Berge & Berge, LLP Blog

Tuesday, June 28, 2016

Dying Without a Will or Trust Can Cost You Money, Privacy, and Control

What happens if I die without a will or trust in California?

“Dearly beloved, we are gathered here today to get through this thing called life.”-Prince

In late April, the music world was shocked by the loss of the artist (formerly known as) Prince, who died suddenly at the young age of 57. The above quote is a lyric from one of his most popular songs, “Let’s Go Crazy”.

And speaking of crazy…one thing most people do as they “get through this thing called life” is prepare a will or trust. Prince-- a man worth an untold fortune, with no spouse, parents, grandparents, or known children—apparently died without either.

Read more . . .

Thursday, June 16, 2016

The Importance of Obtaining a Power of Attorney Before You Need One

What are the risks of waiting too long to appoint a trusted friend or relative to make financial or health care decisions in an emergency?

No one likes to think very hard about a time when he or she may be unable to function independently. But few estate planning topics are as important. Even when it is clear who should manage an elderly person's health care and finances, the lack of legal preparation can lead to unhappy surprises.

The Advantages a Power of Attorney—And the Risks of the Wrong Choice

In the event of illness or incapacity, a power of attorney should be held by someone who knows and cares about the needs and wishes of the patient.
Read more . . .

Tuesday, May 31, 2016

Mental Competency, Hollywood Style

By now, many are aware of the raging court battle involving media mogul Sumner Redstone, the ailing 92-year old whose net worth is valued somewhere in the $5.5 billion range. So far, the Hollywood heavyweight has reigned victorious -- at least with regard to the contentious mental competency battle initiated by a former lover who recently found herself completely ousted from his Will and health care power of attorney.

While the glitz and glamour of the Redstone case makes for heightened intrigue, the case presents an all-too-common scenario families across California face as their loved ones transition to their 80’s and 90’s. Fortunately, proper planning for mental incompetency can help avoid the litigious -- and embarrassing -- plight of the Redstone family, as well as ultimately save thousands of dollars in court fees and costs.

Read more . . .

Tuesday, May 10, 2016

Estate Planning for Unmarried Couples

Do I need an estate plan if I am not married to my partner?

Today, more and more Californians are deciding not to marry and choosing, instead, to live together. Whether divorced individuals or widowers who have decided not to get married again, young couples not ready to tie the knot, or even same-sex couples who can now legally marry, but choose not to do so, it is essential for unmarried couples to establish an estate plan.

While married couples have certain built-in legal protections with respect to property rights, the same is not true for unmarried couples. For example, legally married couples can leave their entire estate to the surviving spouse free of estate tax. Legally married couples also enjoy other benefits such as Social Security, surviving spouse benefits, hospital visits, and statutory inheritance rights, among others.

Read more . . .

Wednesday, May 4, 2016

2016 Facts and Figures Concerning Alzheimer’s Disease

According to the Alzheimer’s Association, Alzheimer’s disease is now the sixth leading cause of death in the United States, while more than 5 million Americans currently battle the disease on a daily basis. Recently, the Association published the most updated statistics surrounding this form of dementia, and the numbers reveal a startling and consistent increase in the prevalence of this devastating illness.

To date, as many as one out of every three senior citizens dies while under the auspices of Alzheimer’s or a similar dementia condition. As well, an American is diagnosed with the condition an average of every 66 seconds. Of this group, a growing number of Americans -- approximately four percent suffer from early-onset dementia, or dementia occurring before age 65.

Read more . . .

Sunday, April 17, 2016

Protecting Seniors from Financial Abuse

Seniors are increasingly becoming the target of financial scams for a variety of reasons. While many older adults may have accumulated significant assets, even those with low or fixed incomes are vulnerable to financial exploitation. Financial abuse often comes at the hands of an older individual's family members whether adult children, grandchildren, other relatives, and caretakers.

At the same time, there a number of scams in which strangers prey on seniors. The most common scam involves bogus telemarketing calls aimed at obtaining personal information.
Read more . . .

Saturday, March 26, 2016

California Law Makes Early Withdrawals From an IRA Even More Costly

When can you withdraw from an IRA without penalties?

After years of savings, investment and compound interest, an IRA account can be a tempting source of emergency funds. Many wonder if there is some way to tap into their savings before retirement without triggering taxes or penalties. There are some exceptions, but early withdrawals can often prove costly, especially in California.

When a person withdraws funds from an IRA before age 59 1/2, this "early" withdrawal may be subject to penalties. There is usually a 10% penalty, in addition to any tax due on the funds. The penalty can be even higher —25%—for a specific type of matching savings incentive plan for employees known as a SIMPLE IRA.

There is an additional California early withdrawal penalty equal to 2.5% of the early distribution for account holders. For holders of a SIMPLE IRA who make withdrawals within the first two years of starting the account, the California penalty is 6%.

There are some exceptional circumstances in which an IRA owner can take distributions without penalties, both at the Federal level and in the state of California. These include:

  • Distributions taken after a permanent disability
  • Distributions to pay expenses for medical insurance when you're unemployed
  • Distributions for unreimbursed medical expenses greater than 10% of your adjusted gross income.
  • Distributions to pay certain higher education costs
  • Distributions (up to $10,000) to pay for a first home.
  • Distributions to military reservists called to active duty
  • Distributions to certain qualified public safety employees

Depending the type of IRA involved, you may still owe taxes on these distributions even if there are no added penalties.

If you withdrew funds from an IRA and believe you are covered by one of the exceptions, you need to make sure your actions are fully disclosed in your federal and state income tax returns so that both the IRS and the California Franchise Tax Board understand why you are exempt. You may also want to confer with your professional estate planning tax advisor.

Friday, March 18, 2016

Senior Protection Legislation Clears Legislative Hurdle

What can be done about unscrupulous elder care referral agencies?

Legislation designed to protect seniors and their families from unscrupulous elder care referral agencies is working its way through the California legislature. Authored by Sen. Tony Mendoza, the bill will put in place tougher licensing and financial disclosure requirements for these agencies. The bill recently received bipartisan support by the State Senate and is now under consideration by the State Assembly.

In some cases, situations arise, like a health crisis or incapacitation, that require long-term decisions to be made quickly, leaving many seniors and their families susceptible to pressure, inadequate information about care facilities, and shady referral agencies.

"Minimum standards for disclosure are needed to ensure that seniors, and their families, are making the most informed choices when it comes to their long-term care needs." said Senator Mendoza.

New Disclosure Standards

As more seniors require elder care, for-profit businesses have sprung up that provide valuable assistance for individuals and their families in finding long-term care facilities. Because of weak licensing requirements, however, and no disclosure requirements, many of these agencies have engaged in a wide range of unscrupulous practices that lead to financial abuse of the elderly.

What Is Long-Term Care?

Long-term care (LTC ) refers to the care needed by an individual who depends on others for help with daily activities. LTC is designed to assist people with chronic health problems or dementia by enabling them to live as independently as possible. Long-term care often takes place in a nursing home and involves a variety of services and supports to meet health or personal care needs over an extended period of time, sometimes for the rest of an individual's life.

Unscrupulous Practices

There have been reports of referral agencies advertising free services when, in fact, the agencies receive undisclosed commissions, incentives and bonuses for placements. This can lead to unsuitable or potentially harmful placements. Other practices involve hospitals sending patients to placement agencies that demand high fees only to then be referred to unlicensed facilities. Seniors have also been placed in facilities on a short-term basis only to be sent to other care providers in order to generate ongoing and ill-gotten commissions.

The Mendoza Bill

Proponents of the bill believe new licensing requirements and minimum disclosure standards will enable seniors and their families to make informed decisions about appropriate care facilities. Individuals have a right to know whether referral agencies garner commissions, what qualifications the referral agencies have. In short, referral agencies should be required to act in the best interests of their clients.

While the legislation should provide protection to seniors and their families when making long-term care decisions, elder abuse continues to be a growing problem in California. If you or a loved one has been the victim of elder fraud, or any other kind of abuse, you should consult with an attorney who has expertise in elder law.

Tuesday, February 23, 2016

California Uses A Presumption To Confirm The Legitimacy Of Gifts To Caregivers

How does the State of California determine whether gifts to caregivers are fraudulent?

It is a story we have heard countless times before: an elderly or incapacitated person who is dependent on caregivers decides at the last hour that he or she wants to give one or more of these people a gift from his or her estate. It is the case many times that the caregivers pressured or tricked the person into making these gifts. So, how can the probate court be sure that gifts made legitimately are not the product of fraud or undue influence? The State of California now uses a legal presumption.

What is a legal presumption?

A legal presumption is a fact that is taken as true without proof. Some presumptions are rebuttable and can be disproven with the correct evidence. That is the type of presumption we are dealing with in California

What is the presumption regarding gifts to caregivers in California?

Throughout the state there is a presumption that gifts to caregivers are the product of fraud or undue influence. Therefore, if the caregiver wants to receive the gift, he or she must go to court and present evidence that the gift is legitimate. There are various types of people that need to prove with clear and convincing evidence that the gift to them was made in good faith. These include any individual that drafted the instrument by which the gift is made, any individual in a fiduciary relationship with the person making the gift that caused the instrument to be transcribed, any caregiver and employee, among others. A Certificate of Independent Review from a disinterested attorney can also rebut the presumption. This attorney’s duty is to evaluate the gift and to determine if it is legitimate under the circumstances. Essentially, obtaining a Certificate of Independent Review removes the need for a court hearing.

If you are thinking of making a gift to one or more of your caregivers, you want to make sure it will hold up after you pass away. An experienced elder law attorney can assist you in ensuring the viability of this gift. Contact the California estate planning attorneys at the Law Offices of Berge & Berge for a consultation today.


Monday, February 22, 2016

Complications Involving Gifts to Caregivers in California

What difficulties arise when an individual makes a caregiver a beneficiary? 

The California Probate Code, in its attempt to protect incapacitated, vulnerable people, can make it difficult for an individual to leave assets to a caregiver. This is because the Code contains a presumption that bequests made to certain individuals in caregiving positions are the result of fraud or undue influence. While the intentions of the California government are clearly to protect the incapacitated person from coercion and/or abuse, this regulation sometimes backfires, restricting the testator from bestowing a gift upon whatever person he or she chooses.

Reasons for Presumption

 It is clear that, if an individual makes changes to his or her estate plan while under a non-relative's care, designating the caregiver as a new beneficiary, there is room for suspicion. In order to address the issue of possible abuse by the caregivers of dependent adults, the California Probate Code makes the presumption that transfers made in such situations are fraudulent, with the caregiver having used "undue influence" to coerce the action. 

While the Probate Code offers protection against abuse, it can also stymie genuine attempts on the part of the testator to provide a generous gift to someone to whom the testator is deeply grateful. Though it is tragic to contemplate the caregiver of a defenseless person being manipulative or abusive, it is also sad to think of that same defenseless person not being able to act volitionally to reward someone they care about. This presumption of fraudulence may be viewed by some as a presumption of guilt, something our legal system forbids.

When it has to be proven that there is no fraud involved

According to Probate Code Section 21380, there are three situations in which "clear and convincing evidence" has to be provided that the bequest (donative transfer) was not the result of fraud or undue influence. These categories are:

  • When the beneficiary is the individual who drafted the instrument
  • When the beneficiary is in a fiduciary relationship with the testator
  • When the beneficiary is the caregiver of the testator, the latter being a dependent adult

The presumption of fraud extends to relatives, cohabitants and employees of any of the three individuals mentioned, and to anyone affiliated with the law firm that drafts the documents.

It should be noted that, if a donative transfer is made to an individual in any of these categories and that person is unable to prove the legitimate intent of the deceased, not only will the designated recipient not inherit, but that individual will be responsible for attorney's fees incurred during the contesting of the gift.

How to avoid presumption when the gift is legitimate

While it is clear that the Probate Code is designed to be protective of the most vulnerable among us, it is important to know how to guarantee that your last wishes are not second-guessed after you die. The way to ensure that presumption of fraud doesn't occur when a transfer of assets is legitimate and desired is to have such gifts reviewed by an independent attorney.

The attorney must counsel the person making the bequest in the absence of any heir or beneficiary. In this way the lawyer can presumably determine whether undue influence or fraud is present. The attorney can then issue a Certificate of Independent Review (CIR) which will ensure the bequest is legitimate

There is no substitute for a skilled, impartial, untrustworthy attorney

Although CIRs clearly can be helpful is protecting your estate from unscrupulous caregivers or financial advisors, they are not a perfect solution to avoiding fraud. First of all, it is essential that the attorney who issues the CIR be completely trustworthy. Second, it is wise to include trusted medical professionals in the process -- very few attorneys are trained to be capable of making a determination of mental competency.

The situation can be further complicated by the variety of nontraditional living and care arrangements in today's world. These days, "family" members are not necessarily biologically related, or related by adoption or marriage. It is, therefore, necessary that you work with a knowledgeable estate planning attorney when you want to leave assets to a life partner to whom you are not married or with whom you do not reside, or to a beloved friend or caregiver who has stood by and supported you. Without the diligent work of an adept attorney, you run the risk of having Probate Code presumption nullify your wishes.


Friday, January 29, 2016

Changes To The Eligibility Requirements For First Party Special Needs Trusts

What terms must be found in a Special Needs Trust in order for the beneficiary to be entitled to government benefits?

A Special Needs Trust (SNT) is a legal instrument used for the benefit of individuals who cannot support themselves due to a disability. Assets are held in the trust and not by the beneficiary making the disabled person eligible for various types of needs based government benefits such as Supplemental Security Income (SSI) and Medi-Cal. Currently, the Social Security Administration (SSA) is reviewing these trusts with stricter scrutiny. The agency will now require SNTs to contain certain terms in order to qualify for needs-based benefits.

These changes have been made with regard to first party SNT’s. A first party SNT is one that is set up by a relative or pursuant to a court order, but are funded by assets that belonged to the beneficiary him or herself. According to federal law, assets that remain at the termination of a first party SNT must be used to pay back the government for any benefits that were provided, particularly SSI and Medi-Cal.  Now, trust terms must actually provide that all states will be paid back with remaining trust assets, not just the State of California. 

Another change made by the SSA is that SNT trusts must actually be set up by a relative or pursuant to a court order, not by an agent of the disabled person, even one that is related.  Lastly, the SSA has also become stricter in enforcing the “sole-benefit rule” which means that trust assets can only be used for the benefit of the disabled party.  Previously funds could be used for the indirect benefit of the disabled person, such as to pay for a person to visit him or her, this is no longer an option.

Any trusts that have been previously approved by the SSA are safe unless they are subject to changes via an amendment. 

Deciding whether to use an SNT and then drafting one that is appropriate is a decision that is best made with the guidance of a skilled elder law and special needs planning attorney.  

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