- Voltaire (1694-1778)

- Steve Martin

--Jorge Luis Borges (1899-1986)

We all know the importance of annual check-ups. We have our yearly visits to the doctor and dentist, we review our finances at least once a year during tax season, we even take stock of our closets during spring cleaning! To everything there is a season, and your estate plan deserves no less.

Many people are tempted to think of their estate plan as a one-shot deal, but the truth is that your estate plan is an investment and deserves the same annual maintenance and attention as any of your other investments. In fact, your estate plan is more than an investment of money, it's an investment in your future, and your children's and grandchildren's futures as well. 

Take the recent example of Anna Nicole Smith and her out of date Will. Smith's 6 year old Will leaves everything to her deceased son, and nothing to her living baby daughter. To further complicate things, some of the language in the Will seems to exclude Smith's future spouses and children. Smith's Will most likely very adequately expressed her desires for the protection and execution of her estate at the time it was written, but even the best attorneys can't anticipate how a client's situation and desires will change in future years.

How often you need to review your estate plan will depend a lot on your family's personal and financial state of affairs, although not entirely. Families and finances ebb and flow, relationships grow or fall by the wayside, and tax laws definitely change, all of which have a bearing on your Trust, Will, Health Care documents, and others. This means that depending on how in flux your personal/financial situation is, you should be reviewing your estate plan every one to five years.

Keep your estate plan as strong and healthy as your body, your teeth, or your stock portfolio. Call your attorney and review your plan regularly!

By guest blogger Jenni Buchanan

Every month, the California Bar publishes a list of lawsuit verdicts across the state.  Because many people wonder how catastrophic a judgment against them might be, I'm sharing a few.

Here are the two most striking May, 2007 judgments:

Premises Liability

You can be liable because you own the property.

Judgment: $4,057,354

Vehicle Negligence

Remember that with "joint and several liability" even if you are only 1% at fault you may have to pay 100% of the judgment.

Judgment:  $23,295,000

There were other remarkable judgments  in January, February, March and April, 2007.  There will be more in June, July, August and the months and years ahead.

The California Law Revision Committee has posted a tentative recommendation about no contest clauses. These are the provisions in your estate plan that punish a beneficiary for suing the estate by disinheriting him or her. California has long had a love/hate relationship with no contest clauses. While there are strong reasons to keep people from suing willy nilly when someone dies, the state is also concerned that legitimate issues get aired in court.

California changed its no contest laws just a few years ago, which is why so many of our clients needed to update that provision of their estate plan. 

Now the Committee is making a further recommendation.  The Committee suggests that no contest clauses should be honored in general.  But there should be a big exception to protect against elder abuse, a growing problem. 

The Committee proposes that a new law should enable beneficiaries to make contests where there is a significant possibility of elder abuse in a late change of beneficiaries.  This new law would protect those beneficiaries from disinheritance.

You can read the Tentative Recommendation at http://www.clrc.ca.gov/pub/Misc-Report/TR-L637.pdf

The proposal is to allow contests "that are brought with probable cause."  As estate planners for our clients, many of whom have strong reasons to create enforceable no contest clauses, we will be watching the case law to determine what rises to the level of "probable cause".

Planning Tip:  A long history of limiting the rights of a particular beneficiary makes enforcement of the no contest clause against that beneficiary much more likely.

The Committee's Summary follows:

"The Law Revision Commission finds that there are good policy reasons to enforce a no contest clause. However, the existing statute has become overly complex and is contributing to uncertainty as to whether a particular no contest clause would apply to a contemplated action. That uncertainty has led to widespread use of the declaratory relief procedure, adding a new layer of litigation to contest cases. A no contest clause can also operate to deter legitimate inquiry into cases of elder financial abuse and fraud. An abuser may coerce or trick an elderly person into amending an estate plan to include a gift to the abuser, combined with a no contest clause. If the other beneficiaries contest the gift, they risk losing their own bequests. That can insulate fraud from effective judicial review.

After weighing the advantages and disadvantages of the no contest clause, the Commission recommends that enforcement of a no contest clause be preserved, but that the statute be significantly simplified. The existing complex provisions exempting most "indirect contests" from the enforcement of a no contest clause would be replaced with a rule limiting the enforcement of a no contest clause to a specified list of traditional "direct contests." The declaratory relief provisions could then be deleted as unnecessary. Existing exceptions to enforcement for certain types of contests that are brought with probable cause would be generalized to apply to all direct contests. That would provide a greater opportunity for beneficiaries to bring a direct contest based on suspected elder abuse."

On October 21, 2006, Kelly Greene answered a question in the Wall Street Journal's Encore Personal Finance section on how to name a minor child as a beneficiary of your retirement plan.  I was delighted to be able to contribute to the answer. 

You can see the article, How to Name a Minor as your IRA Beneficiary,  here.  (Subscription to www.wsj.com may be required.)  If not, email me and I'll send you a reprint!

The Centers for Medicare & Medicaid Services (CMS) has released the 2007 federal guidelines for how much money the spouses of institutionalized Medicaid (known in California as Medi-Cal) recipients may keep.

In 2007, the spouse of a Medi-Cal recipient living in a nursing home (called the "community spouse") may keep as much as $101,640 without jeopardizing the Medi-Cal eligibility of the spouse who is receiving long-term care. When a spouse needs to keep more, a court order may be sought.

The maximum monthly maintenance needs allowance for 2007 will be $2,541. This is the most in monthly income that a community spouse is allowed to have if her own income is not enough to live on and she must take some or all of the institutionalized spouse's income. Bear in mind that these figures apply only if the community spouse needs to take income from the institutionalized spouse. According to Medicaid law, the community spouse may keep all her own income, even if it exceeds the maximum monthly maintenance needs allowance.

The new numbers take effect on January 1, 2007.

Thank you to Elder Law Answers for the update.

As our clients know, a conservatorship is a court process that takes away an adult person's legal right to manage her own affairs and gives that right to a conservator appointed by the court. This firm regularly seeks and obtains conservatorships over developmentally disabled and incapacitated adults on behalf of their parents and others who care about them. 

The Los Angeles Times investigation has discovered, however, that many conservatorships do not follow this thoughtful and caring model. Most alarming, total strangers are being appointed conservator over adults who are not told about the proceedings until after their legal rights have been curtailed.

A few examples:

• One man first learned he was "conserved" when his credit card was denied at lunch.
• A disabled man's food allowance was withheld, forcing his to rely on handouts for survival.
• One conservator bought her conservatee's home cheap and then resold it for a profit of three times.
   

Even people who had nominated loved ones to act as Conservator found themselves under conservatorships established by strangers. Fortunately, these conservatorships can be overturned but only at great expense. 

The Times investigation also noted that many private conservators are caring ethical people who take care of elderly or incapacitated people who desperately need help. 

The Times' advice? Establish a power of attorney, an advance healthcare directive, a nomination of conservator and a revocable trust. Good advice.