Reminder: Trusts 101 September 19th

On Mondy, September 19, 2011 I will be speaking on drafting revocable trusts and ethical issues for estate planning attorneys at the Oakland Marriot. In addition, Veronica Cerruti will be giving an overview of trusts, and will talk about irrevocable life insurance trusts. Daniel Newbold will speak on using trusts for tax reduction, and grantor trusts. Wrapping it all up, Christing Beraldo will speak on trusts for the disabled. It is part of the all-day seminar "Trusts 101" put on by National Business Institute. For more information, click here.





Hope to see you there!

Spoiling for a Fight: Estate Planning and the Family Dynamic

Estate planning and litigation help each other out. As an attorney, having experience in estate planning will make you a better litigator because, among other things, it helps you understand and spot the issues. There is little doubt (at least in my mind) that being a litigator makes you a better estate planner because it gives you a front row seat to what doesn't work, and why.

In Teselle v. McLoughlin, the estate plan was big and complex. It also was amended. One of the amendments may have removed property from the trust, or maybe it didn't. When the settlor died, the successor trustee distributed the property that may or may not have been removed from the trust as though it was still in the trust. Litigation ensued.

Complaints were filed. Demurrers were filed. Amended complaints were filed. More demurrers were filed. Finally, a motion for summary judgment was filed (after over two years of litigation). The motion was granted (in part because the plaintiff was one day late in filing their opposition!). An appeal was filed. The appeals court held that the summary judgment should not have been granted, so back to the trial court we go.

Most of the controversy is from the language surrounding the piece of property. The original trust called for the property in one brother's trust to be exchanged with property in the other brother's trust on the death of either brother. The one brother amended his trust, and removed a piece of property from the list to be exchanged with the other brother's property. When the first brother died, the trustee exchanged the removed property anyway, and then sued to get it back when they concluded that the property should not have been exchanged. The defendant argued that removing the property from the list in the trust did not mean the property was no longer in the trust and subject to the exchange agreement.

During the course of the litigation, the drafting attorney signed a declaration that the property was removed in the amendment because the brother intended to sell it. It was never sold. The attorney declared that the brother never intended to remove the property from the exchange agreement as long as he owned it.

Could clearer drafting have avoided this litigation? Maybe. The parties did seem very committed to fighting with each other, and there were (many) other issues in the lawsuit, but communicating the intent of the settlor is the most important job of an estate planner. Part of that is looking for the potential red flags of future litigation. Honestly, if the family is not getting along, it may not matter how carefully the plan is drafted. But it's better to know in advance because it may help the attorney counsel the client against a gift that may cause conflict.

Back with More Trouble from the Astors

Yes, yes, it's like ducks in a barrell, but the Astors have been so good to the world of estate planning and litigation that I feel almost duty-bound to report.

The N.Y. Times today had this article on the similarities between the recent fighting over Brooke Astor's will, and the fight nearly 50 years ago over her husband Vincent's will. Vincent Astor's half brother, John Jacob Astor VI, was left out of Vincent's will, so he contested it. John VI argued that Vincent was unduly influenced to change his will, which Vincent had done 26 times. Allegations of drunkenness, lack of mental capacity, and other sordid behavior flew freely. In the end, John VI, who was born to John Jacob Astor IV's second wife four months after he died in the Titanic, settled with Vincent's estate for $250,000. Vincent's estate was worth hundreds of millions of dollars, so the settlement was, really, "go away" money. In fact, Brooke Astor's long time attorney Louis Auchincloss claimed that the $250,000 was less than the cost of the attorney's fees if the matter had gone to trial.

Two-hundred fify thousand dollars in attorney's fees? In 1959!? The very rich are different from you and me.

More Ammo for Estate Planners: Estate of Schellenbarger

In California, if you die without an estate plan (or "intestate" in legal jargon), California law determines who gets what, no matter how unfair it may be. That's what the Court of Appeals for the Sixth Appellate District (Los Angeles) has held in Estate of Schellenbarger.

Mom and Dad were married briefly in the early 1960s. They had a daughter Michele. In 1962, when Mom was pregnant with their son Lesley, Dad left and moved to Michigan. Lesley was born in 1963. Mom and Dad got divorced in 1964. Dad never saw his son Lesley.

Lesley died intestate in 2004. He had no wife, domestic partner, children, or issue of deceased children. Under California law, his estate would go to his parents if living. The court appointed Mom administrator of Lesley's estate. She also petitioned the court to deny Dad from taking any of Lesley's estate as an intestate heir. The trial court denied the peitition, and the court of appeal affirmed. "'[C]an a bad guy luck into an inheritance, and is there an equitable way to avoid it?' [the trial court] answered the second question with a 'no.'" The court of appeals observed that there is no provision in the intestate succession law to deny a parent from inheriting because they were not present as a parent. "We accordingly reject the argument that the failure to pay child support or the lack of a meaningful parent-child relationship affects Clifford's rights as an intestate heir. If that were the rule, it would rewrite the laws of succession."

Estate planning attorneys often talk about how you lose control over your estate if you do not have an estate plan. Here it is in black and white. The only way to avoid your estate from falling into the wrong hands is to have an estate plan, whether it's a will or a trust.

And don't think you can put it off because you're relatively young. Lesley died at age 41. A major reason for having an estate plan is because you cannot plan with any accuracy when you might die.

So, if you don't have an estate plan, or if you do have a plan that's out of date, make a resolution to take care of it in 2009.

The Future of Same Sex Couple Planning (married or not)

Yesterday, California voters passed Proposition 8, which amends the California Constitution to limit marriage to a union between a man and a woman. What does this mean going forward? Here are some observations:

All Previous Same-Sex Marriages Are Still Valid

All same-sex weddings performed between the California Supreme Court's decision in In re Marriage Cases (2008) 43 Cal. 4th 757, on May 15, 2008, and midnight, November 3, 2008 will remain valid. California Attorney General Jerry Brown said yesterday that, because Proposition 8 was not retroactive, it will not apply to same-sex couples who got married in California before Election Day. Attorney General Brown also said that the State of California would defend the validity of the marriages if they are challenged.

Estate Planning is Unchanged

As I have previously posted, most estate planning tools are developed to deal with federal law, particularly federal tax law. The federal Defense of Marriage Act (or DOMA, 1 USC sec. 7) was passed by Congress in 1996 and essentially prohibits the federal government from recognizing same-sex marriage. This means that even legally married same-sex couples cannot take advantage of federal tax laws including unlimited tax-free transfers between spouses, joint filing of tax returns, etc.

From an estate planning prospective, this means that, legal same sex marriage or not, special estate planning is needed for same-sex couples to get around the restrictions of DOMA.

Registered Domestic Partnerships are Unaffected

The text of the amendment, which is only one sentence long, refers only to marriage. Same-sex couples can still register as domestic partners in California. Under California law, registered domestic partners are given all the same rights and duties (including community property and California tax filing) as married couples.

Conclusion

Legally, at least, life goes on pretty much as it did before. Symbolically, it's quite a different story.

Keep Those Beneficiary Designations Updated!

I have been doing some research on Federal preemption of California community property law by ERISA. If you are still awake after reading that, you'll love what's next:

In Emard v. Hughes Aircraft the Federal Ninth Circuit Court of Appeals held that ERISA law does not preempt California community property law. While that might not move you to dance in the streets with joy, consider the facts of the case. Wife married Husband 1 in 1975 and named him as the beneficiary of the life insurance policy she received from her job at Hughes Aircraft in 1981. Wife and Husband 1 divorced in 1985. Wife then married Husband 2 in 1986. She never changed her beneficiary designation even though she purchased additional insurance through Hughes while she was married to Husband 2 (that means Husband 1 was the named beneficiary on the new policy as well). Wife died in 1995 without an estate plan. Husband 2 sued Husband 1, among others, to get the benefits of the life insurance policy she purchased while married to Husband 2.

This case is significant not because of the issue of federal ERISA preemption, but because it shows what a mess can be created if you do not keep your beneficiary designations current. Think of how much in attorneys fees were generated in suing for the benefits, losing, and then appealing.

Remember: you should review your designations every year, and certainly when you get married, divorced, widowed, or when you have children. This is probably not the first thing on your mind when these events occur, but the consequences of ignoring it can be pretty serious.

My Schedule for the Week of Nov. 3

Starting today, I will be posting about conferences and seminars I will be attending or presenting. Here's my schedule for the week of November 3 through 8:

Nov. 4 - Bernstein Private Wealth Symposium
Hotel Nikko, San Francisco 8:30 - 1:30. You can read more about it here. The Bernstein symposium will focus on the roots of the current financial mess, and the potential for opportunities. Since much of estate planning is about preserving wealth for future generations, this should be informative.

Nov. 6 through 8 - State Bar of California Taxation Section Annual Meeting
Grand Hyatt, San Francisco. This is a three day event covering all manner of topics related to taxation. I will be attending seminars on taxation related to estate planning, wealth transfer and other trust and estate related issues.

These two conferences should provide a host of topics for future posts. Stay tuned!

Death, Divorce and the Surviving Spouse

Recent case law is a trove of potential blog topics. Estate of McDaniel (2008) 161 Cal.App.4th 458 (if you're keeping score) addressed the intersection of death and divorce. The court held that the wife was not a "surviving spouse" where the husband died after the two had instituted divorce proceedings, divided their property pursuant to a stipulated judgment, but where the final termination of the marriage was not yet in effect.

Husband and wife entered into a stipulated judgment in July 2005 dividing their property and dissolving their marriage, with the final termination to become effective in October 2005. In the meantime, the couple tried to reconcile and signed, but did not file, a dismissal of the dissolution action. Husband died in a motorcycle accident in September 2005.

The court held that because the couple had separated their community property, confirmed their separate property, and accounted for and waived their marital property rights, the wife was not entitled to inherit husband's estate because she was not a surviving spouse pursuant to probate code section 78.

Estate planning is geared toward expecting the unexpected. That extends to estate planning's intersection with family law. Here, had the couple filed the dismissal of the divorce before husband's untimely death, the court would likely have held that wife was entitled to inherit the estate. As an attorney, this is obvious, but I'm sure that husband and wife's priorities were a little different.

Gifting with Depressed Asset Values

The Wall Street Journal strikes again. In October 18's Money Matters column, Anne Tergesen writes about taking advantage of depressed asset prices and low interest rates to make gifts during your lifetime. This would take the assets out of your estate, and if done properly allow you to transfer the assets tax free.

Among other things, Ms. Tergesen writes that a transferring a depressed asset, such as shares of stock, to a family member could be a benefit when the asset price rebounds. The methods include Grantor Retained Annuity Trusts (GRATs) and Charitable Lead Annuity Trusts (CLATS). Read the column to get a brief overview of what these instruments are, and then call an attorney for more information.

Obama and McCain on Estate Taxes

Yesterday was the last debate between Barack Obama and John McCain before the election. Although they did not tread much new ground in their comments, one area that was covered (at least a little bit) was taxes.

And speaking of taxes, what are the candidates positions on the estate tax? As I posted previously, Obama favors freezing the estate tax at the 2009 level ($3.5 million exemption, 45% rate), whereas McCain's plan is for a $5 million exemption and a 15% rate, which matches the capital gains tax rate.

A major issue, on which both candidates seem to agree is portability. Basically, it means that married couples could use their spouse's exemption in their estate. This was reported on in yesterday's Wall Street Journal. Here's how it would work: Currently, each spouse's estate gets an exemption (for 2008 it is $2 million, increasing to $3.5 million in 2009) before the estate tax is assessed. When one spouse dies, and they leave their estate to the surviving spouse, it passes free of taxes (note: this is for opposite-sex spouses only at the federal level, courtesy the Federal Defense of Marriage Act.) to the surviving spouse. The surviving spouse, however, only gets to use their exemption. For example, if Husband dies and leaves his $2 million estate to Wife, and Wife has an estate of her own of $2 million, she will now have an estate of $4 million, but currently only a $2 million exemption. If Wife were to die this year, she would have estate tax exposure on the $2 million she inherited from her Husband. With portability, she could use her husband's $2 million exemption and avoid estate tax exposure. This would make estate planning somewhat less complex for opposite-sex married couples.

The primary purpose of estate planning should not be tax avoidance, but in reality, it plays an major role. Even with portability, there are many non-tax reasons for trusts of various complexity. That's a post for another time.

Estate Planning During Economic Catastrophe

I'm not an alarmist, but like you, loyal readers, I'm a little freaked by all the economic news. On the TV last night I watched esteemed economics professors using phrases like "classic bank run." And this was on News Hour on PBS!

So, what does this have to do with estate planning? Well, during times like this, you might be inclined to put your estate plan on the back burner. Don't. Here's why: your need for an estate plan doesn't go away because of economic uncertainty. If you don't have a plan, you should still get one. If you do have a plan that is out of date, you should still get it updated.

The fact is that estate plans can be expensive, and during times like these, you probably want to hang on to as much cash as you can for security. Here are some tips for keeping as much of that cash as possible, while still getting a plan in place:

Get a Will Instead of a Trust

Estate planning attorneys like to recommend trusts because they are more flexible than wills, they avoid probate (which can be expensive, time consuming, and is a public court record), and they can be set up to assist you if you become incapacitated. Because they can do so much more than a will, they are much more complicated documents. Because they are much more complicated documents, they are more expensive to prepare. If you want an estate plan, but cannot afford a living trust, a will might do for now. Let's look at the following scenario:

A married couple in their late 30s with two children under the age of 5. They own their own home worth about $550,000 (titled as community property), each have about $100,000 in separate 410(k) plans from current and previous employers, and each have $500,000 life insurance policies with 30-year terms naming the other as beneficiaries. They also have about $35,000 in checking and savings accounts. All of their assets are in California and are community property.

In a perfect world, an estate planner would recommend a living trust that is split into two trusts on the death of the first spouse (one for the surviving spouse, and another funded with the deceased spouse's estate that bypasses the surviving spouse to ensure something for the children), and trust for the children that will pay the money outright to them when they turn 25 or graduate from college. Such a plan would avoid probate, would ensure that there is some money to be inherited by the children when the surviving spouse dies, and would ensure that they children don't get the money before they are ready to handle it. In the world of living trusts, this is a more simple plan, but it is still a pretty complex document. It can also be very expensive to prepare.

Can you achieve the same result with a will? Not really, but you can come close. With the wills, you can create a trust with your estate, but you cannot split the estate into two trusts on the death of the first spouse. Because the assets are all community property each spouse's estate is half of each asset. That becomes tough to split when it is not held in cash (like the house). Although each spouse could leave their estate to their children in trust (rather than to each other), it would likely result in the liquidating of the estate assets in order to properly fund the trust. Since the surviving spouse would probably want to stay in the house, each spouse should give their estate to the other spouse. The house would automatically transfer to the surviving spouse because it is titled as community property. The surviving spouse would receive the insurance proceeds and 401(k) as beneficiary.

Their might not necessarily be a probate on the death of the first spouse. Assets held jointly (like the house) do not go through probate. Assets with beneficiary designations (like the life insurance and the 401(k)s) also don't go through probate. If a person's probate estate is less than $100,000, then probate can be avoided. Here, the actual assets subject to probate are less than $100,000, so probate can be avoided on the death of the first spouse. (The surviving spouse will probably not be able to avoid probate because the house will no longer be held jointly, and the proceeds from the life insurance will be held by the surviving spouse alone.)

To keep the will-based plan as simple as possible, they could leave their estates to each other, and if their spouse does not survive them to their children in a California Uniform Transfers to Minors Act (CUTMA) account. This holds the money in an account, and distributes the money to them outright when they reach an age between 18 and 25. The will can also name guardians for their children while they are still minors. They can execute durable powers of attorney for financial decisions in the event they become incapacitated, and advance health care directives for their medical decisions.

This is much more simple, and less expensive, to prepare than a living trust. It has some drawbacks, but it is far better than no plan at all.

If you are considering an estate plan, but are uncomfortable with the expense of getting a living trust, a will may be a good alternative. Once the ecomony picks up, and you feel better about spending the money on your estate plan, it can always be amended to include a trust.

Don't let economic uncertainty keep you from putting together that you know you should have.

Witness Requirement for California Wills relaxed

Wills are relics of an ancient era, and the laws surrounding them are often incompatible with our modern world, and sometimes internally inconsistent. For example, if you print out your will from a computer or pre-printed form, it must be signed by you and two other people, who either saw you sign the will or can acknowledge your signature, and who know that the document they are signing is your will. You can also handwrite your own will. If you do, then you don't need anyone to witness your signature. Also, if you execute a living trust, your signature doesn't necessarily need to be witnessed by anyone in order be valid. Why is the law so much more strict for pre-printed wills?

The State of California recently took steps to make my rhetorical question moot. On July 1, 2008 Governor Schwarzenegger (I am never going to get used to that) signed into law a revision of Probate Code section 6110 relxing the formal witnessing requirements of a pre-printed will. In the latest issue of the California Trust and Estates Quarterly, published by the State Bar of California's Trust and Estates section, Silvio Reggiardo III writes about the changes. Basically, a pre-printed will no longer has to be signed by two witnesses in order to be valid, if the person trying to enforce the will (usually the executor) can show by clear and convincing evidence that the person who wrote the will intended that the document be their will despite the lack of witness signatures.

Here's how it would work: Joe prints out a will using a pre-printed will drafting program. He signs it, but no one signs the will as a witnesses, even though two if his friends saw him sign the will. Joe dies, and the executor of the will submits the will to the court for probate. The executor presents the evidence from the two friends who saw Joe sign the will, and there is no evidence of any other document that was intended to act as Joe's will. It is up to the judge to determine whether this meets the "clear and convincing evidence" standard, which is greater than the "preponderance of the evidence" standard used in civil courts, but less than the "beyond a shadow of a doubt" standard in criminal courts. If the judge decides that the evidentiary standard is not met, then the will is not valid, and Joe's estate is distributed per California law applying to people who die without a will.

While this change in the law helps modernize will execution standards, it is still more onerous than the standard for executing a trust. This is yet another reason why a living trust is superior to a will. Trusts are much more flexible, and are less likely to be invalidated on arcane technical grounds.

Ambiguity in Charitable Gifts

A gift in a will setting up a charitable trust is valid, even if the gift does not specify any particular charity or class of charitable recipient. In Estate of Clementi, The Fourth District Court of Appeals upheld an Orange County Superior Court ruling that allowed the following language from a will:

"I give the balance of my assets to a charitable foundation or trust in my
name to be run by Richard Weisz. If Richard Weisz is not alive when I die, then I
appoint his son, Frank Weisz[,] to run my charitable foundation or trust."

The court held that the general policy in California is that charitable gifts are highly favored and that a charitable gift in a will must be liberally construed to uphold its validity.

While this policy is admirable, it can create problems for the trustee who then must administer the trust with no guidance as to how to direct the funds. This is yet another example of how an estate plan must be carefully drafted in order to make sure the wishes of the client are carried out. Sometimes a person may have a charitable intent, but has no real idea who to give their estate to. At those times, the estate planning attorney should ask a lot of questions to try to get an idea of what kinds of charitable organizations may fit with the client's charitable impulse. Are there any friends or loved ones with a medical condition that they would like to donate money to? Is there a specific group of people who the client would like to help (seniors, orphans, veterans).

A crucial part of estat planning is for the attorney to ask questions and listen carefully to the client. That is the key to drafting a plan that is clear to all involved.

CA Widow Cannot Use Husband's Frozen Sperm

The California Court of Appeal for the Third Appellate District (Sacramento) today held that a widow cannot obtain the frozen sperm of her husband, who requested that the sperm be destroyed upon his death.

Technically, the court upheld the probate court's denial of the widow's motion for preliminary distribution of the frozen sperm.

Iris and Joseph Kievernagel contracted with an IVF clinic to help Iris have a baby. Joseph did not want children, but agreed to the IVF because Iris did want them, and he was worried that Iris would divorce him if he did not agree. In completing the paperwork for the IVF clinic, Joseph signed a document entitled the "IVF Back-Up Sperm Storage and Consent Agreement." The Agreement stated that the sperm sample was Joseph's sole and separate property, and that he had two options for the disposition of the sample upon his death or incapacity: donation to his wife or disposal. The box for disposal was checked. The Agreement was filled out by Iris, and signed by Joseph.

After Joseph died in a helicopter crash, Iris was appointed Administrator of his estate. She filed a petition for preliminary distribution of the sample. The court denied the petition, citing that the Agreement indicated Joseph's intent that sample be destroyed, and noting that there was no contrary evidence of Joseph's intent.

The Court of Appeals upheld the trial court's ruling. The court noted that "gametic material," with its potential to produce life, is a unique type of property that is not governed by the general laws relating to gifts of personal property or transfer of personal property upon death. It also held that Joseph's "right of procerative autonomy" allowed him to control the disposition of his sperm, and that since this was not a frozen embryo, Iris' right to procreative autonomy was not implicated. The court noted that if Iris could only become pregnant with Joseph's sperm, then her rights would be implicated, but that this was not the case.

The court punted on the issue of contract law. Throughout the decision, the court used contract law language, but in the end it based its decision on the intent of Joseph. The court did note a French court decision holding that contract law did not apply to gametic materials.

The court concluded that the intent of the donor controls the disposition of sperm on the donor's death. What if Joseph had a will or a trust that stated that Iris was to receive the sample upon his death? Presumably, the court would see this as evidence of changed intent. As practitioners, we must make sure that the intent of estate planning client is being carried out, and that the estate planning documents don't contradict or conflict with other documents.

You can read the full decision here.

NY Times Article on "Learning to Share"

Earlier this week, I attended a workshop on mediating estate plan disputes. One of the biggest topics of discussion was how involved the heirs or beneficiaries should be in the preparation of an estate plan. Opinions varied widely, but most agreed that the more likely it was that a dispute would arise once the plan went into affect (i.e. when the testator died), the more important it was that the heirs and beneficiaries be involved during the planning process - espcially if the intention was to leave someone out, or to give them less than others.

Not to be outdone, the NY Times printed this article in yesterday's edition. They discuss how children fight over their parents' estates, and how to avoid the conflict. One person profiled, Eric Zeller, started the process of discussing his estate with his children early on. He intended to leave his estate to various charitable entities rather than to his children, so throughout their lives, he talked with them about how to make their own way in the world. As they grew up, they did not have the expectation that they would get their Father's money, and they became independent.

Not everyone agrees that a parent should leave nothing to their children in order to keep them from being too dependent on their parents. But whatever your intentions are, you should make them known to your children, relatives, friends, and anyone who may believe they might get a piece of your estate. It's not a guarantee against disputes, but it's certainly better than keeping it to yourself.

What do you think?

Keep Your Special Needs Trust Up to Date When You Move!

Remember your Special Needs Trust when you or your child with special needs moves. Kevin Urbatsch, a special needs trust attorney in San Francisco, relates this article that gives useful information for people on the move who have special needs trusts.

While most benefits for those with special needs are federal, many are provided by the state (such as Medi-Cal). If you move to another state, you will need to re-visit the process of getting state-specific benefits. If you have a special needs trust that deals with the state benefits, the trust will need to be changed to reflect the new state benefits.

Thanks to Mr. Urbatsch for this useful info.

Avoiding Probate in a Small Estate

In California, as in many other states, if an estate is small enough, it can avoid probate. California allows for "summary administration" of estates of less than $100,000 by affidavit. What this means is the successor(s) or beneficiary(ies) can prepare a declaration that includes certain required information and present it to the holder of the property in the estate, and are entitled to receive the property.

Although California sets forth the requirements of the affidavit for content and presentation to the holder of the property in Probate Code sections 13100-13104 and 13106.5, there is no approved form to use. So, if you want to start a summary administration, you must draft (or hire an attorney to draft) the form yourself.

Other states, including Illinois, have such forms for use by beneficiaries. Joel Schoenmeyer posts on his excellent Death and Taxes blog about the Illinois form. You can't use it here in California, but it is an example that perhaps the Judicial Council, which is responsible for approving such forms here, may want to consider.

Estate of the God Father of Soul

Heirs - named, disputed and otherwise - are fighting over the goodies in James Brown's estate. The NY Times reported over the weekend about how the planned auction of items from the GFOS's estate is being postponed while the dispute is dealt with.

So, if you were planning on getting one of those glittery jumpsuits, or some unused hair product, you're gonna have to wait a little while longer.

Remember, when planning your estate, don't be shy. Tell your estate planning attorney about ALL your potential heirs, and whether or not you expect anyone will contest your estate. Better to get it over with now. No one likes posthumous surprises.

"Spending It All" is Not an Estate Plan

Last Saturday there was an interesting article in the New York Times about how increasing costs and other factors may reduce the potential inheritances of heirs. The article talks about how increased life expectancy, changes in social security and medicare laws, the decline of pensions, increases in health care costs, divorce, declining home equity, lifetime transfers of wealth, and other factors will deplete most estates, leaving little or nothing for the children.

One of the biggest obstacles I come across as an estate planner is "I don't need an estate plan. I plan on spending it all." This is a close cousin to the ever-popular "I don't have anything. Why do I need a will?"

My mantra about estate planning is "Control, Control, Control." The most important thing that an estate plan gives you is control. Control not only over who gets your money when you die, but over who makes decisions about your health care and personal care if you are incapacitated, who administers your estate when you die, who will take care of your children if they are under 18 and you are unable to take care of them, and on and on. Most of the control you get over your estate plan has little or nothing to do with how much money you have.

The problem with the "I intend to spend it all" philosophy is that presupposes that you know exactly when you will die, and have planned your spending accordingly. Most people don't know exactly when they are going to die. This goes for healthy young people as well as the terminally ill. I have talked to people who were told they had six months to live - 10 years ago. People on death row don't even know exactly when they are going to die. They just know, like everyone else, that it's going to happen some day. It has happened where death row inmates have died from natural causes while awaiting execution (just type "death from natural causes while on death row" into Google). It is because of this uncertainty that you should have an estate plan in the first place.

The concerns in Ron Lieber's column are real. Many people don't have a ton of money, and assuming they live long enough, we can only hope that they have enough to meet their needs as they get older. But don't construe this as a reason for not needing a living trust, durable power of attorney for personal care, or advance health care directive, among other things. The fact is that, if you live long enough, and are no longer able to take care of yourself, you will need someone to make the decisions relating to the concern in Mr. Lieber's article. A complete estate plan gives you control over your estate and affairs. That control is not dependent on how much money you have to give away (or even if you have any money to give away).

California Same-Sex Marriage, A Sort-Of Victory

The United States recently took another step toward remembering that it has a Constitution that it is supposed to follow by allowing same sex couples to marry in California. I am a Trust and Estate attorney, not a Constitutional scholar, but I cannot see how banning same-sex marriages is not a violation of the equal protection clause of the 14th amendment to the Constitution of the United States. If you know, maybe you can help me out.

As you may have heard, the California Supreme Court ruled unconstitutional a law limiting marriage in California to a union between a man and a woman. You can read the decision here. (WARNING: it is 172 pages long!)

While there were celebrations-a-plenty over the recent weddings performed (as well as some protests by people who appear in the media to be more than a little nutty) in City Halls across the state, the real impact of all this is pretty much nil. The fact is that California domestic partnership law already gives same sex couples all of the legal rights and privileges of married couples. The major problem is that many of the most important rights and privileges of married couples are Federal. And under the Defense of Marriage Act, Federal law does not recognize same-sex marriage.

So what the State of California (and the Commonwealth of Massachusetts) giveth, the Feds taketh away. This means all Federal tax laws, including the unlimited marital deduction and married income tax filing status, are not available to legally married same-sex couples.

What does this mean for estate planning? Basically, it means that a lot of the planning must still be done as though the couple is unmarried and unrelated. This can create a more complicated estate plan, particularly if there are estate or gift tax issues. Fortunately, there are very good estate planning attorneys who specialize in planning for same-sex couples, and can structure their plan to account for the lack of rights under federal law. As always, you should choose your estate planning attorney very carefully. Talk to a lot of attorneys and others whom you trust. Almost as important as the expertise of the attorney is how comfortable you feel with your counsel. Estate planning is a process that you will engage in for the rest of your life, so it is important that you make the choice of counsel very carefully.

Who's up for challenging the Constitutionality of the Defense of Marriage Act?