The Importance of filling out Beneficiary Designation Forms

Ruiz v Publix Super Markets, Inc.

 

Whether you have any Estate Planning in place or not, you need to understand this recent case

 

There was a case decided in a Florida Federal District Court in March of 2017 called Ruiz vs Publix Super Markets regarding an improperly filled out Beneficiary Designation Form.  

 

The employee was a participant in the company’s retirement plan and had filled out a beneficiary designation form.  These forms are used to tell the Plan Administrator who to give the money to, if there is any left, after the employee “participant” passes away.  The employee had done so, but down the road had decided to change the beneficiary.  Well, the plan documents provide very specific instructions on how to fill out the beneficiary designation forms.  On this occasion, even though the employee called the administrator, the employee filled the form out incorrectly.  The administrator refused to give the death benefits to the new beneficiary and instead gave them to the original beneficiary.

 

The Federal District Court held that the plan administrator had acted properly because substantial compliance is not enough and that the U.S. Supreme Court has stated that the plan administrator must act in accordance with the plan documents.  Further, the court stated that there was no justification to inquire into the expression of intent that does not comply with the plan documents.

 

So, as you can imagine, even if you don’t have any estate planning in place, the proper filling out of your plans beneficiary designation forms is important.  Likewise, if you do have a Revocable Living Trust, or perhaps a Stand Alone Retirement Trust, it is equally important to have your forms filled out correctly.  If you’d like to read about the advantages of estate planning, see my blog about Revocable Living Trusts, and Stand Alone Retirement Trusts.

 

See a lot of helpful estate planning information on my website at: www.myestate-plan.com

 

My most important job is to listen to your wishes then suggest solutions.  Call today and let’s start planning!  I always answer my own phone, and I even make house calls!

 

Thanks for reading!

 

Dan Powell

 

1-619-980-2297

 

 

****Reminder****

Just like my website, nothing in this blog is intended as legal advice. If you need legal advice, contact an attorney licensed to practice in your jurisdiction. I am licensed to practice law in California.  Further, please remember that I speak in generalities in my blog (and on my website). There are so many different factors that can contribute and completely change the outcome that it would not be practical to discuss all of them here. This is why I speak in generalities. Thanks again for reading.

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information.

What shouldn’t I put in my Living Trust?

 

Automobiles

I don’t recommend putting your automobile into a Revocable Living Trust mainly because if you should get into an accident, and the other person sees that your car is owned by a Trust, they may think you are wealthy and look to sue in a situation where they otherwise would not.

Now, if you own a classic car, hot rod, or other collectable car that you plan on keeping for a long period, then it makes more sense to put the auto into the Trust.  Usually these types of cars are not “daily drivers” and pose less of a risk of lawsuit like discussed above. 

  

IRA’s and 401(k)

IRA and 401(k) accounts present a specific problem if we try to put them into a Living Trust by changing the title of the asset.  The problem is that doing so creates a “taxable event” and too much of the value of the IRA will be lost to taxes.  Not good.  So what do we do with IRA’s?  The question depends on your situation.  If you are married, likely the best solution is to name the spouse as the beneficiary (and not a Trust).  If you are not married, then a beneficiary designation can still be utilized to pass the asset on to someone else such as a child.  Another method is to name a specially designed Trust called a Standalone Retirement Trust (or SRT) as the beneficiary.  Using a Standalone Retirement Trust provides some benefits to the beneficiary that an outright gift cannot.  Naming an individual as the beneficiary (and not a Trust) is considered an “outright gift” because once they are entitled to the funds, there is no control over how the funds are to be used (provided they are over 18 years of age).  They get the lump sum and off they go.  You can see how this can be a bad situation for the young, those bad with money, those subject to predators, or even those bad marriages!  In a recent case called Clark v. Rameker, the Supreme Court held that an inherited IRA cannot be shielded from creditors or bankruptcy.  This is why a Standalone Retirement Trust can be so beneficial.  There are other tax advantages to using a SRT that I won’t go into here, but in a nutshell, the distribution may be able to be streached out and keep the beneficiary in a lower tax bracket, and provide opportunity for the IRA to continue to grow. 

  

Other items that shouldn’t go into your Trust

There are other items that should not go into your Living Trust that I won’t cover here.  Please check my future blogs for possible discussion of these items (or of course consult an attorney!)

Please feel free to give me a call and we can review your Estate Planning goals, or start your Estate Plan today!

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

Thanks for reading.

 

William Daniel Powell (Dan)

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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Monday, 20 June 2016 20:13

Does my Car go into my Living Trust?

Does my Car go into my Living Trust?

 

Technically speaking, your automobile can go into your Revocable Living Trust, but I don’t usually recommend it.  I don’t usually put cars into Trusts for two reasons.  The first is that we tend to buy and sell cars more frequently than other “big ticket” items.  The second and more important reason is that should you get into an accident and the other party sees that your car is owned by a Trust, they may see dollar signs and look to sue in a situation where they otherwise may not.  Generally, people (married people) tend to keep their cars in both spouse’s names, so transferring the car is not difficult.

 

There is an occasion that I would recommend putting an automobile into a Living Trust, and that is when someone owns a special car such as a collector car, classic car, hot-rod, or other car that they plan on keeping for life.  

 

Please feel free to give me a call and we can review your Estate Planning goals, or start your Estate Plan today!

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

Thanks for reading.

 

William Daniel Powell (Dan)

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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Friday, 17 June 2016 02:01

Does my Home go in my Living Trust?

Does my Home go into my Living Trust?

People often ask “what items do I put in my Revocable Living Trust?”  Usually the biggest and most important item is your home.  The process for putting your home into a Revocable Trust is fairly simple.  The attorney will obtain the latest deed to your home if you don’t have one, then he or she will prepare a new deed that transfers the home from you as an individual to you as Trustee of your Revocable Living Trust.  It does not matter if you are still paying a mortgage on your home, it can still be put into the Living Trust.  If you have property outside of California, then an attorney in the other state will need to prepare a deed and have it recorded.  Your estate planning attorney will explain all of the details to you.

 

A “PCOR”, or Preliminary Change of Ownership Report is also filled out and submitted with the deed to the County Recorder’s Office.  This PCOR basically tells the County Recorder that the home is being transferred to a Revocable Trust, and that no reassessment is needed (so property taxes don’t go up!) 

   

It is important to remember that one does not lose control of their property when they create a Revocable Living Trust (sometimes called an Inter Vivos Living Trust, or just Living Trust).  Think of a Living Trust like a bucket that you built.  You decide what to put in your bucket (with advice from an attorney), and what to take out of your bucket should you so choose.  The IRS, as a matter of fact, views this bucket as an extension of you and doesn’t require a separate tax return.  You just do your taxes as normal.  If something happens to you, you can decide who is going to hold your bucket next.  This person is called the Successor Trustee.  Should you kick the bucket, you can decide what happens to what is left inside.  Forgive the attempt at humor.  We can’t take life too seriously! 

 

Please feel free to give me a call today and we can review your situation and other Estate Planning goals.  Everyone’s situation is different, and I can help create solutions. 

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

William Daniel Powell (Dan)

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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Do I Need a Living Trust? My Granddad’s Story

 

The phone on the kitchen pass-thru rang.  Granddad was in the hospital, had taken a turn, and this was the call we hoped didn’t come in.  It was quickly decided how many cars to drive to the hospital and as it turned out I drove myself there.  Hindsight being what it is, I should have ridden with someone because I may have fractured a speeding law while simultaneously setting a new land speed record in driving my Dodge Charger to the hospital in an emotional and horsepower fueled semi-panic.  Probably not the safest, but I was 18 years old and loved my granddad very much.

 

He never came home from the hospital and mom helped grandma with all that she could.  I remember asking my mom about what was next to come.  I felt bad asking if there was going to be a reading of the Will because I didn’t want to appear like I was interested in material things, but the reality was that I believed that was just how it happened.  I thought it was like how we see it happen on TV.  You know, sitting in a lawyer’s office, with wood paneling on the wall, and all the family sitting in chairs listening.  That’s not how it happens.  The reality was that there was very little estate planning in place, and my mom had to deal with most of the issues and red tape.  After things were cleared up, she told her mom that she really needed to create a Living Trust, and grandma agreed.

 

Have you had someone close to you pass away?  Aside from the emotional pain and distress this caused, if the loved one had no estate planning in place – no Will, no Revocable Living Trust, nothing – and you had to handle the affairs, I sure you realize what a mess this can create.  If you’ve never dealt with this, I’m sure you can learn from others.

 

I’ll give you an explanation of just one of the rewards of creating an estate plan beyond avoiding the mess that not having any estate plan creates, and that is avoiding the costs and time delay of probate.  Let’s say you have an estate worth $650,000.  That is not difficult to do living here in San Diego.  Let us assume that you have a home worth $500,000 and accounts and other property that values at $150,000.  Now with Probate, it doesn’t matter that you owe $10 for your home, or $400,000, the estate is still valued, and costs are still determined at the $650,000 number.  The statutory amount an attorney can charge is $16,000.  The Executor of the estate is also allowed to charge the estate for his or her services up to the statutory amount.  So in this example, another $16,000.  Excluding court costs and other costs, we can see that the cost of Probate for an estate valued at $650,000 is potentially $32,000.  Wow, that’s a lot compared with the few thousand dollars that an inter vivos living trust will cost you.  Plus, Probate usually takes a year or longer.  You can avoid all this loss very easily – create an Estate Plan today.  By the way, a Trust goes by many different names including Living Trust, Revocable Trust, Revocable Living Trust, Inter Vivos Trust, Inter Vivos Living Trust and others.  You can read more about the costs of Probate in my blog.

 

Please feel free to give me a call today and we can review your Estate Planning goals.  Everyone’s situation is different, and I can help create solutions to address your specific goals and your particular situation. 

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

William Daniel Powell (Dan)

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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Wednesday, 04 May 2016 01:29

Prince Dies Without a Will or Trust

Prince Didn’t Have any Estate Plan!

 

I am always surprised to hear about people that die without any estate plan in place.  I am especially surprised to hear when people with large estates pass away with no plan in place.  This was the most recent case with Prince.  Price died with no Will, and no Trust.  Yesterday a special administrator was appointed.  Now everything that transpires, because the estate will have to be probated, will be public record.  Moreover, a Will is not private, and is easier to contest (generally) than a Trust.  Michael Jackson died with a Will and provided for his children via testamentary trusts, but still this is a public transaction that could have been avoided with a proper estate plan perhaps utilizing a Living Revocable Trust, Irrevocable Trust, or other means.

 

Upon hearing that people die without estate plans in place make me wonder why.  I wonder if they think they are too young to die, or if they think they are too young to plan.  Perhaps they don’t prefer to contemplate their own demise.  No matter the reason, we all know and need to come to grips with the fact that we could die at any age, that having a plan is far better than not planning, and planning for our demise is one of the best gifts we can give to those we love.  A Revocable Living Trust, an Advance Healthcare Directive and other proper estate planning methods can take tremendous stress off of your family.  It can also minimize fighting among family member (not always, I’ll give you that!) and insure that your hard earned assets are given to those you desire to provide for.

 

I believe you are never too young to plan, no estate is too small to prevent providing some peace of mind, and planning is an excellent way to show that you care and that you are remembered.  Please feel free to give me a call and we can establish your Living Revocable Trust or other estate plan objectives.  If you have specific estate planning goals in mind, I can help create solutions you may not be aware of. 

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

Thanks for reading my blog.

 

William Daniel Powell

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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Saturday, 23 April 2016 22:55

A Gift Given Outright, or in Trust?

Outright Gifts Versus Gifts in Trust

 

In this blog we will be talking about the advantages and the disadvantages of giving a gift outright versus a gift given in Trust.  Generally speaking, a gift given in Trust is the preferred method because of the protection a Trust can provide.

 

 

Outright Gift

 

What is an Outright Gift?  This is a gift that is given to another with no strings attached so-to-speak.  A simple Will that gives a person (a beneficiary) something does so “Outright”.  A Will that does not create a Trust (called a Testamentary Trust) cannot control how the gift is used, how long it is to be held, or provide any protection to the beneficiary from predators, bad marriages, creditors, or even from the beneficiary her or himself.  The donee (the person that receives a gift) is free to do whatever they like with an outright gift the moment they receive it.  Some donors cringe at the thought of one (or more) of their kids getting a large gift at a young age for fear of squandering the gift.  The older we get, the older we think our kids should be before they get such a large gift also!  Aside from that concern, or even if you don’t have such a concern, there is another reason to use a Trust to distribute a gift.  I heard a story once of a responsible donee that received a gift of money from his parents.  He put the money in his account and just used it over the years for various reasons.  Much later on reflection, he wished his mother had said something like “it is my wish that you use this money for memorable occasions such as vacations, or even gifts to one another.”  This way every time he spent the money, or remembered the vacation, he would have thought of mom also.  That’s a pretty nice thought.  That shows love and caring in my book.

 

 

Gifts Given in a Trust

 

So now let’s talk about what it means to give a gift in Trust.  This is the most flexible way to give a gift to another person.  A gift given in Trust can be outright, even though it is given in Trust, and on the other side of the spectrum, a gift in trust can be held by the Trustee (someone other than the Beneficiary) and distributed to the Beneficiary at the discretion of the Trustee.  This provides the most protection for the Beneficiary. 

 

For more on protecting the Beneficiary’s inheritance, please see my blog here:

protecting the Beneficiary’s inheritance

 

So because of the protection that a Trust provides, and because we can provide guidance – from mild to extensive – giving items in Trust is the preferred method of distributing our assets to the next generation.

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

I am never too busy to help, and I do my best to answer my phone every time it rings.  Call me and let’s get your Estate Plan together to get you the peace of mind it provides.

 

Thanks for reading my blog.

 

William Daniel Powell

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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Thursday, 21 April 2016 21:55

Out of State Property and California Trusts

Should I Put my Out-of-State Property in my California Trust?

 

We have discussed the benefits of a Revocable Living Trust elsewhere in my Blog, but to recap, the most important reasons are to:

  • Avoid the cost and delay of Probate (probate is the judicial proceeding that resolves all of the decedent’s claims and distributes his or her property)

  • Provide for management of assets and the estate should the person creating the Living Trust become incapacitated

  • To protect the beneficiary

  • Provide more privacy than a Will

  • Better tax and gift planning

 

After a Revocable Trust has been created it must be “funded”.  This is simply the process of titling certain property in the name of the Trust so that the Trust can do its job.  The most obvious item that goes into the trust is your home.  But what if you own out-of-state property?  Your out-of-state real estate should also be put into the trust, and a deed should be prepared by an attorney that is licensed in that state.  This (depending on the law of that particular state) should avoid ancillary probate in that state.  Such is the case in California – an out-of-state trust that holds a properly transferred California property will avoid California Probate proceedings.  If the out-of-state real estate is not put into a California trust, then the real estate would have to be probated in its home state which can cause additional delay and cost.

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

I would love to help you create your estate plan and help you provide the kind of gift that you want to give to your beneficiaries.  Call me today and we can get it done!

 

Thanks for reading my blog.

 

William Daniel Powell

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Further, please remember that I speak in generalities in my blog (and on my website). There are so many different factors that can contribute and completely change the outcome that it would not be practical to discuss all of them here.

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Do I need a Living Trust?

 

You may be thinking “do I really need a Will or Trust?” Well, if you don’t do any estate planning, then the state of California decides what happens to your property. I don’t find this outcome very palatable. Also, this result is called “probate” and is costly and time consuming. Please see my Blogs on Probate for more information.

 

So let me ask you a question – what if something were to happen to you today? That would likely have a negative impact on your family. Well, with no plan, your kids or closest family member would get all or most of your estate. Let me ask you another question – if your kids got most or all of your estate all at once, would they be responsible with the property, or would they squander the inheritance? Even if they were responsible, would they spend the inheritance in the manner you wished? For that matter, do you want to make any other gifts to friends, other family, or charities? These are some of the reasons why estate planning is important. It’s not fun to think about, but we might meet our end at any time. Because of this, it is important for us to plan.

 

Discussing your wishes with an estate planning attorney is the beginning of the process. For example, I spend time and careful attention to you, ask important questions, determine any potential problems, and provide solutions to achieve your goals.

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

It has been said that the best investment you can make is in yourself. Investing in an Estate Plan provides a level of comfort in knowing how your property will be handled in the event you become incapacitated, and ultimately upon your passing. Also, a proper estate plan can provide a level of protection for your beneficiaries from creditors, predators, bad marriages and the like. I would love to help you get your estate plan completed. Call me now, and let’s start planning!

 

 

Thanks for reading!

 

William Daniel Powell

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

 

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This document is for informational purposes only. Nothing in this is to be considered legal advice. Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship. If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction. I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Further, please remember that I speak in generalities in my blog (and on my website). There are so many different factors that can contribute and completely change the outcome that it would not be practical to discuss all of them here.

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Published in FAQ and Client Care

Analyzing Clients Needs

 

What is Analysis?

I teach law.  I help students prepare for both law school exams and the California bar exam.  The number one thing I see students struggle with is analysis.  So what exactly is analysis?  A quick Google of the word tells us that it is a “detailed examination of the elements of something, typically as a basis for discussion or interpretation”.  I tell my students that analysis is applying the facts that we are given to the law. 

 

 

Why is Analysis Important?

On a law school exam or the California bar exam, we are given a story – a set of facts.  From these facts, the law student is expected to recognize the relevant issues of the fictional client, identify them, give the rule of law, then (and this is where the points are) provide a proper analysis.  With this analysis the student is to determine if the issue will expose the fictional client to liability.  Why does the California bar exam test potential attorneys this way?  Simple.  Because clients will come into our office, tell us a story, and we are expected to discern what facts raise potential issues, analyze the issues, and determine if these issues affect our real-life clients. 

In many blogs, I have written that my most important job is to listen to my client and provide solutions.  I think this is better stated as “my most important job is to listen to my client, analyze the issues, and provide solutions.”  Knowing what questions to ask is half the job in establishing a plan for one’s estate.  Analyzing the facts given to us by our clients is of the utmost importance because without analysis, we would not know what is important, and what may raise potential problems.  As I have said before, for this reason (among others), I feel that a properly trained estate planning attorney will far outperform a website that simply asks questions and produces documents based on your answers – like LegalZoom. 

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

If you fail to create an Estate Plan, the state of California will determine how your estate is distributed.  I would rather decide for myself!  I would love to help you get your estate plan completed.  Call now and we can start planning!

 

Thanks for reading!

 

William Daniel Powell

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

****************

This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Further, please remember that I speak in generalities in my blog (and on my website). There are so many different factors that can contribute and completely change the outcome that it would not be practical to discuss all of them here.

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Published in FAQ and Client Care
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