Episode 20: A Series of Unfortunate Events – Make A Will Edition

One reason to write a will: assign a guardian to your children, preferably not Uncle Olaf

We’re continuing the estate planning theme this April in honor of Make A Will month here at Rocket Lawyer, and this time we focus on everything that a Will can do for you besides mere property distribution. San Diego-based estate planning lawyer Daniel Printz tells us the myriad of things to be aware of when drawing up a Will, especially in the areas of child guardianship and business succession. Some of the case studies may highlight unfortunate situations, but fortunately for you listeners this was one of our best, most informative interviews thus far. We highly recommend sharing it with your friends and family!

00:00 Introductions. While Charley was at the ABA Tech conference in Chicago mingling with lawyers and checking out the new technology around the law, Juli kept herself busy writing a slew of blog posts about the week’s legal news, ranging from cattle rustling to Facebook and Barry Bonds.

01:23 First up, we go over the curious resurgence of old-timey cattle rustling in many ranching states as livestock prices increase. There are criminal statutes in place, but they don’t necessarily help ranchers recover their stolen cows. Perhaps the role of the hero cowboy will make a comeback…

02:14 Next, it’s on to the seemingly never-evending story of Facebook lawsuits: first there were the Winklevoss twins, but even with them out of the picture (thanks to a Ninth Circuit ruling), Mark Zuckerberg now has to contend with one Paul Ceglia, a fraudster who may or may not have a legitimate case for 50% ownership of the social network site. He certainly has a legitimate law firm on his side (DLA Piper), so it should be an interesting legal battle.

04:09 Another big issue in the news was Alaska’s proposal to lower the legal drinking age to 18 years for military service members. The legislation may not be likely to pass, but it has created buzz over a someone controversial issue, namely, why young adults who are able to drive, vote, get married, serve in the military, take out expensive loans and enter into contracts — essentially, are deemed fit to do every adult activity in the book— aren’t allowed to drink.

05:01 Barry Bonds’ perjury trial came to a close at the end of last week, but the resolution (or lack thereof) was thoroughly unsatisfying. The homerun king was charged with one count of obstruction of justice in the 2007 BALCO investigations, but the jurors couldn’t reach an agreement on the perjury charges and the judge declared a mistrial for those counts.

6:12 Switching gears to estate planning, we wrote about some pretty wacky provisions in celebrity wills. We give you a teaser with a brief look at the estates of Luis da Camara and Leona Helmsley, but you can check out the full stories on our Rocket Lawyer Press blog.

7:18 Our interview with “the legacy lawyer”, aka Daniel K. Printz. When we asked Daniel about how he got into estate planning in the first place, he surprised us by saying that he started in business law. After getting a number of requests from small business clients to do business succession planning, he refocused his practice on estate planning, trusts and probate. According to Daniel, it’s one of those areas of the law where you always end up with a happy client. Talk about job satisfaction! Individuals and small business owners often think of Wills and estate planning with a sense of dread, but Daniel compares it to a swimming pool: clients spend a lot of time dipping their toes in the water, wondering if it’ll be too cold, not sure if they want to get wet, but after they’ve jumped in, swum around, and dried off on a deck chair, they’re happy they took the plunge. Daniel also gives us some examples of the types of business law clients who create succession plans, from bike shop owners to professional firms. When there’s no successor in place, Daniel recommends hiring a business broker to sell the business as quickly as possible, before it loses too many clients and customers.

12:32 A lot of what we’ve been talking about during Make A Will month is the idea of lost income and insurance in case something happens suddenly. It turns out that Daniel ends up recommending insurance quite a lot to both business law clients and private citizens, ranging from “key employee insurance” to “long term care insurance”. While insurance is an important risk-managing tool, is it something that you can designate in a Will? The answer is “no”, since you already designate a beneficiary in the insurance policy. As Daniel puts it, Wills only cover the “junk drawer” of your assets, the loose assets as opposed to trusts, 401(k)s, insurance policies and other designated-beneficiary accounts.

14:08 In addition to designating beneficiaries (who you want to receive the assets), you’ll also have to select an executor for your Will (someone to handle the distribution of the assets). But more important than either of these things, if you’re a parent of minor children at least, is the ability to designate a guardian for your children in your will. A guardian is in charge of the child’s person or his/her assets in the event that no parent is available for a variety of reasons. The court will appoint a guardian whether or not you have a Will, but they would much rather have your input than not. Without a Will, the judge will look to the next of kin to take over as guardian, and will take into consideration input from various family members, the attorney appointed to the child and court investigators. When a parent’s Will recommends a specific guardian, that’s a high barrier for others to overcome, since it reflects a conscious decision. Parents will want to designate two guardians for their child: a guardian of the person and a guardian of the estate. The guardian of the person is responsible for the child’s upbringing and well-being, while the guardian of the estate handles the child’s money (if the assets are in a trust, a guardian of the estate may not be needed). With two distinct guardians, there’s a reduced possibility for a conflict of interest or misuse of the child’s money.

18:58 Every estate planning lawyer can tell horror stories of people who chose the wrong executor or guardian. As a result, you’ll find more and more lawyers recommending that people consider private fiduciaries rather than family members as executors, to reduce tensions and conflict and make sure the estate can be administered as fairly as possible. By not choosing a guardian for your child, you are setting up a battle ground for both sides of the family to fight over. If you designate one of your children as an executor, you risk pitting siblings against each other. The first problem for an executor who’s a family member is the decision of whether or not to take their just compensation as executor: do you reduce the inheritances of your other family members to pay yourself, or do you split everything evenly even though you’re doing all the work? If you can, please avoid putting your heirs in this situation.

21:30 What does “next of kin” mean, and does it mean the same thing in all states? As Daniel explains, the concept of next of kin is basically “who is the decedent’s closest living relative?”, and as a general rule, it means the same thing in all states. Essentially, your next of kin is going to be first your spouse, then children or grand children, then parents, then siblings, nieces and nephews, and then grandparents, and so on… To determine how many steps it takes between the decedent and a family member, an estate planning lawyer or probate lawyer will often draw up a family tree. Even when people are equally distant, there are still some ranking rules to help states decide which of the two to consider as next of kin: typically, when it comes to issues of inheritance, money flows down, not up, the tree.

24:04 Is your Will the best place to list your memorial plans? Absolutely not, says Daniel. In many cases, a Will isn’t even found or read until days or weeks after a person passes away, by which time it would be too late to follow memorial plans or requests for the decedent’s remains. You should list what you wish for your remains (such as cremation or organ donation) and for your memorial or funeral service in a document called an Advance Health Care Directive, which is a combination of a living will and a durable power of attorney for health care. This document also tells people what your end-of-life wishes are, and who you put in charge of your medical decisions and care, in the event that you’re incapacitated. These documents are important parts of your complete estate plans, so it’s essential not just to create them but to let your family know where they are an how to access them. Always make copies!

26:23 We move on to a slightly lighter topic, of celebrity Wills. Daniel recently wrote a blog post about the curious case of Tony Curtis’ will, in which he appears to have disinherited his children and left everything to his widow. While this is a perfectly valid choice, it’s rather odd that a) he didn’t put his considerable fortune into a trust for his wife (thereby avoiding probate and some estate taxes), and b) that he used a Will, which is a fairly public document, to make such a potentially controversial decision. Daniel suggests that perhaps the actor didn’t know that he could have put his fortune in a private trust, and in that trust said explicitly that he didn’t want to leave anything to his children, thereby eliminating the publicity and gossip.

29:07 For our last question, we ask what happens when you have negative assets, in other words, a lot of debt. Luckily, debt isn’t passed on to your heirs like it used to be in the olden days. If you owe more than you own, the remaining debt is forgiven. However, because all debts need to be repaid before your survivors can receive anything, if your entire estate is used up to pay off creditors, then your family won’t receive anything.

30:33 This highlights the basic fact that people aren’t often sure where to turn for information about estate administration once a friend or relative passes away. Unfortunately, you don’t get a pamphlet in the mail when Aunt Jeanne passes away telling you what to do, but the next best thing is talking to a lawyer who can tell you about the specific laws in your state. If you need an expert estate planning attorney in California, you can contact Daniel Printz via his website, thelegacylawyer.com, or his Rocket Lawyer profile.

32:39 Time for the Rocket Docket! Considering how many responses we got on our Facebook page concerning the minimum legal drinking age, we thought we’d ask you: do you think the drinking age should be lowered to 18, or kept at 21? Vote on our Facebook poll, post your thoughts on our Facebook page or blog, or tweet us @rocketlawyer.

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