Estate Planning Secrets Every Family Must Know!

Video Transcript

Ray Hrdlicka – Host – Attorneys.Media

Hi, this is Ray Hrdlicka, host of Attorneys.Media – Legal Commentary Interview.  Today we’re sitting with Andrew Dósa, a estate planning attorney in Tacoma, Washington and Alameda County, California.

And today we’re going to talk about something that everybody should think about, not everybody does.  And that is, of course, estate planning.

But let me set the stage here.

The government in Philadelphia recently went into low-income areas and said, and they did this to 1,000 houses.  That’s just amazing to me.  And said, we are going to help you create an estate plan to ensure that the home that you own goes to your heirs and who you want it.

The article talks about, hey, it’s going to avoid arguing between relatives, between the children.  And it made a lot of sense.

But I want to get away from a single, whatchamacallit, income level, and I want to talk about estate planning in general.  More importantly, Andrew, I want to ask you, what are the two, because probably there’s more than two, but what are the two greatest reasons why everyone should take the time to do estate planning?

Andrew Dósa – Estate Planning Attorney – Tacoma WA and Oakland, CA

Well, good afternoon, Ray.  Thank you for having me.  So, I think there are two primary reasons.

One is the expense that happens, the expense that’s borne by those who are the heirs or the family of an individual who does not have an estate plan.

And the second is the amount of confusion or complication that comes to a family if there is no estate plan.

So, let’s talk about the second one first.  And that is, if there is an estate that’s substantial enough that has to have a probate, then you have to hire an attorney or you have to figure out how to fill out a form and become the petitioner, meet the court’s requirements.

And if you don’t, then you have to hire an attorney.  That becomes expensive.  The attorney will get fees based on the value or the total extent of the estate.  But when you avoid the confusion or the complication of a court hearing, one, the confusion or complication that comes with all of the financial affairs being made public, because it’s a public proceeding, the court has to find out what’s going on.  So all the private information that you’d like to keep quiet is made public.

Now, for most of us, we don’t have much to really worry about it, I don’t know why anyone needs to know what’s in my bank account, nor do you have any desire for an unknown person to have that information.  So that’s another confusion.

And then there’s just a whole lot of time that is expended in trying to figure out how to get things done if there is no estate plan.

So you just take those three things.  And I will say, you mentioned it earlier too, there’s a fourth thing, and that is there’s a chance for greater conflict in a family if there is no estate plan.  If the estate plan sets in place who gets what, who’s the responsible party or parties that will manage things or affairs afterwards, then it’s a lot harder to make an argument.

Because usually if the estate plan is done by an attorney, it takes a lot to overcome the testimony of an attorney who’s earnest and wanting to simply provide services for his or her client.  And when there’s a challenge to the trust, it has, you know, you’re overcoming that barrier of a competent professional, putting things in order and expressing clearly that the person who’s passed, these were the goals of that person, their plan, their purpose, and then everything gets managed a whole lot better with that.

And then the first thing I mentioned is the expense.  So if you were able to do a trust, for example, if that made sense for you, wouldn’t have to do probate.  Probate figure between 5 to 10% of the total amount of the estate can get lost in fees and the fees would be fees that an attorney would charge for doing the work and fees that the representative of the estate would be able to charge.  And they’re all set by statute, but still it becomes expensive.

And then there are the costs of probate too.  It may not be extensive, but there might be occasions for a deposition or other stuff like that, other component parts of a legal proceeding, and then the expense is borne by those beneficiaries.

And look at it this way, if you had $1,000,000 estate and it was a 5% cost to have a probate and you had two children, it’s not going to be the end of the world that your children are going to be without the 25,000 of those costs each.  But why would you want to have that go to a lawyer or someone else?  It’s just better that it goes to the beneficiaries.

Ray Hrdlicka – Host – Attorneys.Media

Well, you mentioned something.  about the timing of the length of a probate versus the ease of estate planning.  And I want to bring up a realistic example.  We know of a friend of ours whose parents died, excuse me, whose father died, and the mother is elderly too, and they have to go through a 18-month process that’s what they estimate for the probate but in the meantime the mother needs care and so nothing is coming out of the father they’re divorced and so nothing is coming out of the Father’s estate to take care of the daily medical needs of the mom.  And because they were married for a number of years and they got divorced, but they still remain friends.  And so he had her in a will getting a huge portion of his estate.  But it’s not going to happen for 18 months.  And so now the kids are scrambling trying to figure out what do we do for a year and a half?

Andrew Dósa – Estate Planning Attorney – Tacoma WA and Oakland, CA

Right.  Well, I’ll just give you one example.  And it’s not quite the same as a probate.  It’s just a single provision or single petition that you’d file in California.  It’s called a Hegstadt Petition.  There’s something like this in Washington as well.  If there is a trust that identifies an asset as a trust, but there’s a failure to change the title of that property, like real estate, you have to file a petition, this Hegstad petition named after the Hegstad case, and show the court that this asset was intended to be in the trust because it’s identified in the trust, right?

And it’s even possible that if there’s an extensive gap in time between the creation of the trust and this failure to identify the title.  It is possible the court could interpret that there was a change in the intent of the settler, the person who created the trust, so that the trust would not include the property.

That would be the catastrophe that you would want to avoid.  It’s not a major catastrophe.  It’s not like someone dying.  But if that house now has to have this Hegstadt petition, and so I mentioned that because I had to do a Hegstadt petition.  And because there was a financial urgency in that situation, I was able to get it on shortened notice, a minimum of 30 days in California, but I had to file this particular ex parte application to shorten time.

If I hadn’t done that, the petition would have been filed in May, the hearing would have been in October.  And that’s just for one matter where it was pretty obvious what the intent of the settler was.  So if it’s a probate, you figure you file your petition, you’re going to get a hearing within 60, 90 days.  Statute says sooner, but sometimes delays come up or someone’s not ready or they need to hire an attorney.  They want to delay, they want to fight it a little bit, then there might be a delay.  If it’s a three-month process, a four-month process, then the person has to manage all the assets.  They have to collect all the bills.  They have to prove that they’re the one responsible.  Bills get paid.  Distributions usually are not going to be made until the end.  And if there’s a child that has a need, whether it’s a minor or just a young adult in college, and there’s not any income coming in because the person’s just a student.

And it takes, in California, I would just say in California, maybe nine months, you could turn things around really quickly if things went really well.  If it’s real estate, you’re probably expecting a year to a year and a half.

And when I estimate for clients how long it takes, they’re aghast, and then when it takes longer, they’re going, Gee, I wish I had known.

Ray Hrdlicka – Host – Attorneys.Media

Exactly.  Well, thank you.  Obviously, we’ll have you back on to talk about estate planning because it’s never going to go away and people should really consider it well before it’s too late in their life.  So thank you for being here.

Andrew Dósa – Estate Planning Attorney – Tacoma WA and Oakland, CA

My pleasure.  Thank you, Ray.

Relevant Authoritative Links

• Secrets of Estate Planning Every Family Must Know Codi M Dada Law
• Top Estate Planning Mistakes Families Make And How To Avoid Them Forbes
• Top Seven Estate Planning Strategies to Guard Family Harmony Cunningham Legal
• Estate Planning for Young Families Protecting Your Children’s Future SSW Law
• Estate Planning Checklist 13 Smart Moves Kiplinger