Carney & Sugai, LLP- Notes and Updates

NOTES and Updates -Fall 2007

In THIS ISSUE
California Law Changes
	Administration Laws
Unclaimed Property
Inadvertently Disinheriting An IRA Beneficiary
Scam Alerts
	Sweepstakes Scams
Staying Connected
	Cell Phones
	Printing Mailbox

"Autumn...what we lose in flowers, we more than gain in fruits."
--Samuel Butler

We at Carney and Sugai welcome the emergence of Autumn with its own unique charms to our beautiful community. As Autumn begins its dance towards the end of the year bustle, we have a moment to pause and reflect on the fruits of our labor - you, our clients. Abundance is a prevailing theme of this season, and we are abundantly grateful to serve each one of you. It is our pleasure to serve you and we will continue to do everything in our power to ensure that the fruits of our labor provide you with the harvest of good, sound legal advice you have come to expect from Carney & Sugai.

CLIENT SEMINAR
November 13th, 7:00pm
"Trust Administration - The First 60 Days"

Take a journey with us through the world of trust administration. We will lay out for you, in simple-to-understand steps, the path a trust administrator must maneuver in the first 60 days. The death of a loved one is never easy, so let us guide you through the ins and outs of implementing the after-death wishes your loved one has set forth in their trust.

As many of us will deal with these issues at some point in our lives, we encourage you to join us as we discuss the legal requirements of the first 60 days. As always, if you have family or friends interested in this topic, we would be pleased to have them join us.

Welcome
Welcome to Julie Monda, the firm's new clerk, who will be assisting Leslie with the Retainer Program as well as in various other areas. Julie comes to the firm with the dparture in June of long-time employee Sue Anderson. Sue was with us for seven years and we will certainly miss her presence among us - we all wish her the very best in her retirement.

California Law Changes

Trust Administration Laws

Creditor Notice Period
New legislation is changing trust law to more closely match the law governing probate estates. While the thought is to create uniformity between the laws governing trusts and estates, some of the benefits of having a trust are becoming more restrictive. For instance, the creditor notice period for trusts is being increased to the lesser of 4 months or 60 days to match the probate statutory creditor notice period. As trust laws are slowly made more restrictive, we will keep you informed of changes which will impact your estate plan. At this point, however, the benefits of a trust including probate avoidance, privacy, and some tax planning still make a trust the best basic estate planning instrument for most people.

Broadening of Trust Accounting Rules
Only the current income beneficiaries of a trust are entitled to annual trust accountings under the California Probate Code. Remainder beneficiaries can request financial information, but are not entitled to receive the annual accounting. Recent case law has held that the trustee can be forced to provide an accounting to a remainder beneficiary for certain periods. Thus, although remainder beneficiaries are not ordinarily entitled to the accountings, they can request such an accounting through the courts for a specified period. This expansion may lead to broader dissemination of the trust accounting information in the future.

Trust and Estate Administration
During the very difficult time when a loved one dies, survivors do not need extra complications from, of all things, utility companies. Utilities have in the past forced survivors and estate administrators to appear in person to cancel services for a deceased loved one. New legislation will streamline the process to cancel utility services for a decedent. Companies will be prohibited from requiring heirs and estate administrators from appearing in person at the office to cancel such utility services. You can simply submit the cancellation request in writing.

"Care Custodians" as Beneficiaries
For anyone wanting to leave a portion or all of their estate to a non-relative, care must be taken to determine if a gift to that person will be void as a gift to a "care custodian". The definition of a "care custodian" is currently broad enough to include anyone who provides health or social services to an elder - "social services" meaning the types of things a friend or neighbor might do for an incapacitated or disabled person, i.e. driving the person to doctor's appointments or making phone calls for the person (such as to their attorney). To ensure that the gift passes as desired to the "care custodian", a certificate of independent review from a second attorney is required for the person making the gift. The California Law Review Commission is reviewing issues relating to "care custodians"- specifically looking at whether there should be a "pre-existing friend" exception or whether a second independent attorney is required. Also under review is how broadly to interpret this section while still upholding the legislation's intent to protect vulnerable people from undue influence regarding their estate plans. We will keep you posted regarding developments in this area. If you have any questions regarding the impact of this law on your estate plan, or on gifts to non-relatives, please call us.

Unclaimed Property
Property (other than real estate) especially financial or investment accounts sometimes becomes characterized as "unclaimed property" because the owner forgets the property/account exists, or fails to keep the custodian of the property/account updated with current address information. Often, the owner passes away and the heirs are unaware the property or account exists. California law requires that the custodian of "unclaimed property" turn it over to the State Controller. Besides financial or investment accounts, common types of "unclaimed property" are safe deposits boxes, uncashed cashier's checks, money orders, trust funds, escrow accounts, utility deposits and matured/terminated insurance policies.

For a free search to find out if you have any unclaimed property, or for more info, log onto the Controller's website at www.sco.ca.gov or call them at 1-800-992-4647. If a search reveals you are entitled to unclaimed property, there is no fee to initiate a claim unless you use an "heir finder" to assist in the claims process.

Inadvertently Disinheriting An IRA Beneficiary

This has happened lately to persons with IRA accounts at Vanguard. As of mid-September, Vanguard revised beneficiary designation requirements for all customers with IRA accounts (T. Rowe Price has also been mentioned as a proponent of this policy). Customers are now required to designate identical beneficiaries for all IRA accounts which fall into the same category.

Vanguard IRA categories:

- IRAs holding money rolled over from employer pension plans

- Traditional IRAs (both pretax and after tax)

- Roth IRAs

What this means to someone who has multiple IRAs in the same category and have designated a different beneficiary for any of those IRAs, is that Vanguard will apply the latest beneficiary form you have on record to all of the IRAs within the same category. If you submitted two beneficiary forms at the same time, Vanguard will treat the last one processed as the newest. For example: you have two Roth IRAs and you named your son to be the beneficiary on one and your daughter to be the beneficiary on the other. As of September, whichever beneficiary designation was processed last by Vanguard will become the beneficiary of both your Roth IRAs in their custody. Thus, if the beneficiary form naming your daughter was the last one processed, your daughter would inherit both Roth IRAs and your son would be disinherited.

This revision affects Vanguard's custodial accounts regardless of when they where set up. Although Vanguard notified its customers of this beneficiary revision, it is possible that this notification went unnoticed within the mass of material an account custodian usually provides to its account holders; or, perhaps misunderstood by an account holder. In any case, IT IS IMPORTANT that you follow up now with the custodian of your IRA account(s) to confirm that the the beneficiary designations are as you intend them to be. Remember, it is the latest beneficiary form on record with the account custodian that determines who gets your IRA - not your will or trust. A prudent rule of thumb is to periodically review the beneficiary designations on your retirement accounts as well as on your insurance polices. Overlooking a policy change such as Vanguard has made, can potentially alter your estate plan. Please review your designation forms on file with all your IRA custodians to ensure your beneficiaries are as you desire. If you have questions, please contact our office.

Scam Alerts

Sweepstakes Scams
There are many, many scams out there today targeting the elderly. One of the most common is the sweepstakes scam. You receive a call or letter advising you that you have won the Grand Prize. All you have to do is send in payment for the taxes or postage, or purchase something so you qualify to receive the prize - should you fall for this? The answer is no! You won't receive a prize and you will lose your money - you will have been successfully duped.

Some words of warning from fraud watchdogs are 1) never pay to play and 2) buying something does not improve your chances of winning. Federal law requires that you be advised that no purchase or payment is necessary to claim your prize. Never enter events that either ask for credit card or bank information - no legitimate sweepstakes company will ask for this information or require that you pay taxes directly. If a company sends you a partial payment and wants you to pay taxes on your winnings to get the rest, be wary. The original check will bounce and you will lose the payment you made for taxes. Finally, always get the rules in writing. Don't fall for mail that looks legitimate or sweepstakes names that are sound-a-likes to the real deal. Especially beware of foreign sweepstake offers - they are too difficult for the US to monitor and most are scams. Play it safe and always investigate a company if you are considering their sweepstakes offers and never send in any money to claim a prize.

back to top

Staying Connected
Living independently as we age is a goal most of us have and staying connected to our loved ones is vital in keeping emotional and mental energy alive. The less we are connected to our loved ones and the world outside of our homes, the greater the risk for loneliness, isolation, or depression - any of which can lead to a general decline in health. There are numerous reliable resources to help keep an elder connected and possibly extend their ability to live independently. They include senior centers, adult day care centers, in-home companion services, and transportation services. You can look in the government pages of your phone book under "Senior Citizens" for these resources or contact your local Council on Aging.

The technology industry hasn't forgotten the journey we all take as elders either, and has come up with new or improved old innovations on their behalf such those below.

Cell Phones - Simple & Magnified
Remember when the words cell phone would have brought to mind a phone in a jail cell, or a pager meant the school PA system?" In these times of rapid technological changes, these images have long been replaced with an entirely new set of visions. Are you a member of the cell-phone impaired club? Do you shy away from cell phone use because you can't see the keys (where did those glasses go?), can't hear on it, or it is just too complicated? The next phase of cell phone technology is finally getting around to meeting those concerns by creating new phones with bright, easy to see display screens and dialing buttons, hearing aid compatibility with louder volume control, and simplified operations. It is comforting to know that in this age of technological obsession, researchers have not lost sight of the human condition and have come to recognize that sometimes, simpler is more advanced.

Printing Mailbox
HP has come up with a printer called a "printing mailbox" designed with the idea of helping loved ones stay connected. If you have a family member who is a non-tech person who does not own a computer, the "printing mailbox" will allow you to send e-mails to them through your computer and
they will receive e-mails via a printout from their "printing mailbox". Installation is simple - just plug it in to the phone line and the incoming e-mail will automatically print and a melodic ring will be generated to announce the arrival of an incoming e-mail. You can easily set it up to receive from only people you want to hear from thereby eliminating junk mail. Keep your loved ones connected by sharing photos instantly (we all know the power of photos to make us feel like we were there), sending messages, reminders, and even crossword puzzles and interesting articles. Imagine a world that could open up for anyone who cannot hear on the phone, or those that are missing out on e-mail messages and photos from family and friends.

back to top