’s widow mishandled the trust. When should you use a Petition for Declaratory Judgment? Let’s say you’re dealing with Charlie Brown’s parents’ trust. It says that after Mr. and Mrs. Brown die, Charlie Brown’s younger sister, Sally, is to become the successor trustee. And let’s say that Sally is now the trustee. The trust contains a No Contest Clause. Sally is refusing to do certain things (like selling the house, providing an accounting, treating the beneficiaries equally). If Charlie goes to court and make all of these claims, and then asks that Sally be removed as trustee, Charlie could be violating the clause (because the trust named Sally to be trustee). However, Charlie could still do this and get away with it if he has “probable cause” to bring your petition. (And yes, “probable cause” is also a loosey goosey term.)

Confused yet? Read on and hopefully it will get clearer …

Charlie has two choices. First, he can roll the dice and hope he can prove his case. That’s not a good idea. Or, second, he can file a Petition for Declaratory Judgment.  Assuming you go the second route, you are not actually asking for the Court to remove Sally the trustee. You are simply asking the Court to determine whether Sally has breached her duties as trustee. Here the petition would say:

WHERFORE, Petitioner requests that the Court:

  1. Find that Sally Brown is unwilling to act as trustee of the Trust.
  2. Appoint Charlie Brown as successor trustee of the Trust only if the Court finds that Sally Brown is unwilling to serve as trustee.
  3. Order Sally Brown to deliver all accounts, books, and records of the Trust to Charlie Brown only if the Court finds that Sally Brown is unwilling to serve as trustee.
  4. Grant such other and further relief the Court deem just and appropriate under the circumstances.

A really conservative approach to a Declaratory Judgment action would be to do this in two completely separate stages. First, you would ask the court to rule that if you bring an action alleging the various misdeeds of the trustee, that you would not be violating the No Contest Clause. Only after you have the Court’s blessing with that first proceeding would you file a second petition requesting that the trustee be removed. That’s the way things are done in, for example, California.

The same principle applies in the context of a Will.

If a trustee or Personal Rep is not doing his/her job, and the relevant document has a No Contest Clause, you need to see a probate litigation attorney. Do not try to do this on your own! We’re here to help. Give us a call at 602-443-4888.

  • 05
    Aug 16
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Photo of a house that was cut in half in order to be moved.

Does a Beneficiary Deed Avoid Probate in Arizona?

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In Arizona, the owner of a house can deed that house to someone using a Beneficiary Deed. The good thing about it is that it’s revocable and it can avoid probate. The applicable statute is A.R.S. Section 13-405. Sounds pretty slick, right? So the question is … does a Beneficiary Deed avoid probate in Arizona?

There are three main problems that I see with using a Beneficiary Deed:

  1. If you name more than one beneficiary, those beneficiaries may not get along. They are taking title as tenants in common, meaning that they each own an undivided interest in the property. But what if one of the beneficiaries moves into the property and refuses to cooperate in selling it or letting the other beneficiary have use of the property. Also, do you really foresee your kids (or whoever the beneficiaries) living in that property like a big commune, along with their kids and grandkids and spouses and friends. I’ve actually seen that happen and it’s kind of crazy. Usually the only way to force all of the beneficiaries to agree to move out and sell the property is to file a legal action in civil court known as a Partition by Sale. This is sometimes called a “Forced Sale.” The rest of the beneficiaries will almost certainly be successful in forcing a sale.
  2. The other problem I sometimes see if naming only one family members as the beneficiary, and assuming that person will sell the house and divvy up the proceeds among the rest of the family. I’ve seen this happen more than once. The way it often happens is something like this: Mom owns the house. Mom signs a will naming son as Personal Representative (executor). The will states that everything gets divided among three kids. Mom then records a Beneficiary Deed giving the house to the son. Son decides to keep the house and tells his siblings “tough luck.” Son wins because the law is on his side.
  3. Some people get confused and think the Beneficiary Deed is the same as a will. They keep it safe with their important documents but never record it with the County Recorder. If the owner dies before the deed gets recorded, it is no good.

The actual way that a “forced sale” works is that the attorney prepares a Complaint for Partition. The applicable statute talks about getting three commissioners to work together and have the property surveyed. The statute was written with farm land or vacant land in mind. Obviously you can’t survey and divide a house (like the photo above). The statute is a little vague about alternatives, but it allows some wiggle room. I usually ask for a neutral third party (such as a licensed fiduciary) to be appointed. The court will order that the neutral party be appointed as a “commissioner” in order to list the house for sale and divide the proceeds. If someone is living in the house, the “commissioner” can start an eviction proceeding to remove the tenant.

Does this all sound pretty complicated? Yup. So the moral of the story is to use a Beneficiary Deed only if you are absolutely 100% sure that you want the property only going to a single beneficiary, and you name that single beneficiary on the deed. Otherwise, stay away from them. There are too many risks. Besides, there are plenty of better ways of handling an estate plan. Don’t be stingy. Hire a good lawyer (such as us) to help you. The money and time that you save your family in the long run will far outweigh the cost up front.

Have a question about this? Drop me an email at [email protected] or give us a shout at 602-443-4888.

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    Aug 16
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Photo of 6 year old Dachsund Winnie Pooh dreaming of money

When does it make sense to have a pet trust?

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According to DNAinfo.com, there is a court battle over a $100,000 pet trust created for a 6 year old Dachshund in her deceased owner’s Will. Supposedly, the owner, Patricia Bowers, passed away in 2010 (apparently when the pet was but a wee pup). The dachshund, named Winnie Pooh, was left to caretaker Virginia Hanlon. Ms. Hanlon filed court papers in Manhattan last week, alleging that the executor of Winnie Pooh’s deceased owners estate is improperly withholding funds from the doggie’s trust. The trustee has occasionally sent payments of $2.36 per quarter (apparently estimating the cost of caring for a pet to be $10 per year).  Last year when Winnie Pooh had a $6,000 surgery, the reimbursement check from the trustee bounced. So … when does it make sense to have a pet trust?

Many questions surface from this strange story.

  • Why would you name a dog after a cartoon bear?
  • What is the trustee doing with the money? If $100,000 is held in a pet trust, then there should be absolutely no reason that a check would bounce–unless the trustee is completely mishandling the money. If that’s the case, the trustee needs to get removed by the court and ordered to pay the caretaker’s legal fees and costs.
  • The caretaker says that it would take $5,000 per year to take care of Winnie Pooh. I understand when there is a $6,000 vet bill. But how often does that happen?
  • According to peteducation.com, the high end estimate of owning a dog for 14 years would be $39,000. What else was the caretaker planning to do for the dog? Go on trips to Europe?

Final Thoughts.

Looking at the big picture, whether Winnie Pooh gets $5,000 per year, or a little more or less, her story is actually kind of within reason. You recall Leona Helmsley leaving $12 million to her beloved maltese, Trouble, among many other pets. That is actually absurd. So is when Gunther IV inherited his $375 million fortune from his father, Gunther III, the beloved pet of Countess Karlotta Libenstein. (This was actually the first time I had heard of a pet dynasty. I guess it’s technically possible.)

To conclude, I’m in favor of leaving a reasonable amount of money in a pet trust. That’s only fair to the person to whom you leave your pet. However, if you want to leave millions of dollars to your pet(s), you might just do some more soul searching and see if perhaps your money could better help the world.

  • 01
    Aug 16
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US musician Prince performs during his concert at the Sziget Festival on the Shipyard Island, northern Budapest, Hungary, on Tuesday, Aug. 9, 2011.

Why Prince should have had a Will

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I’m disappointed with Prince. Here’s why. He was in a position of influence because of his popularity, but he left as a legacy a court battle over his estate. And worse than that, he left a trail of emotional trauma and possibly financial damage to his family. First, let me update you on where things stand regarding Prince’s estate. Then I’ll tell you why Prince should have had a Will.

Quick update: According to an article in Reuters, 29 people have had their claims denied in the Prince probate proceeding in Minnesota. These folks (I won’t call them vultures) included a professed secret wife who said the CIA had classified their marriage records as top secret. Among other would-be heirs denied by the court were five people who came forward claiming Prince was their biological or adoptive father. Several others claimed their dad was also Prince’s genetic parent by way of an extramarital affair with his mother. There is no final word on who the heirs will be, since some have to submit to genetic testing.

For all the taboos that Prince pushed against (sexuality in particular), he certainly avoided the taboo of talking about death. And I say this all as a fan. I’m originally from Minnesota. And I saw the movie Purple Rain in my hometown of Winona, Minnesota when it first came out. Also, I’m proud to say that my high school (Cotter High) recorded a jazz band album in the same recording studio where Prince recorded the day before in 1980. (I played alto sax.) We could still smell his cigarette smoke. That was a pretty cool experience.

So … here’s why I’m disappointed with him:

  • His family is having to fight each other (and a bunch of strangers) over who gets what.
  • The lawyers are having a field day raking in fees, which is what Prince would NOT have wanted since he was always so careful to manage his own affairs.
  • The people who are inheriting from his estate are getting a financial windfall. This is a recipe for disaster. Various articles on the internet claim that 70% of lottery winners end up in bankruptcy. I couldn’t find any actual research about this. But from my experience, I would not be surprised about this statistic.
  • He completely missed an opportunity to help causes that he cared about … perhaps teaching music to underprivileged kids.

Anyway, I would like some popular icons and leaders to actually do a good job of planning for their deaths and give us that kind of positive experience. But, then again, I guess that wouldn’t make it in the news because it would be handled quickly and privately.

If you have any questions about Wills or Trusts, give us a call. We regularly handle high net worth estates, including some famous people. We are discrete with our clients. Prince was not my client, otherwise (a) his estate wouldn’t be an issue like it is, and (b) I wouldn’t be bad-talking about him here (because of our obligation of confidentiality).

  • 12
    Jul 16
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An elderly person such as this is more susceptible to financial exploitation from inheritance impatience because she is loney, depressed, and lacks the ability to protect herself.

Inheritance Impatience

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Recently, I came across some news articles discussing the term “Inheritance Impatience.” I had never heard this term before. Inheritance Impatience is a form of financial exploitation of the elderly. An example would when when an adult child pressures mom or dad to get their inheritance now (rather than waiting for the parent to die). Sometimes the adult child actually helps speed up the parent’s death (by withholding food or medical care). Now that I have a label it, I realize that we actually see this sort of thing happening too often.

The problem is this: The parents are at such an age that their children start thinking about what they will inherit. In fact, sometimes they get so excited that they start making plans far ahead of actually receiving the money. And too often I witness kids who decide that they can take matters into their own hands. These cases can be from mild to extreme as you might imagine but more frightening are the more subtle ways of expediting the transition from this life. Family members have commenced upon their own selfish acts such as withholding food and medical care, or choosing a nursing home that is known to provide sub-par care with discounted rates.

How can you prevent this happening to your own parent?

  • Make sure your parents have a revocable trust that becomes irrevocable when one of them passes away or becomes incapacitated. That prevents the surviving spouse from being pressured into making changes by an unscrupulous family member or caretaker.
  • Make sure the trust has a strong Trust Protector who can quickly remove and replace a trustee in case an impatient family member gets appointed as trustee.
  • Name a neutral third party as trustee when the parent can no longer effectively protect himself or herself. (In Arizona we call these companies licensed fiduciaries.)
  • Make sure to visit your parents regularly, or have someone who you trust that would be able to check in on your parents’ well being. Don’t just rely on the one family member or caretaker who happens to live close to your parents.
  • Make sure that all adult children have copies of estate planning documents. If there is a pattern of sharing all estate planning documents, then it looks more like undue influence if a set of documents if kept a secret from the rest of the family. (And undue influence can be a way of getting a court to invalidate legal documents.)

Just by being aware of this issue, you can be on the lookout for signs of financial exploitation or “inheritance impatience.” If you believe a vulnerable adult is being financially exploited or physically abused, call Adult Protective Services. They will investigate and take action as appropriate.

  • 06
    Jul 16
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Widow sitting alone worried about not having Trust Protector

Every Trust Needs a Trust Protector

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I have come to the conclusion that every trust needs a Trust Protector. The reason is that you have no idea what will happen in the future. And once you are gone, there is at least a possibility that your family will fight over who gets what and how everything gets divided. It is also possible that other changes may need to be made. I discussed Trust Protectors previously here. But this is such an important topic that I wanted to share a story about why this is so important.

I recently got a phone call from a lady whose husband died a little over a year ago. They had created a joint revocable trust naming themselves as the trustees.  The value of their trust was around $3 million. They named their adult child (now disabled) as the successor trustee to take over if neither of them was able to be trustee any longer. So … when the husband died, the wife had a nervous break down. She could no longer manage her affairs. The next-in-line trustee was their child (who was also incapacitated). That meant that there was no one able to manage her finances.

Here’s what happens in a situation like this (and what happened to her). The County Attorney brought a Petition to appoint a private fiduciary company as her guardian (to make health care decisions for her). This company also became her trustee. There was litigation over whether she needed a trustee and guardian. Over the course of one and a half years, the lawyers ate up approximately $500,000!!!

Even if she is able to prove that she can now serve as trustee again, this is still set to be a problem in the future. Years from now when she is much older and perhaps develops dementia or is otherwise unable to manage her affairs, the government will again have to step in and name a new trustee. And the new trustee is almost certainly going to be a stranger!

This could have easily been avoided by naming a Trust Protector. And the future problem (which is almost certainly going to happen) could be avoided by asking the Court to amend the trust by adding Trust Protector language. Because this is so powerful, I encourage my clients to include very broad trust protector powers. (I am happy to send you my preferred trust language if you email me at [email protected].)

You can read more about Trust Protectors in an article on Forbes.com from 2012. In the meanwhile, if you have any questions about trusts or Trust Protectors, give me a call. I’m passionate about helping families avoid (or solve) court battles and family feuds.

  • 29
    Jun 16
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Man and woman looking distraught

Naming a family member as trustee? Yikes!

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You go to an estate planning attorney to set up your will or trust. That attorney asks you who you want to be in charge of your affairs when you’re gone. You say you want your husband or wife or one of your kids to serve as trustee. Makes perfectly good sense of the time. And the attorney just want to get the answer so he can prepare documents and get paid. But it does it make sense to be naming a family member to serve as trustee?

At the time of writing this blog, our law firm is involved in representing a number of trustees who are accused of mismanaging trust property. We see how this can strain marriages, and cause irreparable harm to family relationships.

The fact of the matter is that most people don’t know how to handle their own money. Most people live paycheck to paycheck and and if they get control over any amount of money, they will figure out how to miss manage it.

You may think the world of your husband or wife or oldest child. But that doesn’t mean that person has a clue about all of the responsibilities required to administer a trust. The final tax return needs to get paid. The trustee needs to identify what property belongs to the trust, what property is payable outside the trust. What about personal property? How does it get distributed? Should the house get fixed up before getting sold or just get sold as is? Any wrong decision can result in personal liability for the trustee. In other words, you could be putting your loved one in a position of inadvertently making a mistake and having to pay the big bucks as a result.

To make matters worse, is there any possibility of family dissension? Is there any possibility that the other beneficiaries of the trust will be jealous of the person you choose to be trustee?

How about if the surviving spouse is either in control of the trust or has psychological influence over the person who serves as trustee? There’s a good chance that the surviving spouse Will try to figure a way out of paying any money to a stepchild or nonblood relative. I have seen this time and time again.

So what’s the solution? The answer really starts by either properly laying the groundwork so the family is all on board and there are sufficient checks and balances so whoever is managing the trust will be absolutely certain to do it properly. Or… You hire a neutral third-party to serve as trustee.

For wealthier families who have family offices, the family office can serve as trustee. But this requires that the entire estate plan is properly set up so that the surviving spouse or some other family member cannot somehow take over control of the family office. This requires checks and balances and proper organization.

What can you do to prevent a problem? If you have a trust, get a second opinion about whether it will actually work when you were gone. Here is a short checklist of things your trust absolutely, definitely needs to have:

1. Every trust needs to have a trust protector. Sometimes this person is called an independent trustee. The purpose is to have a neutral third-party who can remove and replace irresponsible or criminal trustees, and make other changes as necessary to the trust so that your wishes are carried out.

2. Require regular accountings. At a very minimum, this needs to be annually. Waving the requirement of an accounting is essentially a license to steal without any way for someone to find out before it’s too late.

3. Make sure multiple family members have copies of all of your trust documents. Otherwise, the person in control of the trust document may not be happy with it and could destroy it without anyone ever finding out.

If you have any questions about hooter name as trustee or how to prevent family squabbles when you’re gone, contact us.

  • 14
    Jun 16
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Photo of the musician Prince on a purple motorcycle

Bequeathing Trouble: Prince’s Estate Plan

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Prince’s death came as an enormous shock to the world. And the $150 million in estate taxes that his family will end up paying will come as a shock to them. It turns out that Prince’s estate plan was to not have a plan.

The untimely death of the enigmatic music icon left two things:

  1. Millions of grieving fans
  2. A vault of unreleased recordings

But just what’s going to happen to those recordings—a collection reportedly large enough to release new music for the next 50 years—and the 57-year-old pop star’s $300 million in assets, is still very unclear.

Why?—because Prince died without setting up an estate.

The absence of an estate plan is surprising for an artist known for his meticulous attention to detail, but in reality it is an all too common occurrence for the wealthy.

  • “It’s too expensive”
  • “It’s too much trouble”
  • “I’m not planning to die”

These are ALL lines I’ve heard over the course of my career, and they’re all equally frustrating to hear. I really shake my head at the “It’s too expensive” excuse. Consider Prince’s example. If his estate is worth $300 million, as reported by CNBC, then his family will pay half of that in taxes. Compared to $150 million, spending $50,000 in estate planning sounds pretty cheap to me.

You see, whether Prince wasn’t ready to think about his own mortality, or he simply forgot to form an estate doesn’t matter. What DOES matter is that his heirs are now going to be mired in paperwork with government.

By failing to form an estate plan (or even a will), Prince died intestate, which means no instructions were left. No instructions mean the government has to fill in the blanks. A court will appoint an executor for the estate, and after debts, taxes, and probate costs, will divide what’s left according to the laws of intestate succession.

Prince completely surrendered his right to control what happens to his worldly possessions—music, money, property, clothing, jewelry, etc.—by not taking the time to form an estate plan.

Worse still, he’s pass along the financial, emotional, and legal burden of settling the estate to his family.

In my experience, when a high-value individual dies intestate, lengthy in-family legal battles over rights, custody, or the valuation of assets, are not far off.

In the case of Prince, the deceased artist’s sister and half-brother have very different ideas about what should happen to his unreleased recordings, and those different ideas will—at some point—lead to a legal confrontation.

Prince’s legacy—his legend, his unpublished songs, his wealth, his property, his famous outfits, everything—will be controlled by people he has never even sat down and had a conversation with.

The executors of Prince’s estate literally don’t know him any better than you or I do—we can only hope they’ll make decisions he would approve of.

  • 07
    Jun 16
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Coming Soon

We will be starting a new series on Wealth Management!  Stay Tuned!

  • 08
    May 16
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Should you waive bond?

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If your loved one died either without a Will, or with a Will that fails to specify if bond is waived, the person nominated as Personal Representative (aka, Executor) will probably ask the other heirs to waive bond.  (Click here to see a sample Waiver of Bond form.)  Should you waive bond?

What is bond? Bond (in terms of a probate) is a type of fiduciary insurance policy that insures against the Personal Representative improperly administering the estate or stealing assets.  In order to qualify for bond, the Personal Rep needs to either have good credit and a net worth that equals the value of the estate, or find someone who meets those qualifications to co-sign as a guarantor.

The main reason that a nominated Personal Representative will ask other family members to waive bond is the PR can’t qualify because he or she has bad credit or does not have a sufficient net worth.  This is a bad sign.  Do you want someone who the credit reporting agencies recognize as a bad money manager being in charge of your loved one’s estate?  Probably not.

You don’t have to be nice.  It’s okay to protect yourself.  Require the PR to post bond.  It will protect yourself in case the PR acts improperly.  If you give in, and sign the Waiver of Bond form, it’s hard to unwind that.  If the PR gains control of the estate and steals money or makes bad decisions, you won’t find out for at least six months to a year. By then, the money could be gone.  Even if you then file a Petition to remove the Personal Representative and get a judgment against the PR for the missing money, do you really think you can collect against someone with few assets and poor credit?  Good luck!

If you have any questions about what to do, reach out for help.  Call a probate attorney at Magellan Law (at 602-443-4888) and ask for a free consultation.  You may need to pay an attorney for a little time to assist you.  But that will be money well spent.

  • 17
    Mar 16
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Photo of attorney Paul Deloughery playing bagpipes

I didn’t grow up dreaming of being a probate lawyer

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How did I end up as a estate planning and probate lawyer? I don’t really know. I certainly didn’t grow up dreaming of being a probate lawyer. One of the common themes of my life is to learn about adaptability.

Growing up, I believed that I was one-half Irish. After all, my last name is Deloughery (which comes from Dubhluachra and dates to before the Vikings … more than 1,000 years ago). Then around 2003 (some ten years after the above-photo was taken), I learned that I’m basically 100% German. But first, let me tell you more about my story and about how a musician ended up as one of the most sought-after probate and estate planning attorneys in Scottsdale, Arizona.

In high school, everyone told me how good I was at music. So I became a music geek, playing sax, flute, clarinet, bassoon, and bagpipes. (Yes, bagpipes.) I practiced hours every day, eventually making a decision that I would become a professional musician. Actually, I’m not so much sure that I actually made the decision. Rather, everyone including my overbearing mom said I “should” become a musician. As a teenage kid with no clue, it was more like I gave in to the pressure. I don’t honestly remember anyone ever asking me what I personally wanted to do. I got into playing and competing in Irish music. (My mom and Irish stepdad had convinced me that I was Irish; I had been given my stepdad’s last name.) I actually loved (and still love) the sound of well-played Highland bagpipes. I won lots of competitions, including Irish dance competitions (I was in the Michael Flatley School for a time), the contest to be one of the 100 high school kids to play in the McDonald’s All-American Marching Band (in which I played alto sax), and even the All-Ireland championship for bagpipes in 1983.

I ended up getting two music degrees. The first was a B.S. in Music Performance and B.A. in History (double major) from Indiana University-Bloomington. (I graduated With Honors, and in the Honors Program, thank you very much.) Then I also got a Masters in Music Performance from the University of Iowa in Iowa City. By then, I figured out that I didn’t want to spend the rest of my life playing music (and making a fraction of what other people made for less work). Within four months of getting my Masters Degree, I looked into what it would take to go to law school. Being short of money at the time, I borrowed a couple of LSAT review books from the local library. About six weeks later, I took the LSAT and got a good enough score to get into the Iowa College of Law (which was ranked around 20th in the country at the time.

During law school, I also helped my mom run a small Medicare/Medicaid-certified skilled-nursing home health agency in Southeastern Minnesota. She had been working long hours trying to pay off debts from when my stepdad died and also save for retirement. She had always been a nurse, and was very proud of her profession. Earlier in her career, she had been a nursing professor at UCLA and other universities. She had published several nursing textbooks that had been translated into several languages. But by the mid-90s (when I was going to law school), she was in her fifties and wanting to start slowing down. Or at least she seemed to me to be getting tired. In any event, that’s why I helped her start a home health agency.

Being involved in home health care introduced me to struggles that families go through as loved ones get older. I remember one elderly couple. The man had been a physician (and a long-time friend of my mom’s). He had self-diagnosed himself as having Alzheimer’s Disease. The wife helped care for him as long as she could, but then they both needed help to stay in their home. Our home health agency also took care of my mom’s dad (Grampa Meinen).

Somewhere along the line, I got drawn into becoming an estate planning and probate lawyer. I liked being able to help families through some of the more difficult times of their lives. But what has always frustrated me is the disconnect between the reality of psychology and family dynamics on one hand, and the rigid solutions provided by professional advisers on the other. I’ll get more into that in coming blog posts.

In the meanwhile, I’d really like to hear stories about what you dreamed of becoming as a child and whether that relates in any way to what you are doing now. Do you wish you could turn back the clock and take a different direction in your life?

  • 29
    Feb 16
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Why Your Trust Needs a Trust Protector

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If you follow my blogs, you know by now that our law firm not only prepares Wills and Trusts. We also do probate litigation. This means that we go to court to handle messy family feuds over inheritances. One of the most common type of lawsuit has to do with a trustee who steals money, mismanages the investments, or for various reasons needs to be removed. A basic check and balance for a trust is to have a “Trust Protector” named who can remove an irresponsible trustee and appoint a successor. In this post, I will explain why your trust needs a Trust Protector.

That fact is that life is unpredictable. You have absolutely no guarantee that the people you named as trustee in your trust will actually do what you want. I have seen this too often. Let me give just a couple of real life examples.

Example One: Husband and wife sign a trust. They say that if husband dies, husband’s father and wife will be co-trustees. (This was a good idea at the time; it was one form of check and balance.) But, what wasn’t planned for? That husband and wife would get a divorce, husband would die shortly after that, and that the husband’s father would make off with all of the trust property, leaving the wife and kids impoverished. This could have easily been avoided if a Trust Protector had been named who could easily remove husband’s father as trustee and appoint a new truste.

Example Two: As mentioned by Jay Adkisson in a Forbes article from 2012, let’s assume that in your living trust you simply make one of your heirs/beneficiaries the Trustee. “The problem here is that you can’t predict the future. Maybe by the time you die the new Trustee has developed a drug problem, or maybe the Trustee harbored a grudge against one of the other heirs/beneficiaries and now wants them to get nothing (even though you wanted them to get their share). Without a Protector, the situation is bad. But with a Protector, the new Trustee can be fired.”

If your trust does not have a Trust Protector, I encourage you to amend it to include one. Personally, I prefer to have the protector have very broad powers, but also have a fiduciary duty. Thus, they are somewhat like a trustee, except that their powers are different from the trustee’s powers. The Trust Protector’s responsibility is to provide a check and balance to the trustee. The trustee is the active manage. The Trust Protector rarely gets involved except when needed to remove a trustee, modify the trust, or make other permissible changes.

This is not to be done by lay people. See a competent estate planning attorney.

P.S., if you are wondering what’s with the coat of arms and tartan, here’s my explanation. The Deloughery Coat of Arms shows horses, which are a symbol of loyalty. Also, there is a knight’s helmet. These are all symbols of protection and loyalty. These are good traits for a Trust Protector (and for a trustee, for that matter). The tartan in the background is the official Deloughery of Scottsdale tartan, duly registered in Scotland (which is where even Irish tartans need to be registered). I see a Trust Protector as being something like a knight … always on guard to protect the family fortune if necessary.

  • 24
    Feb 16
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When to Appoint a Special Administrator after Someone has Died

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If someone has died and there is an emergency about property, there is a solution. It is called a Special Administration.This blog discusses when to appoint a special administrator after someone has died. Some typical examples of when this is needed are:

a. If no one has access to the property to be able to look for a Will. Normally, if there is family around, the family be able to gain access to the house. However, if there is no family, a friend or fiduciary company may need to be appointed on a temporary basis (as a Special Administrator) to go onto the property and look for a Will.

b. If the family is fighting over family heirlooms and other personal property, it might be best to appoint a neutral third party to safeguard the property until a Personal Representative is appointed and until there is an agreement about how to divide things.

c. If the deceased person was obligated to do something (like complete the sale of a house), and a Personal Representative can’t be appointed in time for the closing.

These are just some examples that we see regularly. In any event, there is a solution. It will obviously increase the cost of the probate (because more documents need to be filed with the court and there needs to be at least one additional hearing).

Who can be appointed as Special Administrator? The Arizona statute (A.R.S. 14-3615) provides:

A. If a special administrator is to be appointed pending the probate of a will which is the subject of a pending application or petition for probate, the person named executor in the will shall be appointed if available, and qualified.

B. In other cases, any proper person may be appointed special administrator.

In other words, you appoint the person nominated in the Will. Otherwise, you can name “any proper person.” If the family is fighting, then the “proper person” is a neutral third party … preferably a licensed fiduciary.

You can see a video about this topic here. If you have any questions about special administrators, give us a call. And if you have any stories about special administrators or emergencies in probates, we would love to hear about them.

  • 17
    Feb 16
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Succession Planning for LLCs

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A business is like other types of property. If you die owning them in your personal name, there will need to be a probate. Don’t be like the young lady above, whose parents owned an LLC but failed to specify how the business would be managed when the parents died. Think about it. There might be payroll, bills, customers needing service. And no one is legally authorized to do anything. However, this is easily avoided. This blog will discuss two basic types of succession planning for LLCs.

In Arizona, there is a statute that covers “non-probate transfers.” As an example, if your house is in joint tenancy with your wife (or husband), then when you die, it goes to your spouse. The same thing happens with a checking account. If it’s jointly held, it goes to the joint owner.

You can do the same thing for a limited liability company (or for that matter, any other type of business). But it requires additional documentation that most people don’t do. For a limited liability company, we would rely on A.R.S. 14-6101 (“Nonprobate transfers on death; nontestamentary nature”). That statute basically says that an asset that is owned by the deceased person, and that is controlled by a written instrument, passes to a person the deceased person designates either in the written instrument or in a separate writing.

There are two basic ways to make sure a limited liability company is not tied up in probate after the owner dies. My preference is to have the LLC owned by a revocable trust. The revocable trust then says what happens to the property (including the company) after the owner dies. The second way is to name one or more beneficiaries of the member’s ownership interest in either a company document (such as a Member’s Operating Agreement) or (even simpler yet) on a separate writing like a Beneficiary Designation.

The quickest way to name a beneficiary of your LLC’s membership interest is by signing a form similar to this:

“Effective upon my death, I hereby assign all of my right, title, and interest in __________________, LLC to ______________________.”

Succession planning for LLCs can be tricky. It’s best to have an attorney do this for you because you want to make sure you are having the correct person sign it. I’m saying this because transferring assets can involve community property interests (if you are married) or other issues. If that’s the case, decide whether you want the spouse to sign a waiver of community property interest. It should also be acknowledged by a notary.

If you have any questions, feel free to give us a call at 602-443-4888.

  • 10
    Feb 16
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Do you need to add “LLC” to your company name?

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Do you own a business? Is that business formed as an LLC? Here’s the next question: Do you need to add “LLC” to your company name? After all, McDonalds just has a big “M” in front of their restaurants, and they merely advertise as “McDonalds.” Who thinks of Ronald McDonald being a spokesperson for “McDonalds, Inc.”?

Here’s the answer. Failing to include “LLC” whenever you advertise or print your company name can be a factor in determining whether you should be personally liable for business debts. Here’s an example. Let’s say you own a store. Someone slips and falls on a banana peal in your store. That person wheels his wheelchair into a lawyer’s office and asks who he can sue. The lawyer will mention suing your business. But then the lawyer will do some research. If it turns out that your signage simply shows as “Billy Bob’s Grocery Store” (instead of “Billy Bob’s Grocery Store, LLC”), the lawyer could make a case that you failed to inform the injured person that there was an LLC. Essentially, the lawyer is saying it’s unfair for you to surprise your customer by now informing him that your business is a limited liability company. Perhaps the customer would have decided not to do business with you if they had known they weren’t actually buying groceries directly from Billy Bob. (I know this sounds far-fetched, but this is the way lawyers and courts think.)

There are not many Arizona cases on this point. However, there is a U.S. District Court case from Arizona that discusses this issue. See EEOC v. Recession Proof United States LLC (2013 U.S. Dist. LEXIS 171524; 2013 WL 6328000). That case discussed the doctrine of corporate veil piercing. (I.e., holding the owner personally liable for a business debt.) The case found that even though Arizona had not specifically held veil piercing applies to limited liability companies (as opposed to corporations), the same principles and rationales apply. The federal court basically predicted that an Arizona court would ultimately apply the doctrine to limited liability companies.

Next the federal court in Recession Proof listed the various factors that a court will consider in whether to pierce the LLC’s veil (and hold the owner personally liable:

1. payment of salaries and expenses of the company by its owners;
2. failure to maintain corporate formalities (This doesn’t apply as much to limited liability companies);
3. undercapitalization (in other words, not having adequate liability insurance or cash reserves to pay any foreseeable claim);
4. commingling of corporate and personal finances;
5. plaintiff’s lack of knowledge about a separate corporate existence;
6. owners making interest free loans to the corporation; and
7. diversion of corporate property for personal use.

EEOC v. Recession Proof United States Llc, 2013 U.S. Dist. LEXIS 171524, *22 (D. Ariz. Aug. 19, 2013). If you are personally sued, the court will ask if (1) the owner is even bothering to treat the business as a separate entity, and (2) whether failing to hold the owner personally liable would result in fraud or injustice. See Seymour v. Hull & Moreland Eng’g, 605 F.2d 1105, 1111 (9th Cir. 1979). A third factor to be considered is whether the person who created the limited liability company formed the copany with fraudulent intent or if the corporate form was fraudulently misused following formation.

In plain English: If you’re a business owner, chances are that you already violate some of the above-listed factors. You might pay some personal expenses from the company. You might take money as “loans” from the company as a way to get cash out. You might use company property (maybe the car, maybe a computer) for personal use. If you also fail to advertise that you are an LLC, there is a pretty strong case that you should not be protected from the company’s creditors.

So … to answer the question of whether you should include LLC in your business name when it appears in your marketing, etc., the answer is “Yes.” This is an easy way to make one of the factors not apply.

I’ve tried to explain this as simply as possible (for a short blog post). But I’m sure I haven’t answered all your questions. If you have further questions, feel free to call me at 602-443-4888.

(P.S., the photo of Paul Deloughery in front of the Magellan Law office shows how we advertise that we are an LLC. Since the law firm is a professional limited liability company, we use the acronym “PLC.”)

  • 25
    Jan 16
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Decanting: When Trust B needs to be fixed

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Here’s the scenario: A married couple had a joint trust. One spouse has died. The survivor now wants to ensure that the trust money is protected for the benefit of the couple’s child or children (and grandchildren). A well-written Trust B (the decedent’s trust or bypass trust) would provide asset protection benefits, and would also prevent the next generations from squandering the money. But not every trust is well-written. Sometimes Trust B needs to be fixed by a process called decanting.

Our law firm fixes problems with trusts, so we are all to familiar with the problems that can arise when one spouse has died. Many of these problems are caused by poorly written documents. And a lot of these poorly written documents were prepared by non-attorneys (such as document preparation companies). Such companies are more interested in selling canned documents than actually providing a quality service. In our experience, documents prepared by non-lawyers (even non-lawyers who market themselves as estate planning experts) are usually full of mistakes.

As written in a recent Forbes article: “The trouble with do-it-yourself planning, however, is that even if your situation seems simple, there are many oddball things a layman wouldn’t think of that can go wrong, especially with a will. These mistakes can end up costing your heirs a lot more than you saved in legal fees.” I would lump document preparation companies in the same category as “do-it-yourself planning” because these people have no idea how the documents actually hold up after a person has died.

A couple of common problems in trusts that arise after one spouse has died include:

a. The surviving spouse has complete control. This sounds great at first. But as the surviving spouse gets older, he or she can be pressured by family and friends to change the beneficiaries of the trust. And suddenly the original beneficiaries have been written out of the will (or trust). It is best to provide a check and balance. Having co-trustees is one approach. Another method is to use a trust company (assuming the amount of assets allows for this).
b. The irrevocable trust lacks flexibility. For example, Trust B may provide for an outright distribution to the children, regardless of the children’s ability to successfully manage the money. Or perhaps a trustee is irresponsible but there is no way to remove the trustee without going to court. (This is one reason for using a trust protector.)

Luckily, the Arizona statute provides a way of fixing an irrevocable trust such as Trust B. Section 14-10819 of the Arizona Statutes allows for one irrevocable trust to be transferred to a newly written trust (assuming that certain conditions are met). The process of called “decanting” and is best done by an experienced estate planning attorney.

Has anyone had an issue with needing to fix a trust after one spouse has died? Please let us know below.

  • 01
    Dec 15
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Should You Transfer Your Cemetery Plot to Your Trust?

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Should you transfer your cemetery plot to your trust? Yes, if you want to make sure that your wishes are carried out. In Arizona, the applicable law defines “cemetery property” that you would transfer to your trust as “a cemetery plot, including interment rights, mausoleum crypts, niches and burial spaces.”

If you have purchased such a cemetery plot or mausoleum niche (such as with a prepaid burial plan), the cemetery will give you a “Certificate of Ownership” for use of the plot. You don’t actually own the plot. There is no deed that gets recorded anywhere. Upon your death, the cemetery will contact the “next of kin” to determine what happens with your body. “Next of kin” generally means your spouse, then your kids (if you have any), or if you aren’t married and have no kids, then your parents or siblings.

But … what if your “next of kin” is someone who is irresponsible or who is estranged from you? Then what?

That would be a good reason to have a revocable living trust and to have the cemetery re-issue the Certificate of Ownership in the name of the trust. The cemetery will charge a small fee (perhaps $200) to re-issue the Certificate of Ownership. To get the ball rolling, I usually have my client sign an Assignment of the lot (or niche). I then fax or email that Assignment to the cemetery, along with the contact information for my client. The cemetery will contact the client to arrange for payment, and will then re-issue the Certificate of Ownership.

Here is the language for a sample Assignment:

Assignment of Personal Property

For value received I, [name of person] of [city and state], assign, transfer, and convey to:

[name of trustee], Trustee of the [name of trust] dated [date of trust], and any amendments thereto

The following described Interment, Entombment, Inurnment or Niche Right of Use:

[Description of the lot or niche, such as Section 6, Block 2, Lot 5, Space 3 Single] situated in [name of cemetery, and County and state of location], according to a map of said plot, Mausoleum or Columbarium filed in the office of the County Recorder of said County, and also in the office of said [name of cemetery], which map is hereby referred to and made a part hereof.

 

Dated:  ___________________                                                                                 [signature]

STATE OF ARIZONA                                              )

COUNTY OF MARICOPA                                      )  ss.

This instrument was acknowledged before me on [date], by [name].

[Seal]

                                                                                   

Notary Public

My commission expires:                                             

Once transferred to the trust, the trustee will be able to ensure that your body is properly disposed of according to your wishes. I suggest making sure that this does not conflict with any Health Care Power of Attorney or other document that gives a person the ability to decide what happens to your remains when you die. Avoid conflicts by having the same person in charge of this decision. (You don’t want your health care power of attorney and trustee fighting over what happens.)

  • 29
    Nov 15
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Your Husband Died and His Children are Asking Questions

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If your husband died and his children are asking questions, what do you do? Your husband’s kids may be asking if they can get your husband’s belongings, such as family photos or furniture. Perhaps you and the step children don’t agree on whether your husband should be buried or cremated.

First, you need to see a probate attorney right away. Find out your rights and responsibilities. Once you know where you stand legally, then you will be better able to deal with the other family members. Treat your husband’s kids with respect. But you also don’t need to be a door mat. Maintaining communication is important. It is usually best to invite them to the funeral or memorial service. It also helps diffuse some of the emotions by allowing your husband’s kids to get mementos, such as family photos. These are easy enough to copy and distribute. (You can either take the photos to an art store than can duplicate them. Or there are places that can scan them and save them digitally.) The same thing applies to military medals; you can purchase duplicates for family members who want them.

As to the bigger issues (like your husband’s house and bank accounts), you need to understand that the devil is in the details. Estate planning and probate can be complicated. To help explain what happens, let’s see what will happen to your husband’s house:

  1. If your husband added you to the house deed as “joint tenants with right of survivorship,” then you get the house now that your husband died. Even if your husband had a will or trust, the designation of a beneficiary on a house or account trumps whatever it says in the will or trust.
  2. If the house was in your husband’s name, and he didn’t have a will or trust, then the house is transferred according to state law. The applicable statute in Arizona is somewhat complicated, but generally you (as the surviving spouse) get 50% of your husband’s “stuff” and his kids get 50%.
  3. If your husband had a will, then the will determines who gets what.
  4. If your husband had a trust, you need to see a probate attorney.  While the trust probably determines who gets what, this is not always black and white. For example, you are probably the sole trustee now that your husband has died. However, there are other issues. What rights do you have to income and principal? Are you supposed to divide the trust into different subtrusts?  Do you have a power of appointment?

It always amazes me how blended family seem to get along fine over the years until one of the parents dies. Then all of a sudden the biological children of the deceased parent becomes scared that they’re not going to be treated fairly. Sometimes this is justified, and sometimes it is not. So often, the surviving spouse excludes the other side of the family from even basic civilities. Suddenly, the surviving kids never find out about the funeral. Their request for copies of photographs and family mementos go unanswered. Sometimes they can’t even get a copy of the will! This friction can lead to arguments and even court battles.

If your husband died, you need the help of a probate and trust attorney who will take charge right away. Give us a call at our Scottsdale office and ask if we can help you.

  • 23
    Nov 15
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What is a De Facto Personal Representative?

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In Arizona, and perhaps in other states, a court can hold a person liable for managing a deceased person’s estate even prior to being appointed as personal representative. I refer to such a person as a “de facto personal representative.” Under Arizona law, such liability arises according to  a combination of A.R.S. § 14-3701 and  the court’s inherit equitable powers. Such a liability can arise, for example, when someone is nominated as personal representative in the deceased person’s Will, but that person decides it is more beneficial personally to take no action (sometimes failing to probate the Will for years) and simply hold onto estate assets for personal gain. Such a person can be held accountable as a “de facto personal representative” for failure to abide by the duties of a personal representative, even prior to the person being officially appointed by the court.

The Arizona Probate Code specifically authorizes certain actions by a person acting as Personal Representative prior to appointment, thus essentially creating the possibility of a “de facto Personal Representative.” A.R.S. § 14-3701 (“Time of accrual of duties and powers”) provides:

The duties and powers of a personal representative commence on appointment. The powers of a personal representative relate back in time to give acts by the person appointed which are beneficial to the estate occurring prior to appointment the same effect as those occurring thereafter. Prior to appointment, a person named personal representative in a will may carry out written instructions of the decedent relating to the decedent’s body, funeral and burial arrangements. A personal representative may ratify and accept acts on behalf of the estate done by others where the acts would have been proper for a personal representative.

(Emphasis added.)

Courts in other states have interpreted similar statutes as creating a “de facto Personal Representative,” and have found such a person liable for failing to live up to the fiduciary duties of a Personal Representative. See, e.g., Footnote 15 of In re Estate of Bryant v. Bryant, 793 A.2d 487, 493 (D.C. 2002), which states:

While Ms. Bryant had yet to be appointed formally to serve as personal representative, D.C. Code § 20-505 (1981 and 1989 Repl.) provided that “acts which by statute are authorized to be done without prior Court approval after the issuance of letters but which in fact were committed by the personal representative prior to issuance of letters, when done in good faith, shall have the same effect as acts occurring after the issuance of letters.” A personal representative is authorized to pay valid claims and distribute the estate without first obtaining court approval. See D.C. Code §§ 20-701 (a), 20-741 (r) (1981 and 1989 Repl.). The trial court found no genuine dispute (and we agree) that Ms. Bryant acted in good faith, and without obtaining any improper personal advantage, when she transferred the funds to Charles Bryant to enable him to pay partnership creditors. Thus we treat that act as that of a de facto personal representative, and evaluate it against a personal representative’s legal obligations.

(Emphasis added.)

However, the Arizona statute (A.R.S. § 14-3701) only discusses powers of a de facto Personal Representative, and not the person’s responsibilities. Section 14-3701 states, “[t]he powers of a personal representative relate back in time to give acts by the person appointed which are beneficial to the estate occurring prior to appointment the same effect as those occurring thereafter.” Does this mean, for example, that someone acting as personal representative following appointment is held to the fiduciary duties of acting in the best interest of the successor of the estate, but that same standard does not apply to someone who, prior to appointment takes control of estate assets (such as the deceased person’s house), treats those assets as her own, fails to tell the rest of the family that they have an interest in the estate, and/or fails to collect rent (and hold it for the rest of the family)?

Such a result would make no sense. That is essentially what the Estate of Bryant case holds. And it seems ludicrous to think that an Arizona court would decide this case any differently.

If you know of someone who has failed to act responsibly regarding a deceased person’s estate (prior to that person being appointed as a Personal Representative), you should contact a probate litigation attorney right away. You may be able to have a court hold that person to the same standard as an appointed Personal Representative, including the duties to serve the “best interests” of the successors to the estate, and to act with fairness and impartiality to the other heirs and devisees (beneficiaries of a Will).

  • 31
    Oct 15
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Problems with Universal Life Insurance Policies

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Here is a recent article in the Wall Street Journal that discusses the increasing costs of Universal Life Insurance:  Stung by ‘Universal Life’  This is one of the myriad of issues that can affect people in their estate planning. This is why it is essential that you review your estate plan with your attorney at least every five years (at a minimum).

This is also one of the problems with the commission-based financial services industry. Real people rely on the “advise” of salespeople who are more focused on getting paid the next commission rather than actually providing necessary and useful information. This is especially sad when it affect older people.

This is yet another reason that it is crucial for all of the advisors to work together (and for clients to insist on this). This keeps the various advisors honest.

  • 30
    Oct 15
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When One Party to a Contract Dies

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If one party to a contract dies, the deceased person’s estate can usually simply enforce the agreement the same as if the original party to the contract were still alive. However, things can get even more complicated when dealing with family. For example, let’s say that one person loans money to another, such as when a parent loans money to a child. Is the contract still enforceable even when one party to a contract dies? Being a lawyer, my answer is, “It depends.”

For purposes of this post, I’m going to assume that there once was a valid contract. In other words, I’m not going to analyze the requirements to form a valid contract (such as offer, acceptance, lack of valid defenses, etc.). And I’m not going to analyze whether it was required to have been in writing (such as for a contract to transfer real property). However, I will discus some of the trickier issues that can arise when a person who is part of a contract (in other words, a “party to the contract”) dies.

Statute of Limitations Issues. A statute of limitations is a statute that limits the amount of time within which you can bring a legal action to enforce a contract. In Arizona, for example, a legal action to enforce a written contract signed in Arizona must be brought within six years of the breach. See A.R.S. 12-548. But what happens when we are dealing with family members?

Imagine this example: A parent loaned money to a child 10 years ago, and the parties signed a written loan agreement. The loan agreement stated the amount that was due and the interest rate. However, it did not provide a due date. The parent just died. Is the contract enforceable by the parent’s estate? Probably yes, unless some other defense applied, such as laches.

How about if the contract required periodic payments, plus an optional acceleration clause on the due date of each matured but unpaid installment? In that event, the six-year period would begin to run on the due date of each matured but unpaid installment. As to unmatured future installments, the period commences on the date the creditor exercises the optional acceleration clause. Navy Fed. Credit Union v. Jones, 187 Ariz. 493, 930 P.2d 1007, 233 Ariz. Adv. Rep. 47, 1996 Ariz. App. LEXIS 281 (Ariz. Ct. App. 1996).

Discovery Rule. This is the rule that a claim accrues when the plaintiff knew or should have known by exercise of reasonable diligence that the plaintiff had been injured. Gust, Rosenfeld & Henderson v. Prudential Ins. Co. of Am., 182 Ariz. 586, 898 P.2d 964, 193 Ariz. Adv. Rep. 3, 1995 Ariz. LEXIS 55 (Ariz. 1995). The important inquiry in applying the discovery rule is whether the plaintiff’s injury or the conduct causing the injury is difficult for the plaintiff to detect. Gust, Rosenfeld & Henderson v. Prudential Ins. Co. of Am., 182 Ariz. 586, 898 P.2d 964, 193 Ariz. Adv. Rep. 3, 1995 Ariz. LEXIS 55 (Ariz. 1995).

Dead Man’s Statute. Arizona’s “Dead Man’s Statute” provides that “neither party shall be allowed to testify against the other as to any transaction with or statement by the testator…unless called to testify thereto by the opposite party, or required to testify thereto by the court.” A.R.S. § 12–2251. While most other states have eliminated their Dead Man’s Statutes, Arizona still has such a statute. However, it is discretionary. Personally, I have raised the Arizona Dead Man’s Statute multiple times over the years. In the context of a dispute over a written promissory note, the issue might be whether the debtor made payments that he claims should have reduced the debt. Verbal discussions with the deceased person over whether there was an agreement that payments or services (such as repairing the deceased person’s roof) were to be applied to the amount owing on the debt would usually fall within the Dead Man’s Statute. However, I have yet to witness a probate judge or commissioner actually keep evidence out based on the statute. Similarly, such discussions also typically fall within the definition of hearsay, but such hearsay statements are usually allowed in as freely as the shirttail relatives that often attend probate hearings.

This is by no means an exhaustive discussion. If you are trying to enforcement a contract against a deceased person’s estate (or if you are in charge of an estate involving such a situation), you really need an attorney.

If you have had any experience involving the enforcement of a contract when one of the parties has died, please share below.

 

  • 26
    Oct 15
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Business Owners Need Estate Plans

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Business owners need estate plans in order to ensure their businesses survive once they pass away. Here is why. Let’s say you own a successful business. It has lots of employees and ongoing business. There are contracts that need to be completed, and staff that needs to be paid. Then you die. You have a Will that names your spouse as the Personal Representative (executor). However, Wills need to be probated, and normally the soonest that can happen is one week from the date of death. Assuming there aren’t any hangups (such as the Will failing to waive bond), the surviving spouse can be appointed as Personal Representative right away.

But a week can be an eternity in the business world. Employment laws dictate that payroll needs to be paid within a certain time after the pay period ends. And what if there are employees in the field who need expenses covered?

Also, who is going to manage the business until it gets sold? Selling a business can’t be done in a matter of days. It takes time. Can your business last the months is normally takes to find a buyer and arrange a sale?

Here is the best way to plan ahead of time. The best way to plan ahead is to have a revocable trust that names a responsible (and business savvy) trustee to take over if you can no longer manage your business. Then make sure that your trust owns the business. If your business is an LLC, the member of the business needs to be the trust. (In other words, you will file Articles of Amendment for your LLC that replaces you as the member with, for example, “John Doe, Trustee of the ABC Trust, dated January 1, 2014.”) Make sure the trust language permits the trustee to manage an ongoing business, and that it permits the trustee to delegate the responsibility of managing the business to a replacement business manager.

NOTE: The word “manager” is used in two different ways here, and it can be confusing. The “manager” of an LLC is the person listed with the Secretary of State as the person in charge of the LLC. However, in terms of managing a business, that may be completely different people. I normally assist clients in this regard by having the LLC Manager (the person named as the official manager on the Articles of Organization) sign a Resolution naming one or more assistant managers. These assistant managers are the people who are actually on the ground running the business: making sure that paychecks get signed, continuing marketing efforts, meeting with clients, etc.

You can read more on this topic at an enterprise.com article here.

Have you heard of situations in which the business owner died and the business struggled as a result? Do you have any insights? Please share below.

  • 30
    Sep 15
  • 2

How to Remove a Conservator

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How to Remove a ConservatorWhen someone is legally appointed to manage the finances of another person, that’s known as a “conservatorship.” This is a beneficial option for those who aren’t able to manage their own money due to health concerns, mental illness or old age. There are also conservatorships for children who receive money.

Unfortunately, some conservators mismanage funds (intentionally or unintentionally), compromising the financial wellbeing of people who aren’t able to tend to their own affairs. While it’s normal to become angry or frustrated in these situations, you should know that you have legal recourse to remove an ineffective conservator and seek a replacement.

A conservator has a legal duty to protect and conserve the protected person’s money and assets. If the conservator fails to fulfill these duties and responsibilities, he or she can be removed from the position.

The first step in the process is to gather evidence. You will need to prove that the conservator has failed to perform the required duties. Evidence might include bank statements or copies of checks that show the conservator has not been acting in the best interest of the protected person (known as a “ward”).

These statements can be compared against the annual accounting that the conservator is responsible for filing. If you need additional information in order to prove the conservator’s mismanagement of funds and assets, you can petition the court for a more detailed disclosure of financial dealings. Look for an experienced probate litigation attorney to assist you with this process.

Your attorney will help you file a notice of appearance and submit the documents that show the mismanagement of the protected person’s funds.

If you need to get documents from the conservator or another party (such as a bank or other involved person), your attorney can serve what is called a “subpoena duces tecum.” If you’re not able to get the necessary documents for evidence, you may need to work with the court to obtain them.

After you and your attorney have submitted the documentation, the court will rule on whether the conservator should be removed and, if so, will appoint a successor.

The courts, and the state and county governments, take very seriously the rights of vulnerable children and adults. The court accountant’s office closely monitors conservatorships. The court accountant, however, is merely reviewing annual accountings. If you or another family member discover before that review that money is being stolen or misused, you or the family member should take immediate action.

It’s important to act quickly in situations where money or assets are being stolen. Such quick action will increase the likelihood of recovering lost funds.

If you have questions about how to remove a conservator, please contact our office. We’d love to help.

Listen to the Podcast

  • 23
    Sep 15
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Removing a Guardian with Mental Health Powers

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Removing a Guardian with Mental Health PowersIt can be emotionally draining for you when your loved one’s personal rights have been limited. When age, mental or physical illness or other situations affect the ability of the loved one to maintain independence, important decisions (such as choice in doctors, healthcare treatments, where to live, whether he or she can drive a car and what family and friends can visit) need to be made by someone else.

That’s where guardianship can help. To review, a guardian is a person granted the legal authority and responsibility to help another person make decisions that affect his or her wellbeing. A guardian with mental health powers has authority to make decisions specific to mental health care, including whether the ward needs inpatient hospitalization.

Unfortunately, a guardian may not always do a good job fulfilling the delicate and sometimes confusing responsibilities of the position, and may be putting the protected person at risk.

If you find yourself in a situation where a guardian is not acting in the best interest of your loved one, you have the right to petition the court to remove the current guardian and to appoint a replacement.

If this happens, you will need to supply the court with a professional evaluation of the protected person. The quickest way to work with HIPAA and other confidentiality laws (HIPAA refers to The Health Insurance Portability and Accountability Act of 1996) is to seek assistance from an experienced probate attorney to file a motion with the court that will require the ward to receive an additional psychiatric examination.

This ruling process typically takes about two or three months. If the situation is an emergency, your attorney can help you file for emergency status to receive a ruling sooner.

The court will make a ruling for removing a guardian and appointing a successor based on the best interest of the ward. This means that the court doesn’t necessarily need to find that the current guardian has acted inappropriately. The court is interested in what is best for the protected person and will support replacing a current guardian with a successor who is better qualified.

The most common mistake that guardians make is not disclosing information to the family and lawyers. If you’re acting as a guardian with mental health powers, make sure you keep lines of communication open between your ward’s family and attorney. Maintain copies of all letters and reports that are sent to involved parties. Preserve meticulous records of expenses you’ve made for which you’ve used the ward’s resources.

Whether you’re a guardian in need of help navigating the responsibilities of the position, or a family member concerned about the care your loved one is receiving, don’t be afraid to talk to an attorney. Attorneys’ experience in navigating the legal system can help you make sure your loved one receives proper care and give you peace of mind.

  • 16
    Sep 15
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Guardianship with Mental Health Powers

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Guardianship with Mental Health PowersDisability, physical or mental illness or alcohol or drug abuse can limit a person’s ability to live an independent life. In such cases, a guardian may be appointed to take care of everyday tasks such as housing, education, medical care, food and clothing. However, this post discusses a guardianship with mental health powers, meaning that the guardian has additional powers to deal with psychological or psychiatric issues.

To review, a guardian has the legal authority and responsibility to make all these decisions on behalf of another (who is legally referred to as a ward, incapacitated person or protected person) to protect his or her well-being. A guardian who has powers over mental health has additional authority to admit the protected person for inpatient mental-health treatment.

Admitting a ward for inpatient therapy is a serious responsibility. Inpatient treatment means the ward will not be free to leave. This limits or removes a U.S. citizen’s constitutional right to liberty and due process. Taking such an action is, understandably, a measure of last resort.

A guardian with “mental health powers” has other responsibilities and obligations of that include:

• Making decisions concerning the ward’s mental-health needs. This includes the decision to place a ward in a mental-health treatment facility.

• Seeking the advice and assistance of qualified mental health professionals.

• Exploring alternatives to inpatient hospitalization. Inpatient hospitalization should be the last resort.

• Giving notice of placement. That is, notifying the ward’s attorney of placement of the ward in an inpatient treatment facility within 48 hours.

• Providing assessment of the appropriateness of placement. The guardian is responsible to make sure assessment is done every 30 days. A copy of the assessment must be mailed to the ward’s attorney.

• Giving the facility the ward’s attorney’s contact information. If the ward is admitted to an inpatient behavioral health treatment facility, the guardian must make sure the facility has the address and telephone number of the ward’s attorney.

• Transferring a patient to least-restrictive care once and if inpatient care is no longer needed. The guardian must find alternative care within 10 days after notification from the inpatient facility that the ward is no longer in need of such care. If there are issues in finding alternative placement, the guardian or medical director or both may request the court hold a hearing for assistance.

The longest time that a guardian can admit a ward to inpatient psychiatric facility for mental health care is one year. If inpatient care is required after the year is up, the court will need to grant authorization for an additional year.

If you have questions about guardianship with mental health powers, contact our office. This is a complicated area of law and can be confusing, even for lawyers. We have the experience to help you safely navigate this often-challenging part of life.

In the next post we will look at how to remove a guardian with mental health powers.

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  • 11
    Sep 15
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Petition for Removal of Personal Representative

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Hey, this is attorney Paul Deloughery. I’ve been practicing probate litigation since 2007. One of the things I often get asked to do is to remove a Personal Representative (also known as the Executor) who is not performing his or her duties. Read more here.

How do you remove a Personal Representative who has already been appointed by the court? You hire a good probate litigation attorney. And that attorney follows A.R.S. Section 14-3611 regarding the removal of a Personal Representative. The attorney will also look at all of the various duties of a Personal Representative and make a list of various ways in which the PR has failed to live up to the required standards.

Here is a list of common failings by a Personal Representatives that can support removal of that person:
1. Failing to provide the heirs with an Inventory and Appraisement within 90 days of being appointed.
2. Failing to sell the house.
3. Failing to fairly distribute the personal property.
4. Failing to file tax returns or pay the taxes.
5. Using the estate money for his or her own personal use. (also referred to as “stealing”)

The nerve-racking part to this is needing to wait. If you didn’t get the Inventory exactly 90 days after the PR was appointed, you can’t file a Petition for Removal of Personal Representative the next day. The courts are fairly forgiving at first. Being two months to provide the Inventory will warrant a status conference with the judge. It won’t be enough to remove the PR yet.

However, there is a tipping point. If the Inventory is late, AND there is evidence that the Personal Representative is not treating the heirs fairly (as required by the Will or statute), AND there is some evidence that the PR is using the estate money personally, then that is probably enough to justify having the court appoint a successor PR.

The best thing to do is to talk to a probate litigation attorney. If you have any questions, give us a call at 602-443-4888. We will listen to your specific situation and tell you your options.

  • 09
    Sep 15
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How to Remove a Guardian

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How to Remove a GuardianIt’s hard watching loved ones age. Their loss of independence can come as quite a blow for their families, and such challenges can become even more difficult if the guardian trusted with the care of a loved one is not fulfilling the responsibilities of the position.

A guardian is a person appointed by the court to make decisions about a protected person’s well-being (the “ward”).

A few of the responsibilities of a guardian, include ensuring safe and clean living arrangements, seeing to appropriate medical care (including compliance with taking of necessary medications)and determining whether or when family members or other people should be able to visit the ward.

If you suspect or see that something isn’t right with the guardianship, you should find an experienced probate litigation attorney to help you file a petition with the court or to contact Adult Protective Services (APS). Both of these bodies take the fulfillment of a guardian’s responsibilities very seriously.

Sometimes, a guardian might be doing an adequate job, but the court will remove a guardian and appoint a successor if it deems that another person is better able to act in the best interest of the ward.

Let’s look at an example where the need for a new guardian is not due to negligence but to circumstance. Sarah, a 75-year-old widow suffering from advanced dementia, is living in a nursing home. She needs a guardian to help with daily living and healthcare. Her son, who was originally appointed as her guardian, lives an hour away from his mother and has his own a busy work and family life. He’s finding it more and more difficult to remain as his mother’s guardian while also seeing to the care of his own family.

Sarah’s sister Beth, who is of sound mind and health, is a registered nurse who happens to live just 15 minutes away from Sarah’s nursing home. Beth visits Sarah daily and is able to be there quickly in an emergency. She has more time to devote to the care of her sister than does Sarah’s son.

It would be in the best interest of the court that Sarah’s son be removed as her guardian, though he has not abused his position, and to appoint Beth as the new guardian.  Sometimes another party is better able to care for the ward.

If a guardian is doing a poor job (whether intentionally or unintentionally), in most cases the court will simply to remove a guardian and appoint a successor. If the case is a more amicable transfer of responsibilities as in the example of Sarah and her son, the court will help with the legalities to relieve the original guardian of the responsibilities and transfer the legal authority to the new guardian.

If you’re serving as a guardian, focus on maintaining open lines of communication with your ward’s family and lawyer. Keep detailed records of both letters and reports of care and receipts for expenses paid for with the ward’s resources.

If you have questions about the process of removing a guardian, please contact our office. We’d love to help relieve you and your family of the burden of navigating the legal system as you seek care for your loved one.

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  • 02
    Sep 15
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Recovering from Trustee Misconduct

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Recovering from Trustee MisconductBeneficiaries of a trust depend greatly on the trustee to act in the best interest of the beneficiaries and the trust.

Unfortunately, trustees don’t always live up to the duty and responsibility of their position. Beyond creating headaches for family members and other beneficiaries, such misconduct can rob them of their inheritance.

In previous posts we covered the actions that can led to the removal of a trustee [link to post on what qualifies trustee for removal] and how to petition the court to remove the trustee and appoint a successor.

After those important steps, how do you go get back the stolen or misused money? It all depends on whether you are able to trace where the money was sent, if it was spent or if it still exists in some form. Let’s look at an example:

If a trustee used money from the trust to buy a new house, and if that house has not been sold or transferred to someone else, you can get a court order to freeze the property and eventually have it transferred back to the trust.

If the money is gone, there are three ways to recover funds:

  1. Surcharge. This applies if the trustee is also a beneficiary of the trust. In this situation, the former trustee’s inheritance from the estate can be reduced by the amount of any judgment the court passes against him or her. To have a surcharge ordered on a former trustee, you must file what’s known as a “Petition for Surcharge” with the probate court.
  2. Seize assets. If you’re able to trace the trustee’s spending to existing assets (cars, jewelry or other property), or if you’re able to show bank statements showing cash the trustee’s withdrawals from estate funds at ATM machines, the court can place a judgment against the trustee, making it more likely that you will get the money back. If the trustee has spent money on intangible purchases such as vacations, it will be much harder to get the money back.
  3. Personal refund. If the trustee has other personal assets (such as a house or bank accounts), the court can order the former trustee to turn over those assets to compensate for the value taken from the trust.

The process of getting the money returned can be lengthy. It can take from three to six months or more to settle a case recovering losses. The court process involves gathering evidence, and filing a petition with the probate court (this is all part of the steps necessary to remove a trustee).

After the court determines the amount of damages caused by the former trustee, the new trustee or other beneficiaries can then request the court to make further orders. To give an example, let’s say that a former trustee, Roger, owned a house, which used to be owned by the trust. After Roger has been removed from the position of trustee, the court can order that the house belong again to the trust. An attorney for the trust can then get a certified copy of the order and record the ownership of the property with the county recorder in the county where the property is located.

If you’re dealing with a trustee who is mishandling a trust, don’t wait to seek help. An experienced probate litigation attorney can walk you through the tricky and complicated petitioning process. It’s important to have someone knowledgeable on your side who knows the law and the court system.

Your attorney should work closely with you and the court to help you recover lost funds that are justly yours. The probate courts are there to help you and your family. Remember to act quickly and seek the assistance of an attorney. This will increase the likelihood that you will recover your inheritance.

Have any questions about recovering from trustee misconduct? Give us a call. We’d love to help.

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  • 26
    Aug 15
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After Death Checklist

If your loved one has just died, here is a list of things to do:

AFTER DEATH CHECKLIST

Within first 24 hours:

1. Determine whether any of decedent’s property needs to be safeguarded, such as: valuable assets, motor vehicle, and vacant home or vacant rental house. Ask: who has keys to vehicles and properties?

2. Ensure that cremation or funeral arrangements have been made. The funeral home will order Certificates of Death from the proper state bureau or department.

3. If the obituary contains the decedent’s address, or it is in the phone book and depending on where home is located, consider hiring security or off-duty police officer to watch the decedent’s house while the family is at the funeral.

4. Do not to list the day and month of birth in the obituary, due to a new form of identity theft.

Within two weeks:

5. Locate the decedent’s Letter of Instruction, or other final wishes.

6. Locate the original Will/Declaration of Trust/Trust Agreement and read it.

7. Locate important records: account statements, titles, deeds and life insurance policies.

8. Make appointment with an estate attorney to discuss the property in the estate, estate taxes, and obtain answers to your questions.

9. Contact U.S. Post Office to make changes in delivery of mail to the Personal Representative or Trustee.

10. After receiving death certificates, send photocopies to 3 credit-reporting bureaus (Equifax, Experian & TransUnion) to prevent future identity theft.

11. The state motor vehicle department should be asked to cancel the decedent’s driver’s license and refuse any requests for duplicates. Send a photocopy of the death certificate.

12. Order at least one death certificate for each account or major asset owned by the deceased, or at least seven death certificates from funeral home.

13. Notify life insurance companies and annuity companies of the death and request claim forms.
14. Determine if a mortgage life insurance policy exists; notify mortgage holder and mortgage insurance company of death.

15. Determine if any bills are past due or must be paid immediately. Identify a source of the decedent’s funds for payment.

16. Contact any creditors who are demanding immediate payment and notify of death to make proper arrangements for handling the account.

17. Notify credit card companies of death.

18. Cancel all credit cards on which the decedent was the only signer.

19. All charge accounts should be cancelled as soon as possible after death.

20. Obtain bill for last illness from hospital doctors, labs and nursing homes.

21. Begin to complete an inventory of the estate, list of all assets and debts.

 

Within one month:
22. If the funeral home hasn’t done so, notify Social Security of the death, PLUS any other organization paying a pension, retirement or an annuity payment. If direct deposits have been made, they may reverse that month’s deposit and retrieve the money from the account.

23. Gather and organize financial documents-including assets jointly owned:

a. Bank & money market accounts

b. Mutual funds

c. Brokerage accounts

d. Certificates of Deposit

e. Bond (including U.S. Savings Bonds) and Stock Certificates

f. All promissory notes where decedent was entitled to receive payment.

g. Titles to Motor Vehicles, Trailers and/or Mobile Homes; obtain a copy of homeowners/renters insurance (Make sure you do not cancel coverage, but keep in force all insurance until assets are sold or transferred to the beneficiaries. Some companies will not insure a vacant home beyond the current policy date.)

h. Deeds to real property

i. Any appraisals of jewelry or other valuable personal property owned by decedent.

24. Complete an inventory of the contents of any safe deposit box.

25. Obtain the account balance on mortgages, loans, checking and savings accounts as of the date of death.

26. Bring original Will, Trust, deeds and financial documents showing recent balance and account number, death certificates, and the inventory of safe deposit box to meeting with the estate attorney. Many trusts require allocation of assets among subtrusts which is accounting and legal work. Due to Federal Estate Tax uncertainty at time of death and depending total assets, you may have to file a DISCLAIMER to minimize taxes. Seek legal counsel for advice.

27. Notify a CPA, tax preparer, Enrolled Agent, accountant or bookkeeper of the death and the need for an inventory of estate assets. A final income tax return may be needed.

Within two to six months:

28. If automobiles are held in joint tenancy, change motor vehicle titles to reflect ownership only by the surviving joint tenant.

29. If stocks or bonds are held in joint tenancy, contact stockbroker to change records to reflect ownership by the surviving joint tenant.

30. If bank or financial accounts are in joint tenancy, leave the decedent’s name on the account for at least 90 days to deposit final payments to the decedent which may be received, or to provide payment for outstanding checks which may be presented for payment after death.

31. Once the Probate Court sends Letters of Testamentary, free credit reports can be obtained from each credit bureau at www.annualcreditreport.com to verify there has been no post-death activity, as a check for identity theft.

32. Do not pay any bills for charges that appear to have been incurred as a result of identity theft. Consult with the creditor/company or an attorney.

33. In the event of identity theft, you can minimize damage by calling the police and other parties; credit card companies, bank, and the three major credit bureaus (Experian 888 397-3742, Equifax 800 685-1111, and Trans Union 800 680-7289) and notify them of the occurrence.

This is general information and is not intended to replace the advice of an attorney. Your specific situation may differ. Please contact us at 602-443-4888 if you have any questions. No attorney-client relationship is established until you have signed a written fee agreement with Magellan Law, PLC.

  • 26
    Aug 15
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How to Petition to Remove a Trustee

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How to Petition to Remove a TrusteeLGIn a previous post, we covered the things trustees do that can lead to their being removed from that position. After you’ve identified where a trustee has abused this position of trust, and as you seek to have the offending trustee removed, the next step is to petition the court for that removal, and to appoint a successor.

It’s important that you work with an experienced probate litigation attorney on the petition process. This area of law is complex (even for lawyers). If you are unfamiliar with probate litigation, you risk increased delays and costs if things aren’t filed or presented correctly.

A trustee can be removed either by the terms of the trust or by court order. If you need to remove a trustee, the first thing is to contact a probate and trust litigation attorney who can help you put together a plan for removing the trustee.

If the trustee can’t be removed under the terms of the trust, then this will have to be done by going to court. The petition to the court should include specific details explaining why the trustee should be removed. If possible, include evidence to support your case (usually documentation such as copies of checks made out to the trustee or other evidence of the misuse of the trust’s funds or assets).

Your attorney will review the case to determine if your situation qualifies as an emergency (this can speed up the process in cases where the trustee is spending money or otherwise reducing the value of the trust).

Here’s an example of one such emergency case:

One family had a large amount of gold bullion owned by the trust. The bullion was kept in a safe in the home of the family member who was managing the trust.  Other family members noticed that the trustee had bought several new cars and expensive jewelry for his wife. The family suspected the trustee of using the bullion to fund these extravagant personal purchases.

After reviewing the case and gathering evidence that showed exactly those things, I helped the family petition for emergency status to remove the trustee. We were able to get an immediate court order freezing the assets and requiring that the remaining gold bullion be transferred to a secure storage facility.

Although you need to gather evidence of wrongdoing once you notice something wrong, the funds may not be returned. It is extremely difficult to recover money once it’s been spent. Waiting and hoping things work out rarely works out well. It’s better to take immediate action if you think a trustee is acting improperly.

Don’t be afraid to consult an attorney. Look for one who will work to protect the value of the trust while exploring ways to resolve disputes.

If you have any questions about removing a trustee or need help protecting your inheritance from an ineffective trustee, comment below or contact our office.

We’d love to help.

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  • 19
    Aug 15
  • 5

How to Remove a Trustee

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How to Remove a TrusteeNot everyone works out. And you have the right, as a beneficiary of a trust, to petition to remove the trustee of the estate if he or she proves to be incompetent, hostile, dishonest or otherwise unable to fulfill the responsibilities of administering the trust.

Here’s a quick definition of a trustee and a summary of the duties of the position.

A trustee can be a person (or a trust company) who has legal title to property, who holds that property for the benefit of another and who has assumed a legal duty (also called a fiduciary duty) to act in the best interests of the beneficiaries of the trust. As you can imagine, things can go awry.

Here’s an all too-frequent scenario from a recent case:

In a case involving a prominent Phoenix family that operated multiple businesses owned by their trust, the father had passed away a number of years earlier. The mother continued running the businesses, gradually turning over control to her adult children. One of the sons took control of the trust after the mother developed dementia.

The son used the money from the trust to enhance properties he would ultimately inherit. He also bought himself a new car and started taking lavish cruises and vacations.

My clients – the siblings of this trustee – turned to me for help. First they obtained evidence of wrongdoing. In this case, they were able to get copies of checks written from the trust directly to the trustee. This gave us enough to petition the court and get the son removed as trustee and replaced with a private fiduciary.

Trusts can be set up to allow for safeguards in case of wrongdoing. That is, they contain trigger points that can lead to the removal of a trustee.

For trusts that don’t specify a mechanism to remove a trustee, the court recognizes other reasons. Here are three:

  1. If the trustee has committed a breach of the fiduciary duties of care over the assets or loyalty to the beneficiaries. Examples include failing to pay taxes, stealing assets, and not following the specifications of the trust.
  2. If the trustee is unfit, unwilling or persistently fails to act in the best interest of the beneficiaries and the trust, the court can remove the trustee.
  3. In come cases, the circumstances surrounding the trust can change significantly or all qualified beneficiaries can request the removal of the trustee. The court can review the case and remove the trustee if it deems this for the best interest of the beneficiaries, as long as this isn’t inconsistent with the original specifications and intent of the trust.

If you are the beneficiary of a trust, it’s important to know what to do if the assets are being mismanaged. Trusts are normally very private affairs. In addition, trusts, being civil matters, are outside the jurisdiction of the police. There’s typically no court supervision and no government regulation to make sure that the trust is being run properly. It’s up to you and your attorney to pay attention to how a trust is being managed.

You need to take immediate action if you believe money is being misused. Proactive action increases your ability to protect your inheritance. Contact an experienced probate attorney at the first indication that a trustee is unethical or irresponsible with trust assets.

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  • 12
    Aug 15
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Removing a Personal Representative: How to Appoint a Successor

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Removing a Personal Representative How to Appoint a SuccessorIn the last few posts, we’ve looked at the first two steps in removing an ineffective personal representative: gathering evidence and petitioning the court. Once these steps are completed, you will need to appoint a successor. You’ll want to be particularly careful in choosing a qualified replacement after going through the effort to remove an ineffective personal representative.

If you think you can do a better job yourself than the person who had been personal representative, think twice. Before nominating yourself for the position, you should understand the responsibilities and duties of a personal representative. While you may be qualified to fulfill the role, it may be more than you really want to deal with.

Serving as a personal representative in an estate is time-consuming and requires great attention to detail. You will need to work closely with both your probate attorney and a CPA to make sure that everything is done properly. This includes the inventory of the estate, detailed recordkeeping, annual accountings of the estate, and other details that you might not have considered.

Here are a few criteria to consider when deciding whom to appoint as personal representative:

• A personal representative must be bondable. This means the person can be insured against fraudulent acts. Most states require this measure to protect the beneficiaries of the estate. The size of the personal representative bond must equal the amount of the estate’s estimated value. (For instance, you would need to have a net worth of $5 million in order to be bondable to administer a $5 million estate.)

• A personal representative must have good business sense. Managing an estate requires a lot of the same skills needed to run a business. It’s a big responsibility. Personal representatives are held to higher standards in managing the estate than they would be in their own personal affairs. The courts take this responsibility very seriously.

• A personal representative must be reliable and of good character. Choosing a personal representative who suffers from drug or alcohol addiction is an obvious bad move. And of course choose someone who does not have a criminal record.

The replacement personal representative is often appointed in the same petition that removed the original personal representative. You will work closely with your probate litigation attorney throughout the petition process.

A hearing will be scheduled after the petition is filed with the court. Depending on the case, the petition process can require several hearings that will eventually lead to the trial. (Actually, in probate court, the trial is called an evidentiary hearing.)

Unfortunately, the process of appointing a new representative is rarely quick. In uncontested cases with ample evidence, the case can be resolved within a few weeks. However, it usually takes several months to resolve the issue in contested cases.

Petitioning to replace a personal representative can be an emotional and overwhelming task. The guidance and assistance of a lawyer familiar with probate litigation can help make the process less challenging (and less lengthy). Look for a skilled litigation attorney to be your advocate in protecting your inheritance, and to make a difficult time easier for you and your family.

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  • 05
    Aug 15
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Petitioning to Remove a Personal Representative

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Petitioning to Remove a Personal RepresentativeIn the previous post we covered how to gather evidence to remove a personal representative. Once you have the necessary documentation as evidence, you can petition the court to remove the personal representative and appoint a successor.

The first step in petitioning the courts is to work with your probate litigation attorney to put together a formal Petition for Removal of Personal Representative and Appointment of Successor Personal Representative.

The Petition needs to include specific details that will be used as evidence to justify the removal of the personal representative. The more evidence and documentation that you can provide to the judge, the better your case. (Documentation should clearly show mismanagement of the estate, such as copies of checks drawn on the estate written to the personal representative, indicating that the representative is using estate money for personal gain.)

Once you have compiled the initial paperwork, the next step is to discuss with your attorney how quickly you should act to remove the representative. Discuss with your attorney if you can petition the court for emergency relief, if you feel this is necessary. The courts will work with you if you can prove that there’s an urgent need to replace an ineffective (or dishonest) personal representative. Probate judges and commissioners are both extremely busy and also extremely reluctant to take immediate action to remove a personal representative. The process of removing a personal representative normally takes months.

However, there are things you can do in the meanwhile. You can get a Temporary Restraining Order preventing the personal representative (or others) from taking action detrimental to the estate. You can request an Expedited Order for Formal Administration, meaning that the Personal Representative will need to get the court’s approval before taking any future action.

If the court approves the emergency status here, the court will take action quicker than it would otherwise. In most cases, there will still need to be at least one hearing. In any event, your lawyer can help you in arranging this.

If your case is not urgent, it will likely take the court anywhere from a few weeks to a couple of months before it intervenes. Everyone involved in the estate will need to be notified of this process. (Again, remember that there are often steps that can be taken to protect the estate in the meanwhile.)

There is normally more than one hearing. The first one, known as a “return hearing,” determines whether anyone objects to your petition. If that happens, then the court will require an additional hearing, or hearings, to sort out the situation.

Because each case is different, there’s no set standard for the amount of time or number of hearings a case will take to be settled. On average, you can expect the process of getting a court order to remove a personal representative to take between three to six months. In certain situations, such as where you are able to provide evidence that the personal representative is stealing assets or jeopardizing the value of the estate, the court might take more immediate action.

It’s important to keep an eye on the progress of the case, especially if you’re expecting an inheritance.

Be proactive. Seek the help of an experienced probate attorney if you suspect things related to the estate aren’t being handled correctly. Waiting to take action can jeopardize the estate and your loved one’s legacy. (Once money is spent or things have been stolen, it’s usually pretty hard to get it back.)

If you need help petitioning to remove an ineffective personal representative or trustee, please contact our office.

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  • 29
    Jul 15
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How to Remove a Personal Representative

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How to Remove a Personal RepresentativeSome situations in the handling of an estate warrant the removal and replacement of the executor (called a “personal representative” in Arizona) who’s been appointed by the court.

Although the person accepting the position agrees to comply with a list of laws and court orders, sometimes the representative falls short for some reason.

If the PR fails to perform the expected duties, then the deceased’s family and beneficiaries can seek help from probate court.

During the first few months of a representative’s term, when this person is learning what is required to administer an estate, the probate court is somewhat lenient. After a period of time, however, if the representative hasn’t fulfilled the required specified duties or followed procedures properly, the person may be removed as personal representative.

A PR can be removed for any of four basic reasons:

  1. If it’s in the best interest of the estate;
  2. If the personal representative had lied in the court proceeding leading to that person’s appointment as personal representative;
  3. If the personal representative disregarded a court order, has become incapable of discharging the duties of being personal representative, has mismanaged the estate, or has failed to perform any duty pertaining to the office of personal representative;
  4. If it is shown that the personal representative has intentionally disregarded the decedent’s wishes with regard to disposing of the decedent’s remains.

If you find that the PR is not fulfilling the duties of the position, the first thing you need to do is gather evidence. If it concerns the misuse of the estate’s funds, evidence can include documents such as copies of checks written to the personal representative or a copy of the deed showing that the PR transferred the decedents’ house to him or herself.

Evidence needs to be concrete. That is, the court usually does not accept situational evidence or hearsay as evidence to support removal of a PR. An example of hearsay might be a neighbor telling you that the PR said that he or she was going to steal the estate’s money or assets.

Evidence to support the removal of a personal representative can also include:

  • The fact that you have not received an inventory of the estate more than 90 days since the personal representative was appointed
  • The fact that the estate has been open for more than a year and the personal representative has not filed the required annual accounting.
  • The decedent’s house has not been listed for sale a year or more after the appointment of the personal representative.

In our firm, we frequently help families who need to remove personal representatives. It’s usually not a single incident that leads to this: In most cases the personal representative has done between five and 15 things incorrectly.

If you’re a personal representative and need help understanding and performing your duties, we can also help. If you need assistance in removing a personal representative to protect your loved one’s legacy, we can help with that, too.

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  • 22
    Jul 15
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3 Ways to Reduce the Stress of a Conservatorship

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3 Ways to Reduce the Stress of a ConservatorshipThe illness, incapacity or death of a loved one is certainly an emotional blow to a family. Additional stress can come from disputes regarding the conservatorship of loved ones – especially when things don’t go smoothly.

A conservatorship deals with money, which can be stressful on its own. A conservator has many responsibilities in the position. In addition to managing the incapacitated person’s affairs, the conservator is responsible for keeping detailed accounting records and for providing annual reports to the courts that detail the protected person’s assets.

Here are three ways to reduce the stress of serving as conservator:

  1. Keep all financial accounts separate.
  2. Never use the money for personal expenditures.
  3. File annual accountings with the court.

Of course, there’s a fourth tip as well: Hire a qualified CPA or probate law firm to help you keep track of the conservatorship assets. This is often the best way to reduce stress in a conservatorship. It will give you the personal confidence that things are being done correctly, and will reduce your risk for personal liability.

Being a conservator is a detail-oriented job, and one that involves providing for the needs of the incapacitated person while keeping track of all income and expenditures. At the same time, family members or other involved parties may have concerns about how the conservator is fulfilling his or her responsibilities. They may wonder if conservator is making bad choices or they may even suspect the conservator of stealing money from the protected person’s accounts.

Wherever money is involved, emotions can run high (as can temptation). And since a conservatorship involves money management for a protected person, conservators need to take care to understand their responsibilities, and follow them. At the same time, family members or involved parties need to be aware of potential mistakes or, worse, misdoings.

If, for example, a conservator squanders money reserved for the care of the protected person, the family or involved parties may feel they need to call the police for assistance. But in these instances, the police will usually not take any action, stating that it is a “civil matter”. Such situations then must be handled through probate court.

If you suspect something is amiss with a conservator, do what you can to gather evidence about the situation to make sure the conservatorship is being handled properly. If the conservator is mishandling the estate, enlist the assistance of an experienced probate attorney to resolve the situation and, if necessary, recover lost funds or assets.

Remember, it is natural to feel some stress if you’re involved in a court proceeding involving a conservatorship. You are likely unfamiliar with particular court rules and laws as well as uncertain of how to deal with judges and lawyers.

But you’re not alone. If you have a loved one who needs the assistance of a conservator or have been appointed as a conservator, it’s important to consult with an experienced probate attorney.  We’re here to help – and to put your mind (as well as that of the protected person) at ease.

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  • 15
    Jul 15
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How to Avoid Disputes in a Conservatorship

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How to Avoid Disputes in a ConservatorshipWhen a loved one needs help managing finances or legal affairs, a conservatorship is often the best option. The conservator, usually a family member or trusted friend, has the authority to act in the interest of the protected person’s legal and financial affairs. As beneficial as this can be for the loved one, at times this transfer of power can lead to disputes over certain decisions and situations.

First of all, though, we should clarify what a conservatorship dispute is. For one thing, it differs from a guardianship dispute. A guardianship dispute concerns disagreements about who should be making decisions regarding where the incapacitated person lives and the healthcare he or she receives. A dispute about a conservatorship is a disagreement about who should be in control of money and assets.

Most disputes surrounding conservatorships, then, involve money matters. A conservator may even be abusing his or her authority. Examples could include stealing money or not acting in the best interest of the protected person. But far more common are the disputes arising out of mistakes – so it pays to be aware of some of the pitfalls.

There are three common mistakes people make in conservatorships:

Mistake 1: Failing to segregate conservatorship assets. All assets must be transferred from the incapacitated person’s name into conservatorship accounts.

Failing to separate the protected person’s cash and assets from the conservator’s personal cash and assets can have significant legal consequences. This is a very sensitive area: A conservator may unknowingly use funds from the conservatorship for his or her own use, or may even think it’s okay to use an incapacitated person’s funds for personal use. But the conservator must repay all funds to conservatorship accounts. In the State of Arizona, a conservator can also be fined an additional amount on top of the original sum taken. The conservator can also be disinherited from the protected person’s estate and be made liable for legal fees that have been incurred as a result of mismanaging funds.

Mistake 2: Failing to keep detailed records. The conservator must document and account for all transactions. Dealing in cash, withdrawing funds from an ATM, failing to keep receipts and not keeping track of time spent on the conservatorship are all accounting issues that can leave a conservator liable to accusations of mishandling the responsibilities of the position. If you don’t keep accurate records, you may be held personally liable for all money that isn’t accounted for.

Mistake 3: Failing to comply with court orders. As a conservator, you are responsible for filing an inventory, filing a credit report, submitting a budget and performing annual accountings of the estate. If you fail to comply with the court’s orders and the conservatorship statute, you as conservator may also risk being removed from your position.

The best way to avoid making these mistakes is to be aware beforehand of all the responsibilities and requirements of being a conservator. If you’re not good with recordkeeping and other detailed work, it may be best to defer the position to someone who’s better suited to such things. One option is to get a licensed fiduciary appointed.  A licensed fiduciary is a specially trained person who regularly serves as conservator and/or guardian in cases.

That said, remember that if you do accept the position of conservator, you don’t have to do it alone. Find an experienced probate attorney to help you understand the requirements of the position, and to comply with them.

If you have questions about how to resolve or prevent a dispute in a conservatorship, comment below or contact our office. We’d love to help.

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  • 08
    Jul 15
  • 2

How to Petition for Emergency Conservatorship

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How to Petition for Emergency ConservatorshipAs loved ones age they may need help managing their finances or legal matters.

A durable general power of attorney can be a great tool for helping older loved ones when they get to the point that they need help. Simply put, it’s the written authorization to represent or act on another’s behalf in private affairs, business, or some other legal matter. A durable general power of attorney is good in many situations, such as selling a car or home. The durable general power of attorney can give others the legal rights to perform or assist with any legal acts that the person covered under this power of attorney would do for him or herself.

In certain situations, however, a general power of attorney either is not available or is perhaps insufficient to the situation. In those cases, you may need to obtain a conservatorship.

First, let me define conservatorship for you. A conservatorship is a court proceeding that appoints a person or entity (such as a private fiduciary – a fiduciary is a legal or ethical relationship between two or more parties.). This person or entity will have the authority to manage the affairs of a minor or of an incapacitated adult who is unable to manage his or her property or financial matters.

Let’s look at a few situations where a power of attorney may have limited usefulness:

  • The person listed as the agent on the power of attorney turns out to be dishonest; this person may be stealing money or otherwise mismanaging assets.
  • The person listed as the agent may be unavailable to fulfill the role of power of attorney.
  • The power of attorney is somehow invalid.
  • The family is fighting over who should control the assets.

If a conservatorship is needed urgently for the above or other reasons, you can petition the courts for an emergency conservatorship.

You may have an emergency situation if your loved one’s bills are not getting paid, if your loved one is making poor financial decisions or if someone is stealing money or taking advantage of your loved one’s financial situation.

A hearing will be scheduled either within a few weeks or within a few days, depending on whether you can prove that there is an emergency.

If you are seeking to remove a current conservator who is either abusing power or mishandling assets, you must provide evidence of this to the court. A probate or litigation attorney can help you get the evidence you need to establish your case.

If you’re unable to provide evidence to prove that the situation is an emergency, the court will schedule your hearing as it fits into its schedule, which may take several weeks.

If the court hearing needs to be made immediately, then the court will treat it as an emergency and appoint someone without giving the other interested parties an opportunity to appear.  A follow-up hearing will then be scheduled to ensure that everyone involved is given due-process rights and allowed to contest the conservatorship if it’s felt to be necessary.

Probate courts are familiar with emergency situations. They are there to help. Remember that you have options. With the assistance of an experienced probate attorney and the probate courts, you can get help resolving the situation.

If you have questions about an emergency conservatorship, give us a call. We’re here to help.

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  • 01
    Jul 15
  • 1

How to Handle Estate Emergencies After a Loved One Passes Away

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How to Handle Estate Emergencies After a Loved One Passes AwayDealing with the death of a loved one is always difficult. But death isn’t always the hardest part for the survivors. Many family members are surprised by the challenges and conflicts that arise after the funeral when the family works to settle the estate. If you find that you cannot resolve a conflict regarding your loved one’s estate, you may need to seek assistance from an experienced probate attorney.

I’ve worked with many families in which bickering siblings made emotionally charged and hasty decisions when they distributed the personal property of a deceased parent. It often ended in chaos. Often, I’ve found that executors or trustees grossly mismanage bank accounts and other assets, and consequently deprive remaining family members of their portions of their parent’s legacy.

Naturally, everyone wants the administration of a deceased person’s property and money to be orderly and methodical. But if it isn’t, and if you feel the situation is on the verge falling apart or has already deteriorated into an estate emergency – through misunderstandings or power struggles or other complicated interpersonal relationships – you have two legal options:

  1. Get a personal representative or executor appointed by the court (if one hasn’t already been appointed), or
  2. Petition for an immediate protective order from the court (if the appointed representative or executor is mismanaging the estate).

The biggest mistake I see families make when they try to resolve arguments about distributing their deceased loved one’s belongings and property is to take the law into their own hands. It’s vitally important that you go through proper legal channels to handle an estate. This avoids later flare-ups and also ensures an orderly distribution of assets and legacies. Take these essential steps:

  1. Secure the estate’s property until an executor or personal representative is appointed. If necessary, enlist the help of a third-party fiduciary to do this by being appointed as a Special Administrator. (The police will not intervene in family-estate issues.)
  2. File for an immediate protective order from the court with the assistance of an experienced probate attorney.
  3. Have a representative or executor appointed to manage the estate.

With a qualified representative or executor is in place an estate can be settled according to the will or trust that a loved one has left in place. Without quick action and the help from a special administrator, you risk a delay in probate proceedings and the disappearance of personal property.

If, after your loved one has died, you find that his or her estate is not being administered fairly or methodically, you may have an emergency on your hands. Be prepared to take immediate action if you suspect foul play or mismanagement of personal property in these instances. Talk to a probate lawyer right away.

Delayed action may leave you with no inheritance and no recourse. Working with an experienced estate attorney will not bring your loved one back, but it will ease your mind knowing that your late loved one’s wishes will be carried out.

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  • 24
    Jun 15
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Handling Emergencies in Guardianships and Conservatorships in Arizona

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Handling Emergencies in Guardianships and Conservatorships in ArizonaIf you notice certain changes in an aging family member, it might be time to seek outside help. When a loved one can no longer make intelligent decisions about his or her healthcare, housing, finances or legal matters an emergency guardianship or conservatorship may be the solution.

Emergency guardianships and conservatorships are legal mechanisms created under the direction of the court to assist a person who has become incapacitated or debilitated.

The roles of guardian and conservator in Arizona are similar but distinct.

  • Guardianships concern specifically healthcare, living arrangements and other personal issues.
  • Conservatorships  deal with financial decisions.

A guardianship or conservatorship may be necessary if your loved one has a debilitating condition such as dementia and someone needs to step in immediately to take care of things. For example, if your loved one is not paying bills, or is wasting money, a conservator might be appointed to assume these financial decisions and responsibilities.

On the other hand, a guardian might be appointed if your loved one is continuing to drive even though it’s dangerous. Similarly, if your loved one is no longer safe at home but refuses to move, you may need to be appointed as guardian to make this decision concerning where your loved one should live.

Sometimes the court needs to get involved even when there is a healthcare power of attorney or general power of attorney. For example, I represented a family of three brothers whose mother was in hospice. One of the brothers was granted power of attorney for health care, and his mother’s living will provided him with the authority to act for her. But without communicating to his brothers, this son put the mother in a hospice where food and fluids were withheld, contrary to the mother’s wishes. (Can you imagine? This older lady was able to communicate that she wanted to eat and drink but the son instructed the hospice to withhold all food and fluids.)

The two brothers learned of their mother’s situation and came to her aid. Within 72 hours of contacting me, we were able to work with the probate court and appoint one brother as temporary guardian. He restored care to the mother, taking her out of an untenable situation and ultimately saving her life.

I’ve also helped clients in cases where an emergency conservatorship was necessary to protect the financial health of a loved one when someone was misusing or stealing money.

Every situation is different.
Searching for solutions can be incredibly frustrating and difficult.
But you don’t have to do it alone. Working with an experienced attorney, you’ll take comfort from knowing there is a solution to your situation.

Since 1998 I’ve been helping clients resolve both simple and complex issues and have helped them find resolution and peace of mind. We’d love to help you, too.

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  • 17
    Jun 15
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Life and Estate-Planning: What Is a Conservatorship?

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Life and Estate Planning What Is a ConservatorshipWhen an adult is no longer able to care for himself or herself, the court can appoint another person to take over responsibility of managing finances and other everyday affairs. The person appointed (usually a spouse, family member, relative or hired professional) would serve as conservator and collect income and pay expenses on behalf of the protected person.

It can be difficult for an adult child to let a parent know that a conservator is needed. A parent with dementia or Alzheimer’s, for example, may not be aware of a problem. The parent can also become confused in thinking that the child is trying to take over money matters. The parent may think that the child is trying to cheat the parent, or the parent might feel that a vestige of independence is being removed.

Most such situations are resolved by requiring the person in need of help to go through neurological and psychological examination by a trained physician, psychologist or registered nurse. The court relies heavily on the results from these examinations to determine the need for a conservator.

This level of care protects those who are incapacitated from losing assets and being evicted from their homes or living facilities because they have failed to make payments.

Conservators are not, however, required to pay for the care of the protected person with the conservator’s own resources. The conservator should use the protected person’s resources to take care of expenses. The conservator can then apply for government benefits if needed to pay for the cost of care.

Some of a conservator’s duties include:

  • Obtaining a credit report on behalf of the protected person.
  • Creating a budget for the protected person’s finances.
  • Sending annual accounting reports to the court, as specified in that state.

Should the conservator fail to fulfill these responsibilities, he or she can be replaced by someone better suited to the position. Conservators who mismanage funds can be held personally liable.

If you have an aging loved one who is not making careful financial decisions, a conservatorship can be a good solution. Conservatorships are complicated. If you don’t like balancing your own checkbook or reviewing financial statements, then acting as a conservator is probably not something you should undertake. You may benefit from the help and direction of a financial conservator.

If you have questions about conservatorship or serving as a conservator, I’d love to help. Please comment below or contact our office.

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  • 10
    Jun 15
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What Is a Guardianship?

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What Is a GuardianshipSince life expectancy has increased over the last two decades., a growing group of Americans will likely need some kind of long-term assistance. An important part of preparing for the future should you become unable to care for yourself is designating a health care agent and (if needed) a legal guardian. Having a health care power of attorney can usually avoid the need for someone to get appointed as a guardian through the court system. However, sometimes despite your best attempts at planning, someone will need to go to court and be appointed as your guardian.

A legal guardianship is a legal action in which someone is appointed by a court as a guardian to make decisions regarding healthcare and personal well-being for another person (who, in legal terms, is referred to as an “Incapacitated Person” or ward). These decisions can include living arrangements, medical care and whether the family should be able to visit.

Guardianship is a big responsibility, and it can sometimes be challenging. For example, I once represented a man who was caring for his mother as her legal guardian. They both lived in the Phoenix area. This man’s brother and sister, who lived in Michigan, wanted their mother to move out to live with them. Their mother was being well taken care of and was happy in Phoenix. This could have proved difficult, with different children wanting different things for their parent. But through working with my client on aspects of his guardianship, we were able to arrange a visitation schedule for the family, similar to child-custody arrangements common in divorce situations.

Guardianship is not that well-known a function among the general public. And common misperceptions and misconceptions exist.

• One is that the guardian is legally obligated to use personal resources to support the ward. This is incorrect. A guardian’s legal obligation is to use the ward’s resources to support the ward, not the guardian’s personal assets.

• Another is that the guardian assumes liability for the actions of the ward. This is not true except in cases where, say, the guardian gives a car or a gun to the ward. If the ward crashes the car or shoots someone with the gun, the guardian can be held liable if the guardian should have known that allowing the ward to have the car or gun was dangerous.

A guardian is required to sign a document called an Order to Guardian and Acknowledgement, which outlines the guardian’s responsibilities. A guardian should this document carefully and refer to it during the guardianship to prevent errors, and ensure that all responsibilities are being followed.

Here are two common mistakes that many guardians make:

  1. Failure to file an annual guardian’s report with the court. If you do not file this report, you will have to attend a hearing and explain why the report was not filed.
  2. Failure to restrict access to family and others when appropriate. This can justify removal of the guardian if the guardian is acting out of spite or maliciousness (as opposed to protecting the ward from people who may be dangerous).

As we age, our needs change. A health care power of attorney is an important part of a well-planned estate to make sure a person’s needs will be met as they arise. But sometimes this document can’t be found, or there is a dispute over who should be making the decisions.  In that case, someone needs to go to court to be appointed as a guardian. Just as it can be a delicate situation to consider making a will or plan an estate, it can be difficult to approach one’s parents about needing help now or in the future. It’s important to be proactive and address these issues sooner rather than later.

That’s where you come in. Remind your parents that you care about them and that you want to do what’s best to promote their health and well being, both today and in the months and years to come. And sometimes you need to make the tough call and get appointed as guardian even if your mom or dad does not want to give up control over their personal or health care decisions.

Remember that you aren’t alone. This is a common situation faced by adult children caring for their elderly parents.

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  • 03
    Jun 15
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Resolving Disputes Involving Trusts

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Resolving Disputes Involving TrustsTrusts are legal arrangements in which someone holds property for the benefit of someone else.

Trusts can minimize estate taxes and prevent the need for probate. Trusts also offer greater precision in wealth management and distribution, and can protect your legacy.

But given the human element involved in estates and trusts, disputes can arise when a trust is being settled, even if you’ve given proper care to creating a trust.

Some common examples of trust disputes include:

1. A trustee stealing or misusing money or property in the trust.
2. Questions over whether an amendment to a trust is legitimate.
3. Uncertainty regarding the running of a business, should the trust own a business.

What is a trust dispute, then?

Simply put: If you’re a trustee and family members accuse you of mismanaging the trust, you are involved in a trust dispute.

Or, if someone else is the trustee and that person is mismanaging or stealing assets (or accused of doing so), then you are (or probably should be) involved in a trust dispute.

I have experience in trust disputes. In one particularly lengthy trust dispute case, I represented a professional licensed fiduciary who was the trustee of a trust.

Even before her death, the woman who created the trust was aware that her two adult children had been fighting with each other over how her trust would be settled.

After her death, the younger sibling accused the older one of stealing money from the trust.

The older sibling accused the younger of convincing their mother to amend the trust after she had become incapacitated.

Both accused the other of elder abuse and wanted the other to be disinherited. The case was in a standoff for months. It progressed very slowly through the court system.

This case shows the mistakes people make when resolving trust disputes. These
include:

1. Trying to settle disputes without the assistance of an experienced probate litigation attorney.
This area of law is very complicated and confusing – even to lawyers who do not work regularly in the area of probate disputes.
Statutes of limitations can be detrimental to resolving disputes if the disputes are not handled properly (and within the required time).

2. Not going to court when there is the possibility of a conflict of interest.
If you are both trustee and beneficiary, it can be tricky to avoid the appearance of acting in self-interest when dividing assets.
In such situations you should file a petition with the court asking for court guidance on how to distribute the assets and avoid conflict of interest.

The best way to avoid mistakes when navigating a trust dispute is to enlist the support of a skilled probate litigation attorney.

With the assistance of a qualified attorney, you may be able to settle an affair outside of court, saving you time and money.

Either way, an experienced attorney will help you prevent, negotiate, settle and litigate disputes to avoid costly losses.

If you have any questions about resolving trust disputes, I’d love to help. Give us a call.

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  • 27
    May 15
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Resolving Disputes Involving Guardianships and Conservatorships

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Resolving Disputes Involving Guardianships and ConservatorshipsDisputes involving guardianships and conservatorships can be confusing and overwhelming for most people. The single biggest mistake I see in this area is people not consulting a probate litigation attorney. An experienced attorney will not only be familiar with the applicable statutes and case law, but will also know the applicable probate rules. Here is what you need to know about resolving disputes involving guardianships and conservatorships.

Guardianships and conservatorships is one of those areas of law that the uninitiated simply cannot tackle alone. People serving as guardians or conservators find themselves in a position where they are expected to be an expert on a complex topic they likely know little about. This is fertile ground for anger, surprises, greed and revenge among heirs and family members. While some guardianship and conservatorship matters are settled peacefully and amicably among family members and heirs, many times the actions by the guardian or conservator can engender disputes and bad feelings.

I recently worked with a prominent family in the Phoenix area to help the adult children resolve a dispute about their mother’s money. It turned out that one sister who had been named trustee and financial (general) power of attorney was mismanaging funds. To rectify this, I helped the other siblings file for conservatorship. We were able to obtain copies of all the financial documents and track all the funds that had been held in the mother’s trust and LLC.

After examining the financial documents, we could then force the sister who had been serving as trustee and financial power of attorney to pay back the money she’d stolen from the trust and business. We then replaced her with a professional trustee. (My clients became co-conservators.) We resolved this dispute in a cost-effective and family-oriented manner while maintaining the family’s privacy, thus avoiding public drama that would have tarnished the family name and reputation.

Conservators and guardians make important decisions on behalf of a loved one. But if the conservator or guardian is not living up to the responsibilities of the position you do have options. A probate litigation attorney can help you assess your unique situation and give you direction.

If you are an heir or if you’re serving as a guardian or conservator and you’ve found yourself in a dispute, don’t wait and hope the problem will go away on its own. Enlist the help of a probate litigation attorney right away.

In our next post we will look at solving disputes that involve trusts. If you have questions about guardianships and conservatorships, or other probate issues, please comment below or contact our office.

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  • 20
    May 15
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Solving Disputes Involving Estates

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Solving Disputes Involving EstatesResolving disputes over estates, wills and trusts is often a delicate process. In a previous post we looked at the definition of a probate dispute (a dispute or conflict among family members that arises while settling a deceased loved one’s estate). As we’d seen, resolution to these conflicts doesn’t always come easily. An experienced probate and dispute litigation attorney can help you navigate the complex and often-confusing situations associated with settling an estate.

Consider a case where I represented two brothers in an estate dispute. The father had died a number of years earlier, and the mother had remarried. Later, both she and her second husband passed away. Before their deaths, the mother and her second husband – the stepfather – had revised their estate plans so the stepdfather’s children were in charge of everything after both parents died.

Instead of selling and distributing the home and assets, the stepsiblings moved into the parents’ home and refused to distribute the estate. (The estate included personal items of my client’s father: military medals, family heirlooms, photos and other irreplaceable family keepsakes). The stepsiblings were even threatening to give away or donate many of these treasured family heirlooms.

I helped resolve this dispute by going to court and obtaining orders to force the stepsiblings to turn over the heirlooms. We negotiated a resolution that saved my clients a lot time, money and further heartache. In the end everything was distributed fairly according to their parents’ wishes.

That was one case, all-too similar to many others. Here are a few questions to consider in estate disputes, where the assistance of a dispute-litigation attorney is beneficial:

  1. Who should be the personal representative or executor?
  2. Is the personal representative or executor doing what he or she is supposed to be doing?
  3. Is the will valid?
  4. Was there a will but is someone hiding it?
  5. Is a stepfather or stepmother in charge of the estate? Or are stepsiblings in charge of the estate?

The best way to solve an estate dispute is to address the issue when it arises, rather than waiting to see how it might play out. Seek the assistance of an experienced litigation attorney as soon as possible after your loved one passes away. This is true whether you have been nominated to be in charge of the estate or if you’re a beneficiary.

With an attorney assisting you in an estate dispute, you will have the advantage of an experienced guide to help you navigate a complex legal system. The dispute will be resolved in less time than if you were to attempt it on your own. You’ll also have peace of mind knowing that the estate will be settled as your loved one intended.

If you have any questions about resolving an estate dispute, please contact our office. We’d love to help.

[will write up an alternate CTA to send people to the quiz/whitepaper that will be the next step in the gravity well]

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  • 13
    May 15
  • 1

Probate Disputes: How to Deal with Estate Conflict After Someone has Died

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How to Deal with Estate Conflict After Someone has DiedSettling an estate after a loved one’s death is a complex process.  The process can be even more challenging if detrimental disagreements and conflict arise among the various people who believe they are entitled to an inheritance from the estate. The court offers a recourse to resolve such probate disputes.

Here are five of the most common probate disputes that arise after someone has died:

  1. Who should be in control of a deceased person’s property? (In other words, who should be named the Executor or Personal Representative?)
  2. Has a trustee or personal representative done something wrong? Or has that person failed to do what was required?
  3. Did someone do something wrong prior to the person’s death? (For example, did someone acting as a guardian or conservator or agent under a power of attorney do something wrong?  Perhaps a trustee helped himself or herself to money held in trust?)
  4. Who should get the property of a deceased person?
  5. Is the last will and testament valid or was it forged? Or was the deceased person pressured to sign it?

The most common probate disputes arise when the personal representative or executor of an estate is doing a poor job of fulfilling executory responsibilities.

Let’s look at a hypothetical example. When Sue dies, her son Richard is appointed as personal representative. Instead of selling Sue’s house and splitting the proceeds between his siblings (as Sue’s will specifies), Richard moves in and takes up permanent residence. He never sells the house or distributes the proceeds to the rest of the family.

To complicate matters further, Sue has had a mortgage on the home and a loan on her Buick. Her will had stated that these assets – the home, the car – were to be sold with the money from the sale distributed equally between her children, but Richard begins making the payments to the bank so the bank never complains.  Richard doesn’t take very good care of the house and car, and at some point, Richard loses his job and stops making the payments to the bank.  Now the value of the house and car have gone down and the bank is threatening to foreclose on the house and repossess the car.

Richard’s sister Beth has had enough and doesn’t want to see their mother’s legacy squandered by her brother’s failure to live up to his responsibilities as personal representative. Beth calls the police to get help evicting her brother, but the police wont’ get involved in such cases, except to prevent physical violence.

This is where probate court and a probate litigation attorney can help.

But probate should be brought in quickly. One of the biggest mistakes people make in situations similar to this is waiting too long to hire an attorney. Delayed action can result in disappearing assets.

Another common mistake is hiring an attorney who has little or no experience in probate litigation. An attorney without direct experience in resolving probate disputes won’t be able to advise you properly and may in fact leave you with the impression that nothing can be done.

Dealing with disputes when settling an estate can be quite tricky. Finding common ground in any situation may be extremely difficult without the help of a qualified lawyer. If you’re dealing with a complex situation, don’t attempt to handle the situation without the help of a skilled probate litigation attorney.

Probate attorneys do more than provide legal information. They will serve as your legal “coach” and will help you to arrive at the best possible outcome.

And working with an attorney who knows how to solve general probate disputes will give you confidence that your loved one’s estate will be handled properly.

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  • 06
    May 15
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Pitfalls of Estate Planning: When Assets Are Used for Personal Benefit

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When Assets Are Used for Personal BenefitA trustee must never use the assets of a trust for personal benefit (unless this is specifically permitted by the trust). There’s really no wiggle room here. Trustees are held to the highest legal standards.

If you’re serving as a trustee, conservator or guardian, it’s important to clearly understand the duties of your position to be certain that you are performing your duties correctly and to protect yourself and reduce your liability in case of error.

Most cases where assets are mismanaged involve trusts. This is because trusts are normally unsupervised. As a result, it’s not uncommon for a trustee to neglect providing beneficiaries with annual accountings or to keep detailed bookkeeping records. Laws vary by states, but in Arizona, current law requires that a trustee give annual accountings and provide beneficiaries sufficient information to protect their interests.

Some trustees, unfortunately, take the breach of duty further and use an estate’s funds for their personal use. Taking family vacations, buying cars or paying off a personal mortgage are all examples where a trustee has breached fiduciary duty by misusing trust assets.

Here are the three biggest mistakes trustees make when managing trust assets:

  1. Failing to keep records.
  2. Taking unauthorized personal “loans” from the trust.
  3. Using assets for personal use – and thinking they won’t get caught.

A trustee who mismanages trust assets—whether intentional or unintentional—can face severe legal consequences. But you should know that if you’re serving as a trustee and don’t understand your responsibilities and duties, you don’t have to do it alone. An attorney with experience in trust management can help you avoid making costly mistakes and ensure that you’re aware of your responsibilities.

From the other side, if you’re a beneficiary and you suspect the trustee is mismanaging assets, don’t wait to take action. Seek legal counsel from a skilled probate attorney.

Settling an estate is a complex process. Probate court offers resources and recourse for those who are working to settle a loved one’s estate. We’d love to help make this process easier for you and your family. Give us a call with any questions about how you can properly manage a trust, and what you can do when trust assets are being mismanaged.

In the next post, we’ll look at how to deal with estate conflict in probate disputes.

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  • 29
    Apr 15
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How to Get a Physician’s Report for a Guardianship or Conservatorship

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How to Get a Physician’s Report for a Guardianship or ConservatorshipCaring for an aging parent or loved one can be challenging. Especially when one or both parents become unable to care for their health and finances. In these situations, it may be necessary to seek a guardianship or conservatorship to help your parents get the care and support they need.

Obtaining a physician’s report is an important step in applying for guardianship or conservatorship. In the State of Arizona, a physician’s report can be completed by a physician, a registered nurse, a psychiatrist or psychologist. The content of the physician’s report (which varies from state to state) will be used to determine whether the situation requires a guardianship or conservatorship.

Here are three important steps you need to take before the court can appoint a conservator or guardian:

  1. Take action. If a loved one is not paying bills, starts to make poor financial decisions or isn’t receiving the healthcare he or she needs, you should be proactive. Learn more about what you can do to help. Frequently aging parents will resist a child’s urging to get help. But be persistent. You are their best advocate.
  2. Get a physician’s report. If a parent refuses to be examined by a physician, you can enlist the support of a social worker or anyone else familiar with the situation by getting a statement about what’s going on. The court can use this statement to appoint a physician or other professional to make an evaluation.
  3. Prepare for a court hearing. Petitioning for guardianship or conservatorship requires a lot of paperwork. Remember to include the physician’s report and other supporting documentation. It’s much easier to spend a little extra time preparing for the hearing than dealing with the frustration and delay of rescheduling a hearing because you didn’t have all the necessary paperwork. Make a checklist of what needs to be included; if you are working with an attorney, the attorney will help with the details.

If you’re seeking a guardianship or conservatorship for a loved one, or if you’re concerned about a current guardian or conservator, it’s important to know how to get a physician’s report in order to establish your case.

If you have any questions about how to get a physician’s report or about guardianships or conservatorships contact our office. We’d love to help.

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  • 22
    Apr 15
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What’s a Probate Emergency?

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What's a Probate EmergencyThings can get out of hand, even under the best circumstances, when caring for a loved one or settling an estate.

Probate court helps families arrange care for loved ones who are aging or incapacitated. After a loved one passes away, probate court helps a family sort through and settle their affairs.

It generally takes many months, sometimes more, to settle a case, depending on where you live and the complexity of your situation. Sometimes, however, families need immediate action from the court.

Here are a few examples of emergency probate situations that could require immediate legal intervention from probate court.
• If an elderly person is on the point of being evicted because bills haven’t been paid. A judge can appoint a temporary conservator to help resolve the situation until a permanent conservator can be appointed.

• If a person is not receiving necessary medical treatment for a life-threatening condition. The court can be petitioned to appoint a temporary conservatory.

• If assets are being stolen from the estate or trust of someone who has passed away, a judge can appoint a special administrator or special trustee.

Although some people feel that the police should be called in to resolve an emergency probate situation, the police have no jurisdiction in civil matters involving a guardianship, conservatorship, trust dispute or a decedent’s estate.

What people can do is provide evidence showing a high likelihood of imminent harm or danger unless the court acts immediately. For example, in a situation involving guardianships or conservatorships, you must present the judge with a physician’s note that clearly states, “An immediate guardianship is necessary.”

It’s essential to provide sufficient evidence to prevent a dismissal of any petition. This is where it’s important to have an attorney working with you. Most people who try to represent themselves to establish an emergency situation don’t know enough about the complexities of probate law to provide the judge or commissioner sufficient supporting information.

Here are a few of the other common mistakes people make in probate emergencies:

• Doing nothing after being told by the police the probate emergency is a civil matter.

• Taking away an elderly parent without letting anyone else know, to prevent the parent being placed into a nursing home you didn’t approve of. This can be considered a criminal action.

• Securing valuables from the decedent’s estate to protect them

A probate emergency situation arises when there is immediate danger, immediate harm to either a person, to property or the trust. You must be able to prove to the court that your situation requires immediate action. A lawyer can help with this to ensure the time response that is critical to helping you receive the assistance you need. You don’t have to navigate the waters of probate alone. We can help.

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  • 15
    Apr 15
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Estate Planning: What Is a Guardianship?

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What Is a GuardianshipAs one generation matures another one needs care. Children are suddenly faced with dealing with their aging parents. This shift of roles, however natural it may seem, can be difficult. Illness, injury or long-term condition can leave a parent or loved one needing a little (or a lot) of extra help.

Legal guardianship may be necessary to allow you to help your loved one(s) make the legal, financial and healthcare decisions that are needed for their well-being.

A legal guardianship comes with a number of responsibilities. First, let’s define a few terms:

Guardianship. The legal right given to a person who will be responsible for assisting a person who is deemed to be fully or partially incapable of providing for him- or herself.

Guardian. The person granted guardianship over an incapacitated person

Ward (called an Incapacitated Person in Arizona). A person who is deemed to be fully or partially incapable of providing for him- or herself.

A guardian makes decisions about how the ward lives. These decisions include:

  • It’s important to make sure your ward is getting regular, healthy meals. Malnutrition is common in the elderly.
  • Doctors’ appointments, administering medication, ensuring the ward gets regular checkups are all an important part of guardianship.
  • If your loved on is not safe living alone, it is the guardian’s responsibility to arrange and pay for housing from the estate funds or government benefits. (The guardian is not personally responsible for paying for this expense out of pocket.)
  • Annual reporting. Filing annual guardian reports with the court is also one of a guardian’s responsibilities.

The guardian should assist the ward in maintaining as much independence and autonomy as possible, and should consider the ward’s value system, religious beliefs, wants and desires when making decisions on the ward’s behalf.

Guardianship has its limitations, and it certainly isn’t a magic wand. As a guardian, you cannot force your ward to take medications or to be more compliant. But you can make a difference in the overall care of a ward. And in especially tough situations a guardian can work with the courts to get a court order to make sure the ward in question gets the care and support needed.

Acting as guardian for an aging parent or loved one is an important role. Loved ones may need your help with the most intimate care as they age, which can be demanding and draining. And fraught with uncertainty regarding your responsibility and your ability to take action.

If you have any questions about legal guardianships, I’d love to help. Leave a comment below or contact our office.

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  • 08
    Apr 15
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Solving Disputes Involving Trusts

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Solving Disputes Involving TrustsDisputes are not uncommon during the administration of a trust. But they can grow into something devastating both financially and emotionally.

Such disputes can become so fierce they can tear a family apart. But if you know of some of the more common trust disputes and how you may prevent them, you’ll go a long way toward ensuring a relatively smooth trust-administration process.

Disputes over trusts arise rise from three basic issues:

  1. Trustee mismanagement. It is not uncommon for a trustee to make mistakes when administering a trust—these mistakes may be intentional or unintentional. A trustee has a fiduciary duty to act in the interest of the trust and the beneficiaries.
  2. Improper trust creation or amendment due to settlor capacity or undue influence. A settlor is the legal term for a person who settles property, through trust, for the benefit of beneficiaries. Settlor capacity refers to whether the settlor was of sound mind and legal age when creating the trust (which can lead to a dispute about improper trust creation). Undue influence occurs when a relative or other party manipulates the settlor to change asset distribution in a trust or will.
  3. Disagreement over how a trust was written. Sometimes a beneficiary wants or needs assets to be distributed differently from what was specified in the trust. Perhaps the trust requires that the funds be held in a trust rather than being distributed outright. A disagreement over disbursement can lead to disputes.

Depending on the nature of a trust dispute, you have a few options. One is to go to court. This might be best when the other parties involved are unwilling to compromise or work together to find a peaceful resolution. Going to court can be time-consuming and expensive, as well as emotionally draining.

Another way to resolve trust disputes is to negotiate a settlement. Negotiation requires that both parties being willing to work together to find a mutually beneficial solution.

This can be challenging in situations where emotions are running high. But in my work with trusts, I’ve applied some basic principles that help clients neutralize conflict in order to avoid a lengthy court battle:

  1. Hire an attorney upfront. This seems self-evident, but many people are afraid of what they see as the cost of an attorney. But a qualified attorney can help parties prevent a loss of funds and an escalation of tension. It may be necessary to hire a lawyer to protect your inheritance. But hiring an attorney for assistance in trust disputes can be vital to preventing further trust mismanagement or other compromises to assets. Be aware that this can change the dynamics of your relationship with the other party involved in the dispute. But you will also have someone who can act on your behalf, and spare you the emotional interchanges that might arise with others in the dispute.
  2. Realize that the person with whom you’re in conflict is also human. Even someone who may have abused trust, failed to perform his or her fiduciary duties or even has broken the law is, after all, human. This person likely feels justified in his or her position. It helps to try to have a conversation to understand the other person and resolve difficulties.
  3. Change your perspective. Consider for a moment the other person and view the situation from his or her perspective. How does that change the way you will make decisions?

At our firm, we approach settling disputes by presenting facts and letting the facts win the case. We have no interest in litigating for the sake of gamesmanship or bravado. It’s not necessary and it’s not in the best interests of our clients.

If you or your family needs assistance with resolving trust disputes or other probate issues, we’d love to help. Give us a call.

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  • 01
    Apr 15
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Administering a Trust with an Ongoing Business

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Administering a Trust with an Ongoing BusinessAdministering a trust with an ongoing business can be intimidating and overwhelming. It is even more tricky if the business needs to go through probate. And for good reason.

As a trustee or personal representative, you will be held to a high standard as you administer the trust, a standard higher than that the original owner was held to. And if you have specific knowledge (such as having owned a business before, being an attorney or CPA) you will be held to a higher standard still.

Here are three steps you can take as a trustee or personal representative that will help you better manage your responsibility as well as reduce your liability as you administer an estate or trust that has business or complex investments:

  1. Assemble a team. Even if you have experience with owning and operating a business or in managing an investment portfolio, you can be held accountable for making decisions that have a negative impact on the viability of the trust’s business or assets. Seek help from qualified professionals (CPA, probate attorney with experience working with businesses and other relevant advisors.)
  2. Delegate control. You need to find a qualified person to take responsibility or accountability for his or her actions in managing this business and operating it. That person must be committed to making the right decisions, even difficult ones such as firing family members. (This in particular is a common and difficult decision that must be made with a number of trusts.)
  3. Maintain communication. As personal representative or trustee, it’s your responsibility to keep beneficiaries informed of the state of the business or other assets.

Passing along the commitments and responsibilities of a business and business assets through a trust can be complicated. The trustee or personal representative who administers the estate should understand the responsibilities of the position.

Without information, knowledge and expertise needed to run a business profitably, the trustee can be held liable for a decline in the business. Assembling a team and delegating control are two critical steps a trustee should make to maintain and manage the assets. Be sure to keep the beneficiaries informed and in the loop regarding the state of affairs.

If you need help understanding the duties of a trustee and how to manage a business or other complex assets in a trust, we’d love to help.

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  • 25
    Mar 15
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Trust Management: 3 Top Mistakes Trustees Make

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Trust Management 3 Top Mistakes Trustees MakeServing as a trustee is a big responsibility that can be complicated and confusing. It’s easy to fall into trouble if you’re misinformed or careless in the trust management. Keep in mind these three pitfalls when serving as trustee:

  1. Breaching fiduciary duties. Fiduciary duty is the highest legal duty of care recognized by the U.S. legal system. The most common example of breaching duties is when a trustee uses the trust to pay for personal expenses or purchases.
  2. Failing to keep beneficiaries informed. Trustees have the duty to keep beneficiaries “reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests.” Thus, beneficiaries are entitled to periodic accountings showing investments, disbursements and expenses. If a trustee is not transparent with these actions, he or she may be subject to legal action.
  3. Breaking the law. This can involve theft – the most common way a trustee may break the law – or the failure to pay taxes.

A trustee who doesn’t act in the best interest of the trust may be subject to consequences in civil court. The most common of these – for trustees who are also beneficiaries of an estate – is a surcharge, which is a legal term under probate law for a type of lawsuit that will reduce the trustee’s portion of the inheritance to return any losses to the trust that have been incurred because of mismanagement by the trustee. A trustee can also be personally liable for losses resulting from mismanaging assets in the trust.

If you’re concerned that a trustee is mismanaging your loved one’s trust, it’s important to seek help  immediately from an experienced probate attorney.

Many people want to avoid going to court to resolve their probate issues, but probate court exists to help families sort through the process of settling an estate. In fact, probate court can be particularly beneficial when a trustee is either a family member or a friend, because emotions and stress can complicate these situations.

If you’re a trustee and feel over your head in fulfilling your duties, attorneys can help you avoid pitfalls. You don’t have to do it alone. Consider hiring an attorney, bookkeeper, accountant or even a corporate trustee to work with you. A little bit of help can prevent not only mistakes but undue stress during an already-stressful time.

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  • 18
    Mar 15
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Estate Planning Basics: Trust Assets and Probate Assets

Estate Planning Basics Trust Assets and Probate AssetsEstate planning isn’t just for the wealthy. It’s an important element of protecting the people you love and the legacy you want to leave behind. An estate is made up of assets.

Assets can be any form of cash, physical property or intangible benefits. These include:

•  A house
•  other real estate
•  business interests
•  stocks, bonds, and mutual funds
•  money-market accounts
•  brokerage accounts
•  royalty contracts, patents, and copyrights
•  jewelry and antiques
•  precious metals
•  works of art
•  valuable collections

For estate-planning purposes, assets fall into two main categories: trust assets and probate assets. Assets held within a trust [link to post on trusts] are referred to as trust assets. Assets that are not within the trust are called probate assets. I’d like to outline the two, and show why creating trust assets is preferable in estate planning.

Trust assets

The advantage of putting assets into a trust include reduced estate taxes and greater control in how your descendants will receive their inheritance. When you put your assets into a trust, you no longer own the assets legally, which become known as trust assets.

You can decide what you’d like to be put into a trust, to become a trust asset, and you do this by having the item or property or deed officially given to the trust, with a title in the form of a deed or other legal documentation. For example, a certificate of title for a car owned by a trust should show John Doe, Trustee, or something similar indicates that it’s the trust that owns the asset, and not John Doe himself. There are various ways to transfer property such as jewelry, art, coins and other collectables, and an estate planning attorney can assist with this.

Probate assets

All assets that are not included in the trust are probate assets. A court proceeding is necessary to determine how these probate assets can be distributed. Thus, it makes sense to consider assigning assets to a trust, to avoid having your heirs go through probate court to receive any legacies you have assigned them.

The actual act of transferring assets to a trust can be a bit complicated and challenging, even for an attorney who has some experience with this process. But it’s worth the time to work with an experienced estate attorney to set up a trust for assets so that your estate can run smoothly.

Get help from someone who is skilled in estate planning and probate. It’s critical that you have legal documentation that the trust owns the assets. Without such documentation, these assets cannot be distributed as part of the trust and, as I mentioned, they’re considered probate assets.

The consequences of a poorly planned estate can affect not only the peace of mind of your survivors, but can be detrimental to the value and distribution of the assets you leave behind.

Find an experienced attorney who is familiar with probate law and asset protection in your state to protect your family and protect your legacy. [link to service line questionnaire]

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  • 11
    Mar 15
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Estate Planning: What Are the Duties of a Trustee?

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Estate Planning What Are the Duties of a TrusteeMost people feel honored when asked to be a trustee over a friend or loved one’s estate. But being a trustee is more than a title. It comes with a lot of responsibility and obligation.

The general duties of a trustee vary depending on the laws of the state where the trust is situated. But to provide you with an overview, here are the duties of a trustee based on Arizona statutes, where I practice:

1. Duty to administer. The first duty of a trustee is to administer the trust in good faith and, according to its terms and purposes, in the interest of the beneficiaries, according to Arizona statutes,. This involves reviewing the trust document or trust instrument to determine how the trust is to be administered, how debts are to be paid, etc.

2. Duty of loyalty. The trustee has the duty to administer the trust solely in the interest of beneficiaries. This means the trustee should not use the trust as a source of funds for personal activities or investments (thus, no gambling or buying speculative businesses). All expenditures should be solely in the interest of the beneficiaries.

3. Duty of impartiality. If the trust has two or more beneficiaries, the trustee must act impartially when investing, managing and distributing trust property, giving due regard to the beneficiaries’ respective interests

4. Duty of prudent administration. The trustee should administer the trust in a reasonable and prudent manner. This means not making haphazard or random choices when choosing investments, managing business or managing assets.

5. Cost of administration. The trustee may only incur costs that are
reasonable in relation to the trust property. For example, it may be
reasonable to hire an attorney and spend $50,000 to fight a lawsuit if it’s for a multimillion-dollar trust. Obviously, that would not be prudent for a
$60,000 trust.

6. Duty to use special skills. If a trustee has special skills or expertise, it’s the trustee’s duty to use them to benefit of the trust. If you’re a CPA or an attorney, you’re expected to use your skills and training for the trust.

7. Delegation. As a trustee, you must delegate duties, and exercise reasonable care, skill and caution when it comes to selecting an agent. You must also establish the scope and terms of that delegation and periodically review the agent’s actions and performance.

8. Duty to control and protect trust property. It’s important to make sure assets aren’t stolen and to guard against the waste of assets.

9. Duty to keep records and identification of trust property. This is both a protection for a trust and for the trustee. Keeping good records will make it simpler when preparing taxes.

10. Duty to collect trust property. The trustee must identify the trust property so things don’t get lost and stolen.

11. Duty to inform and report. The trustee is responsible for keeping the qualified beneficiaries of the trust reasonably informed and responding to requests from beneficiaries regarding the trust.

12. Discretionary powers and tax savings. These powers provide the trustee with options in order to accommodate varying situations.

As you can see, this is a big job. But that doesn’t mean you have to do it alone. You have the right (and duty) to seek expert help to make sure things are handled properly. If you have any questions about your duties as a trustee, I’d love to help. Leave your question below or contact our office.

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  • 04
    Mar 15
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Can You Avoid Probate with a Trust?

Can You Avoid Probate with a TrustOne of the primary reasons people create trusts for their estates is to avoid probate  and the associated attorney and court fees. It also better maintains privacy. But a trust doesn’t guarantee that you won’t need probate. And that’s a good thing.

A well-drafted trust properly managed by a responsible trustee certainly can avoid probate. But some estate issues require the assistance of probate court. Probate provides a way to resolve problems that may come up in settling an estate. Here are a few common problems that probate can help resolve:

1. Who should be the trustee?
2. How much should the trustee seek to be reimbursed for managing the trust?
3. What happens when a trustee who is not familiar with applicable rules, tax
rules and state-specific rules makes a mistake in managing the trust?

Many do-it-yourself legal services claim that the biggest benefit of creating a trust is avoiding probate. These services try to make it simple for people to create their own trust without paying for an attorney. But it’s not a one-size-fits-all kind of process. Just as each person is different, so is each person’s estate. You’re going to run into problems if you standardize a process that should be tailored to your individual situation.

One common error people make with standardized trusts is failing to transfer assets to the trust or misplacing one or more pages. This usually requires the trustee to seek help from the probate court.

Remember that probate court was created to help resolve problems specific to your unique situation. Probate gives recourse to both heirs and trustees if they feel something wasn’t handled correctly. The ability to go to court to solve questions and problems is a good thing.

If you have any questions about trusts or other estate planning issues, let me know. Leave your questions below or contact our office.

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  • 25
    Feb 15
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Estate Planning: What Is a Trust?

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Estate Planning What Is a TrustA trust is similar to a will. It’s an elegant way of specifying how your property gets distributed upon your death. Property placed in a trust can pass to your designated beneficiaries without the delays and expense of going to probate court.

But – a big but – a living trust is not a complete substitute for a will. You won’t be able to name a guardian for a minor child, for example. For many people a trust is a more efficient way to transfer property at death, especially large-ticket items such as a house. Here are a few benefits of placing your property in a trust:

  1. You can avoid probate. This allows you to bypass probate and to pass the property directly to your designated beneficiaries. This is especially important if you own real property in multiple states.
  2. A trust can help with property management for those who can’t or do not want to manage for themselves. (This is particularly beneficial for older individuals who want to make sure they will be cared for without the need for guardianship or conservatorship.)
  3. Trusts can reduce estate and gift taxes.
  4. A trust protects assets from creditors and lawsuits better than does a will.
  5. If you want to protect family wealth for future generations, you can set up a trust to protect these assets (whether a business or other accumulated assets). You can also save estate taxes (if this is relevant). A trust can also protect these assets from irresponsible heirs over several generations.

There are a variety of types of trusts. They are both flexible and complex. One of the most common types of trusts is called an AB trust, also called a bypass trust. An AB trust helps provide significant estate-tax savings as well as preserve assets to survive the blending of families when and if spouses get remarried. You need three things to create a trust for your estate:

  1. The creator, also called settlor or grantor
  2. Trust property
  3. Beneficiaries

You don’t need to name someone to manage your trust (though this is certainly a good idea). The court can always choose someone to administer the trust. You can have a trust as long as you have someone who created the trust, you have property in the trust and some identifiable beneficiaries.

Think of a trust as a special place where ordinary property from your estate goes, as the result of some type of transformation that occurs, that takes on a new identity with immunity from estate taxes and resistance to probate. In this article, I primarily discussed “living trusts” or revocable trusts. You can read more about this type of legal instrument here.

I’d love to hear from you. If you have any questions please give us a call or leave a comment below.

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  • 18
    Feb 15
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When to Get Help from an Arizona Probate Attorney

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When to Get Help with ProbateDo-it-yourself projects can range from remodeling your home to engineering homebrew biodiesel to fixing your car to building worm-composting systems. But just because you can do something yourself, doesn’t necessarily mean you should. If you are named as a Personal Representative or trustee, and some of the property is in Arizona, you need to hire an experienced Arizona probate attorney.

That means, especially, something as important as probate.

Managing and settling an estate is one thing that may not be well-suited to doing it on your own. In some cases, settling an estate can be done without the assistance of an attorney. But in most situations, settling an estate can be quite complex and difficult to navigate on your own. If you make mistakes as a personal representative, you may pay more in penalties than you would pay for an attorney to help execute the will.

The two most common mistakes probate DIYers make when managing an estate are these: The failure to maintain adequate documentation, and the failure to pay taxes or creditors before distributing assets.

Unfortunately, it’s easier to make mistakes than to avoid them. Probate is a technical area of law that varies for each unique situation.

In most cases, you can’t really do it by scanning the Internet. Here are 10 tricky areas of settling an estate that an attorney can help you navigate:

  1. Dealing with creditors
  2. Sending the proper documents to interested parties
  3. Making sure the proper forms are filed with the court
  4. Locating and interpreting your estate planning documents
  5. Making sure you know how to properly protect the deceased person’s
    property
  6. Creating an accurate inventory of probate assets 
  7. Adequately informing necessary parties about a person’s death: bankers, insurance companies, the Social Security Administration.
  8. Discussing the division of assets with the heirs
  9. Keeping adequate records, especially if you’re being reimbursed for your
    time serving as personal representative
  10. Making sure tax forms get filed properly

Most people have minimal knowledge of the technical legal aspects involved in
settling an estate. What may seem to be just a simple mistake could actually result in fines, lawsuits and a lot unnecessary struggle and grief during an already stressful time.

If you are serving as a personal representative, it is your duty to make sure the estate is handled correctly. You don’t have to do it yourself. Seeking qualified help is the best way from protecting yourself from mistakes and their consequences.

If you have questions about whether you need an attorney to help you settle an estate, we can help. Comment below or contact our office.

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  • 11
    Feb 15
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The Role of a Personal Representative, Part 2

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The Role of an Estate Planning Representative, Part 2As I mentioned in my previous video, a good estate plan covers key life decisions. Your personal representative will be the one to make the necessary decisions to carry out your wishes.

Here are further responsibilities, based on the law in Arizona, but pertinent no matter where you live in the U.S.

  1. Provide an inventory of assets. This is where having an attorney with some experience comes in handy to help you classify different types of assets, especially personal property like furniture, ceramics or porcelain and photographs.
  2. Comply with the applicable standards of care. As personal representative, you are required to perform duties with prudence, reasonable care and caution.
  3. Keep detailed records. Keep and maintain records of everything: copies of checks, receipts, bills. Everything. You need to be able to prove where every dollar goes. So, avoid dealing in cash.
  4. Pay valid debts and expenses. There’s a specific procedure for determining whether a debt is valid. This takes into account all the debt and how to treat creditors equally as part of a personal representative’s fiduciary duty.
  5. Pay applicable taxes. Always pay applicable taxes before paying creditors and distributing assets.
  6. Distribute remaining assets. After all taxes and expenses have been paid, the remainder of assets can be distributed as the will has specified.
  7. Change the address of the estate. Until probate is closed and you complete your role as personal representative, you must notify the court in writing if you move or if your mailing address changes.
  8. Document payment your receipt of payment as personal representative. It’s important to document meticulously the time you’ve spent and the expenses you’ve incurred when seeking reimbursement from the estate you’re managing.
  9. Court involvement. The court prefers minimal involvement in settling estates where a personal representative has been appointed, but will get involved if the estate is not closed within two years.

To be sure your wishes are carried out, carefully select a personal representative for your estate. A little extra planning now can protect your family’s future. You can read more about a personal representative’s duties here.

If you have any questions about the duties of a personal representative, I’d love to help.

  • 04
    Feb 15
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What are the Duties of a Personal Representative?

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What are the Duties of a Personal RepresentativeA good estate plan covers key life decisions such as what happens to your home and other assets if you die. It also addresses who will care for your children and financial assets if you pass away. Your personal representative will be the one to make the necessary decisions to carry out your wishes.

The role of personal representative is a big responsibility. Settling the estate of a deceased person requires attention to detail. It’s important to select someone who is qualified for this position regardless of your net worth.

Specific duties and responsibilities can vary slightly from state to state. I practice in Arizona, but in this two-part overview, you’ll be able to get a sense of the duties of a personal representative, regardless of where you live in the United States.

  1. Act as personal representative. Perform fiduciary duty of fairness and impartiality to the beneficiaries and to the creditors, to be cautious and prudent in dealing with the state assets.
  2. Gather, control and manage estate assets. This is not moving into the deceased parent’s house and taking over assets for personal use. The personal representative oversees the execution of the will and makes sure that the assets are distributed according to the will.
  3. Provide notice of the appointment. You will need to notify your state’s revenue department and all of the heirs and devisees that you have been appointed. These heirs and devisees have four months to contest the probate.
  4. Provide notice of the admission of the will to probate. This is a form that gets filed with the court and delivered to those involved in the estate. It explains the duties and responsibilities of a personal representative.
  5. Mail copies of the order to the personal representative. You must mail copies of the order to the personal representative to the heirs and devisees.
  6. File proof of compliance. A notarized statement must be filed with the court affirming that the order to the personal representative was sent out.
  7. Publish notice to creditors with the court. You will need to notify creditors that they have a certain period of time to file a claim and give them instructions on how to file and pursue being paid.
  8. Protect assets. It is your responsibility to secure and keep valuables safe.
  9. Determine whether there are any statutory allowances. Statutory allowances can include a homestead allowance, exempt property allowance and a family allowance.

We will continue with this list in our next post. This is an important part of estate-planning. It doesn’t have to be complicated, but it does help if you have a sense of what the roles and responsibilities of a personal representative are.

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  • 28
    Jan 15
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Wills and Estate Planning: Appointing a Personal Representative

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Wills and Estate Planning Appointing a Personal RepresentativePart of creating a will is naming a personal representative. A personal representative is responsible for managing the estate of another, including the probate assets.

To name a personal representative, you must first have a valid will in place. The will should specifically name who you want to manage your estate. Most people choose a representative they already know and can trust. Acting as a personal representative is a big responsibility. It’s best to choose a personal representative who has enough time as well as the financial stability to fulfill the demands of the role.

It’s also important to choose a personal representative who is good with details and record-keeping. A personal representative is held to the very highest standard and must act in the estate’s best interest. If the representative fails to pay taxes, distributes assets to the wrong person or in the wrong proportions, fails to pay creditors before distributing assets (among other things) he or she can be held personally responsible. And your intended beneficiaries can end up getting less than they should have.

If the person named in the will is unqualified to manage the estate for whatever reason – whether this person is a drug addict, gambler, spendthrift or otherwise unavailable – you can request a hearing in probate court to seek to have the second person listed on the will appointed as representative.

In high-conflict situations where family tension is running high, it’s often best to enlist the services of a licensed fiduciary or a trust company. In Arizona, a professional private fiduciary is licensed by the Arizona Supreme Court and will know how to get the job done. While there is a fee to hire a third party fiduciary, having a licensed fiduciary will often save you money by avoiding drawn-out court battles.

The position of a personal representative can be burdensome. It’s important to select someone who is not only willing, but qualified to fill the position. If you don’t have family or friends qualified, enlist the help of a licensed fiduciary.

We offer a multi‑page list that details all the tasks a personal representative must tend to when manage an estate. Do you have any questions about appointing a personal representative? Please comment and let me know.

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  • 14
    Jan 15
  • 4

Testate and Intestate: The 2 Things You Need to Know About Your Last Will and Testament

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The 2 Things You Need to Know About Your Last Will and TestamentIf you don’t have a plan for your estate after you die, the state where you live has one for you. But you probably won’t like it.

Even if you don’t believe in the afterlife, you need to take control of what will happen after life. Your life. For your family’s sake. Without a valid, comprehensive living will (a legal document that specifies what you want to happen to your assets after you die), your family will be left to pick up the pieces.

You should be aware of two definitions about your last will and testament in order to protect your assets and make things easier for your family. These definitions involve the difference between testate and intestate. The difference is simple, but it can determine whether or not your wishes are carried out.

Definition 1: testate – Having a valid will made before one dies. “She died testate.”

Definition 2: intestate – Not having a valid will made before one dies. “He died intestate.”

Translation: If you have a valid will, you are said to die testate. If you die or become incapacitated without a valid will, you are said to die intestate.

It’s also important to understand what makes a will valid and legally binding. Let’s look at the key components of a living will.

A valid will must provide instructions stating:

  • whom you want to receive something,
  • what you want that person to receive and
  • when he or she will receive it.

A valid will must be in writing and must be signed by the testator (the person making the will) or in the testator’s name by some person in the testator’s conscious presence, and by the testator’s direction.

To define this more simply, your will must be in writing. You must sign it. If you’re not able to sign it (if you become paralyzed or otherwise incapacitated), someone else may sign for you under your direction. Most wills are notarized and include a self-proving affidavit. While this extra step isn’t strictly necessary, it does help expedite the process.

A valid living will is important for every family. It helps make the complex process of settling an estate much simpler.

Now that we’ve given you the basics of a valid will, you should be aware of what not to do with it. Here are three common mistakes people make when it comes to a last will and testament:

  1. Putting the will in a bank safety deposit box. Unless you have specifically given someone the authority to open the safe, you will have to have a probate to determine who has authority to open the deposit box. This can create an unnecessary sticky situation.
  2. Not giving a copy of the will to your children or other involved parties who will be handling the estate after your death. If your will is stuffed between the mattress or hidden in the back of your sock drawer, your family may not be able to locate it. Without a copy of the will, your estate will be subject to probate.
  3. Not being specific about who will be in charge of the estate in blended family situations. This is one of the most common causes of confusion and disagreement.

Take the time to create a valid will and give instructions. This will give you and your family peace of mind both now and later. It may be uncomfortable for you to plan your estate, but it’s far better to do it correctly now than for your family to pay an attorney to try to fix later.

Do you have any questions about testate or intestate? I’d love to help. Please leave a comment below or contact our office.

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  • 07
    Jan 15
  • 4

Probate Basics: 5 Things You Should Know About Probate

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Managing a loved one’s estate that’s gone into probate can be overwhelming and more than a bit confusing. But it doesn’t have to be. Here are some probate basics that can help you start to understand this process.

With proper estate planning, you can avoid a lot of the drama often associated with legal proceedings.

Most people don’t know how to properly plan their estates or the granting of their final wishes – so remaining family members are left to sort through an often-confusing mess. But if you understand what probate is – and how it benefits you – you can take the first step to avoiding drama and confusion.

5 Things You Should Know About ProbateLG

What is probate law?

Technical definition: Probate is a court-supervised process where a will or a trust is established to be the decedent’s valid will. It concerns validity.

But probate also applies to instances where someone is incapacitated, or when there’s a trust that’s been established (and there is a dispute that needs to be resolved). In general, probate refers to any court proceedings that deal with the deceased or incapacitated person’s affairs. (Probate court does not apply to murder, malpractice or other wrongful death cases.)

Translation: Probate is the first step in the legal process after someone dies, or if a living person is unable to make further decisions about his or her estate. The parties involved in settling the estate will go to probate court where a judge (no jury) will review the case and help straighten things out to settle the affairs of the deceased or incapacitated person.

Probate court accomplishes five basic things:

  1. Proves that the deceased or otherwise incapacitated person’s will is valid (this is usually straightforward)
  2. Appoints a person to be in charge of gathering and inventorying assets, paying debts, and distributing the assets
  3. Pays any outstanding debts and taxes
  4. Resolves various disputes that can arise, such as who gets what personal property or how much the house should be sold for
  5. Distributes the remaining property as the will directs (or under state law if there’s no will).

Benefits of Probate

Probate sometimes gets a bad rap. It’s expensive, it’s scary, it’s overwhelming: These are just a few complaints I hear often. There are regulations in place, however, to protect you. Lawyers can charge only what’s considered a reasonable amount for their service in probate.

Here are a few of the benefits of probate that make it a worthwhile proceeding.

  1. Probate gives you options. You can have a say in making sure things are taken care of correctly, according to directions given in the deceased persons’ will.
  2. Probate gives heirs and beneficiaries a voice. Probate gives you recourse should you need help as a beneficiary and heir to make sure the will is carried out properly.
  3. Probate provides perspective. In probate you get the benefit of having multiple people look at issues from various angles, which makes it more likely that you will find a decision that everyone will agree on.

For the most part, probate is a relatively quick and easy way to work out these details. Most cases get resolved within a few months.

To sum up, probate is a court that you can go to whenever someone either dies or becomes incapacitated. It’s a way of not only resolving issues that come up, but also of preventing issues both for the protection of the person in charge and for the other heirs involved.

Do you have any questions about probate? I’d love to help. Leave a comment below or give our office a call.

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  • 27
    Aug 14
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Appearing Pro Per: Why You Shouldn’t Represent Yourself (even if you’re a lawyer)

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There is a trend for people to represent themselves more and more in legal matters. This is called appearing “in propria persona” or “pro per.” But unless it is an extremely simple legal matter (such as a speeding ticket or small claims court dispute), you are always going to be better served by having an experienced legal advocate on your side. Here are the top 4 reasons why you shouldn’t represent yourself (even if you’re a lawyer) in probate court.
Reason #1: Even if there is no dispute now, there could be if you do something wrong. If you are the person in charge, such as the personal representative or trustee, then you are held to a very high standard. You have a fiduciary duty to act in the best interest of the estate, to act fairly, and to administer the estate or trust expeditiously. But the applicable probate statutes, plus case law, are complicated even for lawyers who practice exclusively in this area. And if you make a wrong move (such as distributing money to the wrong people), you can be held personally liable. Is it really worth saving a few thousand dollars to risk this much personal liability?
Reason #2: You don’t know the applicable law and rules of procedure. Unless you are an experienced probate and estate planning attorney, you are at a severe disadvantage. You are expected to know all of the applicable probate statutes, plus the probate rules, plus the civil rules (to the extent that they do not conflict with the probate rules). Then there are the softer issues, such as knowing when the hearsay rule or the Dead Man’s Statute apply. (Hint: Even if you can recite these rules by heart, that has very little to do with their application in real life during a real evidentiary hearing.)
Reason #3: You are taken more seriously by the opposing parties (and the court) if you have a lawyer. In grade school, did you ever have an older sibling, or a friend, who could help you stand up to a bully or show you the ropes of how to deal with social situations? I had an older sister who would give me straight-forward advice about how to handle various social situations. Or have you ever gone to a party in which you didn’t know anyone? That is a lot easier with a “buddy” as well. Having a lawyer is somewhat like this. You don’t need to always worry that you might forget something or do something wrong, because your lawyer has your back and is helping you navigate the system.
Reason #4: You can’t see outside your own bottle. We all imagine that we are the stars of our own movies. Yet we don’t know how others perceive us. Are we being taken seriously? Do our legal arguments make sense to other people? Is our line of thinking persuasive? There is a saying among attorneys that “An attorney who chooses to represent himself in court has a fool for a client.” Even lawyers who routinely handle legal matters know better than to handle their own cases. The reason is this: We (as lawyers) would be too emotionally involved in our own situation to be able to make rational decisions. This hurts us when it comes to making sound, logical decisions. It also hinders our ability to see the big picture, possible flaws in our thinking, and possible solutions.
If this applies to lawyers who routinely handle legal matters, then it applies even more to non-lawyers. There is definitely an advantage to hiring an experienced advocate to handle your legal drama for you. It will get done quicker and have a higher likelihood of success.

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Magellan Law, PLC

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Office: 602-443-4888

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Why Choose Magellan Law

A great legal team is critical to the success of your Estate Plan. The Scottsdale Estate Planning and Trust attorneys at Magellan Law will help you plan a cohesive strategy to take care of your estate now, and for future generations!

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