I will admit that I am not the biggest proponent of asset protection devices.  Primarily because there seems to be a lot of schemes and scams sold under the guise of “asset protection.”  But not every asset protection device is bad.  In fact, there are some very good, and legitimate (and, yes, legal), asset protection strategies.  Our friend and colleague, Michael Hackard, at Hackard Law in Sacramento, was kind enough to submit this guest post on the subject of domestic asset protection trusts, one of the legitimate forms of asset protection.  Hope you enjoy this informative post:


THE SUBTITLE: I struggled a bit for an appropriate subtitle regarding Domestic Asset Protection Trusts (DAPTs). I wanted the subtitle to be descriptive, to underscore the benefits of DAPTs and to neither overstate nor understate the trusts’ advantages. While such trusts have limitations, they can substantially improve “financial longevity” for individuals and families.

DEFINITION: Alaska has been the leader in updating its trust laws and has some of the most expansive asset protection laws in the United States. Alaska was the first state in the country to allow “self-settled” trusts. The advantages and a description of “self-settled” are delineated in the website of one of Alaska’s leading trust companies.

Alaska has the best trust spendthrift statutes for both the grantor and other trust beneficiaries. Alaska provides for “self-settled” spendthrift trusts which allows the grantor to set up an irrevocable trust, be a discretionary beneficiary and avoid having the assets be subject to creditor claims of either the grantor or any other beneficiary. Also, the assets in such a trust may be excluded from the grantor’s taxable estate even though the grantor is a trust beneficiary. . . Alaska has no special “class” of creditors which, unlike the laws of other states, would permit those creditors to attach the assets of the trust. Alaska allows creditors to attach trust assets in a self-settled trust only upon proving by actual fraud (and not “constructive” fraud).[1]

ADVANTAGES: As the above definition reflects, “self-settled” spendthrift trusts allow the grantor to establish an irrevocable trust while still being a discretionary beneficiary of the trust. A grantor is the creator of a trust and is the person who initially places his or her assets into a trust. Thirteen states now have some statutory frameworks that allow for self-settled trusts. Not all statutes are the same, and the level of protection available to grantors varies widely. That said, the remaining states that do not allow “self-settled” trusts follow the common law rule that generally prohibits the establishment of a trust with your own assets to benefit yourself.

ASSET PROTECTION AND THE DANGERS OF LITIGATION: The New York Times recently addressed one of the realities facing American families: The United States is the most litigious society on earth.[2] I purposefully did not describe asset protection as “insuring financial longevity” because asset protection does not provide absolute insurance from the potential of runaway litigation. It does improve the probabilities of financial longevity and should address an orderly wealth transfer with effective tax planning. Self-settled spendthrift trusts are only part of asset protection. A number of other multiple entity structures are also important to effective planning.

SUCCESSES AND FAILURES: All states recognize the attorney-client privilege. The attorney-client privilege provides that what is said and written between a client and his or her lawyer is confidential and protected from disclosure to others. The “ethical duty of client-lawyer confidentiality is quite extensive in terms of what information is protected. It applies not only to matters communicated in confidence by the client but also to all information relating to the representation regardless of whether it came from the client herself, or from another source.”[3]

The attorney-client privilege precludes much storytelling in the domestic asset protection field. Suffice it to say that some circumstances will preclude the utility of DAPTs while other circumstances will present “golden opportunities” for domestic asset protection that substantially improves family and personal “financial longevity.”Asset protection successes are successes that rightly belong in the zone of confidentiality and constitutional rights of privacy. Asset protection failures are often the focus of news stories or the cautionary tales of creditors’ lawyers.

CAVEATS: Wealth preservation planning is an ongoing process. Attorneys competent in the field must be aware of the ethical and legal issues that are part and parcel of asset protection. On the one hand an attorney might be vulnerable for failing to counsel a client about asset protection; on the other hand the same attorney must be cautious in counseling clients who wish to protect their assets from creditors. The asset preservation available in Domestic Asset Protection Trusts is evolving. Not many years ago self-settled spendthrift trusts were not allowed in the United States. Now the trend, although not cascading, is for their allowance. The impact of this trend and the statutes that accompany it will be part of “the life of the law” and its evolution through “experience.”

The life of the law has not been logic; it has been experience . . . The law embodies the story of a nation’s development through many centuries, and it cannot be dealt with as if it contained only the axioms and corollaries of a book of mathematics. (Holmes, Selections from the Common Law, The Mind and Faith of Justice Holmes (Random House 1943), 51.)

It is likely that the role of Domestic Asset Protection Trusts will be tested, expanded, at times contracted, explored, updated and judicially articulated as time goes on. That said, their utility for estate planning should at the very least be considered and weighed for their applicability. Our observation in “Successes and Failures” is an appropriate close to this article: Some circumstances will preclude the utility of DAPTs while other circumstances will present “golden opportunities” for domestic asset protection that substantially improve family and personal “financial longevity.”

© Copyright Michael A. Hackard, 2012. All rights reserved. 

 

[1] Alaska Trust Company (August 10, 2012), available at http://alaskatrust.com/index.php?id=89 (last viewed August 10, 2012).

[2] Rubin, More Money Into Bad Suits, The New York Times, Nov. 16, 2010, available at http://www.nytimes.com/roomfordebate/2010/11/15/investing-in-someone-elses-lawsuit/more-money-into-bad-suits (last viewed August 10, 2012).

[3] Sue Michmerhuizen, Confidentiality, Privilege: A Basic Value in Two Different Applications, Center for Professional Responsibility (May 2007) available at http://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/confidentiality_or_attorney.authcheckdam.pdf  (last viewed August 10, 2012).

 

When do you need to probate the assets of a decedent?  First of all, let’s make sure we know what “probate” means–it sounds like a medical condition.  But in fact it is simply a court process where a decedent’s assets are taken over by an appointed “personal representative”, the last debts and bills of the decedent are paid, and then the assets are eventually distributed to the heirs (if there is no Will) or to the named beneficiaries under the Will. 

Probate only applies to assets that are owned, or titled, in the indiviudal name of the decedent at the time of his or her death.  Probate does NOT apply to things like joint tenancy with right or survivorship, beneficiary designations, pay-on-death accounts or transfer-on-death account, or any assets held in a Trust.  And since a majority of assets are held in one or more of these types of ownership, it can be rare when a probate is actually required.

Further, in California you can pass up to $150,000 of property (not including real estate) without having to open probate.  Instead, you can use an affidavit of small estate, sometimes referred to as a “13100 Declaration” (see a sample 13100 Declaration).  The “13100” refers to Probate Code Section 13100, which governs the transfer of small estates.  For real property, the limit is $50,000 that can pass without probate.  That is a very small number for California real estate (even after the market crash), so real property almost always must be probated if it is held in an individual’s name (and not in joint tenancy) at time of death.

By the way, we often are asked what are “Letters Testamentary” or “Letters of Administration.”  Oftentimes, when a family member tries to wrap up a decedent’s assets, they are told by a bank or financial institution that they need “Letters Testamentary” or “Letters of Administration.”  Those are not letters drafted by lawyers, they’re not letters at all in the modern usage of that term.  Rather, they are documents issued by the Court AFTER a probate has been opened and the Court has signed the order appointing the personal representative (the term “personal representative” is a catchall phrase that includes both Executors (who are named under Wills) and Administrators (that same thing as an Exeuctor except for estates where there is NO Will)).

The Answer: where a decedent dies owning assets in his or her own, individual name worth more than $150,000 (not included real estate), then you need to open probate to transfer the decedent’s assets to the heirs or beneficiaries under the Will.  If the decedent owned real property worth more than $50,000 in his or her own name, then off to probate you must go.

You can see a few of our aticles about the probate process here. 

Beneficiaries have all the legal rights, and none of the legal obligations, when it comes to California Trusts and Wills.  But beneficiaries, at times, have one very practical obligation—paying to enforce their rights.

For beneficiaries of California Trusts, it’s every beneficiary for him or herself.  That means there is no governmental oversight of  Trustees until the matter is brought to Court.  And every Trust has the potential to wind up in Court if not managed properly.  But just because you may have the right to challenge a Trustee in court does not mean that it comes free of charge.

Most beneficiaries don’t know this, but our judicial system follows the “American Rule” when it comes to attorneys’ fees.  That means each party to a lawsuit pays his or her own fees and generally does NOT get them reimbursed even if successful in the lawsuit.  You read that right, you can win your lawsuit, but still be out the attonreys’ fees it took to get you there.  Seems unjust, and un-American (remember “justice for all”), but that’s the American Rule for attorneys’ fees. 

Contrast that with the English Rule (used in Great Britain and many other Countries) where the losing party to a lawsuit pays the winner’s attorneys’ fees and costs. 

There are a few exceptions to the American Rule even in our own judicial system.  For example, parties in a contract can agree that the winner gets his attorneys’ fees.  There are also a few statutes that only apply to very limited cases where fees can be shifted so the winner is compensated.  Such as with Trust accountings, where the losing party can be forced to pay the winner’s fees if the losers acted in “bad faith” (which can be a tricky standard to prove in court).

The problem is that California Courts are reluctant to shift fees even where doing so is authorized by statute.  In other words, the default rule that everyone pays their own fees, actually weighs against fee shifting even where authorized.  It’s just human nature, when everyone pays their own fees, why should the Court shift the burden of paying in a particular case?  And where the Court can exercise discretion and award fees to the winner, the Court typically will not do that because it goes against the norm. 

What does that mean to you, the Trust or Will beneficiary?  It means you have rights, but it may cost you to enforce those rights.  And you may as well assume that you will not be reimbursed for your attorneys’ fees. 

Given the American Rule, is it still worth enforcing your rights as a beneficiary?  Only you can decide that question.  It obviously is worth it to some people or else there wouldn’t be a backlog of Trust and Will cases congesting our Court system.  But before you go head-long into litigation, be sure to consider your own practical burden of being a beneficiary.  

How do you remove a California Trustee in three “easy” steps?  In truth, the steps aren’t so easy.  But Trustee removal is not impossible either.  It just takes time (a lot of time), patience, money, and emotional fortitude.  (See our What to Expect series for a more detailed discussion of the litigation process).

The legal basis for removal is found at California Probate Code Section 15642, which lists the following grounds for Trustee removal:

  1. Where the Trustee has committed a breach of Trust,
  2. Where the Trustee is insolvent or otherwise unfit to administer the Trust,
  3. Where hostility or lack of cooperation among cotrustees impairs the administration of the Trust,
  4. Where the Trustee fails or declines to act,
  5. Where the Trustee’s compensation is excessive under the circumstances,
  6. Where the Trustee is the same person who drafted the Trust document,
  7. Where the Trustee lacks capacity,
  8. Where the Trustee cannot resist fraud or undue influence, and
  9. For other good cause

Now that you know the grounds for removal, how do you go about removing a Trustee? 

Step 1.            Starting the Removal Process.  Let’s start at the “easy” part—the procedure.  Procedurally, to remove a California Trustee you have to file a petition in Probate Court.  Before filing in Court, however, you should look at the Trust document.  Some Trust documents give the beneficiaries the power to remove and replace a Trustee.  If that is the case, then removal can be accomplished outside of Court.

If the beneficiaries do not have the power to remove the Trustee under the Trust document, then they must file a Trustee removal petition.  In the petition you must state all the reasons for removal, and those reasons must fit into one of the nine categories listed above. 

After filing the Trustee removal petition in Court, you wait.  The Court will give you an initial hearing date, which you must serve on all interested parties (e.g., the Trustee and all the other Trust beneficiaries).  At the initial hearing nothing will happen!  The initial hearing is just the first chance for the Court to review the petition and see if anyone is going to object to the relief you are seeking.  In most cases, if you are trying to remove a Trustee, the Trustee will most likely object to your petition.  The Trustee can either object in writing before the hearing or can appear in person (or have his or her lawyer appear in person) and object right there at the initial hearing.  The Court will then allow the Trustee some time to file a written opposition.

You will then be given another hearing date, and when you appear at that second hearing date…nothing will happen.  Sound familiar?  The petition is not officially “at issue,” as they call it, until everyone files their written objections and responses. 

Step 2.            Conducting Discovery of Evidence.  Once the petition is at issue, the discovery process begins.  Discovery is the process where you try to gather together as much evidence as you can to prove your case.  You send documents requests, written interrogatories (fancy word for “questions”), requests for admission, etc.  You also serve any subpoenas on third-parties, such as banks and brokerage firms if you are trying to gather financial information for the Trust.

At some point, you can even take the deposition of the opposing party and they are allowed to take your deposition as well if they choose to.  You may also have to hire an expert witness to testify to the Trustee’s duty of care and whether they met the reasonable standard of a Trustee.  Or an expert on financial investing to discuss how the Trustee invested Trust assets; or an accounting expert to discuss how the Trustee accounted for the Trust assets.  The opposing party will have the right to depose each of your experts and you can do the same for their experts.

Step 3.            Your Day in Court.  At some point, the Court will set a trial date.  Trial dates are usually set much further out in time than you would like.  And it’s not uncommon for trials to be delayed multiple times before actually getting under way.  But eventually, trial commences and evidence must be produced as required under the California Evidence Code.

Or maybe trial does not commence because in so many cases the parties reach a voluntary settlement before trial begins.  Why?  Because of everything I just described.  Litigation is time-consuming and expensive.  It costs a great deal of money, time, and emotional involvement.  Most Courts strongly encourage parties to attend either a mediation or a mandatory settlement conference in hopes of resolving the conflict among themselves. 

So maybe removing a Trustee is not so “easy,” but it’s not impossible.  You just have to follow the steps and don’t stop until your done.

Think the law is always black and white?  Think again…at least when you are thinking of Trust vs. Will capacity.  From a legal perspective, capacity as it relates to Will and Trust creation is confusing—even for us lawyers.  Primarily because California Courts have not always applied consistent standards in evaluating capacity to make a Trust.

Will capacity is an age-old standard that can be broken down into three main elements (See Probate Code Section 6100.5):

  1. The decedent must be able to understand the nature of the testamentary act (i.e., they must know they are creating a Will),
  2. Understand and recollect the nature and situation of their property (not details, but general knowledge of their property), and
  3. Remember and understand their relationship to their relatives and those that will benefit from the Will.

This three-part test is referred to as “Testamentary Capacity,” and it applies only to Wills.  Well it used to apply only to Wills, but Justice Steven C. Suzukawa, of the Second District Court of Appeals, changed that last year with the Court’s ruling in Anderson vs. Hunt.

Before the Anderson decision, it was generally believed that to validly create or amend a Trust, a settlor (the person creating the Trust) must meet the higher burden of contract capacity.  Unlike Testamentary capacity, contract capacity requires a person to understand (See Probate Code Section 812):

  1. The rights, duties and responsibilities created by or affected by the decision,
  2. The probable consequences for the decisionmaker and, the persons affected by the decision,
  3. The significant risks, benefits and reasonable alternatives invoiced in the decision

Testamentary Capacity does not require any of these elements.  In other words, a person can create a Will without knowing the duties and responsibilities it creates or the probable consequences of the decision.  Plus there is no requirement for a decedent to know the reasonable alternatives to creating a Will.  As you can see, contract capacity is a higher standard to meet than is Testamentary Capacity.

In Anderson, the Court decides, for the first time, that the lower standard of Testamentary Capacity can apply to the creation of a Trust amendment where the amendment’s “content and complexity, closely resembles a will or codicil.”  In Anderson, since the Trust amendments at issue merely changed the percentages of the trust estate that the settlor wished each beneficiary to receive, the Court concluded that the amendment was like a Will and, therefore, Testamentary Capacity applied. This is a classic example of bad facts make bad law. This decision has far reaching negative ramifications for Trust amendments. 

THE PROBLEMS WITH ANDERSON

1.         When does a Trust Amendment look like a Will?  Good question to which no one knows the answer.  We know changing a few percentages is enough for a Trust amendment to look like a Will, but what else fits into that category?  How about changing the name of a successor Trustee?  Or changing the powers and duties of the Trustee?

The problem with the Court’s ruling in Anderson is that we don’t know where it stops because what one person may consider a simple amendment, someone else may decide is too complex.  Therefore, what standard must a settlor meet in order to amend his or her Trust?  We can’t be sure which standard is appropriate until a Court (likely several Courts of Appeal) rules on it.

2.         What about other Will formalities?  Wills use the lower test of Testamentary Capacity because Wills also have other formality requirements that do not apply to Trust amendments.  For example, Wills must be in writing, signed by the testator (the person creating the Will), and witnessed by two independent witnesses. 

The witness requirement is unique to Wills.  In California, we do not notarize Wills.  In fact a notary on a Will does not make a Will valid.  Instead, a Will must be witnessed by two disinterested witnesses (meaning two people who are not beneficiaries under the Will).  The policy behind requiring witnesses is to ensure that the Will is signed by the testator without undue influence, duress, fraud or at a time when the testator lacks capacity.  Of course, the witnesses don’t always serve this purpose.  There are times when a Will is witnessed when a testator lacks capacity; but still, the witness requirement provides some safeguard against wrongdoing.

No such safeguard is required of a Trust amendment.  An amendment usually only requires the signature of the settlor.  And while Trust amendments are often notarized, there is no legal requirement that an amendment be notarized—just a single signature of the settlor is sufficient (unless the Trust terms state otherwise, which most don’t).

Since a Trust amendment does not require witnesses, it should be judged using the higher level of contract capacity to be sure it is done properly.  Otherwise, Trust amendments should require at least two witnesses as is required for Wills.  But the Anderson Court can’t have it both ways.  It essentially treats a Trust amendment like a Will, yet does not require all the formalities of a Will.  This is a dangerous precedent.

3.       Is incorporation of the whole Trust in a Trust amendment complex or simple?  Another problem with Anderson arises when the settlor creates a “simple” Trust amendment that includes language in the amendment stating that the original trust (usually signed years before) is once again ratified and confirmed. The original trust is almost always going to be “complex” in nature. So does Testamentary Capacity still apply in a case where an original (and complex) trust is ratified and confirmed in a “simple” Trust amendment? Or does contract capacity apply in that case?  We don’t know the answer to that question.

In the end, Justince Suzukawa’s holding in Anderson does what the Appellate Court seem to do best in Trust and Will law—make it far more confusing.  Good for lawyers who litigate these cases, bad for people trying to put their Will or Trust down on paper (and the beneficiaries whose interest are so easily torn apart).

I get calls every week from California Trust, Last Will, and Estate beneficiaries complaining that they can’t get their brother or sister, who is the Trustee and Executor of their parents’ estate plan, to provide copies of the parents’ estate plan after the parents have died.

I usually suggest the following. First, send a letter to the Trustee and Executor politely requesting the entire Trust, including amendments, and Last Will for both parents. Include the following language in the letter: 

A.         Please Provide True Copy of California Will

Under California Probate Code Section 8200, you, as Executor of Mom’s and Dad’s estates, are required to deliver mom’s and dad’s Last Wills to the County Superior Court where mom and dad died within 30 days of mom’s and dad’s respective deaths. Please note, if I am damaged by your failure to deliver moms’ and dad’s Last Wills to the Superior Court you will be liable for my damages. (See Probate Code section 8200(b).)

As you are required to deliver the Wills to the Superior Court, you should have no objection in providing me with true copies at this time. If you do not provide me with a true copy of the Wills I will have no choice but to file a petition in the Probate Court requesting the Court to order you to provide me with true copies of the Wills. Please note, if I’m forced to file a petition, I will request that the Court order you to pay for the attorneys’ fees and costs associated with my petition. I hope I am not required to file a petition and you will simply provide me with true copies of the Wills on or before DATE. 

B.         Please Provide True Copy of California Trust

Under California Probate Code Section 16061.7, you, as Trustee of Mom’s and Dad’s Trust, are required to provide all beneficiaries of the Trust and all of Mom’s and Dad’s heirs with a true copy of the Trust documents, including any amendments, 60 days after Mom’s and Dad’s respective deaths.

As you are required to provide Mom’s and Dad’s Trust after 60 days of their respective deaths you should have no objection in providing me with true copies of the Trust, and any amendments, at this time. If you do not provide me with a true copy of Mom’s and Dad’s Trust, and any amendments, I will have no choice but to file a petition in the Probate Court requesting the Court to order you to provide me with a true copy. Please note, if I’m forced to file a petition, I will request that the Court order you to pay for the attorneys’ fees and costs associated with my petition. I hope I am not required to file a petition and you will simply provide me, as an heir and/or beneficiary of the Trust, a true copy of the Trust, and any amendments, on or before DATE.

If you include the above-referenced language in your letter to the Trustee, more times than not you will be successful in getting the Trustee to turn over the Trust and Will documents.

If the Trustee still refuses to provide the Will and Trust, then you must seek help from the Probate Court to force the Trustee and Executor to hand over these documents. I will explain in a future post how you get the Court’s help for obtaining these documents. 

To hear estate planning attorneys talk, you would think a revocable, living trust cures all ills.  And yet, so many trust cases find their way to Court—the one place the settlor hoped to avoid by making a Trust in the first place.

While all Trusts can potentially wind up in Court—that venue should be avoided.  And the best way to avoid Court is to properly administer the Trust in the first place.

Trust administration is the process that takes place after the settlor (or settlors if it is a jointly created Trust) dies.  Trusts don’t magically transfer assets at death, there is a process that must take place to take the assets from the Trust to the ultimate beneficiaries. 

A Trust administration is nowhere near as difficult as a probate (sometimes called a probate administration) because, in California, all probates must be done in Court—with all the necessary rules and formalities that go along with probate administration.  To administer a Trust, is a whole lot easier, but that’s not to say there is nothing to do. 

1.         Knowing the Trust Document.  A proper Trust administration starts with the Trust documents itself.  The Trust should specify what is to occur after the Settlor’s death.  This includes paying debts, paying taxes, and distributing property to the named beneficiaries.  The Trustee needs to thoroughly read and understand the Trust terms (or have them explained if the terms are difficult to understand—and most are difficult to understand since they are drafted by lawyers).

2.         Gathering Assets.  The Trustee then must “marshall” the assets of the Trust.  This means gathering the assets, finding them, and putting the Trustee’s name as the successor Trustee of the Trust assets.  A bank account, for example, held in the old Trustee’s name must be transferred into the name of the new Trustee.  Same for brokerage accounts, stocks and bonds, and even real property (where you typically use an Affidavit Death of Trustee to put the new Trustee on title).

3.         Administering the Assets.  Once the assets are “marshaled” they must be administered.  This means different things for different assets.  For example, real property may need to be appraised and then sold.  Stock and bonds may need to be liquidated, personal property may need to be sold.  The administration of assets varies greatly from case to case depending on the type of assets involved and depending on what the Trust requires. 

The Trustee is given a “reasonable” time to administer the Trust assets and get them into a condition so that a final distribution to the beneficiaries can be made.  There is no hard deadline by which a Trustee must act—the “reasonable” standard is subjective.  But typically Trust administrations can take from 6 month to 1 year, or more in complex Trust cases. 

During the Trust administration, the Trustee is allowed to make a preliminary distribution to beneficiaries.  This allows beneficiaries to receive at least some of their property before the Trust administration is complete.

4.         Final Distribution and Reserve.  Once the Assets are ready and all creditors have been paid (including all taxes), then the Trust is ready to be distributed.  The Trustee must distribute the Trust assets in a “reasonable” amount of time.  However, the Trustee is allowed to retain a “reasonable” reserve—everything seems so reasonable.  Or at least is should seem reasonable.  Where Trustees get in trouble is when they take too long or try to retain too much at the end of the Trust administration.

In fact, there are many points along the way in which a Trustee can be at odds with his or her beneficiaries.  And it can be difficult to work through because the beneficiaries are the ultimate owners of the Trust property, but they are NOT the current owners.  The Trustee alone has the only say in the what, where, how, why and when of Trust administration. 

Yet if a Trustee acts at all times in a “reasonable” way, then the problems can be minimized and the administration can be handled with minimum dispute.  The problem, of course, is when a Trustee is NOT acting reasonably…but they think they are.  Or when a Trustee is acting reasonably…but the beneficiaries think they aren’t.  Differences of opinion on what is reasonable can fan the flames of litigation. 

So just where do Trust administrations go wrong?  That’s the subject of our next post on Trust Administration.

After years of fighting the urge I purchased a BMW R1200GS. Since my purchase, I can’t stop riding my GS. I look for any excuse to go for a ride. Deposition in Los Angeles? No problem—I get to and from LA in just over an hour each way. Need Dog Food? No problem—I just strap the 50 pounds of dog food to the back of the GS. Etc. Etc. Etc.

I love everything about the GS except for the stock windscreen. At 90 mph—I mean 65 mph—the buffeting behind the stock windscreen gets old pretty quick. So I began a search for a better windscreen. I reviewed the AeroFlow Sport Half Fairing, the California Scientific windshield, Cee Bailey’s windshields, and the Touratech Windscreen Spoiler. Each had good points—but I remained undecided.

Several weeks later I had to service my GS at the BMW dealer in Riverside, California. I took my bike in early and had to wait for a few minutes. I saw a gentleman in the parking lot working on the windscreen of a BMW K1600GTL. We struck up a conversation about windscreens. I told him I had reviewed AeroFlow, CalSci, Cee Bailey’s, and even tried the Touratach Spoiler. He smiled and introduced himself as “Paige”. He then told me he was the president and founder of AeroFlow.

Paige invited me to visit him at AeroFlow headquarters in Anaheim. We set up a time to meet the following week. Upon arriving at Paige’s shop in Anaheim, he warmly greeted me along with Bonnie and Clyde—his guard dogs. Paige gave me a tour of his facility. He showed me how they heated and molded the windscreens. After that he showed me his new windscreen design for the BMW K1600GTL. Finally, Paige showed me the rest of his 3600 sq. ft. facility, and then we went to take a look at my GS.

Paige recommended the tall screen. Unfortunately, as we began taking off the stock screen, one of the attachments for holding the screen in place was broken. Paige suggested that I go to the BMW dealership in Orange to get a replacement part. I started to get my GS ready to ride without the windscreen, which we had already taken off. Paige said, “just take my car.” “Really?” I said. Paige insisted. So, I took his car and went to pick up the replacement part. After returning to Paige’s shop he had already mounted the upper brackets. We quickly mounted the tall screen and I was off to test it out. It was much improved, but I have a high riding position. So, Paige suggested we try the extra tall windscreen. The extra tall windscreen did the job. No more buffeting, and I could even hear my motorcycle on the freeway.

After saying thanks and goodbye I left Paige’s shop and got on the 91 Freeway East to drive to my office in Riverside. It was the best ride I’ve ever had on the Freeway. I’ve attached pictures of my experience with Paige and of my new AeroFlow Sport Half Fairing below.

GS 1 (EV)1.pngGS 3 (EV).png

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GS 2 (EV).png                        

Part 3: What to do and when to do it.  (See part one and part two.)

So your private information is being sought, what are you going to do to protect it?  That depends on the manner in which information is being requested by the opposing party.  Private information will either be (1) requested directly from you through the use of interrogatories (a fancy word for “questions”) or document demands—both of which are forms of written discovery—or (2) requested from a third-party (such as a bank or medical provider) using a subpoena.

1.  Information Requests sent directly to you. 

     A.        State your Objections.  If you receive written discovery, such as interrogatories or document demands directly from the opposing party, you must state your objection based on the Right to Privacy within the deadline provided—that’s usually 30 days after being served with the discovery.  If you fail to state your objection, you waive it!  Let me say that again: if you fail to state your objection to producing private information based on your Right to Privacy, then you are waiving that right.  Therefore, you must ensure that your objection is timely made in writing by responding to the discovery requests with the stated objection.

A Right to Privacy objection goes something like this “The information sought violates the responding party’s Constitutional Right to Privacy and no further information will be provided on that basis.”  You can say it however you like, just be sure it clearly is expressing your Right to Privacy objection.

After you object, the opposing party has the right to bring a Motion to Compel, asking the Court to force you to answer the questions or produce the documents regardless of your Right to Privacy.  You then must respond to the Motion and explain to the Court why your rights should be respected in your case.  The Court then uses the balancing test (discussed in Part One of this series) and decides who is right and who is wrong.

     B.        Move for Protective Order.  As an alternative to serving objections and waiting for a Motion to Compel, you can be proactive and bring a Motion for Protective Order asking the Court to rule that your Right to Privacy should prevail over whatever information is requested.  Typically, a party does not bring a Motion for Protective Order because it’s much easier to simply object and then see if the opposing party wishes to force the issue by filing a Motion to Compel. 

If, however, you want to be the first one to bring the issue to the Court’s attention, you can file your Motion seeking a protective order—which would protect your private information from being disclosed.

2.  Information Requests made to a Third-Party (such as a bank or medical provider)

At times, an opposing party will seek your private information from third-parties by serving subpoenas on entities that record your private information, like banks and medical providers.  When a third-party is subpoenaed for your private information you, as a party to the lawsuit, are required to file a Motion to Quash the subpoena.  You do not have the luxury of simply serving written objections as you would with written discovery sent directly to you.  You must take action in Court by way of a Motion.  If you fail to file the Motion, then the information can be produced even though it is otherwise private information. 

As soon as you file your Motion to Quash, there is an automatic stay of the subpoena until the Court hears and rules on the underlying Motion.  So once your Motion is filed, you’ll want to serve a copy of it on the third-party entity so that they know the subpoena should be put on hold until the Court rules.

By the way, if you are NOT a party to a lawsuit, but you receive notice that someone is going to subpoena your bank, medical, or other private records, you can object to that by simply serving your written objections using the form that is required to be given to you along with the notice of the subpoena.  Non-parties can protect their rights by simply objecting—they do NOT need to file a Motion in Court.  Once written objections are made by a non-party, the party seeking the information would have to bring a Motion to Compel in Court in order to overcome the objection.

The bottom line: you must take action to protect your Right to Privacy.  When the time comes to protect your rights, make sure you act promptly!

Part Two: When do you fight, and when should you not fight, for your Right to Privacy? (See Part One here.)

In the words of Kenny Rogers, “you have to know when to hold ‘em, and know when to fold ‘em….”  Same is true for the Right to Privacy.  Just because the right exists and can be enforced doesn’t mean it should be enforced in every situation.

There is a strategy at work here that should be considered to determine whether disclosing private information is better for your case then trying to protect it.

First, let me acknowledge the fact that most parties to a lawsuit want to do everything possible to keep private information from the other side just out of principle.  I understand that.  Opposing parties tend not to like each other. 

But consider this: what if your private information tells a good story?  What if that information tells such a compelling story that any Judge or Jury seeing that information would side with you in your lawsuit?  That just might change your mind about disclosing private information. 

For example, so many times cases revolve around a joint account—money goes into the account and money comes out prior to the decedent’s death.  Was the money used for the benefit of the decedent or did the other joint account holder withdraw the money for his own benefit?  Allegations fly in each direction and the Court must decide who is right and who is wrong.

A joint account holder may be able to assert a right to privacy over the financial information contained in the joint account and could potentially hide that information from other parties.  But what if the bank information can establish that the money in the account was used exclusively for the decedent’s care?  Maybe the bank statements show payments to a care facility or nursing home, hospital bills and doctor bills being paid, prescriptions being filled, etc.  If this is the case, then the bank information tells a compelling story that even though money went into a joint account, it ultimately benefitted the decedent.

Keep in mind that if you refuse to disclose information under the right to privacy, and if that information is protected from disclosure by the Court, then you cannot use that same information at trial.  The law does not allow you to use your rights as both a shield and a sword.  If you refuse to disclose it, you can’t use it…period.

Under this example, waiving the right to privacy may be better for the case overall then trying to hide behind it.  Keeping good and valuable information under wraps can hurt your case because you then won’t be able to use that evidence at trial. 

This is just one example, there are hundreds of other scenarios where the information sought could be either helpful or hurtful to your case.  The point is to consider waiving the right to privacy at times.  Don’t just assert the right because it’s there.  Assert it when needed and let it go when its advantageous to you.

When you do decide to fight for your right to privacy, however, then fight as hard as you can.  So many times the right is waived unintentionally or because people think it won’t be upheld.  While you can’t guarantee that the Court will uphold your right to privacy, most Judges will give the right fair consideration, and will even protect the right to privacy in many cases.

What do you need to do to assert and protect your right to privacy?  That’s the subject of part three of this three part post.