Living and Dying in Casual Wear

We have become too casual in America. We no longer dress for dinner, church, or work. Open collar is the look. Someone decided we all wear jeans on Fridays at the office, (everyone except me that is). OK fine, call it freedom or liberty or whatever you like but there is some harsh legal environments we really can’t be causal about.

You may find yourself in a bank, opening a checking and savings account. You are wearing Dockers and a shirt from Lands End.  You may find yourself in the personnel office of your new employer filling out forms about all kinds of things, including your 401(k) dressed in the style of the corporation, which in Seattle means you shop at REI. You may find yourself in your living room, with a life insurance sales man, and a lot of paper, and a lot of distractions and might even be in your pajamas. You may say to yourself, well, what do these have in common?

Death. You are probably making dispositions of what happens to the money you are handling in each situation. Not so casual, is it?

And Death changes things. Conduct that one would never believe possible from friends and neighbors, people you have trusted for years suddenly become crazed with greed when a windfall appears available. Naming your best friend as the beneficiary of any of these instruments tests him “to do the right thing”. He might fail the test. He might decide perhaps you really intended to disinherit your kids. There is little your lawyer can do about it.

Many of us in this practice draft in “superwill” or “blockbuster” terms into the will to fix all these issues with the will, clearly designating where property is to go if you have casually checked some wrong box in scenarios as listed above, but they can’t fix all of them, depending on the State’s statute on the topic. Generally these  super terms in the will won’t fix your causal approach to death if you open that account, are hired at a place that tolerates the REI look or have a visit from the life insurance salesman after the date you have executed your will.

Life and Death. It is time to get serious when you think about both. Dress for the event.

How Do I Avoid Probate?

I hear this question daily in my practice. Here are some answers.

1) Avoid Death. This is more of a medical than legal answer, but as far as I know no one has been able to do this yet.

2) Die Penniless. Some really famous and well regarded people have died penniless, thereby avoiding probate as there is nothing to distribute. Consider this short list: Jesus Christ, Mahatma Gandhi and Pope John Paul II to name a few. Spend everything and gain fame. Not a bad choice. Or you can give it all away, but then what do you live on while you are waiting to die? Just to avoid probate? Maybe not such a great choice.

3) Will Substitutes. This is actual legal solution. These will substitutes take several forms. Here is a non-exhaustive list:

A) Joint tenancy With Right of Survivorship. This is a favorite box that is checked on bank records not by the depositor but by the bank clerk because, they testify in the estate litigation later, “We always do it that way”. It is indeed remarkable how much law is practiced by the unlicensed in bank lobbies across America.

What this designation on the bank record does is make the money in the account instantly the property of anyone else on the account when one of them dies. What this means is the niece who was trusted to pay grandma’s bills suddenly has a windfall when grandma dies and creates a family fight that will last a generation. Moral of the Story: If you are going to open a bank account with anyone you are making an estate planning decision.  Ask to see the card before you sign where they indicate. It is possible to name people as joint tenants without right of survivorship, or just give them signatory authority if you do not want them taking at death. But then you haven’t avoided probate, because the probate is how we move the money to the people you want to receive the money at death.

B) Revocable Living Trust. The idea behind this approach is the person contemplating death transfers everything he or she owns to a trust that is controlled by the person transferring to it. The house is titled under the trust as is the car, and anything else that needs a name attached to it. The trust then transfers assets to the residual beneficiaries when the person making the trust dies, and no messy probate need be commenced. At least that is the idea.

Revocable Living Trust is something Susie Orman has told America via television to do to avoid probate. Susie doesn’t have a law degree or a license to practice law, but she is on television so apparently we are to believe her. She is in California as well, and based on my ancillary contact with the probates of California I this is probably a good choice.

The trouble is I have yet to see a fully funded trust after the persons have died that formed it. It seems there is always something left out, not transferred to the trust during life, and the only option is filing the probate. Additionally not everyone in Washington State caught Susie Orman’s legal advice on television. As such, showing up at the bank and declaring yourself the Trustee of your parents Revocable Living Trust draws a blank stare, and a standard response: Go file a probate and bring us authority from the Court that you really get your parents money.

C) Contracts. This is related to the first two, but can include a life insurance policy. It could also reference a transfer of land at death due to the tenancy in land being only a life estate, with remaindermen named in the recorded deed. Wow, that sounds hard. It doesn’t really dispose of all the property either, only the land.

So, to sum up an answer to the question “How do I avoid probate?” the answer for most of humanity is to buy into a lot of gimmicks that are usually filed under “Mistakes a lawyer will fix later by filing a probate”.

Patrick Henry and the Special Needs Trust

We The People,  now have a segment population who would otherwise pass away naturally due to birth defects or accidents but for the advanced medical care in America. In legal parlance we refer to this segment as “disabled” and having “special needs”. Because we sense a  duty to these folks we tend to leave them money in our wills because we think they will need it after we pass.

That sounds good but it has to be done right because the government is already there doing the same thing. It’s sort of their territory so you have to play by the governments rules if you want to add to the support. A person unable to provide for himself may qualify for SSI, or a supplemental income from social security regardless of whether they have ever had earnings that would pay into the system. This stream of benefits long-established and part of a structure can suddenly be undermined by an inheritance or gift to the child not otherwise funneled into a legally recognized catch basin called a “special needs trust” or “supplemental needs trust”.

Often, in my experience, the parent hangs on to the disabled child far into that child’s adult life, the parent ages naturally and one day dies. There is no special needs trust, but more important the lack of that estate planning process also  leaves no one really available who knows what the needs of the disabled adult are, what he or she likes, what makes them upset, what their medications are and what kind of food they tolerate. That is a dramatic definition of crisis.

Properly drafted, the special needs inheritance then exists side by side with the money we have already paid into social security to shelter and provide health care for these people. Without it the government pulls back, and in a short time the money that is inherited by the disabled person is used up, and we better hope there is a guardian or other caring person left alive to make sure the benefits of social security is sought again. Otherwise we have the disabled person exactly where we feared they will be; alone and unable to survive independently.

It has been a long time since 1775 when Patrick Henry declared he would prefer death to a loss of Liberty. People like my daughter Amy would not have survived infancy to acquire the kind of liberty Henry wanted at the time. Today liberty for Amy is death.

Born profoundly mentally and physically disabled, Amy resides in a state-run facility in Shoreline Washington called Fircrest School. The other residents there are quite a bunch. Going there to visit or retrieve her for a weekend one has the same reaction one might have entering the Star Wars bar. There are a lot of this segment of The People that look only vaguely human and can make you feel uncomfortable. They make all kinds of noises and require bits of blinking machines to be fed or otherwise maintained.

The music is turned up loud enough so “all the residents can hear it” and the television is always on. This sounds terrible, but for these folks there is a comfort level there, it means they have something to do all day. The truth is the staff is first rate, and care about our family members there.

It’s the outsiders that pretend to know what Amy and her cohorts need, based largely on film or other fictions. There is something  in the myth every American believes and protects that includes the theory that no matter how disabled, an American has rights that have to be protected; those rights are identical to those Thomas Jefferson wrote about before any of these people could have survived infancy and therefore these rights we have to be pressed upon this population, even if it kills them.  This is the ostensible claim of those outsiders who really dont know what they are talking about but have a lot of education on political theory might conclude. Or they have seen too many movies.

Far from the common perception that the people residing there have been dumped by their families the reality is that parents as they age need to have a plan for these children as they mature. That includes a care arrangement that will survive the parents as well as an estate plan that ensures maximum financial assistance for the disabled adult during their lives.

The testamentary trust is called Special Needs. The needs are special, different than ours, and we do that population a disservice to read our own expectations and desires into theirs.  The disservice is greater when we leave them money without a proper plan.

 

Dead Men Tell No Tales

Notwithstanding the popularity of pirates these days, and their associated phraseology, people perceive that Dead Men do Tell Tales. It is not so.

There is this law, called the Dead Man’s Statute in the vernacular, that bars the living who stand to benefit from their story from testifying about the transactions they have had with the dead while the dead remained alive. Daily, it seems, I have people in my office who declare than grandmother always wanted her china to go to the favored grandchild, who normally is the person sitting in my office. Or more recently we have the claim of an oral contract concerning acquisition of property which lead to cash being deposited to the dead man’s bank account from his business associate. Then our man died. The living party to the contract is barred from testifying as to the transaction. There is no document anywhere remotely identifying the transaction or ownership of the money which might help him, but the claimant wants “his” money back.

The Law of Death is for the living much like a game of musical chairs;  we all walk around as if the music is never going to stop then when it does the last man standing has nowhere to sit. We didn’t count on our oral contractor dying when he did, nor did we expect the testamentary gifts of property from grandparents to specific family members being required to be in writing.  How often have I heard “Grandpa promised me the cabin!” Invariably, upon learning of the application of the Deadman’s Statute to his claim, our standing man declares “grandpa is rolling over in his grave over this!”

Curious as to whether the grave rolling was as common as the application of the Dead Man’s Statute, I drove out to the edge of town to see for myself. Arriving at the cemetery I expected to see lots of freshly turned earth. There was none, because I suppose that the transaction as remembered by the dead didn’t benefit the living as much as that last man standing said it did, and our dearly departed remains resting in peace.

There are exceptions of course, typically attached to those situations where pen and paper may not be available. For example, a soldier or sailor may, in the presence of two witnesses declare orally the disposition of his estate so long as that is less than two thousand dollars. The few appellate decisions in Washington State concerning these noncupative wills are about 100 years old, as you can imagine. The appellate decisions in Washington State concerning application of the Deadman’s Statute number 348, and counting.

Unfair? Perhaps. Unintended results are often the currency of the estates practice. The remedy is easy enough. Write it down. Soon. Life is short.