New Year = New Laws: What You Should Know

As I mentioned last month, the IRS has increased the estate and gift tax exemption from $5.43 million in 2015 to $5.45 million effective January 1, 2016.  If applied correctly, that means a couple can shield $10.9 million dollars from estate and gift taxes.  Look for future posts to read how to do it right and the mysterious world of “portability.”  The interesting state-related legislation revolves around the new “Transfer of Death Deed” to transfer real property without a trust and without probate (again, more on that to come).

I understand that not everyone finds tax laws and regulations following death quite as interesting as I do, so this one’s for you.

There are several new laws taking effect in California as of January 1, 2016.  Many deal with driving, biking and public safety, while other focus on open and transparent dissemination of information.  Here are just a few key laws that everyone should know:


–          You may not wear earbuds or headsets in both ears while driving or biking (this does not apply to safety earplugs)

–          You must be at least 16 years old to ride an electric skateboard (plus, you must wear a helmet and stay on roads with a speed limit of 35 mph or less)

–          “Amber Alerts” will now include incidents of hit-and-run where there is a death or major injury

–          An ignition interlock device, to test sobriety levels of drivers before a car will start, is required to be installed (at the owner’s expense) as a condition of receiving a restricted driver’s license, being reissued a driver’s license, or having the privilege to operate a motor vehicle reinstated subsequent to a conviction for certain DUI offenses (5 months for the first offense, one year for the second offense, two years for the third offense, and three years on a fourth or subsequent offense).

–          All slow-moving vehicles (now including bicycles) are required to pull over safely to let traffic pass


–          Only children with serious health problems will be allowed to opt out of school-mandated vaccinations.  School-age children who are unvaccinated will need to be home schooled. (Does not take effect until July 1, 2016)


–          Minimum wage increases to $10 per hour

–          Cheerleaders who cheer for professional teams/athletes will be treated as employees, with the accompanying wage and hour protections


–          (effective date TBD)  All persons who apply for a driver’s license or state id will automatically be registered to vote, if qualified

–          Proposals to place an initiative on a ballot is increased from $200 to $2,000

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If You WILL it, they will WAIT and the assets will WILT

It amazes me when my children come home from school that they are singing the same enchanting rhymes that my classmates and I sung decades ago. These are likely the same that my parents sung when they were in school too. The fact is, over time, some things remain a constant and will be passed on between groups with little change. The same is true with the dissemination of legal knowledge. One person talks to another and that person talks to someone else and conceptions and principals are passed on. I have come across a very common misconception both with my clients and with my students when it comes to how a Will works.

Most people understand that if you do not prepare a will, or a trust or some other will-substitute regarding your estate then when you die, the government has a plan, known as “intestacy” and a probate proceeding is commenced with the probate court. A slightly smaller group understands that a fully funded trust or comprehensive will-substitute will bypass the probate court completely (barring fighting amongst the heirs). However, a surprising number of people cannot answer whether having a will bypasses the probate court or requires a probate action.

The answer is: if you only have a Will and nothing more, then a probate proceeding will be necessary. The probate court’s role is to ensure that the plan you have set out in your Will is followed in a timely and efficient process. Unfortunately, with budget cutbacks and a rise in the population in Los Angeles County, the probate courts are bottle necked and what took 12-18 months a couple of years ago to close an estate proceeding, now takes approximately 18-24 months. During that time period, access to assets within the estate are limited, if available at all. Bank accounts may be frozen, putting other assets at risk (such as real property that has a mortgage to be paid).

The other little known fact are the costs associated with a probate proceeding. The executor’s fee and the estate attorney’s fee are set by statute and therefore uniform across the state based on the gross value of the assets under administration. Further, the filing fees with the court are set in advance, as well as the fees paid to the court appointed probate referee (this is the person who completes the appraisal for the assets under management). Based on these relatively constant values, an estate valued at $1,000,000 (which is not uncommon in Los Angeles County once you figure in a house, a car, a brokerage or retirement account and bank accounts) would have approximately $48,120 in costs of administration. While there are other factors involved which may adjust the costs, such as a bond or need for intermediary filings to approve the sale of assets or preliminary distributions, this is by and large the minimum that would be eliminated from the estate and never touch the hands of the beneficiaries.

$1,000,000 – Gross Value of Estate (not counting any encumbrances)

$       435 – initial filing fee to open probate

$       250 – initial publication fee (this cost will vary)

$   1,000 – probate referee fee

$       435 – final filing fee to close probate

$ 23,000 – statutory fee to the executor

$ 23,000 – statutory fee to the attorney for the executor

$ 48,120

The bottom line, if you do nothing, or if you only have a Will, specifically focusing on Los Angeles County, your heirs will wait for their inheritance and the amount that they receive will wilt away. I understand there are exceptions to every situation, however isn’t it worth it to have your plan evaluated to make sure your estate is passed on to those you care about as opposed to going toward fees and costs.

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Delaware leads the way on digital assets – will California follow?

onlineDigital assets and digital accounts present many potential problems and issues upon the death of the owner.  Delaware has taken a major step forward to address some of those issues-under a newly enacted Delaware law, they are now treated the same as any other physical asset.  The Fiduciary Access to Digital Assets and Digital Accounts Act was signed into law by the Governor of Delaware this morning.  This is the first law that gives access to a person’s “digital estate” following death or incapacity.  Among the assets included under the act are: email, cloud storage, social media, health records, licenses and databases.  On a go-forward basis, if a person dies and is a resident of Delaware at the time of death, companies are obligated to provide the username, login and password information to the estate representative.  The company would be able to withhold this information only if they were directed that the account not be accessible in the event of death or incapacity.

This new law addresses some of the problems faced when a loved-one passes away; such as the mother who wanted access to her son’s blog detailing his experiences in the military prior to him being killed in active duty, yet the service provider would not release the information.  While Delaware is the first state to pass legislation in this area, it is anticipated that many states will soon follow suit.   We hope California will be one of them.

To follow along with how California is progressing see SB 849 introduced on January 9, 2014 and amended on April 21, 2014. It is currently listed as pending with the Senate Judiciary Committee

For further information about preserving you digital assets please see my previous article.

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Missing Identification

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I have been a notary public since 2005 yet it was only in this past month that I ran into an issue of the client not having appropriate identification; and it happened twice in the same week.  This opened my eyes to an issue, which I believe will only get worse in the coming years.  Older clients, more specifically the clients who no longer drive themselves, are letting their driver’s license expire and are not obtaining an alternate form of identification.

The U.S. population is aging as a whole.  In 2009, the “older population” (meaning persons who were over the age of 65) were approximately 39.6 million.  This number represented approximately 12.9% of the entire U.S. population.  By 2030, the “older population” is expected to increase to more than 19% of the entire U.S. population (approximately 72.1 million, with 9.6 million over the age of 85).  As we age, problems with vision, cognition and overall movement become more prevalent and driving becomes more difficult.  If you have decided to stop driving (or have had that decision made for you) then when it comes time to renew your driver’s license, you may opt to simply let it expire.

This past month, I had two separate instances of a client who needed documents notarized for their mothers.  When asked for a driver’s license, which is the most common form of identification I typically use when notarizing a document, one replied “I no longer drive, so I don’t have one” and the other handed over a driver’s license that had been expired for several months.  While there is an alternative procedure for proving the identity of a signer, it was a hassle to say the least and not all notary publics may be comfortable with the alternative methods.  If someone does not have identification which contains all of the following: (1) a photograph of the person; (2) a description of the person; (3) a signature of the person; and (4) an identifying number, the notary public can use a “Credible Witness.”  A credible witness is someone who does possess valid identification, personally knows the signer (but does not have a financial interest and is not named in the document being signed).  The credible witness takes an oath that they personally know the signer, that the signer does not have proper identification and that they reasonably believe it would be difficult or impossible for the signer to obtain proper identification.

Luckily, in both instances, we were able to have a credible witness verify the identity of the signer and all of the extraneous requirements were met.  However, had the mothers had proper identification, the hassles, grief and extra time taken to notarize the documents would not have been incurred.

If you are part of the “older population,” know someone who is part of the “older population,” or no longer hold a valid driver’s license, please be sure that proper identification is available.  In California, you can obtain an identification card from the California Department of Motor Vehicles, which looks like a driver’s license, but is only used for identification purposes.  The identification card is valid for six years, however senior citizen identification cards are valid for ten.  The best part, there is no fee for a senior citizen identification card.  It takes about two weeks to process, so if a document needs to be notarized immediately, an alternative method of proving identity will be required.  Don’t delay, get one today.


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Access Denied … Yes, Even If You Are His Mother

hippa   Imagine you are sitting at home one relaxing evening and the phone rings.  On the other end is your son’s college roommate informing you that your son was just taken to the hospital and is very ill.  Your immediate reaction is to get to the hospital as soon as possible, the problem is your son is away at college over 3,000 miles away.  Your second reaction is to call the hospital to find out exactly what is happening, the prognosis and the treatment plan.  You call the hospital and are told that all access to the patient’s medical records are denied (YES, even though you are his mother).

This exact scenario happened to a client and is happening more frequently as hospitals and medical facilities interpret the Health Insurance Portability and Accountability Act (HIPAA) more stringently.  The Act was initially designed to prevent insurance companies from having access without your prior consent.  The Act has been implemented to prevent ALL access to your medical records without your prior consent.  This implementation has led to scenarios like my client faced because her son was over the age of eighteen and did not have a HIPAA Waiver already executed.

Needless to say, when the son returned home for the holidays, we prepared a packet of documents which are necessary in the unforeseen event of disability and illness.  The packet includes a Durable Power of Attorney For Financial Affairs, an Advanced Health Care Directive, and a HIPAA Waiver.  Each of these documents account for different aspects of his daily life and allow him to predesignate an agent (and alternates) to manage those aspects at such time when he is unable.

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