September 2011 – Lonich Patton Ehrlich Policastri

Despite Mandated Reporting Laws, Financial Institutions are not Subject to Civil Liability

September 28, 2011/0 Comments/in Estate Planning /by Lonich Patton Ehrlich Policastri

The elderly population in the United States has steadily been on the rise. Between 1900 and 1996, the population of elders grew from 3 million to 34 million. As the “baby boomer” generation begins to retire, our society will need to make several adjustments. While the first thing that comes to mind when discussing the elderly may be programs such as social security or healthcare, the laws applicable to elders deserve some attention as well.

The California Welfare Code includes sections on who is required to report signs of physical or financial elder abuse to Adult Protective Services or the local law enforcement agency. Included in that law are nursing home workers, healthcare practitioners, ombudsmen, and members of the clergy. The law also deems all officers and employees of financial institutions mandated reporters of suspected financial elder abuse. Recently, a California Appellate Court decided whether the mandated reporting requirement for financial institutions could serve as a legal basis for civil liability.

In Das v. Bank of America, N.A., 186 Cal. App. 4th 727 (2010), Mr. Das’ (the deceased) daughter filed several suits against Bank of America for allowing her father—who suffered from strokes, brain tumors, and dementia—to make a series of transfers overseas totaling over $300,000. She claimed her father’s lack of capacity was readily apparent to casual observers and that bank employees even “wondered” about his state of mind, but did not report Mr. Das’ strange behavior despite the suspicious nature of his transactions. The Second Appellate District, however, found that the legislative intent of the section on mandated reporting for financial institutions was explicitly limited to the government and negates any intent to enlarge the legal basis for a private civil action. Accordingly, they were unable to expand the application of the law despite the egregious circumstances.

There are many ways to protected loved ones from financial elder abuse including conservatorships and financial powers of attorney. If you are interested in learning about how you might be able to protect a loved one from financial abuse, contact the San Jose estate planning attorneys at Lonich Patton Ehrlich Policastri, LLP. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may include legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

Testamentary versus Inter Vivos Trusts

September 23, 2011/1 Comment/in Estate Planning /by Lonich Patton Ehrlich Policastri

A trust is an arrangement where property is transferred with the intent that it be held and administered by the person to whom the benefit is for. There is a large assortment of trust types, however, the two main types of trusts are (1) the inter vivos trust and (2) the testamentary trust. The inter vivos trust, often referred to as a living trust, refers to a trust transfer made during one’s lifetime. The testamentary trust, on the other hand, only arises upon one’s death—typically specified in one’s will.

An inter vivos trust is created by a settlor and signed by the settlor and any named trustees. It is created and funded during one’s life time and may be revocable or irrevocable. A testamentary trust is usually created in the will of a settlor and must be probated. Testamentary trusts are irrevocable as they are created after one’s death and, therefore, cannot be amended or revoked. Inter vivos trusts generally do not have to go through probate and are created primarily to provide an economic benefit to specific people or institutions. Payments to the beneficiaries can begin immediately during one’s lifetime or upon death as specified.

Whether an inter vivos trust or a testamentary trust is the better plan depends on the settlors’ objectives. Inter vivos trusts are an effective way to reduce the value of an estate and the subsequent effect of federal and state estate taxes. Testamentary trusts can provide for the care of beneficiaries without the need for a public trustee/guardian upon death.

If you are interested in discussing your estate, creating a trust, or creating a comprehensive estate plan, contact the San Jose estate planning attorneys at Lonich Patton Ehrlich Policastri, LLP. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may include legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

Spendthrift Clauses: Protecting Your Loved Ones’ Inheritances

September 19, 2011/0 Comments/in Estate Planning /by Lonich Patton Ehrlich Policastri

Most people consider the protection of their assets from their own creditors when beginning to plan for their estate. However, few consider the prospect of their heirs’ creditors. Adding spendthrift language to a trust may help safeguard their heirs’ assets.

A variety of trusts can be spendthrift trusts as long as a spendthrift clause is included. Despite its name, a spendthrift trust does not simply protect heirs from being recklessly extravagant or wasteful in their use of funds. Spendthrift clauses restrict a beneficiary’s ability to assign or transfer his or her interest in the trust and restrict the rights of creditors to reach the trust assets. If your child gets divorced, it can prevent your child’s spouse from claiming a share of the trust property. If your child predeceases his or her spouse, it can ensure that your children or grandchildren receive their inheritance rather than your spouse. A properly designed spendthrift trust can even protect your heirs’ assets from being attacked by frivolous lawsuits, dishonest business partners, or unscrupulous creditors.

There are, however, some limitations. Government agencies may be able to reach the trust assets, regardless of spendthrift language, to satisfy something like a tax obligation. Further, ex-spouses may be able to reach the trust assets to satisfy child support arrearages. Generally, the more discretion granted to the trustee the greater the protection against creditors’ claims.

If you are interested in learning more about spendthrift trusts or creating an estate plan, contact the San Jose estate planning attorneys at Lonich Patton Ehrlich Policastri, LLP. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may include legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

Relocation and Child Custody

September 14, 2011/0 Comments/in Family Law /by Lonich Patton Ehrlich Policastri

When parents share joint custody of their children, one party’s desire or need to relocate can require reevaluation of existing custody orders and can be an extremely complicated issue.

Recently, the California Court of Appeal for the Third District addressed a “move-away” issue in a case involving an unmarried couple and their minor daughter. After the parties’ relationship ended in December 2007, the mother moved to Washington with the child, then later returned to California. Upon her return, the father petitioned for custody of their daughter; in response, the mother filed a motion requesting permission to move back to Washington with their daughter. The trial court granted the parents joint legal and physical custody and denied mother’s request to move with the child. Thereafter, mother requested to move to Washington with the child several more times. At trial, she testified that she was moving to Washington because she had a job prospect and family support there. However, the court apparently did not believe that she would move without her daughter, and denied mother’s request to move with the child because it thought it would be disruptive to the child to leave her father and friends. Therefore, the prior joint custody order remained in place. It was impossible for mother to comply with the joint physical custody order if she moved to Washington, and therefore, the court’s decision effectively prohibited her from moving even without her daughter. The mother appealed and the appellate court found that the trial court order amounted to a coercive attempt to get the mother to change her plans to move. The court does not have the ability to prohibit a parent from moving, only to determine where the child should live as a result of the parent’s decision to move. They reversed and remanded the decision for reconsideration.

The appellate court noted that in joint custody cases, when a parent is considering a move that makes the existing custody plan unworkable, the court must consider the child’s best interests de novo and make a determination of what physical custody arrangement would be in the child’s best interests- either relocating with the moving parent or remaining with the non-moving parent and having visits with the moving parent. Then, the court must fashion an appropriate parenting plan that takes into account the fact that the parents live in separate states.

Jacob A. v. C.H., 196 Cal. App. 4th 1591 (2011).

The Certified Family Law Specialists* at Lonich Patton Ehrlich Policastri have decades of experience handling complex and heavily disputed custody issues like this one. If you are contemplating moving and have joint custody of your child, please contact the Certified Family Law Specialists* at Lonich Patton Ehrlich Policastri, who can provide you with an in-depth analysis of your issues. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may include legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

*Certified Family Law Specialist, The State Bar of California Board of Legal Specialization

Actor Jon Cryer Ordered to Continue Child Support Payments Despite Having Primary Custody

September 12, 2011/0 Comments/in Family Law /by Gina Policastri

“Two and a Half Men” television show actor Jon Cryer pays his former wife a hefty $8,000 per month in child support, even though he has close to full custody of their son. Cryer has 96% of the parenting time while Sarah Trigger Cryer only has 4%.

The two married in 2000 and divorced four years later. Sarah, also an actor, has not had a job since 2005 and is not inclined to look for work. Jon and Sarah each remarried and Sarah had a second child. Following a divorce from her second Husband, Sarah had custody of both her children when, in 2009, the two boys were removed from her after she was accused of being an unfit parent by Jon for leaving their son unsupervised, admonished by the court for negligent parenting, and allowed her second child to be injured while under her care. Jon was awarded physical custody of their son.

Thereafter, Jon requested a reduction of his child support payments from $10,000 per month to zero, as he was now the sole custodial parent. However, the trial court simply lowered the payments to $8,000 per month. On appeal, the court determined that despite Jon’s increased timeshare, any further reduction would be against the best interests of their child and have a detrimental effect, pointing to the fact that Sarah was in the process of reunifying with their son, and that a reduction in support would not allow her to maintain the home that their son would eventually return to once they were fully reunified.

Child support and child custody issues are difficult and complicated. The Certified Family Law Specialists* at Lonich Patton Ehrlich Policastri have decades of experience handling complex and heavily disputed child support issues. If you are involved in a contested child support case, contact the Certified Family Law Specialists* at Lonich Patton Ehrlich Policastri. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may include legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

*Certified Family Law Specialist, The State Bar of California Board of Legal Specialization.

Tough Times Call for . . . More Estate Taxes?

September 9, 2011/0 Comments/in Estate Planning /by Lonich Patton Ehrlich Policastri

It is no secret that, in the present economy, states are looking to increase revenue any way they can. A report published earlier this year showed that total state tax revenue decreased by more than $14 billion from 2009 to 2010, a two-percent drop. So, not surprisingly, while fewer members of the wealthier class will owe an estate tax to the federal government, they may find that they owe it to the state.

Though the trend is not widespread, many states are looking to increase their receipt of estate taxes. Connecticut collects on estates of more than $3.5 million but wants to lower the exemption to $2 million; the state’s legislature is currently taking this proposal into consideration. Illinois reinstated its estate tax in 2011 with a $2 million exemption. And in 2010, Hawaii imposed an estate tax on residents and Hawaiian assets of non-resident, non-U.S. citizens.

Estate tax rules vary greatly across the country. A few states assess an inheritance tax and others an estate tax. Inheritance tax, now uncommon, is levied on assets a beneficiary gets; estate tax is collected based on the whole estate. About half of the states have an estate tax, with rates that range from 1% to 16%. It is worthwhile to note that some states are moving to reduce or eliminate the estate tax where estate taxes are not a huge source of revenue. In California, for example, decedents who passed away after January 1, 2005, are not subject to a California estate tax.

If you are interested in learning more about estate planning, contact the San Jose estate planning attorneys at Lonich Patton Ehrlich Policastri, LLP. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may include legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

Los Gatos Art and Wine Festival Raffle Winners

September 7, 2011/0 Comments/in Estate Planning, In the Community /by Michael Lonich

Congratulations to our raffle winners from the Los Gatos Fiesta de Artes:

Grand Prize Winner of the Lonich Patton Ehrlich Policastri Estate Plan is Todd G.
First Prize Winner of the Tax Planning Consultation with Chan CPA & Company is Regina R.
Second Prize Winner of the Fitness Package with Mint Condition Fitness is Darrell P.

Thank you to everyone who stopped by the Lonich Patton Ehrlich Policastri booth at the Los Gatos Fiesta de Artes a few weeks ago. We had a wonderful time visiting with you and enjoyed participating in the community event. We hope to see everyone again next year.