Articles Posted in Current Affairs

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Assemblymember Evan Low’s assembly bill, AB 1194, dramatically changes conservatorships in California. In the wake of the #FreeBrittney movement and the 2020 Netflix film, “I Care a Lot”, California is poised to significantly tighten the rules governing conservatorships. Governor Gavin Newsom signed the bill on September 30, 2021 which will go into effect early next year.

In the words of Low, “California’s conservatorship system is failing people from every walk of life, whether they are a global superstar whose struggles unfortunately play out in the public or a family unsure of how to take care of an elderly parent.” This bill is the most comprehensive attempt to overhaul conservatorships in California since the Omnibus Conservatorship and Guardianship Reform Act of 2006.

This bill will amend Section 1051, 1460, 1471, 1826, 1850, 1850.5, 1851, 1851.1, 1860, 1860.5, 1862, 1863, 2250, 2250.6, 2253, 2401, 2620, 2623, 2640, 2641, 2653, and add Sections 1851.6 and 2112, and repeal Section 1458 of the Probate Code. It would also amend Section 6580 and add Section 6563 of the Business and Professions Code.

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The short answer is, not easily. Generally, the airline’s policy is that your miles expire when you do. The crux of the problem is that airlines own the miles. You don’t. It is buried deep in nearly all frequent-flier program terms and conditions. They, therefore, can make any rules they want. Additionally, those terms and conditions also usually contain provisions prohibiting the sale or transfer of miles thereby making it difficult to pass them on when you die. Even if an airline might be lenient, they probably will impose a fee to transfer miles after death. The last thing you want to be doing after a loved one dies is pleading with an airline company so that you don’t lose your loved one’s 500,000 points.

A recent Wall Street Journal article suggests the following:

1. Have a will. Many airline companies don’t understand revocable trusts so having a will and including specific language about the airline miles is important.

2. Make sure your accounts remain active. It’s much harder to work with a surviving spouse when the deceased spouse’s account is about to expire.

3. Don’t call credit card companies to inform them of a death until you’ve implemented a plan for the airline miles. Many companies will simply close accounts (and points will be lost) when the credit card company associated with the loyalty program is informed of the death of a cardholder.

4. Make sure you give online access to the person you want to receive the miles. This includes giving them account numbers and login information and passwords. You should also give the login information and passwords for the credit card associated with the loyalty program as well as your email.

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We are pleased to announce that Julia E. Burt and Heidi Richert Clerc were both named Top Lawyers by Palm Springs Life magazine again in 2019. Both Julia and Heidi have consistently been recognized for several years for their exceptional service and experience in Wills, Trusts & Estates.

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We are pleased to announce that the California Board of Legal Specialization has certified Heidi Richert Clerc in Estate Planning, Trust & Probate Law. Heidi joins the ranks of the other Certified Specialists at Burt + Clerc (Julia E. Burt and Elaine E. Hill).

California attorneys who are certified as specialists have taken and passed a written examination in their specialty field, demonstrated a high level of experience in the specialty field, fulfilled ongoing education requirements and been favorably evaluated by other attorneys and judges familiar with their work.

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On October 5, 2015, Governor Jerry Brown signed legislation allowing terminally ill patients in California the option to end their lives. The so-called Option to Die Act will not come into effect until sometime in 2016.

California joins Oregon, Washington, Vermont, Montana and New Mexico as the only states where medically aided suicide is legal.

How does the law work?

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The U.S. House of Representatives voted earlier this month to repeal the Federal Estate Tax. Republicans have long voiced their opposition over this tax but a vote to repeal hasn’t occurred in over a decade. The measure passed with 240 in favor and only 179 opposed. The vote breakdown was almost entirely on party lines with 7 Democrats joining Republicans in favor of repeal. However, there aren’t enough votes in the Senate and the President would likely veto the repeal so Estate Taxes aren’t going away anytime soon. However, this move sets up a potential repeal in the future especially if Republicans gain more seats in both houses of Congress and the Presidency in 2018.

As previously discussed here, the Estate Tax exclusion amount is currently $5,430,000 (and is indexed for inflation). So, if you die with less than that amount in your estate, you pay no estate taxes. The Tax Policy Center estimates that only 2 out of every 1,000 people who die pay any estate taxes. Most families won’t have to worry about this tax at all. The President’s Budget includes a provision lowering the exclusion amount to $3,500,000 which would open that tax liability for more individuals and families, but the vast majority of Americans would still be entirely unaffected by this tax. It will be very interesting to see what happens to the Estate Tax in the next few years.

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Bankruptcy can disrupt your estate plan. We previously discussed here the problem bankruptcy creates if you have assets in joint tenancy with a bankruptcy debtor. However, bankruptcy can also effect your estate plan for your beneficiaries if certain precautions are not followed. A recent case, Frealy v. Reynolds, highlights this problem. A Trust beneficiary was part of bankruptcy and the bankruptcy Trustee attempted to get all of the beneficiary’s interest in a Trust to pay off creditors. The Ninth Circuit ruled that a bankruptcy trustee’s recovery was limited to 25% pursuant to the Probate Code. However, 25% is still a large amount.

Imagine the situation of leaving your entire trust estate to two children outright and free of trust. You think this is fair and equitable. However, if one of them is in a bankruptcy, his share will be greatly reduced after the bankruptcy court takes 25% to pay off your child’s creditors. Your intention of providing equally for your children has now been disrupted.

A more effective approach would leave the bankrupt child’s assets to a spendthrift Trust or keep the assets retained in Trust with spendthrift provisions. The Trustee could have the discretion to distribute to the child but not if the money will be used to pay creditors. The Trustee would not be obligated to make payments and therefore the beneficiary is not considered the owner of the assets. Since the beneficiary is not the owner the bankruptcy court cannot compel the distributions which would go to the creditors. Instead, the Trustee may wait until the bankruptcy proceedings are over to make any distributions to the beneficiary.

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