LA Probate Law

What is a PVP Attorney?

scott@schomerlaw.com (Scott Schomer) — Fri, 01 Aug 2008 19:57:59 -0800

So you’ve decided, for whatever reason, that someone in your life needs a conservatorship. You started investigating the proceedings and perhaps have heard of a number of strange terms: conservatee; incapacity; probate investigator; capacity declaration; or dementia powers. If you are filing in Los Angeles County, you may learn of something called a ‘PVP attorney’. What is a PVP attorney? Do you need one? How do you get one? What exactly does a PVP attorney do?

The abbreviation “PVP” is short for “Probate Volunteer Panel”, which is a panel of attorneys who register with the Los Angeles Superior Court to assist with the resolution of various probate proceedings. The PVP panel consists of attorneys who the court appoints in probate and family law matters, including conservatorships, guardianships and related proceedings. In a typical proceeding, a PVP attorney is appointed to represent the interests of the potential conservatee or ward.

In Los Angeles County, PVP attorneys are required to be members of the State Bar of California in good standing for each of the previous three years and have no pending disciplinary proceedings. The PVP attorney must also meet certain educational requirements and maintain proscribed levels of professional insurance. Within the panel, attorneys frequently designate special expertise and certain members are appointed to deal with particular issues such as special needs trusts, taxes, or complex litigation.

The PVP attorney’s compensation is usually paid either from the conservatee’s estate (if there are resources) or by the County of Los Angeles. As with any attorney, a PVP attorney is required to zealously represent the interests of his or her client. Having been appointed by the court, however, the PVP attorney is given a secondary duty: “The PVP attorney's secondary duty is to assist the court in the resolution of the matter to be decided.” Rule 10.85, Los Angeles County Superior Court Rules.

The interesting conundrum in conservatorship cases is this: the PVP attorney is appointed to defend the legal rights of a client, but those rights include the client’s right to form an attorney-client relationship with the attorney (i.e. the right to contract). If the allegations of the conservatorship petition are true, that the potential conservatee may not have legal capacity to enter into a contract, how can the attorney create an attorney-client relationship with his or her client? If the proposed client isn’t mentally competent, then how can an attorney rely on the client to state his or her desires? Likewise, if the conservatee is legally incompetent is it in his or her best interests to fight the conservatorship proceeding?

Thus the apparent rationale for the court proscribing a secondary role for the PVP attorney; the court wants the PVP attorney to assist the court with the resolution of the matter. The PVP attorney frequently functions like an arm of the court attempting to investigate the various allegations (especially in contested proceedings) and provide objective information about the status of circumstances affecting the welfare of the conservatee. Often the court looks to the PVP attorney to provide an objective, unvarnished assessment of the merits of the conservatorship proceeding.

Another frequently asked question is whether or not the proposed conservatee is entitled to retain an attorney of his or her own choosing. In my experience, the probate court generally prefers using the PVP attorney because of a level of trust associated with the PVP attorney for, among other things, having completed the educational requirements. The non-PVP attorney then must decide whether he or she believes that it is in the client’s best interest for them to continue as additional counsel. The risk posed by this non-PVP attorney is that if the client is found incompetent, he or she may have a difficult time being compensated for services or a demand may even be made for the return of previously paid compensation. A recent opinion of the California Court of Appeals, however, has advised that a prospective conservatee must be given an opportunity to explain why he or she wants to retain other counsel.

When performing his or her duties, the PVP attorney must balance the competing requirements to protect their client’s interests and their court-directed duty to resolve the proceeding. Generally, it is not in the best interests of a proposed conservatee to engage in protracted litigation regarding his or her mental state and most PVP attorneys (in my experience) work hard to find a resolution that is in the best interests of their client.

To paraphrase the Miranda warning, you did not need a PVP attorney but if you are a proposed conservatee, one will be appointed for you. If you are a party to these types of proceedings, how do you deal with a PVP attorney? In my bias opinion (as a current member of the PVP panel), it is usually in the best interests of all parties to fully cooperate with the PVP attorney. As charged by the Court, the PVP attorney has been appointed to “assist the court in the resolution of the matter ….”

New Ebay-Like Site Helps With Estate Administration

scott@schomerlaw.com (Scott Schomer) — Sat, 19 Jul 2008 16:14:27 -0800

One of the challenges in both estate planning and in post-death administration is personal property. During a lifetime, many individuals accumulate vast quantities of personal property including but not limited to jewelry, china, furniture, textiles, antiques, and the like. Few people have the stamina to go through and catalog all of their possessions or make decisions about which if their heirs, if any, should receive each item. Moreover, circumstances change and items that were once valuable may become obsolete (like an eight-track tape collection) while marginal property sometimes ages and becomes more valuable over time.

Likewise, trustees and administrators are often left with the emotionally challenging task of fairly dividing up a lifetime of personal property among beneficiaries or heirs. As the old adage goes, one person’s garbage is another person’s treasure. Some items particularly have little or no commercial value but immense personal value to the heirs or beneficiaries. How does one divide grandma’s favorite quilt among competing heirs without cutting it into pieces? The division of personal property can often be one of the more stressful aspects of estate administration.

Recently, a new web site has offered a creative solution bringing market forces to the equitable distribution of personal property. According to its promotional material, eDivvyup is an online auction site designed specifically to help with the division of the deceased personal’s property. Operating in a fashion similar to eBay, an auction on eDivvyup is a private auction restricted to invited participants. The trustee or administrator catalogs the deceased’s personal property and allows the beneficiaries or heirs who are interested to bid on it. As aptly stated on the eDivvyup web site, “While specific items may hold sentimental value for you, they are not worth the fighting and long-term damage to relationships.” Thus heirs and beneficiaries can express their true desire for particular items of personal property through the efficient application of market forces.

While not necessary or appropriate for every estate, the eDivvyup site appears to offer a novel solution to an age-old problem of dividing personal property that may be commercially worthless but emotionally priceless. According to the site, eDivvyup offers its services for $49.99 for the first 50 items and an additional 99 cents for each additional item listed. If you find yourself facing a King Solomon dilemma, eDivvyup may be just the solution.

Treated Like a Dog?

scott@schomerlaw.com (Scott Schomer) — Tue, 17 Jun 2008 18:35:01 -0800

You may remember the surprising news that the late Leona Helmsley left a $12 million bequest in her will for her Maltese dog named Trouble. With the large bequest, Helmsley’s will provided that Trouble would continue to enjoy the same opulent life even after Helmsley’s passing. In addition to the money, Helmsely’s will also provided that Trouble would be buried next to Helmsley in the family mausoleum. Helmsely’s will also set aside an additional $3 million for cleaning and maintenance of the mausoleum. With the $12 million gift, Trouble was apparently the recipient of one of the largest single individual trusts from Helmsley’s fortune, estimated to be worth $4 billion.

Now it appears that poor Trouble will not receive the entire gift and have to survive on a mere $2 million. Helmsley’s grandchildren alleged that Helmsley was not mentally competent when she signed the 2005 will which left the large bequest to Trouble. According to this article in the New York Post, a Manhattan judge approved an agreement to reduce Trouble’s inheritance from $12 million to $2 million. Under the new deal, $10 million of Trouble’s bequest will go to Helmsley’s large charitable foundation.

It seems only appropriate that Leona Helmsley, dubbed by some as the “Queen of Mean” would have an equally controversial animal. According to a former housekeeper, Trouble slept in Helmsley’s bed and was fed chef-prepared meals in porcelain bowls and silver trays. This same housekeeper actually sued Helmsley for nerve damage she allegedly suffered after being repeatedly bitten by the animal. Trouble’s care taker estimated Trouble’s annual expenses at $190,000 including an estimated $100,000 for the dog’s security squad (which was apparently warranted because of the alleged death threats against Trouble). Given that Trouble is already nine years old, Trouble’s trustees did not oppose the settlement, apparently believing $2 million was adequate for Trouble’s care.

June 15th is Elder Abuse Awareness Day!

scott@schomerlaw.com (Scott Schomer) — Fri, 13 Jun 2008 20:37:34 -0800

Although elder abuse was first recognized in the 1970s as a problem in the United States, it is disappointing to see that it is still not a well-know public health issue, especially considering the magnitude of the problem. According to this report prepared for Congress, during 1996 there were 500,000 incidents of elder abuse in the United States. However, this same report asserts that elder abuse claims were vastly underreported, with only 16% of the incidents being reported to law enforcement agencies during the same time period. According to one AARP advisor "people over age 60 make up only one-eighth of the U.S. population, yet they constitute one of every three scam victims."

In an effort to revise this worldwide attitude, in 2006 the United Nations declared June 15th to be World Elder Abuse Awareness day. The International Network for the Prevention of Elder Abuse has suggested wearing purple as a sign of support to prevent the problem of elder abuse. In Los Angeles, celebrities including Ed Asner, Art Linkletter, Michael Reagan, Los Angeles Police Department Police Chief William Bratton, have contributed to the film Saving our Parents which was released in April 2008.

Elder abuse is generally considered to include any knowing intentional or negligent act that results in harm to a vulnerable adult. Such harm can include but is not limited to emotional abuse, physical abuse, sexual abuse, exploitation, neglect or abandonment. Elder abuse is frequently attributed to care givers but in my estimation it is often more common within families. I have encountered numerous situations where family members attempt to misappropriate a senior’s assets for their own benefit in disregard for the senior who is no longer able to raise an adequate defense.

Another commonly recognized form of elder abuse is known as self-abuse. The typical self-abuse situation involves a senior who is no longer capable of managing his or her daily needs and, without involved family or support, the senior tolerates living in dangerous conditions. In the course of my practice, I have encountered numerous elderly individuals living in squalor simply because they were no longer able to understand their conditions or manage their affairs. Sometimes the senior’s deficiencies are physical (failing eyesight, lack of mobility), sometimes the limitations are mental (dementia, Alzheimer’s disease) and sometimes the deficiencies causing self-neglect are manifold.

So what can you do to help prevent elder abuse? I am a big fan of old fashion values: stay close to your loved ones, friends or neighbors who may vulnerable. It is always a good idea to be wary of any new person or organization who becomes involved in an elder’s life. Ask questions and speak up if you have concerns. If the concerns appear serious, call your local law enforcement agency. In Los Angeles County, we are also lucky enough to have a 24 hour Elder Abuse Hotline, (telephone (877) 4-R-SENIORS), which allows you to make confidential reports of suspected elder abuse. If the situation is not resolved to your satisfaction, it may also be useful to consider legal assistance including possibly a conservatorship for the senior in need.

Can I Avoid Probate by Placing My Child on Title to my Assets?

scott@schomerlaw.com (Scott Schomer) — Mon, 02 Jun 2008 20:34:44 -0800

In California, there are some very good reasons for avoiding the probate administration process. My three favorite reasons include (i) the cost; (ii) the time involved; and (iii) the public nature of the proceedings. For most estates, probate administration costs generally run from four to eight percent of the gross value of the estate and frequently take at least eight months to complete. To avoid these problems, some individuals engaged in what I affectionately refer to as ‘backyard’ estate planning. With respect to many assets, this involves using joint tenancy, which avoids the probate administration system (you can find a list of other probate avoidance devices here). Often I am asked whether this is a reasonable solution to avoid probate but avoid the cost of preparing an estate plan. In most circumstances, my answer to the question is a resounding “no”.

Under California law, joint tenancy includes what is referred to as the “right of survivorship” which means that when one tenant passes away, the asset transfers to the surviving tenant by operation of law. With a bank account, a surviving tenant can present a death certificate to the financial institution and remove the surviving tenant from the joint tenancy account. With real estate, the surviving tenant executes a form known as an affidavit of death of joint tenant which then places title solely in the name of the survivor. While these devices can work well with domestic partners or married couples (who are also bound by family law), they often fail when used with other parties such as children. In fact, using joint tenancy in these situations often creates more problems than it solves.

With respect to financial accounts, the decision to place another person on the account as a joint tenant grants an ownership interest in the entire account to the new joint tenant. The most obvious risk is that the new joint tenant has ownership over the entire account, and can clean it out almost immediately. While the original owner would have a legal claim against the new joint tenant under these circumstances, often you have to sue the joint tenant and find the missing assets before they will be returned (which is frequently challenging if not impossible in many cases). With respect to real estate, making such a transfer, unless accompanied by separate agreement, is frequently considered an irrevocable transfer. What this means is that if the original owner changes his or her mind about disposition, or wants to sell or refinance the property, the original owner will not be able to do so without the consent of the new tenant.

I have been involved in a number of matters where a parent who placed a child on title has received a rude awakening when he or she needs access to the assets. In many circumstances, the new tenant (i.e. the child) has asserted that they thought the transfer was a ‘gift’ and have refused to return it. In some circumstances, the original tenant has wanted to borrow money only to discover the child wants his or her “share” of the loan proceeds. In other cases, the original tenant has discovered that the property has been subject to the new tenant’s creditors.

These illustrations are just a partial list of the dangers of using joint tenancy as an estate planning device in some circumstances. Sometimes a little knowledge can be a dangerous thing; rather than participating in a transaction that could have irrevocable consequences, it is always a good idea to obtain professional help. With a little time investment, you will discover that there are other way to avoid probate that minimizes the risks and downfalls of passing property to a non-spouse/domestic partner.

The LifeLock Controversy: Is There No Protection Against Identity Theft?

scott@schomerlaw.com (Scott Schomer) — Wed, 28 May 2008 08:00:00 -0800

While elder abuse can take many forms, one method of elder abuse is identity theft. A common form of identity theft is where someone obtains your private confidential information and then uses it to obtain credit accounts. This pernicious problem was humorously illustrated in a series of television commercials from Citibank, including this one. Unfortunately, the problem of identity theft has become so prevalent that according to this article, a National Public Radio station in Madison, Wisconsin recently stopped using volunteers during its call-in pledge drive because the station can no longer obtain insurance coverage if one its volunteers were to misappropriate a contributor's credit card information.

A number of private organizations, including Citibank, have tried to remedy the identify theft problem but perhaps none with more confidence than LifeLock. In a series of nationally broadcast advertisements, LifeLock CEO Todd Davis brazenly broadcasted his name and social security number and dared anyone to steal his identity. According to this article, least 87 attempts have been made to misappropriate Mr. Davis’ identity and recently, one conniving person succeeded by convincing a pay-day lender to advance $500 based on Mr. Davis’ personal identification information. Now, customers in several states are suing claiming that LifeLock’s services don’t perform as advertised.

This recent lawsuit, however, is not the first group to be critical of LifeLock. In February 2008, the credit rating agency Experian sued LifeLock claiming, among other things, that LifeLock is overstating the effectiveness of its service. In this article, Experian points out that LifeLock’s services only help stop would-be thieves from opening new credit accounts; the service does not stop computer hacking or the wrongful use of an existing credit card (or credit card number—a problem confronted by the NPR station). Experian also correctly asserts that LifeLock’s main service, placing fraud alerts on your credit accounts, can be done by the consumer for free and claims that LifeLock is actually violating the law by pretending to make the requests on behalf of individual consumers. And this article goes even farther, discussing issues of veracity concerning one of LifeLock’s founders.

So what is a consumer to do? It is unlikely that LifeLock’s services will protect you from some of the worst forms of identity theft as described here. It is also true that many of the services LifeLock performs can be done by the consumer at no expense. But how many of us actually take the time to place fraud alerts on our accounts every 90 days? Taken in perspective, 87 failed attempts against the CEO’s personal information with only one $500 loss is not a bad record for such an obvious target. And I would hope that, if anything, the lawsuits will convince LifeLock to improve its services. If not, it seems likely that another provider—including one of the credit agencies—could provide a better version of a much needed service.

The Latest Fairy Tale: the Return of the Land Grant

scott@schomerlaw.com (Scott Schomer) — Fri, 23 May 2008 13:04:24 -0800

With the ever worsening foreclosure crisis in California, confidence artists have invoked an age-old government program—the land grant—to swindle victims out of their homes. In this article, the Los Angeles Times reported that California and federal authorities recently shut down a San Diego-based company that was allegedly convincing homeowners to pay thousands of dollars to obtain foreclosure protection via the use of a land grant. Allegedly, the victims were told that by transferring their land to the federal government it would be protected from foreclosure and would later be returned to them free and clear. Thus by using the land grant program, they could stave off the foreclosure and wipe out hundreds of thousands of dollars in debt.

If only life were so easy.

The strange thing about this latest confidence scheme is that it essentially advocates the use of a reverse land grant. Historically, a land grant is a program used by governments to reward service and encourage development in remote territories. In the United States, the government started using land grants after the American Revolutionary War to reward veterans for their service. Later, the United States used land grants to encourage the development of the transcontinental railroads. By congressional acts of 1862 and 1890, the federal government also made land grants to states to establish colleges and universities. Many well-know universities such as Rutgers University (which is the oldest land grant university) and Michigan State University (which claims to be the pioneer land grant university) were established through the land grant program.

It is hard to imagine how a land grant program would be applicable to saving an overextended homeowner from foreclosure. While the congress is debating various legislative remedies to the foreclosure crisis, none has involved the concept of the government taking back an owner’s property through a reverse land grant. As California Attorney General Jerry Brown indicated, “there hasn’t been a legitimate use of the land grant since the conclusion of the Mexican-American War”. Nevertheless, the organization was able to convince hundreds of homeowners to participate and pay fees as high as $10,000 for the privilege. As this article illustrates, seniors are often especially vulnerable to foreclosure abuse.

In 1979, California established special restrictions on so-called “foreclosure consultants” finding among other things that homeowners in foreclosure are “subject to fraud, deception, harassment, and unfair dealing ….” There are also special legal restrictions on an attorney purchasing his client’s property. Generally, these laws provide that contracts that fail to adequately protect homeowners can be voided at the victim’s election. Any homeowner facing a foreclosure would be wise to obtain objective independent advice before making any major financial decision. While these foreclosure laws can provide helpful protection, often they come too late for a homeowner who has lost his or her home to a swindler in a confidence scheme.

The Never Ending Will Contest

scott@schomerlaw.com (Scott Schomer) — Wed, 21 May 2008 13:40:12 -0800

With a narrative that was sufficiently compelling to inspire a Hollywood movie, Melvin Dummar has returned and launched yet another legal challenge designed to obtain a portion of the estate of the late Howard Hughes. Dummar’s claim to a portion of the Hughes estate rests on his tale of being a Good Samaritan when he rescued a wandering Hughes from the Nevada desert in 1967.

Dummar, at the time a Utah service station owner, claimed that he picked up Howard Hughes along a desolate desert highway approximately 150 miles north of Las Vegas, Nevada. Hughes allegedly asked Dummar to take him to the Sands Hotel in Las Vegas and during the trip, Hughes revealed his identify to Dummar. After Hughes death, a handwritten will was discovered at The Church of Jesus Christ of Latter-day Saints (“LDS”) in Salt Lake City. The new will (commonly referred to as the “Mormon Will”) was allegedly prepared in 1968 and had a number of strange discrepancies including the fact that it left money to the LDS (Hughes had never been a member), named a dismissed former employee as executor and referred to Hughes’ famous flying boat by the term “spruce goose”, a moniker Hughes allegedly despised. Most importantly for Dummar, the Mormon Will left 1/16th of Hughes’ estate to Dummar. In June 1978, after a lengthy trial, the Mormon Will was ruled a forgery by a Nevada jury and Dummar received nothing from the Hughes estate.

In early 2005, a retired FBI agent claimed to have found new evidence that Dummar’s story was true. On June 12, 2006, Dummar filed another suit in Utah against the primary beneficiary of the Hughes estate, alleging that the defendants had conspired to defraud Dummar by concealing evidence and presenting perjured testimony in the prior trial. On January 9, 2007, Dummar’s second suit was dismissed.

Almost ten years after his initial defeat, Dummar is back again this time having filed a new lawsuit in a Denver court attempting to revive his claim that some of the beneficiaries of the Hughes estate conspired to deprive him of his inheritance. Dummar, now working as a delivery man, claims to have a new witness: a former Hughes’ employee who allegedly corroborates critical details as to why Hughes would have been lost in the desert in 1967.

The Denver court is expected to rule later this year as to whether Dummar should have a new trial on the issue. In the meantime, rumor is that Hollywood producers are considering a sequel: Melvin and Howard part deux.

The Latest Service: a Virtual Safe-Deposit Box?

scott@schomerlaw.com (Scott Schomer) — Mon, 19 May 2008 13:33:53 -0800

One frequent issue that arises in both estate planning and estate administration is effective communication. Many individuals are concerned that their beneficiaries will not find their estate plan, asset accounts or important confidential information after their death. Often these individuals don’t want to share their confidential information with their beneficiaries while they are alive, but are concerned that their beneficiaries will not find the information after their death. Conversely, I have encountered numerous heirs and beneficiaries (usually administering probate estates) who are concerned that they might not have located all of the decedent’s assets or accounts.

One company, iGoodBye.com, has harnessed the power of the internet to create a novel solution to the problem of communicating confidential financial information after your death. At iGoodbye, the user creates a private account which can store copies of estate planning documents, financial accounts, passwords and other private, personal information. The user is provided with a password that will allow his or her beneficiaries to access the private information only after the users’ death (your death is verified with a death certificate). The user is given the security of knowing that all of their information is stored in one central location but accessible by their beneficiaries only after their passing. Essentially, the service appears to be a virtual safe-deposit box for your important estate documents. At this posting, iGoodBye.com service is $29.99 per year and the service can even be used without cost, if the user agrees to charge the annual cost to his or her beneficiaries following the users’ death.

While iGoodBye’s service is interesting, many of these problems can be solved with effective planning. One solution is to maintain an on-going relationship with an established financial advisor and estate planning attorney and make sure your beneficiaries have their contact information. Attorneys will usually maintain a copy of your estate planning documents and occasionally create a record of your confidential accounts and personal information. Confidential information can also be stored in a safe-deposit box or personal safe. If your beneficiaries will not rummage through your home, you can also organize all of this information in a central location. Generally, your beneficiaries don’t need your passwords, only the location of your asset accounts and critical documents. Frequently this information can be provided to the beneficiaries without revealing confidential information. Another solution is to provide the information to a trusted neutral party with instructions to share it only after your passing.

As in life, none of these solutions is perfect and there are always potential problems. But for those individuals with distant beneficiaries who are concerned about confidential information, the iGoodBye.com solution may be a good one.

Creative Scams Against Seniors Continue to Flourish

scott@schomerlaw.com (Scott Schomer) — Mon, 12 May 2008 21:11:29 -0800

Were you recently notified that you were the winner of the Canadian lottery? Or perhaps you received a secret communiqué from a former official of the Nigerian government asking for your assistance discretely moving money out of his country. Were you surprised by your luck? As discussed in a recent Los Angeles Times article, perhaps you have become a victim of bad luck.

These scams are some of the latest variants of a confidence game commonly known as the Spanish Prisoner scam, in which the victim is informed that a very wealthy individual was wrongly imprisoned under a false name in a Spanish prison. The victim is told that if he or she were willing to help the prisoner in his greatest time of need, the victim will be richly rewarded after the prisoner is released. Revealing the name of the wealthy prisoner will most likely result in potentially catastrophic consequences, however, and so the victim is forced to rely on his agent—the confidence artist. The victim then pays the con artist money which is supposed to be used to free the prisoner but instead only helps the con artist.

The recent Los Angeles Times article also included the latest variants of the age-old confidence game, including one scam where potential victims are notified that they are named beneficiaries under the last will and testament of the famed Italian tenor Luciano Pavarotti. While such a claim may sound ludicrous to many people, the writers were able to find one individual who considered the pitch legitimate; a struggling tenor and had previously met Mr. Pavarotti at a musical event. For a mere $800 transfer fee, the victim could receive his bequest under Mr. Pavarotti’s will.

The recent article also detailed some of the other pending scams including the Nigerian Letter, fraudulent charities or the foreign lottery scam. These confidence games usually involve either soliciting funds from you, or obtaining your confidential information in order to perpetuate an identity fraud using your accounts. With the exponential explosion of telecommunications equipment and services—including inexpensive telephone lines and the internet—these types of scams are proliferating.

Seniors are perfect targets for these types of crimes. Seniors often have accumulated a life-time of savings and are frequently isolated. I always encourage families to remain involved with their elderly loved ones and pay particular attention to any new friends or contacts that become involved in the senior’s life. When dealing with an unsolicited offer, common sense should dictate your actions, especially when money is involved. The reality is that if an unsolicited offer sounds too good to be true, it probably is a scam.

Do You Know Who Will Receive Your Retirement Accounts?

scott@schomerlaw.com (Scott Schomer) — Wed, 07 May 2008 18:24:36 -0800

One effective way of avoiding probate is to make use of financial accounts that have a ‘pay-on-death’ feature. This feature, if used properly, allows you to avoid probate and distribute your assets directly to your heirs or loved ones as you designate. Upon your death, the beneficiary simply presents a death certificate to the financial institution and the assets can be paid directly to the beneficiary without having to incur the costs, or experience the delays, of probate administration. But when using these convenient devices, there is always one thing you must keep in mind:

Do you know who your beneficiaries are?

In one case, a son reviewed his late father’s affairs only to discover that his father had only one substantial asset: an IRA account. When reviewing the IRA account, the son discovered for the first time that he was not named as the beneficiary. Who had his father named as his beneficiary? The father’s ex-girlfriend. Worse yet, it was an ex-girlfriend the father had not seen, or had any contact with, for approximately 15 years. It was unlikely that his father wanted to leave this money to his ex-girlfriend and exclude his son but by failing to review his beneficiary designations, this is exactly what happened.

After considerable effort to locate the ex-girlfriend, things only got worse. The son explained to the ex-girlfriend that while she was the designated beneficiary, there were still outstanding bills that needed to be paid. The son also discussed the considerable time and effort he had expended (travelling to a distant city) to handle his father’s post-death affairs and how this account was his father’s only asset. After reviewing all these issues, the son assumed that the girlfriend would do the right thing and turn the money over to the son, so he would have some legacy from his father. Despite this plea, the ex-girlfriend’s response was simple and painful: “your father always wanted me to have that money.” Unfortunately, the son had nothing in writing to demonstrate she wrong and under these circumstances, California law presumes that the ex-girlfriend was the intended beneficiary.

Do you know who your beneficiaries are? If not, contact your financial institutions and see if your beneficiary designations reflect your current wishes. With just a little time and effort, you can save your beneficiaries substantial heartache.

Even When Done Correctly, Managing Finances During Incompetency Can be Challenging

scott@schomerlaw.com (Scott Schomer) — Tue, 06 May 2008 14:30:03 -0800

A durable power-of-attorney is designed to allow someone to manage aspects of your life in the event you become incapacitated. For instance, imagine a situation where you had a stroke and could no longer communicate. Who would pay your bills? Who would deal with your insurance? What if you needed to access your IRA account to pay for in-home care? These are the problems that a durable power-of-attorney is designed to address. A power-of-attorney designates an agent (or attorney-in-fact) to make these decisions and manage your life during incapacity. Two recent articles published in the Los Angeles Times, however, illustrate the occasional challenges with powers-of-attorney facing even those who thought they planned properly.

The first article discussed the challenges faced by one couple who, after hiring an attorney to prepare a durable power-of-attorney, presented the document to Boston-based Fidelity Investments, where the couple held their retirement accounts. Despite the fact that the power-of-attorney had been prepared by an attorney, Fidelity initially advised the couple that their retirement plan didn’t have “a power-of-attorney provision.” In other words, Fidelity would not honor the power-of-attorney. Fortunately, Fidelity is reviewing its policy and anticipates being able to accept permanent versions of powers-of-attorney in the next few months.

Another article illustrates the problems allegedly faced when a son, David, went to access his father’s IRA accounts to pay for his father’s 24 hour care. According to David, he was required to make nine trips to Bank of America before bank officials allowed David to access his father’s IRA accounts to pay for his care. Some of the delays encountered by David included the bank’s demand to see the original document, the bank refusing to allow David to act alone because he was named as a co-attorney-in-fact, and even a legal interpretation by the bank’s counsel that the power-of-attorney did not cover the IRA accounts.

While these situations are frustrating, it is important to realize that the alternative—not planning—is many more times more frustrating and expensive. Using David’s situation as an example, without a power-of-attorney no bank would allow David to access to his father’s accounts. In California, David would be forced to apply to the court to obtain a conservatorship over his father. The conservatorship process can take weeks and requires that the court appoint counsel for David’s father. Between court costs, attorneys, delays and other problems associated with conservatorships, David would most likely have spent several thousands of dollars simply to obtain access to his father’s money to pay for the care. Such expenses may have made the difference between allowing David’s father to remain in his home or transferring to a facility.

When planning for incapacity, a power-of-attorney is a critical document. As these stories illustrate, however, it is frequently a good idea to check with your financial institutions regarding their policies concerning powers-of-attorney. By insuring that you are in compliance with the institution’s policies before you become incompetent, you may save your loved ones a world of frustration.

New Legislation Seeks to Protect Elders from Pseudo Professional Designations

scott@schomerlaw.com (Scott Schomer) — Sun, 04 May 2008 14:17:50 -0800

One challenge facing most consumers is finding trustworthy professionals to help manage their retirement finances. In the last few years, dozens of professional designations have been created, some of which purport to offer special expertise designed specifically for seniors. As described in a recent article, often these new designations are nothing more than a marketing device intended to give seniors a false sense of security.

One such example was the designation “Certified Elder Planning Specialist, a designation that was awarded after completing approximately 100 hours through a self-study course provided by the Institute of Elder Planning. In September 2002, the Massachusetts Securities Division filed a complaint against the Institute’s founder alleging, among other things, that the respondents created “specious titles such as ‘Certified Elder Planning Specialists’ to mislead the elderly and disguise the fact that the associates were insurance salesman.” According to Massachusetts securities officials, the organization has closed its doors and the designation is not long in use. Unfortunately, these kind of deceptive practices negatively impact the entire investment advisory industry.

The Senior Investor Protection Act of 2008 would, among other things, provide additional resources that will monitor the credentials of people claiming to be funding to states to monitor these credentials and prosecute advisors who use fraudulent or misleading professional designations. This legislation has been supported by non-profit organizations such as the Torrance based KEEP-SAFE coalition.

The reality is that seniors hold a vast portion of the wealth in this country and will continue to present fertile fields for the unscrupulous. When in need of professional assistance, it is always best to conduct your own research and obtain recommendations. Never be afraid to ask for a second opinion or independent advice.

The Importance of Minimizing Surprises

scott@schomerlaw.com (Scott Schomer) — Fri, 02 May 2008 11:31:33 -0800

One of the most critical documents in any estate plan is a health care directive or durable power of attorney. A durable power of attorney allows for the orderly management of your health care when you are unable to speak for yourself. Have you prepared a living will, health care directive or durable power of attorney for medical care?

If you have prepared one or more of these documents, the next issue is: have you shared this document with your loved ones? Do your loved ones know who is empowered to make decisions about your care if you can’t speak for yourself? Do your loved ones have copies of these documents? Do your love ones know where to find these documents?

Experts tell us that some of the most stressful events in life include death of a spouse, death of a close family member and a family member suffering from a major illness. This recent Wall Street Journal article illustrates the importance of being open with your loved ones about your end-of-life decisions. The last thing you want during this critical time is for your family members to fight with each other, or your doctors, when the focus should be caring for you during your time of need.

When considering who to place in charge of your care (nominating an agent or ‘attorney-in-fact), it is easy to find yourself with difficult choices about who to put in charge of your care. For instance, if you have two children but one lives far away, does it make sense to designate the local child as your primary agent? Will you offend the other child if you don’t designate him as a co-agent? Will co-agents be able to agree on the proper course of your care? As Ms. Cullen’s candid story aptly illustrates, failing to discuss these matters with your loved ones can easily result in hurt feelings, bruised egos or even worse, brutal litigation. It is frequently the better practice to keep your loved ones informed of your ultimate decisions—prior to your incapacity—so as to minimize the emotional impact of unwanted surprises during the time you need their help the most.

Financial Elder Abuse Occurs Even in Famous Families.

scott@schomerlaw.com (Scott Schomer) — Thu, 01 May 2008 18:49:33 -0800

A recent story illustrates that financial elder abuse impacts a wide spectrum of the population and frequently occurs even within the best families. According to this article, Chase Caro has admitted that he stole $310,000 from his grandparents. Chase Caro ended up liquidating three CD’s without their permission, set up a joint trust fund in his name and theirs, and then began to withdraw money for his personal use. Chase Caro is the son of one of my favorite authors, Pulitzer-prize winning biographer Robert Caro.

Chase Caro pleaded guilty to Grand Larceny and has been sentenced to 2.5 - 7.5 years in prison. Chase Caro had previously pleaded guilty to stealing $470,000 from another client, who was also elderly (and trusting). Caro has agreed to pay restitution of 1.1 million dollars which also includes funds from a third theft. An attorney, Chase Caro was also recently disbarred.

The Caros’ tragic story illustrates the importance of maintaining a healthy skepticism of everyone who becomes involved in your financial affairs, even your family members. It is not unusual for people to afford professionals—such as attorneys, financial advisors—a high level of trust simply because of their training or credentials. When it comes to your financial affairs, never be afraid to ask the hard questions or for a second opinion.

Ray Charles' Management Problems Continue After his Death

scott@schomerlaw.com (Scott Schomer) — Tue, 22 Apr 2008 19:25:15 -0800

Children of legendary recording artist Ray Charles are in a battle over the management of the late singer’s assets. The estate’s management and family member’s wishes have clashed according to a recent article published in the Los Angeles Times. The issue stems from the children’s’ wishes to handle the marketing of their father’s name and image, and assert a greater voice in the way his charitable foundation is run.

In 2002, Charles gathered his children and told them that the bulk of his assets would be left to the foundation, but that $500,000 would be placed in trusts for each of them. Charles also indicated that there might be more for them “down the line,” which led some of his children to believe that they would own the right to profit from licensing his name and likeness. In 1992, prior to his passing, Charles established a partnership with two of his children to market apparel and other items bearing his likeness. Charles’ estate plan, however, is apparently silent with respect to the rights associated with the use of his image, rights that his children contend he pledged to them.

The focus of the family’s complaints is Joe Adams, Charles’ long-time manager who started working for the singer in the early ‘60’s. Adams has served as the head of Ray Charles Enterprises, director of Charles’ foundation and also trustee of the children’s trusts. Adams’ stewardship of Charles’ foundation had also been challenged by Deputy Attorney General Wendi A. Horwitz, after learning that Adams was serving as chairman, president and treasurer of the foundation, which is in violation of state law.

During Charles’ career, Adams was seen by many as wielding too much control over the star. Now it appears that Adams may have too much unchallenged power over the late musician’s estate. Despite his nickname—the Genius—it appears that Charles’ management problems have continued following his demise.