Two years ago, a client walked into the Law Office of Matthew C. Mullhofer, holding a probate court document concerning his deceased mother's estate. The client was confused. A week before his mother passed, she executed a deed to her house in the son's name and asked him to sell the house after her death and split the proceeds with his seven brothers and sisters.
The son agreed to do this for her, and thought this would take care of her estate plan. Unfortunately, she did not have a last will or trust.
The Probate court document was filed by a brother of the client. The brother felt that he should have been the one that would be in charge of selling the home and distributing the cash proceeds to the brothers and sisters.
Needless to say, the case has been tied up in the Probate court for the last two and a half years. During that time the value of the home dropped by more than $250,000. All of the family members were affected by the case. Half chose one brother's side and the other half chose the other brother's side. They no longer speak to one another.
We at the Law office of Matthew C. Mullhofer, work with clients to avoid this type of dispute before it can occur. A simple revocable trust for the mother would have listed instructions in writing as to how and when the house would be sold. It would have helped the family avoid this conflict and preserved the estate asset from being tied up in a long court battle. The trust would have allowed the house to be sold quickly after the mother's death and a much higher gain from the sale would have been available to the heirs.
Above all, the family would have avoided having to choose sides and would have retained their close relationship.
If you have a parent or a loved one that needs help planning their estate and getting their affairs in order, have them call Matthew C. Mullhofer at (714) 827-9955. You can also visit his website at www.protectmyassets.com
Matthew C. Mullhofer
Wednesday, February 25, 2009
Friday, February 13, 2009
The Seven Costly Mistakes Of Using An Online Internet Service To Write Your Will Or Trust
So the time has come for you to start thinking about writing your will and/or living trust, which is a very important step to take in ones life. In deciding whether to use the internet to write your trust, will or estate plan, the old adage holds true: “A man who represents himself in court, has a fool for a client.”
Many people ask me, “Why do I need a living trust”. That is a very good question, because the answer is not always the same for every client. If you own Real Estate in California or any other state, it is important to hold title to that property in a trust. The main reason is that when you die, your intended heirs cannot transfer, sell, or refinance that property until they obtain a Court order allowing them to do so.
This process is what we call "Probate". The probate process allows heirs to have the real estate and other personal property (ie: bank accounts, mutual funds, and CD’s) to be transferred to their name. The downside to probate is that it takes about 18 months to be final and the costs are extreme.
For example, the cost to probate an estate worth $500,000 would be close to $20,000. This would include attorney’s fees, court filing fees, the posting of a bond and appraiser fees.
The cost of a living trust properly prepared and funded by an attorney for a $500,000 estate would cost about $1500.
1. THE COST OF THE IMPROPERLY PREPARED TRUST.
Many people are the do-it-yourself type. This is a nice approach if you have unlimited time and do not care if you have made the proper decisions in changing title to every asset that you have worked so hard to achieve. If your re-titling project goes awry, your heirs may be required to go to court to persuade a judge of what you really intended to happen after you have died. The internet services do not provide the service of re-titling your assets into your trust.
A trust must have your assets funded or transferred to the trust for it to work properly. Assets have legal title, such as your home, money market accounts or stocks and bonds. The title to your assets must be changed over to your trust.
When you transfer title to the assets, you must have legal documentation properly filed and or recorded with the proper agency. If you miss something, or fail to record a deed, that asset will not pass to your heirs through the trust and will be subject to the probate process. For example, the cost to probate a asset worth $250,000 would be close to $12,000. This would include attorney’s fees, court filing fees, the posting of a bond and appraiser fees.
An asset that is left out of the trust will have to pass through probate. This will cost money and take time to finalize the probate process. In addition, the asset (ie: stock account) will be frozen during this process. So if you have a stock that you would like to sell because it is selling at a high price, you cannot sell until the probate is final. Again, this may take 18 months, and during that time, the stock market may change and the price of your stock could fall.
2. THE TIME INVOLVED IN PREPARING A TRUST CAN BE UNLIMITED.
Estate planning attorneys usually need about four to eight hours to properly prepare, execute and fund a living trust. The time needed by an individual that has not had the training to prepare a trust could be more than twenty hours. And there is no guarantee that the self-written trust was properly completed. It is no different than you driving down the road and the “check engine” light goes off and you pull off onto the side of the road. You know that you can try to diagnose the problem on your own or you can take the car to a well trained mechanic that will charge you a fee to fix the problem with your car. You may be able to discover and fix the problem on your own, but how long will it take? Will you do it right the first time. If you don’t do it right, who will you hurt by your mistakes?
If you miss something in putting the trust together, you are only adding more time onto the project, because the trust will most likely be thrown into the probate court. Time is something we do not have an unlimited amount of.
In my practice, I often am faced with having to probate a trust for a family that was prepared by a non-attorney or internet service. In probate court, judges do not like trusts that were not prepared by attorneys. I have had the opportunity to see how probate judges view trusts prepared by non-attorney’s and look for defects that will allow the trust to be invalidated.
Again, if the trust is invalidated, the assets are subject to the probate process and more time is added to the botched estate plan.
3. THE TAX IMPLICATIONS OF IMPROPER ESTATE PLANNING.
The internet services do not look at your net worth or entire estate to spot potential tax traps that could eat up your hard earned assets. A benefit of hiring an estate planning attorney to prepare your estate plan, they will advise you on what to do if your estate is subject to federal estate taxes.
As of 2007, an estate worth over 2 million dollars will be taxed under the federal estate tax at rates of up to 49%. This means that, those assets that you have been taxed on during your lifetime, will be taxed again after you have died.
If you make the right choices with trusts, gifting and insurance, you can eliminate and/or minimize these exorbitant taxes. I can assure you that an online service will not provide this valuable information to you.
4. THE PROPER SUCCESSORS CAN MAKE OR BREAK YOUR PLAN.
When you go online to do estate planning, you are filling out a series of standard questions. One question is, “who do you want to be in charge of the distribution of the assets after you have died?” There is no discussion as to why you choose that particular person.
As an attorney, I take a very active role in helping my clients decide on who is the right person or persons to act as the successor trustee. Is this person ethical? Does this person have a business or financial background? Do they have outstanding debts or creditors suing them? Do they cave into the pressure of others? Are they reliable? These are all very important questions to consider when choosing your successor.
I was once hired to sue a successor trustee for the beneficiaries, because he was diverting monies from the trust to pay for his gambling losses. This lawsuit cost the beneficiaries tens of thousands of dollars because the wrong person was appointed as the trustee and the trust was written by a non-attorney.
In my practice, I receive many calls each month from a disgruntled beneficiary that wants to sue the successor trustee for embezzlement of trust assets. An internet service does not spend the time counseling the client on the pitfalls of choosing the wrong successor trustee.
Another important question and decision is how should assets be distributed to an eighteen year old beneficiary. A typical eighteen year old lacks the ability to invest assets and manage an estate. A properly drafted trust can avoid the assets being squandered by a young inexperienced beneficiary. By using an attorney and not the internet, you can rest assured that your hard earned assets will not be lost at the craps table in Las Vegas.
Another issue that is typically missed on an internet trust application is what to do if a beneficiary is disabled or becomes disabled. Persons with disabilities can qualify for aid from the government if they have a limited amount of assets. If your beneficiary is disabled and then has an asset transferred to him or her via a trust, then that disabled person may no longer qualify for the state aid.
In our client interview, there is always a discussion about the age, maturity, and mental capacity of your intended beneficiaries. I also should mention about looking out for the opportunistic gold digger {daughter-in-law/daughter-in-law}. These people are always discussed in our consultation. I have never seen an internet application that inquires as to whether you trust your son-in-law.
5. THE DUTIES AND LIABILITIES OF A TRUSTEE.
By accepting the role of a trustee, that particular person is taking on responsibilities and potential liability if that trustee/successor trustee fails to follow state laws, the terms of the trust or does not pay creditors. The trustee can be sued in a court of law for failing to prepare the proper accounting documents on behalf of the trust.
Non-attorneys and online services do not have court experience and do not have the insight on how to counsel clients on how to avoid these pitfalls.
In my practice, I have the ability to share with clients the mistakes that I have seen made by others that were unrepresented and the consequences that were doled out due to those mistakes. For example, states provide statutes that define the duties and responsibilities of a trustee, if the trustee fails to act or acts negligently, the trust beneficiaries can sue the trustee for negligence.
6. WHO IS ACCOUNTABLE IF MISTAKES ARE MADE?
When you use a website to write a trust and things do not turn out properly, you have little recourse in correcting the mistakes. You do not have a warranty. Even if the website offers a money back guarantee, a refund of $300 will not get you very far in the probate court.
Attorneys are required to maintain good standing with the state bar and attend continuing legal education seminars on the recent changes in the law. Attorneys also typically carry malpractice insurance. I always let my clients know that I carry malpractice insurance and that they are covered if a mistake were made. In the planning stages of your estate plan and trust preparation it makes no sense to be penny wise and pound foolish.
7. ARE THERE ANY OTHER DOCUMENTS THAT NEED TO BE PREPARED?
The living trust is usually not the only document that is needed to complete your estate plan. Every family has different needs and an in depth discussion is necessary to spot all of the legal issues. It is important to add durable powers of attorney for asset management, advance health care directives, pour-over wills, irrevocable life insurance trusts, and special needs trusts are other documents to be considered. To make this decision, the client needs full disclosure as to why these documents may be necessary.
I also treat a client engagement as an opportunity to help educate that person on each of these documents and how they work and the importance of each tool. If I am not properly passing on my knowledge to my client, I am not doing my job. I enjoy helping people. That is why I became an attorney. It takes time to explain the importance of these estate planning tools. It is not fair to the client if they do not have a chance to explore all of their options.
I have used these internet sites before, I have even owned my own internet site. The goal of owning an internet site is to be able to sell products or services without having to develop a working relationship with the customer. It is all about generating income without having to answer questions. In the area of estate planning, if your questions are not answered you are headed for failure.
IDENTITY THEFT AND FRAUD
One last parting thought is regarding the problems with identity theft and fraud. When you set up a trust, you must disclose information about you, and your assets. In today’s world of crimes being committed on the internet, it does not make sense to disclose your sensitive information to a company that you know nothing about. You do not know who the owner is and you never get to meet their staff. Would you give your birth date, social security number and the whereabouts of your assets to a perfect stranger? When using the internet to set up your trust, you will be required to disclose private information to people that you do not know. This in of itself is a scary proposition.
I hope this information was helpful and encourages you protect yourself and those who are, or will be a part of your will or living trust. For information, please visit www.protectmyassets.com.
Many people ask me, “Why do I need a living trust”. That is a very good question, because the answer is not always the same for every client. If you own Real Estate in California or any other state, it is important to hold title to that property in a trust. The main reason is that when you die, your intended heirs cannot transfer, sell, or refinance that property until they obtain a Court order allowing them to do so.
This process is what we call "Probate". The probate process allows heirs to have the real estate and other personal property (ie: bank accounts, mutual funds, and CD’s) to be transferred to their name. The downside to probate is that it takes about 18 months to be final and the costs are extreme.
For example, the cost to probate an estate worth $500,000 would be close to $20,000. This would include attorney’s fees, court filing fees, the posting of a bond and appraiser fees.
The cost of a living trust properly prepared and funded by an attorney for a $500,000 estate would cost about $1500.
1. THE COST OF THE IMPROPERLY PREPARED TRUST.
Many people are the do-it-yourself type. This is a nice approach if you have unlimited time and do not care if you have made the proper decisions in changing title to every asset that you have worked so hard to achieve. If your re-titling project goes awry, your heirs may be required to go to court to persuade a judge of what you really intended to happen after you have died. The internet services do not provide the service of re-titling your assets into your trust.
A trust must have your assets funded or transferred to the trust for it to work properly. Assets have legal title, such as your home, money market accounts or stocks and bonds. The title to your assets must be changed over to your trust.
When you transfer title to the assets, you must have legal documentation properly filed and or recorded with the proper agency. If you miss something, or fail to record a deed, that asset will not pass to your heirs through the trust and will be subject to the probate process. For example, the cost to probate a asset worth $250,000 would be close to $12,000. This would include attorney’s fees, court filing fees, the posting of a bond and appraiser fees.
An asset that is left out of the trust will have to pass through probate. This will cost money and take time to finalize the probate process. In addition, the asset (ie: stock account) will be frozen during this process. So if you have a stock that you would like to sell because it is selling at a high price, you cannot sell until the probate is final. Again, this may take 18 months, and during that time, the stock market may change and the price of your stock could fall.
2. THE TIME INVOLVED IN PREPARING A TRUST CAN BE UNLIMITED.
Estate planning attorneys usually need about four to eight hours to properly prepare, execute and fund a living trust. The time needed by an individual that has not had the training to prepare a trust could be more than twenty hours. And there is no guarantee that the self-written trust was properly completed. It is no different than you driving down the road and the “check engine” light goes off and you pull off onto the side of the road. You know that you can try to diagnose the problem on your own or you can take the car to a well trained mechanic that will charge you a fee to fix the problem with your car. You may be able to discover and fix the problem on your own, but how long will it take? Will you do it right the first time. If you don’t do it right, who will you hurt by your mistakes?
If you miss something in putting the trust together, you are only adding more time onto the project, because the trust will most likely be thrown into the probate court. Time is something we do not have an unlimited amount of.
In my practice, I often am faced with having to probate a trust for a family that was prepared by a non-attorney or internet service. In probate court, judges do not like trusts that were not prepared by attorneys. I have had the opportunity to see how probate judges view trusts prepared by non-attorney’s and look for defects that will allow the trust to be invalidated.
Again, if the trust is invalidated, the assets are subject to the probate process and more time is added to the botched estate plan.
3. THE TAX IMPLICATIONS OF IMPROPER ESTATE PLANNING.
The internet services do not look at your net worth or entire estate to spot potential tax traps that could eat up your hard earned assets. A benefit of hiring an estate planning attorney to prepare your estate plan, they will advise you on what to do if your estate is subject to federal estate taxes.
As of 2007, an estate worth over 2 million dollars will be taxed under the federal estate tax at rates of up to 49%. This means that, those assets that you have been taxed on during your lifetime, will be taxed again after you have died.
If you make the right choices with trusts, gifting and insurance, you can eliminate and/or minimize these exorbitant taxes. I can assure you that an online service will not provide this valuable information to you.
4. THE PROPER SUCCESSORS CAN MAKE OR BREAK YOUR PLAN.
When you go online to do estate planning, you are filling out a series of standard questions. One question is, “who do you want to be in charge of the distribution of the assets after you have died?” There is no discussion as to why you choose that particular person.
As an attorney, I take a very active role in helping my clients decide on who is the right person or persons to act as the successor trustee. Is this person ethical? Does this person have a business or financial background? Do they have outstanding debts or creditors suing them? Do they cave into the pressure of others? Are they reliable? These are all very important questions to consider when choosing your successor.
I was once hired to sue a successor trustee for the beneficiaries, because he was diverting monies from the trust to pay for his gambling losses. This lawsuit cost the beneficiaries tens of thousands of dollars because the wrong person was appointed as the trustee and the trust was written by a non-attorney.
In my practice, I receive many calls each month from a disgruntled beneficiary that wants to sue the successor trustee for embezzlement of trust assets. An internet service does not spend the time counseling the client on the pitfalls of choosing the wrong successor trustee.
Another important question and decision is how should assets be distributed to an eighteen year old beneficiary. A typical eighteen year old lacks the ability to invest assets and manage an estate. A properly drafted trust can avoid the assets being squandered by a young inexperienced beneficiary. By using an attorney and not the internet, you can rest assured that your hard earned assets will not be lost at the craps table in Las Vegas.
Another issue that is typically missed on an internet trust application is what to do if a beneficiary is disabled or becomes disabled. Persons with disabilities can qualify for aid from the government if they have a limited amount of assets. If your beneficiary is disabled and then has an asset transferred to him or her via a trust, then that disabled person may no longer qualify for the state aid.
In our client interview, there is always a discussion about the age, maturity, and mental capacity of your intended beneficiaries. I also should mention about looking out for the opportunistic gold digger {daughter-in-law/daughter-in-law}. These people are always discussed in our consultation. I have never seen an internet application that inquires as to whether you trust your son-in-law.
5. THE DUTIES AND LIABILITIES OF A TRUSTEE.
By accepting the role of a trustee, that particular person is taking on responsibilities and potential liability if that trustee/successor trustee fails to follow state laws, the terms of the trust or does not pay creditors. The trustee can be sued in a court of law for failing to prepare the proper accounting documents on behalf of the trust.
Non-attorneys and online services do not have court experience and do not have the insight on how to counsel clients on how to avoid these pitfalls.
In my practice, I have the ability to share with clients the mistakes that I have seen made by others that were unrepresented and the consequences that were doled out due to those mistakes. For example, states provide statutes that define the duties and responsibilities of a trustee, if the trustee fails to act or acts negligently, the trust beneficiaries can sue the trustee for negligence.
6. WHO IS ACCOUNTABLE IF MISTAKES ARE MADE?
When you use a website to write a trust and things do not turn out properly, you have little recourse in correcting the mistakes. You do not have a warranty. Even if the website offers a money back guarantee, a refund of $300 will not get you very far in the probate court.
Attorneys are required to maintain good standing with the state bar and attend continuing legal education seminars on the recent changes in the law. Attorneys also typically carry malpractice insurance. I always let my clients know that I carry malpractice insurance and that they are covered if a mistake were made. In the planning stages of your estate plan and trust preparation it makes no sense to be penny wise and pound foolish.
7. ARE THERE ANY OTHER DOCUMENTS THAT NEED TO BE PREPARED?
The living trust is usually not the only document that is needed to complete your estate plan. Every family has different needs and an in depth discussion is necessary to spot all of the legal issues. It is important to add durable powers of attorney for asset management, advance health care directives, pour-over wills, irrevocable life insurance trusts, and special needs trusts are other documents to be considered. To make this decision, the client needs full disclosure as to why these documents may be necessary.
I also treat a client engagement as an opportunity to help educate that person on each of these documents and how they work and the importance of each tool. If I am not properly passing on my knowledge to my client, I am not doing my job. I enjoy helping people. That is why I became an attorney. It takes time to explain the importance of these estate planning tools. It is not fair to the client if they do not have a chance to explore all of their options.
I have used these internet sites before, I have even owned my own internet site. The goal of owning an internet site is to be able to sell products or services without having to develop a working relationship with the customer. It is all about generating income without having to answer questions. In the area of estate planning, if your questions are not answered you are headed for failure.
IDENTITY THEFT AND FRAUD
One last parting thought is regarding the problems with identity theft and fraud. When you set up a trust, you must disclose information about you, and your assets. In today’s world of crimes being committed on the internet, it does not make sense to disclose your sensitive information to a company that you know nothing about. You do not know who the owner is and you never get to meet their staff. Would you give your birth date, social security number and the whereabouts of your assets to a perfect stranger? When using the internet to set up your trust, you will be required to disclose private information to people that you do not know. This in of itself is a scary proposition.
I hope this information was helpful and encourages you protect yourself and those who are, or will be a part of your will or living trust. For information, please visit www.protectmyassets.com.
Top 10 Reasons Business Owners Must Have A Relationship With An Attorney
Do you live in California? Do you own a business? Are you thinking of owning a business? Well here are protectmyassets.com's Top 10 reasons building a relationship with an attorney are vital as a business owner!
Our Firm’s hands on involvement in the business decisions of our clients allows for the early identification and minimization of potential problems. Through implementing our legal and tax strategies, our clients have saved hundreds of thousands of dollars in costly decisions and litigation. Please feel free to contact us at our Orange County Attorneys office to schedule a private meeting.
We hope this information was helpful! If you found this blog helpful, we encourage you to pass this on to friends, family and associates. Thank you!
- They are operating their business without properly drafted written agreements containing safeguard to maximize their protection in the event of a dispute.
- They remain unaware of the myriad of governmental regulations they are responsible for complying with and the consequences for failure to do so.
- They do not realize that by incorporating their business they eliminate personal liability exposure in the event of a lawsuit and gain tremendous tax advantages.
- They are unaware of the vast number of employment laws they immediately become subject to upon hiring even one part-time employee.
- They have no contractual agreements in force (e.g. mediation and arbitration) to avoid drawn out litigation with its costly attorneys fees and potential for large jury verdicts.
- No provisions are in place to address situations where a partner wants to leave the business or be bought out.
- They may have misclassified workers as independent contractors instead of employees which can result in exorbitant penalties and interest.
- No efforts have been made to prevent the theft or misappropriation of their company’s intellectual property (ideas, trademarks, trade secrets, copyrights, etc.)
- They are unaware of the hidden pitfalls included in their office space leases that could, if they arise, substantially increase their cost or lead them into bankruptcy.
- They lack a costs effective plan to collect their stale accounts receivables causing them to lose their hard-earned money.
Our Firm’s hands on involvement in the business decisions of our clients allows for the early identification and minimization of potential problems. Through implementing our legal and tax strategies, our clients have saved hundreds of thousands of dollars in costly decisions and litigation. Please feel free to contact us at our Orange County Attorneys office to schedule a private meeting.
We hope this information was helpful! If you found this blog helpful, we encourage you to pass this on to friends, family and associates. Thank you!
Meet Matthew Mullhofer, Attorney At Law
Since 1999, Matthew C. Mullhofer of Protect My Assets has been an attorney licensed by the State Bar of California and a member in good standing.
He has extensive experience in the area of estate planning and asset protection, which includes the formation of trusts, wills, family limited partnerships, limited liability companies, and domestic corporations.
Additionally, Mr. Mullhofer has formed numerous corporations, trusts, and private family limited partnerships. Mr. Mullhofer has been a featured speaker at many estate planning and asset protection seminars.
Matthew Mullhofer has extensive experience in business and corporate law, civil litigation, probate, and real estate law. Matthew Mullhofer has negotiated many commercial and residential real estate leases and transactions. He has drafted and negotiated numerous business contacts and sale agreements for business owners. In the area of Intellectual Property, Mr. Mullhofer has acquired extensive experience representing corporations in the acquisition, licensing, and registration of their trademarks and copyrights.
Mr. Mullhofer has also experienced success in representation of taxpayers regarding collection efforts by the Internal Revenue Service, Franchise Tax Board, and State Board of Equalization. He also handles Chapter 7 Bankruptcy cases with an emphasis in discharging taxes in bankruptcy.
Courts
Mr. Mullhofer is admitted to practice before the Supreme Court of California, the United States District Court, and the United States Tax Court.
Education
Mr. Mullhofer received a Juris Doctor Degree from Western State University, College of Law, emphasizing in estate planning and taxation. Mr. Mullhofer received a Bachelor of Arts Degree in Political Science and English minor from California State University at Chico.
Professional Affiliations
American Bar Association
The State Bar of California
Orange County Bar Association
Long Beach Barristers
South Orange County Bar Association
He has extensive experience in the area of estate planning and asset protection, which includes the formation of trusts, wills, family limited partnerships, limited liability companies, and domestic corporations.
Additionally, Mr. Mullhofer has formed numerous corporations, trusts, and private family limited partnerships. Mr. Mullhofer has been a featured speaker at many estate planning and asset protection seminars.
Matthew Mullhofer has extensive experience in business and corporate law, civil litigation, probate, and real estate law. Matthew Mullhofer has negotiated many commercial and residential real estate leases and transactions. He has drafted and negotiated numerous business contacts and sale agreements for business owners. In the area of Intellectual Property, Mr. Mullhofer has acquired extensive experience representing corporations in the acquisition, licensing, and registration of their trademarks and copyrights.
Mr. Mullhofer has also experienced success in representation of taxpayers regarding collection efforts by the Internal Revenue Service, Franchise Tax Board, and State Board of Equalization. He also handles Chapter 7 Bankruptcy cases with an emphasis in discharging taxes in bankruptcy.
Courts
Mr. Mullhofer is admitted to practice before the Supreme Court of California, the United States District Court, and the United States Tax Court.
Education
Mr. Mullhofer received a Juris Doctor Degree from Western State University, College of Law, emphasizing in estate planning and taxation. Mr. Mullhofer received a Bachelor of Arts Degree in Political Science and English minor from California State University at Chico.
Professional Affiliations
American Bar Association
The State Bar of California
Orange County Bar Association
Long Beach Barristers
South Orange County Bar Association
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