DOMA and Prop 8

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In light of the events in the Supreme Court last week, both of which affect my primary areas of practice, being Family Law and Estate Planning, as well as other areas of law and rights, I thought a brief commentary might be worthwhile.

First, Proposition 8 was legislation in the State of California made, at least in part, in response to the City and Count of San Francisco, allowing for Same Sex Marriage.  Prop 8 prohibited Same Sex Marriage by attempting to limit a definition of marriage as being only between a man and a woman.  Through a variety of legal and appellate gyrations, the Court of Appeals determined that Prop 8 was unconstitutional as violative of individual rights, ostensibly under various equal protection, due process and anti-discrimination aspects of law flowing from the 14^th Amendment.  Advocates for Prop 8, and against gay marriage, appealed.  The U.S. Supreme Court, rather than endorsing gay marriage, ruled on legal procedures, claiming that the advocates for Prop 8 were not harmed by the ruling against Prop 8 and thus did not have legal standing.  Thus, the lower court ruling stands as valid, and same sex marriage is now allowed in California, and many marriages have been performed just in the few days since this ruling.  While this may not be a ringing endorsement for same sex marriage, the practical implication, when read in conjunction with a companion case addressing DOMA, the Federal Defense of Marriage Act, is to allow for States to determine all laws necessary to effectuate the union of two people, within their state.  As a result, California becomes the 13^th state, joining Connecticut, Delaware, Iowa, Maine, Maryland, Maine, Minnesota, New Hampshire, New York, Rhode Island, Vermont, Washington and D.C. in allowing for some type of same sex marriage.         

Second, as referred to above, the companion case to the Prop 8 case, struck down Section 3 of DOMA, the Federal Defense of Marriage Act.  When enacted in 1996, DOMA defined "spouse" and its related terms to signify a heterosexual couple in a recognized marriage, and by doing so, codified the non-recognition of same sex marriages for all federal purposes, including insurance benefits for government employees, social security survivors' benefits, immigration, bankruptcy, and the filing of joint tax returns, as well as excluding same-sex spouses from the scope of laws protecting families of federal officers, laws evaluating financial aid eligibility, and federal ethics laws applicable to opposite-sex spouses.  The impact is estimated to be felt in over 1000 Federal laws.

In the 5–4 decision on June 26, the U.S. Supreme Court ruled Section 3 of DOMA to be unconstitutional, declaring it "a deprivation of the liberty of the person protected by the Fifth Amendment.”  While debate will be ongoing, especially as various states try to sort out this impact as well as their take on the Prop 8 matter as may apply to their states, and as various departments and agencies of the Federal government begin to re-interpret the practical application of what remains of DOMA, there appears to be a significant broadening of protections and rights of same sex couples, and those that become couples in their states.

So, has does this apply to you?  No easy answer there.  Let’s start by saying if you are a heterosexual person, it has no legal impact on you at all.  You were able to marry a person of the opposite sex, and for the benefit of my practice, you could either develop an Estate Plan together, or seek a Divorce.  Either way, I’ve got you covered.  Moving on, if you live in one of those 13 states or D.C., you have been and may continue to have a marriage with your same sex partner.  Now, while we need to see how things go, if you need to end that relationship, chances are, you will get a divorce, and I can help you there.  I will say, that with regard to reproductive rights and progeny, same sex couples, who can have children or adopt, may offer some unique fact patterns relative to children in divorce, but there again, we have routine formats to address most split custody matters, and if not, the courts are always there to help.  Furthermore, I believe all states have enacted Full Faith and Credit laws.  That is to say, one state will enforce the valid laws of another state, if called upon to address them.  Thus, if you are gay, and get married in one of those states that allow same sex marriages, and move to another state that does not allow for same sex marriages, you still have a valid marriage and should be extended all rights and responsibilities of a spouse.  There may be issues of some states allowing that, but I believe the default position would be to allow and in not doing so there would be Federal violations.  Just my opinion, but there have been similar changes over time, such as interracial marriages and travel over state lines.   

Perhaps more significantly, relative to Estate Planning, there are many rights, privileges and penalties extended through the Federal government that will have to be fleshed out, but should apply.  As noted above, tax filing status would be a prime penalty or option to sort out with your tax advisor.  Tongue in cheek but true.  Seriously, various survivor benefits, pension rights, insurance rights, and many other matters that may impact your Estate Plan and process may now be applicable for the same sex couple, just like any other married couple.  Prior to this last week, no such rights existed, and work arounds were part of Estate Planning for same sex couples, since they were not married, similar to that of long time companions of the opposite sex who simply never wanted to get married but wanted to provide for each other in their passing.  Irrespective of your beliefs on this issue, hopefully we will never have to hear about life long partners not allowed to be at the death-bed of each other, because they are not spouse or family.     

I am sure that in both of my areas of Divorce and Estate Planning there will be more changes and challenges in proper representation of the unique needs of my clients.  However, it is such changes that keep lawyers on their toes.  Make sure when trying to address these unique issues with your legal and other professionals that you share all facts and issues unique to your life, no matter how small, as you never know when something small may adversely affect proper representation by any professional on your A Team. (see my 6/9/13 blog - http://fbegun.blogspot.com/2013/06/the-team.html)

In the blogs that follow, I will get back on track and discuss simple wills and the components necessary to make a complete and valid will.  However, if you have any questions, feel free to respond below, or if you are interested in learning more about an Estate Plan, Wills, Trusts, Advanced Healthcare Directives, or Divorce, Custody, Visitation, Child Support, Spousal Support, Property Division, Modifications, Remarriage, or Pre-Nuptial Agreements, please contact me at http://www.fcbegun.com/, fbegun@gmail.com or at http://www.linkedin.com for Fred Begun.

Simple Wills

Back again with more thoughts on Estate Planning after completing your divorce.  First, a quick thank you to Dennis who had a great question in response to my Changes blog last week.  Basically, how can unmarried couples, and I would presume long term and committed relationships, that simply don’t care about marriage, deal with these same issues, separately, but together.  Check my response to Dennis in the Changes blog.  That said, this week we deal with one tool good for everyone, a Will.

Let’s get very clear up front.  Nothing says you must have a Will or Estate Plan.  If you have virtually nothing, or nobody, who cares if you have a Will.  However, if you have people and stuff, you should consider having a Will.  Every state has its own rules and process for people who die without a Will.  If you die without a Will, you are deemed to have passed “intestate” or, without a Will.  The law provides for the accumulation of your assets and debts, a satisfaction of your debts and the passing of your remaining stuff to your blood relatives.  This is done through the court Probate process.  If you are OK with that, then you don’t need a Will.  Understand that the law also provides for court approved fees for attorneys, so everyone gets a piece.  Having a Will does not always by pass Probate, and there are certain instances where your heirs should elect to Probate your estate, but a Will gives them the first tool necessary to follow your direction, pass along benefits and dispose of your stuff as you wanted.

What is a Will?  We were taught in law school that a Will is essentially your voice from beyond the grave, telling your survivors and heirs what you want to do with your stuff and to help conserve your stuff for your family, and hopefully not the government.  A Will is generally defined as a document by which a person directs the disposition of his or her property, which takes effect after that persons death, and for the legal folk in the crowd, a Will is also ambulatory and revocable during your lifetime, meaning, you can change your Will as long as you live.  What else does a Will do?  It can create the complete list of your property and a complete list of your family, heirs or beneficiaries.

In most instances, the average person will need only a Simple Will.  Of the various types of Wills, I will spend the rest of this blog, discussing only Simple Wills.  A Simple Will describes who you are, with enough information to identify you, and that this is your Will.  It will also identify your beneficiaries, whether that is family, friends, charities or other.  The Will generally appoints one or more Executors, being the people that you trust to be legally responsible for making sure your directions are followed.  The Executor is also frequently called your Personal Representative and there are frequently multiple or sequential representatives identified.  And finally, your wishes.

Pretty simple, right?  In the future, we will discuss other Wills, such as Joint Wills, Mutual Wills, Holographic Wills (no not a 3-D Will, how cool would that be) and Nuncupative Wills.  Don’t you just love the cliffhanger!

In the blogs that follow, I will begin to address in greater detail each of the major parts of a Simple Will, which also applies to most every other type of Will. However, if you have any questions, feel free to respond below, or if you are interested in learning more about an Estate Plan, Wills, Trusts, Advanced Healthcare Directives, or Divorce, Custody, Visitation, Child Support, Spousal Support, Property Division, Modifications, Remarriage, or Pre-Nuptial Agreements, please contact me at http://www.fcbegun.com/, fbegun@gmail.com or at http://www.linkedin.com for Fred Begun.

Changes

Back again with more thoughts on Estate Planning after completing your divorce.  As a diligent reader of this blog, by now you should be picking up a central theme.  Changes mean you should consider revisiting, if not revising, your Estate Plan.

I am posting this week a bit later, because over this past weekend, my nephew graduated from High School, we had Father’s Day, my sister-in-law had a birthday and I had a birthday.  Momentous events for some, odometer ticking for others.  However, whenever there are any significant changes in your life, you should consider reviewing your Estate Plan.

Significant changes can include people or things.  Obviously, getting divorced, getting married, having children, all are people changes.  When family members and friends die, that could mean inheritances for you, these are people changes and thing changes.  Buy a house, sell a house, get a job, change a job, get stock options, get stock, buy stock, sell stock, get a patent, write a book, any changes to investments, buy or sell vacation properties or income properties, buy insurance, contribute to any retirement account or asset, these are the thing changes.  As you get or change the who and the what in your life, these things, may have impact or trigger the need to have an Estate Plan or revise an Estate Plan.

You might say, “OK Fred, I get it, I didn’t have anything, now I am married with children and have some stuff, I should develop an Estate Plan with my “A Team”, but if I have already done that, why would a change in my stuff mean I need a new Estate Plan?”  Fair question.  It is possible that your Estate Plan is written in a fashion that everything you have goes to your spouse and you don’t have much.  It may be that you have your simple will and everything is in both your names, and your retirement is all properly designating each other as beneficiaries.  You may not need a new Estate Plan.  But when you re-fied your house, the names on the deed were not done correctly, or when you changed jobs, the 401K was transferred to become a Rollover IRA and you forgot to re-designate your spouse or children as your beneficiaries.  Could be, your company was using Merrill Lynch to control stock options, but now uses Morgan Stanley, and forms were incomplete.  Maybe, you simply changed primary banks, and all your accounts went from the You and Me Family Trust to You and Me, and we never caught that the bank dropped the “Family Trust” from the title.  Any small change, whether in your control or not, could create an irreparable error upon your death.  We need to check Estate Plans now and with any changes.

Fate favors the ever vigilant.  I hope you review what you have and how you hold it from time to time.  After the holidays every year, you get all your year end statements, maybe time for a serious New Years Resolution?  Every tax season, you have to account for everything, make that the time you also review matter with your a Team.  Maybe just pick some date for your random, but annual review.

In the bogs that follow, I will begin to address in greater detail each of the major components of an Estate Plan, starting with Wills.  However, if you are interested in learning more about an Estate Plan, Wills, Trusts, Advanced Healthcare Directives, or Divorce, Custody, Visitation, Child Support, Spousal Support, Property Division, Modifications, Remarriage, or Pre-Nuptial Agreements, please contact me at http://www.fcbegun.com/, fbegun@gmail.com or at http://www.linkedin.com for Fred Begun.

The "A" Team

Back again with more thoughts on Estate Planning after completing your divorce.  Over the past few weeks, we’ve talked about some of the reasons to have an Estate Plan, such as surviving a divorce, having saved some money out of the divorce and having children and/or family to provide for.  We’ve also talked about some of the basic Estate Planning documents to have, review, revise or create.  Before we get into some of the serious money discussions over the net few weeks, I wanted to talk about the "A" Team.  That is, your trusted team of Estate Planning Advisors.

Obviously, the first person in your Estate Planning Team of Advisors is ME!  Seriously, you need a competent attorney to help you organize your information and your thoughts, who will help you develop the umbrella concept and create the proper documents under which your Estate Plan exists.  After we define the scope of your assets and debts, the list of your beneficiaries, and your general intent, you will need to bring onto your team, a number of other specialists, in nor particular order.

I would normally suggest that the next person you bring on board, is a tax advisor, who is usually a Certified Public Accountant.  With mastering the nuance between gift tax, estate tax and a variety of related concerns, this person should be able to counsel us all, with your giving goals in mind, as to how to best allocate your Estate.  That would be dovetailed back to your Estate Planning Attorney.

Once we have your road map in mind, with the oh so important tax planning incorporated, next we move on to your Financial Advisor.  Whether you have a nice little nest egg or boat loads of money, you should have at least one Financial Advisor, who will help you invest this money to attain your long-term goals.  Frequently, your Financial Advisor works with any of the major investment firms around the globe.  Sometimes, this may be more of a Banker or Insurance specialist, which I will get to in a minute.  After sharing the core of your desires as set forth in your Estate Planning concept, a good Financial Advisor will work with you determine your relative level of risk, direct you to various types of investments, considering your goals and risks, as well as the composition of your entire investment portfolio, and give you recommendations and implement your investing accordingly.  That would be dovetailed back to your Estate Planning Attorney and possibly your Tax Advisor if you want additional feedback from all trusted sources.

While your Financial Advisor will take your liquid or cash investments and develop and implement a balance portfolio, in the broader scheme of your Estate Plan, that balance could include other assets.  Most people, through employment or choice over time, have some form of life insurance, so the next person to draft onto the team might be your Insurance Specialist.   Like any other investment, your life insurance should be reviewed over time, to determine if it meets your needs, if it is the right format for you, such as Term, Whole Life, Universal Life or some other format.  Frequently, your insurance investment might have an Annuity or some other cash flow investment.  This begins to overlap with tools used by your Financial Advisor, so this is a clear example why you take the complete asset list developed and compiled first with your Attorney, and share this with your Financial Advisor and Insurance Specialist, so that you do not accidentally have too much of any particular type of investment and risk losing special tax treatment or over expose your total portfolio to any particular market problem.  This is also where you may begin to feel a bit of a tug to place more money with one type of investment or another, but your team should be able to professionally work and play well with others.  If there is trouble in your paradise, you can always change your team.  It is your life, your money and you are the boss.  Again, once you have your insurance items in place, many of which can have serious tax implications and positive effects on your Estate Plan, that would be dovetailed back to your Estate Planning Attorney and possibly your Tax Advisor if you want additional feedback from all trusted sources.

In California, the two biggest value items in many people’s Estates, except for those hi-tech stock option types, is typically the funded retirement account or their home.  If you have real estate, whether it be a residence alone, a vacation property, or investment properties, your team is further fleshed out by any or all of the Real Estate Specialists, including Property Managers, Mortgage Brokers and trusted Realtors.  With the interest rates as we have today, being historically very low, refinancing properties to reduce payments and affect cash flow, refinancing to shorten loan life and get quicker pay off during high earning years, are but a few reasons to have these folk on your speed dial.  Selling to downsize in later life or when the nest empties, is a common issue for Baby Boomers.  Considering profit taking and tax sheltered trades.  If you have real estate, you have many options and considerations.  Your Real Estate Specialists can have a huge impact on growing and preserving wealth.  I would comment here that you want to have the number of a good Business and Real Estate Attorney to help on some formalities and in order to avoid serious pitfalls.  Again, this would be dovetailed back to your Estate Planning Attorney, possibly your Tax Advisor, and now also your Financial Advisor and Insurance Specialist, not only for additional feedback from all trusted sources, but also for the related services they can provide.

    

Last, but certainly not least, I would recommend have a good relationship with a Personal Banker at a reputable banking institution.  You will need a variety of possible bank accounts, savings accounts, checking accounts, even a safe deposit box and other services that your Personal Banker has to offer.  I also suggest that you consider having accounts in the name of your Trust, which I will talk about in another blog, but also your personal names.  Furthermore, your Personal Banker may also be able to offer a full deck of services, such as Financial Advising investments, Mortgage services and Credit functions.  I cannot express how important it can be, in this day of online banking and ATM transactions, and how nice it can be to know a real person as the face of a massive financial institution to back you up.  And finally, this would be dovetailed back to your Estate Planning Attorney, and possibly the balance of you're A Team not only for additional feedback from all trusted sources, but also for the related services they can provide.

Sorry for being longer than the average blog, but as this is good stuff, I wanted to share a big picture with you.  In the days that follow, I will give you more reasons to create, review and revise your Estate Plan. However, if you are interested in learning more about an Estate Plan, Wills, Trusts, Advanced Healthcare Directives, or Divorce, Custody, Visitation, Child Support, Spousal Support, Property Division, Modifications, Remarriage, or Pre-Nuptial Agreements, and you live in Santa Clara County or thereabout, please contact me at http://www.fcbegun.com/, fbegun@gmail.com or at http://www.linkedin.com for Fred Begun.

Guardians for your Children

Back again with more thoughts on Estate Planning after completing your divorce.  This time, we’re thinking about your children and how to provide for them after your passing.

We have already raised the issue of your passing and that under most cases, if you or your ex were to pass, the other natural parent should step in for complete control of the children.  As we discussed, your Estate Plan could express your wishes for future guardians, after you and your ex’s untimely death.  We can see this in several forms.  Most common is a Guardian of the Person and of the Estate.  This is where a single person, or even several persons, take full control of your children and your money for the benefit of your children.  This is most commonly the case with your brother or sister, the aunt and uncle, taking on the children and their needs, lock, stock and barrel.

However, there can be two other common types of guardians, Guardians of the Person, being the person making life decisions for your children, and/or, Guardians of the Estate, being the person making money decisions for your children.  Very common is where you have a sibling, who the children are attached to, who is in the family way, and better capable of caring for children day to day.  You are also lucky enough to have another sibling that is the investment whiz, the Walls Street guru, who can better manage the money.  This way, we divide and conquer, having your family care for your children in your passing.  This thought process is part of the Estate Planning method, to raise these types of questions and discuss these options.

Assuming you have already designated Guardians of the Person, following my prior blog, the next step is to address their financial needs, most commonly through a Revocable Living Trust or other specialized trust mechanisms.  With such a Trust in place, your successor trustees, who may also be the Guardians of the Estate, can follow your intent, can provide for specific needs of your children out of the funds of the Trust, such as private school tuition, extra-curricular activities, a car, a computer, college application fees, college tuition and more.  As a parent, you can still care for your children and protect their inheritance by having a proper Trust in place to carry out your express wishes.  You may even want the money paid directly to the provider rather than the Guardian, especially if your ex is in charge.  This is perhaps your final opportunity to exercise your care and some of your control. 

There are various other special trust and guardianships to consider, but your Estate Planner should be able to raise and discuss those issues in your consultation and address your needs.

In the days that follow, I will give you more reasons to create, review and revise your Estate Plan. However, if you are interested in learning more about an Estate Plan, Wills, Trusts, Advanced Healthcare Directives, or Divorce, Custody, Visitation, Child Support, Spousal Support, Property Division, Modifications, Remarriage, or Pre-Nuptial Agreements, and you live in Santa Clara County or thereabout, please contact me at fbegun@gmail.com, or through my other websites at www.fcbegun.com, or at www.linkedin.com for Fred Begun