Category Archives: Lawyers

Planning Beats Avoidance

rural-216371_150Dear Liza: We live in Nebraska.  I own a ranch with my brother.  Part of it we inherited and a small part we purchased from family members.  The total value of the ranch is $2.7 million.  We have a buy sell agreement between us.  We have estate questions and aren’t sure where to go.  We each have other assets of approximately $2 million and $4 million respectively.  We have considered a trust; however I have two children and my brother has a second wife and four children.  We do not want our offspring to have to deal with each other.  

So, that’s a REALLY interesting question, and one that involves trusts, but only tangentially, really. The thing is, regardless of whether your estate plan consists of a Will or a trust, your families are most certainly going to have to deal with each other upon the death of you and your brother. You wrote that you own the ranch together….usually, siblings would own a ranch like that as tenants in common, which means that you each own one-half of it and are free to leave it to whomever you’d like to leave it to upon your death. (The less usual alternative, for siblings, would be as joint tenants, which would mean that the survivor would own the entire property at the death of one of you.)

Assuming you each own your half and can leave it at death to others, how on earth are you going to avoid each family having to work something out? Even a buy-sell agreement will require, at a minimum, that one family buys and the others sells, right? Placing your property into a trust will avoid having to go through probate, and gives you the opportunity to try and plan for reducing conflict down the road.  You can each place your interests in different trusts, and specify how each half should be managed upon your deaths.

If you don’t do a trust, then your estate will go through probate, and that in no way reduces the possibility of inter-family conflicts–in fact, it almost invites it, because probate is public, and all interested parties are required to get proper notice and have an opportunity to object to the proposed distribution. With a multi-million property on the table, I would advise you and your brother to hire a good estate planning attorney now to do what you can to anticipate problems and structure the management of the property down the road.

What to Expect From Your Attorney

Dear Liza, I live in Wisconsin and met with an attorney on November 16, 2011, to discuss updating existing wills and powers of attorney for healthcare and property for my husband and myself.   It has been over three months since we met, and while I am ignorant of the ins and outs of the legal process, this seems an excessive amount of time to wait with no word.  How long is a reasonable period to wait for a draft of my will, and how should I approach my concerns with her? I am so sorry to hear that you’re having this sort of trouble. I think that you should discuss your concerns with her directly. Call her up. Ask her to call you back to discuss this. Tell her that you don’t want yet another email. Tell her that you need to see drafts within two weeks. Remember that YOU are the client and your attorney needs to be responsive to your concerns. If you aren’t happy with her, get a new lawyer.  You are completely within your rights to hire someone who is more responsive and to ask your first attorney to forward your client file to your new lawyer. As for what’s reasonable…well, it’s not that I haven’t occasionally been swamped myself, but I think two to three weeks from the initial consulation is a reasonable time to expect to see an initial draft, or at least to be contacted by your attorney with an apology for being late on the drafts. Good luck.

Selecting Professional Executors

Hello Liza, My husband and I need to update our wills, they are terribly out of date.  Our dilemma is around the question of who should be Executor/Co-Executor of the estate. Obviously we would be the executors of one an others estates, however, if something were to happen to both of us, we need a third party Executor/Co-Executor.  We have no obvious relatives, or even close friends that we feel could ask to be an Executor.   We’ve understand that a law firm, bank, financial planner, etc.can act as an Executor (or co-Executor).  Our question is, what is the financial obligation for doing so?  Trust companies, trust departments of banks, and individuals, called professional fiduciaries, can serve as the executor of your estate.  There’s no up front fee for nominating an institution or professional to serve in that capacity. They would charge the estate a fee for their services if they are appointed to serve after the death of the second of you.  Often, these fees are a percentage of the estate. If your estate goes through probate, your executor is awarded statutory fees based on state law, which are usually a percentage of the value of the estate.  Attorneys sometimes serve in this capacity, but, at least in the state where I practice (California) there are strict rules about doing so, because in the past unscrupulous lawyers wrote themselves into client’s documents to generate future fees. Financial advisors often cannot serve due to conflict of interest rules in their companies, but some can.  I would advise you to ask your local bank or financial advisor what their fees would be for this service, or if they can recommend anyone in your area who could serve.

Letters documenting Incapacity

Dear Liza: My 91 year old mother had a stroke in April. Her living trust designates my brother as Medical Power of Attorney and myself as Financial POA.   Her lawyer is asking for letters from two doctors stating our mother is mentally incapacitated before he can talk to both of us about her trust.   Why would a lawyer ask for them? Wasn’t the point of the trust to make everything hassle free?  Your mother’s lawyer is asking for letters from two doctors stating that your mother is incapable of managing her own affairs because, most likely, the trust states that you and your brother can act as successor Trustees only upon your mother’s incapacity. The trust probably also states that incapacity is to be determined by two letters from physicians stating, under penalty of perjury, that your mother is incapacitated. Many trusts are drafted this way. The idea is to protect your mother from having her powers as Trustee taken away unless she really can’t manage her own affairs.  Ask the attorney to provide you with letters for the doctors to sign — that shouldn’t be a big deal if, in fact, she isn’t able to manage.

When to Fire Your Lawyer: Excessive Fees

Dear Liza, my brother and I are in the process of distributing the personal/real property of our recently departed mother’s estate/trust according to her wishes. The attorney for her estate initially included his fee of $17,000+ as part of one document. When questioned, he stated because of the divisive and hostile relation between my brother and me, he was going to charge fees in anticipation of the estate having to be probated, instead of treating it as an dissolution of an estate.  Can he do that? Yikes! $17,000 is A LOT of money to settle a living trust. Here’s my advice–fire that lawyer. Remember, you are the client and if a lawyer isn’t serving your needs (or is charging way too much), get yourselves a new one. Most attorney’s charge an hourly rate for trust administration services. At a rate of $200/hour (which is sort of low), you are being charged for EIGHTY FIVE hours of time. Most estates take only a fraction of that. As for his decision to submit the estate to probate–that’s your decision, not his. Probate can be an effective forum for resolving disputes, but in a trust administration that would be an unusual step. If the estate goes to probate, he can charge you a statutory fee equal to a percentage of the value of the assets in the estate, and $17,000 may actually be about right. But, he’s not entitled to bill you for services he hasn’t provided. Ask for a detailed billing statement outlining exactly how he is spending his time on your matter. If he can’t, or won’t, provide it, fire him and report him to the state bar. I have found that just mentioning your intention to report a lawyer to the state bar can result in an amazing reduction in an excessive bill. Also, ask for your client file on the way out–legally that’s yours, not his.