Estate Planning Lessons from Robin Williams

Posted August 22, 2014 in Estate Planning, In the Community, Probate by Michael Lonich.

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August 22, 2014
Estate Planning Lessons from Robin Williams
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As many of us mourn the loss of this great comedic genius, new information is still coming forward about Robin Williams. According to ABC News, with more than half of his movies portraying Williams as the leading man, his movies grossed over $6 billion throughout his career. While he was paid $165,000 per episode for his one season of The Crazy Ones, it is unclear whether he returned to television because of alleged “bills he had to pay” following his two divorces.

Robin Williams is survived by his third wife, Susan Schneider, who was married to him for 3 years, and his three adult children from his prior two marriages whose ages range from 22 to 31. The question for them now is what was the state of his financial affairs when he passed away?

While it appears from public record that Williams left real estate with equity of around $25 million behind, it is unclear what else he left for his heirs. What is clear, however, is that Williams appeared to have several estate planning documents which will be invaluable to his family. These include two different trusts. The first is the “Domus Dulcis Domus Holding Trust” (Latin for “home sweet home”). TMZ also reported that someone had leaked a copy of a different trust, which Williams created in 2009. This would have been while Williams was in the middle of his divorce from his second wife, Marsha Garces.

This trust reportedly named his three children as beneficiaries, splitting their trust funds into three equal distributions for each of them, set to pay out when they reach ages 21, 25, and 30. While the Domus Dulcis Domus Holding Trust appears to have been done to minimize estate taxes, this second trust accomplishes the goals of safeguarding privacy for Williams and his family since trusts avoid probate, keeping his affairs private (as long as they are not leaked to the media).

If you would like to learn more about trusts or avoiding probate in general, call Lonich & Patton to schedule a free half-hour consultation. Our attorneys are passionate about estate planning and have decades of experience handling complex estate planning matters, including wills and living trusts. If you are interested in developing an estate plan or reviewing your current estate plan, contact the experienced estate planning attorneys at Lonich & Patton for further information.

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The Ways to End Your Marriage

Posted August 8, 2014 in Family Law by Lonich and Patton.

In California, a marriage is dissolved by (1) the death of a spouse, (2) a final judgment of divorce, or (3) an annulment. Alternatively, if spouses do not want to completely end their marriage but do want to terminate their marital rights, they can (4) file for legal separation. Here is a look into each one:

(1) Death of a Spouse

When a spouse dies, dissolution occurs automatically, as a matter of law. This can be significant in family law proceedings if the spouse dies after divorce proceedings have begun, but before a final judgment of dissolution. In this scenario, spousal status is not officially terminated and the surviving spouse will still be considered “married” for inheritance purposes. Additionally, any pending dissolution proceeding is rendered moot at the death of a spouse and the court has no power to hear any remaining unresolved issues.

(2) Divorce

Divorce is the proceeding that legally ends the marriage or domestic partnership. Under Family Code section 2310, the grounds for divorce may be either “irreconcilable differences” or “incurable insanity.” Most marriages are dissolved on the ground of “irreconcilable differences.” A dissolution granted on the grounds of “incurable insanity” requires evidence – including competent medical or psychiatric testimony – that your spouse is incurably insane. In fact, this ground is so uncommon that there are no known reported decisions defining “incurable insanity” in the dissolution context. Further, it offers no tactical advantage so even if your spouse is incurably insane, pleading irreconcilable differences is much easier.

The determination of whether “irreconcilable differences” exist is essentially a ministerial function and is rarely a matter of contention. California is a no-fault divorce state, which means that any evidence of specific acts of misconduct (such as cheating, gambling, or heavy drinking) is improper. Courts recognize that ending a marriage is an intensely personal decision and only need to be convinced that the marital differences are substantial. Thus, direct proof of objective reasons supporting the divorce is not required.

(3) Annulment

An annulment declares the marriage was not legally valid – it was never entered into – and like other defenses to contracts, an annulment can occur if one party was not of sound-mind at the time of the marriage or if the marriage was procured by fraud.

A famous example of an annulment due to lack of capacity is Ms. Britney Spears’ 55-hour marriage to her high school friend, Jason Alexander, in Las Vegas. Ms. Spears sought an annulment stating that she “lacked understanding of her actions to the extent that she was incapable of agreeing to the marriage because she and Alexander did not know each other’s likes and dislikes, each other’s desires to have or not have children, and each other’s desires as to State of residency.” In other words, she was drunk and this was a joke that went too far.

Marriages can be annulled for fraud, if the fraud relates to a matter that California deems vital to the marriage relationship and the fraud directly affects the purpose of the party deceived entering the marital contract. Usually, annulments based on fraud involve the sexual and procreative aspects of marriage, such as a secret intention not to live with the other spouse or a concealment of sterility. False representations about earning capacity, wealth, or social status are not the type of fraud that will warrant a nullity. Nor will a failure to fulfill wedding vows or commonly understood spousal obligations, such as being a loving and supporting partner.

(4) Legal Separation

The grounds for legal separation are the same as those for a divorce but it does not end the marriage. Legal separation is an alternative to divorce, where the spouses do not want to completely sever the legal status of the marriage. Otherwise, a legal separation operates similarly to a divorce, separating all finances and property.

Spouses often seek a legal separation for religious or other personal reasons, or to retain eligibility for medical insurance, veteran’s benefits, or social security benefits that would have otherwise been lost by a divorce.

If you have any questions about the proper way to end your marriage, please contact our California Certified Family Law Specialists. Our attorneys have decades of experience handling complex family law proceeds and offer a free consultation.

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.

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Tax and Estate Planning for Same-Sex Couples

Posted August 1, 2014 in Estate Planning, In the Community, Probate by Michael Lonich.

Earlier this week, the U.S. Court of Appeals for the 4th Circuit struck down Virginia’s same-sex marriage ban, saying that withholding the fundamental right to marry from same-sex couples is a form of segregation that the Constitution cannot tolerate.

In June 2013, the Supreme Court of the United States in United States v. Windsor, held that the federal government must recognize same-sex marriages and that it is up to state Legislatures to define marriage within state boundaries. Since then, numerous law-suits challenging the constitutionality of state DOMAs on equal protection and due process grounds have prevailed in various federal and state courts. Currently, 19 states, including California, plus the District of Columbia recognize same-sex marriage (recognition states), while 40 states prohibit it (non-recognition states).

The prevailing prediction is that a Supreme Court guarantee of a right to marriage is on its way. American support for same-sex marriage is at a new high of 55 percent, and California support is at 61 percent and increasing, if the trends continue. It is important for all couples to create an estate plan. Additionally, it is important for same-sex couples to be aware of the potentially complicated issues that arise when they move across state lines.

Same-Sex Couples Living in California

Same-sex married couples now living in California enjoy the same benefits and burdens under state and federal law as married opposite-sex couples. Before Windsor and IRS Revenue Ruling 2013-17 (which extended federal tax benefits to married same-sex couples, regardless of their state of residency), many married opposite-sex couples likely took this preferential treatment for granted.

Some of these benefits include:

  • Property transferred between spouses incident to a divorce is not subject to income or gift tax;
  • Spousal support (alimony) payments are tax deductible to the paying spouse;
  • Child support payments are not subject to income tax;
  • Spouses receive a community interest in 401(k) accounts and other retirement plans; and
  • Spouses receive all community property and anywhere from one-third to all of the deceased spouse’s separate property for intestate (when a person dies without a will or other non-probate instrument) inheritance purposes.

All couples should be aware of their legal rights at marriage, divorce, and death. It is important for both same-sex couples and opposite-sex couples to consider pre-marital agreements, estate plans, and any tax consequences that arise from marriage or divorce.

The Marital Status of Migrating Same-Sex Couples

When a same-sex couple moves out of California, their marital status will depend on the other state’s law with regards to various issues including, state tax filing status, intestate succession, guardianship and conservatorship appointments, and adoption and artificial reproductive technologies. In other words, a non-recognition state may not recognize the otherwise valid same-sex marriage.

If and when the Supreme Court guarantees a right to marriage, moving across state lines will no longer be an issue for same-sex couples. However, in the interim, it is important to be aware of the possible legal consequences.

For example, under Florida law, the definition of “heir” does not include same-sex spouses for intestate inheritance purposes. This means that a same-sex couple that was married in California, but permanently living in Florida, will not inherit from each other under the Florida intestate system. Some courts in non-recognition states are willing to recognize same-sex marriage in certain contexts through the doctrine of comity, which is where a court gives deference to another state’s laws. However, most surviving spouses want to avoid litigation because it can be a headache, requiring time, money, and mental energy.

In some cases, it might be worthwhile for same-sex spouses to opt out of the intestate system with non-probate instruments, such as estate plans. A same-sex couple’s estate plan needs to be drafted with precision, specifically naming beneficiaries, rather than using general terms such as “spouse.” This becomes especially important if a same-sex couple moves to a non-recognition state, where the court may not interpret a same-sex spouse to qualify as a spouse or heir. If any other blood related heirs of the deceased spouse were to contest the non-probate instrument, they could end up inheriting property that would have gone to the same-sex spouse in California or another recognition state.

If you are a same-sex couple and are considering marriage, or need to create or update an estate plan, please contact our California Certified Family Law Specialists. Our attorneys have decades of experience handling complex family law and estate planning matters and offer a free consultation.

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.

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“No good marriage ever ended in divorce” – Louis C.K.

Posted July 30, 2014 in Family Law by Michael Lonich.

“Divorce is always good news. I know that sounds weird, but it’s true because no good marriage has ever ended in divorce. That would be sad. If two people were married and they just had a great thing … and then they got divorced, that would be really sad. But that has happened zero times.”

-Louis C.K.

This inevitably leads to the question: what is a “good” marriage? Likely, the answer is there are no good or bad marriages. Instead there are a range of risk factors associated with divorce. When two people get married, they usually aren’t thinking that the marriage will end in divorce. But then hard times arise and sometimes they find themselves thinking either casually or seriously about divorce. Is there a way to know if your marriage is statistically likely to end in divorce? Below, we will take a look at some of the most common risk factors in the United States.

Current state of divorce

In the United States, researchers estimate that 40 to 50 percent of all first marriages will end in divorce or permanent separation. The risk of divorce is even higher for second marriages at about 60 percent. Divorce has always been present in American society although it has become more common in the last 50 years. Surprisingly, the highest divorce rates ever recorded were in the 1970’s and 1980’s. Since then the divorce rate has actually decreased a little but still remains at a historically high rate.

Researchers have found that individuals considering divorce make their decision to stay or leave based on the rewards they gain from the marriage, the barriers against leaving the marriage, their perceptions about finding a better relationship, and the amount of investment they have made in their marriage.

Barriers to leaving a marriage, such as concerns about money and the effects of family breakup on their children, can keep marriages together in the short term. However, unless there is improvement in the relationship, eventually the barriers are usually not enough to keep a marriage together in the long run.

What factors are associated with a higher risk for divorce?

The statistics which show that almost half of all marriages end in divorce might make it seem like staying married has the same odds as roulette – namely 50/50. However, research has identified various factors that are associated with a higher risk for divorce. Some couples may have a low risk and others might have a higher risk of divorcing. Understanding these factors may not directly help improve your marriage or make a decision about getting divorced, but they may help couples understand why they’re facing challenges. Researchers have identified the most common factors as:

  • Young Age. Marrying at a young age increases your likelihood of divorce, especially in the early years of marriage. People who married in their teens are at dramatically higher risk for divorce than those who married as early as age 21 or 22.
  • Less education. Researchers estimate that individuals who have some college education as opposed to not finishing high school have a lower chance of divorce. Investing in an education is a good way to build a foundation for a better marriage, not just a better job.
  • Less income. Tied to education is income. Research has estimated that individuals with incomes exceeding $50,000 have a lower chance of divorce. Finances can be stressful and having at least a modest income can help couples avoid stresses that can lead to divorce. If you argue with your spouse about finances once a week, your marriage is 30 percent more likely to end in divorce than if you argue less frequently about finances.
  • Premarital childbearing and pregnancy. In America, more than one-third (37%) of children are born to parents who are not married, and few of these parents eventually marry. Most of those parents will separate before the child begins school, some will never really get together.
  • If you have a daughter, you’re 5% more likely to divorce. This figure multiplies with the number of daughters. Researchers believe that this happens because fathers are more invested in family life when they have boys.
  • If you or your partner have had a previous marriage. Data shows that second (or third or fourth) marriages should be more successful than first marriages. However, this statistic is skewed by serial marriages and researchers have been unable to take the Elizabeth Taylors out of the equation.
  • Parents’ divorce. Of course, some risk factors for divorce you can’t control. If you experienced the divorce of your parents, unfortunately, that doubles your risk for divorce. If your spouse witnessed their parents’ divorce, then your risk more than triples. This does not doom your marriage to failure but rather suggests that individuals who experienced the divorce of their parents need to work harder to make good marriage choices and to keep their marriage strong and happy.
  • Same-sex marriages are more likely to end in divorce. Although the LGBT community is just starting to have legally recognized marriages in the United States, a research team led by Stockholm University on legal partnerships in Norway and Sweden found that male same-sex marriages are 50 percent more likely to end in divorce than a heterosexual marriage. If you’re a female in a same-sex marriage, this figure soars to 167 percent.

These are only a few risk factors that researchers have identified and none of them represent automatic doom for a marriage. However, if a number of these and other risk factors are present, seeking pre-marital or other counseling may be recommended, even if nothing seems wrong at the moment. Much like roulette, one can increase the odds in their favor by learning more about marriage, themselves and their partners.

If divorce seems inevitable, it is also recommended that couples take time to try to fix the relationship through counseling or some other professional service before making the decision to call it quits. However, we understand that sometimes there are no alternatives besides divorce.

If you are considering divorce or have questions about divorce planning, please contact our California Certified Family Law Specialists (as certified by the State Bar of California Board of Legal Specialization). Our attorneys have decades of experience handling complex family law proceedings and offer a free consultation.

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 detail general legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

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How Much Does Divorce Cost?

Posted July 22, 2014 in Family Law by Rachel Leff-Kich.

Divorce can be really expensive. For example, the 2007 Connecticut divorce  between travel entrepreneur, Peter Tauck, and his ex-wife racked up around $13 million in legal fees. The bill reflected two years of highly-contested litigation costs, including nearly 700 filings and an 86-day trial. It is common for such strikingly high-cost divorces to reach news headlines, but how much does getting a divorce really cost?

Plenty of websites have popped up that promise an “easy and affordable divorce” ranging from $99 to $300. These cheap alternatives may be enticing, and could be useful for couples who have few assets and agree on every aspect of child custody and visitation – they just need lawyers to fill out the required forms.

However, most spouses disagree about at least a few things in connection with their divorce. One of the most hotly contested issues is often child custody and visitation. California courts require divorcing parents to attend mediation to see if custody issues can be resolved without a trial, and they often can be. However, in some cases it is necessary to have a child custody evaluation, which can be either broad or specific in scope.  This involves retaining a child custody evaluator, who is an expert, usually a forensic therapist or psychologist. The evaluator meets with both parties, the children, and sometimes collateral contacts, and then prepares a report to assist the court in making custody and visitation orders. Evaluations range substantially in cost, which is usually divided equally between the parties.

Aside from custody disputes, divorces mostly concern money and can require complicated financial calculations to determine and equitably divide the community’s interest in your marital estate. Such calculations may include the percentage you contributed to your 401(k) during marriage, or the amount of post-separation mortgage payments on the family home. Sometimes these issues are complicated enough to require hiring a CPA or a forensic accountant. In addition, many people receive stock options, or RSU’s as part of their employment compensation packages, and it can be necessary to retain an expert for division. Further, sometimes it is necessary to obtain real property appraisals or fair rental surveys, which range in cost depending on the size of the property.

If you and your spouse have acquired a substantial estate, the work to  determine the community’s interest and agree on an equitable division can really add up. Even in what seems like a simple case, the cost can be high depending on many factors. Hourly rates for attorneys can range anywhere from $150, at the very low end, up to $1,000. Spouses can definitely expect to pay attorney fees and court costs, and there may be additional costs for parent education classes, co-parent counseling, private mediation, or retaining various experts.

The good news is that most of the cost is a function of how quickly you and your spouse can reach an agreement – it is in part under your control. If agreement cannot be reached, it may be necessary to file motions, which can cost between $3,000 and $10,000 for preparation and appearance at a hearing. The need for depositions and trial will also increase the cost of your divorce. If you have no assets and no children, it is possible to walk away only spending the filing fees. If you are able to reach a global or partial settlement agreement then the cost of dissolving your marriage will be greatly reduced. However, if you cannot be in the same room as each other without becoming outraged, your divorce could easily cost more than your wedding.

However, if your spouse makes more money than you, or has a greater “access to income,” you may be able to obtain an order for “need-based” attorney’s fees, payable by your spouse. In addition, if your spouse or their attorney is being really unreasonable, you may have the right to obtain sanctions in the form of attorney fees and costs from your spouse. These sanctions can be ordered when conduct frustrates the policy of the law to promote settlement.

On July 13, 2014, a Nebraska man, Michael Peterson, plead no contest to the first degree murder of his divorce attorney. After an unsuccessful malpractice suit seeking reimbursement for over $57,000 in attorney fees, Peterson shot his divorce attorney in the back with a high-velocity rifle. In order to avoid murderous rage upon receiving your bill, it is important to have an open and honest conversation about fees and costs, and ask for an estimated budget before going to trial.

Please be aware, however, that it is simply impossible to accurately estimate the cost of your divorce – there are too many possible factors for anyone to promise a certain outcome for a certain amount. If you have questions or are worried about the cost of your upcoming divorce, please contact our California Certified Family Law Specialists. Our attorneys have decades of experience handling complex family law matters and offer a free consultation.

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.

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