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Estate Planning Should Not be a Near-Death Experience

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A New Era of Estate Planning in the Age of Covid-19

The spread of Covid-19 has caused a huge spike in the number of people looking to get their estate planning done immediately. This is not surprising given the number of people who have not done their estate plans yet. But what may be spreading faster than the virus is misinformation when it comes to estate planning, and the total disaster that may await people who resort to this type of immediate, online planning. What do I mean by this? Just take a quick look at the title of these articles by well-known publications:

If you read them, the one thing each and every one of them sadly have in common is that they each focus on will-based planning (and not a trust).  This is a huge problem if people don’t know the difference between a will and a trust or what their state law requires.

A Will Does Not Avoid Probate

A will is a written instrument that designates to whom your assets should go to once you pass away.  Most people mistakenly believe that if you create a will, the people named in your will should immediately get your assets.

But that’s not the case, especially if you are a homeowner in California.  In California, if you are a homeowner or if you have more than $166,250 in cash assets, you will have a probate unless you have moved these assets into a trust – not a will.  In other words, even if you did a will, your family would still need to go through probate.

I’ve written about probate elsewhere, but safe to say, it’s not a pleasant experience unless your family wants to wait for years and pay tens, if not hundreds, of thousands of dollars in fees.  This is not an exaggeration.  Our firm handles probates as well as estate planning — ask any of our probate clients.  They all wish their loved ones had planned better.

Trusts Need to be Funded

Guaranteed — no online company will fund your trust.  It is impossible for them to do so.  If you don’t know what “funding a trust” means, it’s yet another reason why online companies should be viewed with caution.  A trust only works when all the assets are physically re-titled in the name of your trust.  This requires a physical trip to the bank, or a deed that needs to be notarized if you are a homeowner (see below regarding how Covid-19 is affecting that requirement), or a brokerage form to be completed, or a business document that needs to be amended (if you own an LLC or Corporation).  An asset not correctly funded in your trust leads to probate.

Online plans hurt clients, not lawyers

Believe it or not, most lawyers actually do better when clients initially do their plans online.  Why?

Because they mess up.  And when they do, your online company won’t do much to help.  In fact, they make you sign a disclaimer promising that you give up your right to sue them when something goes wrong.  When someone dies, or a trust needs to be administered, or you lose a copy of your documents, or your guardians don’t know what to do — guess who the online company will refer them to?  You guessed it!  A lawyer.  The online company will not come to court when your family needs it the most.

And that’s where lawyers have actually profited more with the rise of online plans.  Online planning usually leads to bigger fires that cost more money to be put out years later.  

The Problem with Notaries: The Use of RONs (Remote Online Notaries)

It is said that when forests burn, the trees grow back healthier and stronger than ever before.

If any solace can be had from the recent events surrounding us, it is that the industries around us will be better equipped and prepared for the next crisis.  This is especially true when it comes to estate planning, a field which now needs to practice what it has preached all along:

  • “Hope is not a plan.”
  • “Failing to plan is planning to fail.”
  • “A goal without a plan is just a wish.”

As a whole, the legal industry is tragically anachronistic.  Technology is ever-present at the doorsteps, but the law has discriminated against technology for far too long, keeping it outdoors instead of welcoming it inside.  There is no reason why more criminal arraignments can’t be done through video, or why more civil depositions can’t be done via Skype or Zoom.  But this happens only in certain courtrooms or in certain States.

Similarly, there is no good reason why notaries can’t be done remotely online.  If I am allowed to buy a house through an app and sign through DocuSign, why can’t I sign a document and have the notary watch me do it remotely on my computer screen?  Ultimately, California only cares that I, as the signer, simply acknowledge to the notary (through my Driver’s License usually) that I am the person named in my identification.  Surely this does not require physical presence, right?

Yet, of course, the law requires “physical presence” in California.  This is the exact language pulled from the California Secretary of State website as of Friday, March 27:

California Law does not provide the authority for California Notaries Public to perform a remote online notarization. The personal appearance of the document signer is required before the notary public.  

Mind you, this is taken from a FAQ section entitled: “COVID-19 Questions.”  So this isn’t a situation where the Secretary of State hasn’t thought about the situation.  Rather, they’ve updated the website to say “Sorry, even in these tough times, we still require a notary to personally appear.”

But it gets worse.

In light of the Governor’s stay-at-home order to all workers except those who perform “essential services,” surely you would imagine that notaries are included in the list of “essential services”, right?

Wrong.  They are not. 

So the left hand of our State is saying everyone is in lock-down mode including notaries. 

And the right hand of our State is saying to our sick clients who are about to sign their estate plan that they must meet with a notary to transfer their home to trust.

The Secretary of State goes on to further vent on its webpage:

The Governor of the State of California has requested that residents of California stay at home due to the COVID-19 pandemic. Although this doesn’t seem to apply to individuals whose job is considered an essential function, our office cannot make the determination if notary public services are considered essential at this time. We recommend you contact the county health department for further guidance. However, the California Secretary of State’s office will not take administrative action against a notary public for performing a notarial act during a shelter in place order providing the notarial act complies with California law.

In other words, the California Secretary of State is advising us to use another State’s online notary law because it is better than our law.  And it goes on to say, “If you as a notary and Client choose to ignore the Governor’s order, we will look the other way.”

What is even scarier is that online companies are not built to adjust their models to real-life events like this.  They are plug and play.  This is not plug and play times.

Fortunately, our office has figured out options to get this done the right way at this most critical juncture.  But when the fire stops burning, we hope the anachronistic rules imposed by the State of California – and the legal industry in general and the fly-by-night online companies – make way for healthier, stronger trees than before.

This article is a service of Bridge Law Firm. We are an award-winning law firm that specializes in business and estate planning for clients like you. The goal for every family is to stay educated on all topics like this, avoid probate, avoid estate taxes, and build a legacy for you and your loved ones. What sets our firm apart is that we build lasting, lifelong relationships with our clients. They rely on us to keep them updated, provide sound legal counsel, and be there for them immediately if any problems should ever arise. The best part is we don’t charge hourly fees to our families, so you never have to worry about speaking to us. If you’re ready to keep your family out of Court, contact us today to schedule an initial consultation or visit our website at www.bridgelawllp.com.

Prop 19: Reduce Property Taxes Before February 16th!

Proposition 19 will affect each and every person who owns a property, whether it’s a primary residence, a vacation home, a rental property, or a commercial property.

According to the new law, we have a limited window to take action in order to lock in our property taxes under the old rules. 

Bridge Law will be hosting a free webinar on Saturday, November 28 discussing Prop. 19 and what you need to know. There are strategies available to us if we plan now!

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