Medi-Cal and “Estate Recovery”

August 31, 2014

An estate is not only responsible for distributing property after your death. It must also pay any valid debts to the extent your assets allow. Medical debts are a common expense most estates must pay. And if the deceased received health care benefits from the California Medical Assistance Program (Medi-Cal), the estate may have to reimburse the State of California for some of those expenses.

Estate Recovery

This is known as estate recovery. Medi-Cal is part of the federal Medicaid program. Medicaid rules require states to try and recoup the costs of certain long-term care from the estates of now-deceased recipients. California law goes even further and seeks recovery of costs for most covered services provided to people ages 55 and over. The Affordable Care Act (aka “Obamacare”) prohibits California from conducting estate recovery if the beneficiary was under 55 and received coverage under the low-income expansion to Medicaid and Medi-Cal.
If a beneficiary, regardless of age, is permanently institutionalized and owns a home, Medi-Cal may place a lien on the beneficiary's residence during his or her lifetime. Otherwise, estate recovery may not begin until after the beneficiary's death. If the beneficiary was married, recovery may not begin until after the spouse's death. There may also be no estate recovery if the beneficiary left minor or disabled children.

Estate recovery is limited to the lesser of the costs claimed by Medi-Cal or the value of the estate's assets. There are also hardship exemptions available for certain low-income individuals.

Estate Recovery In Practice

A recent California appeals court decision illustrates how estate recovery works. Merver Lee Mays died in 2006. She owned a home in Stockton. She left no will but two surviving children. One of the children, Betty Bedford, was named administrator of the estate, which consisted mostly of the house, which was valued at about $245,000.

The Department of Health Care Services (DHCS), which administers Medi-Cal, filed a creditor's claim to recover approximately $84,000 for services provided to Mays. Bedford should have paid this claim from the proceeds of the sale of her mother's house. However, Bedford's brother had deeded the house to himself, using a power-of-attorney signed by their mother just before her death. A probate judge later held the estate still owned a 50% interest in the house. Bedford later waived this interest in exchange for cash payable to her, not the estate.

Meanwhile, nobody bothered to pay the DHCS. The Department ultimately filed a civil suit against both siblings, maintaining they were now personally responsible for the unpaid $84,000 claim. The probate court—and the Court of Appeal—sided with the DHCS and found that Bedford was personally liable for paying back the DHCS since she personally benefited from her mother's estate without first bothering to properly administer it.

Planning Ahead

This was a case where a personal representative's carelessness proved costly. In developing your own estate plan, it is essential you select agents who will comply with the law and not try to circumvent legitimate creditor's claims. This goes doubly so when dealing with a potential Medi-Cal recovery. If you have any questions, contact the Law Office of Scott C. Soady in San Diego.

The Importance of Safekeeping Your Will

August 29, 2014

A last will and testament does little good if nobody can find the document after you pass away. It is important to safeguard your signed, original will as it must be filed with a probate court in order to formally open an estate. As a general rule, California courts will not accept photocopies of wills.

Any delay in locating a will may produce significant complications for your estate. As an illustration, consider a recent California appeals court decision which is discussed here for informational purposes only. The case arose from a horrific 2009 murder-suicide that resulted in the death of Elizabeth Fontaine, her mother and Fontaine's two small children. Fontaine left a will naming her cousin, Jennifer Hoult, as executor.

At the time of her death, Fontaine worked as an attorney at a prominent Los Angeles-area law firm. Hoult made several attempts to locate Fontaine's will, which she believed the firm held for safekeeping. But it was not until 2013—four years after Fontaine's death—that the will was found. (The law firm entered bankruptcy in 2011, and the trustee assigned to distribute the firm's assets ultimately found the will.)

The will named Fontaine's two deceased children as beneficiaries. Hoult still moved to probate the will, as there were creditors with potential claims against Fontaine's estate. Those creditors included Fontaine's estranged husband, who filed a rival petition seeking appointment as executor of the estate.

A probate judge rejected the husband's petition and agreed Hoult had priority appointment as executor under the will. The Court of Appeal, in a June 25 decision, reversed the probate court's order and directed the judge to conduct an evidentiary hearing on the husband's objections to Hoult's appointment. The litigation over Fontaine's estate will therefore continue nearly five years after her death.

Safekeeping Your Own Will

Setting aside the husband's still-pending objections, this case emphasizes the importance of locating a will in a timely manner. Normally, an attorney's office is an ideal place for keeping a person's will, and but for the bankruptcy issues faced by Fontaine's firm, her will should have been located shortly after her death.

In lieu of keeping a will with your estate planning attorney, you might also consider a safe deposit box. The important thing to remember here is that your intended executor should have easy access to the box. Ideally, you would name the executor (and maybe your alternate executor) as a co-owner of the box. Otherwise, the bank may not release the contents of the box without a court order.

You might also keep your will at home among your personal effects. It is still a good idea to keep a will in a home safe or other locked and secure area that your executor or family can access when necessary. A will should be treated like any other important personal document, such as a passport or birth certificate.

Your estate planning attorney can advise you on all the best options for preparing and safekeeping your will. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

What Is a “Pour-Over” Will?

August 22, 2014

In estate planning, a “pour-over will” is a document signed in conjunction with the creation of a living trust. A pour-over will is like any other last will and testament, except that it distributes—or “pours over”—any probate assets to the related living trust. In this sense, the pour-over will is a backup that ensures no assets remain outside of the trust.

The Difference Between a Will and a Trust

Many people simply dispose of their estate through a will. This means the person leaves an estate subject to probate before the California courts. When the person dies, his or her will must be filed with the court, an executor is named (usually by the will) and assets are distributed according to the terms of the will.

A trust operates along similar lines. A person typically creates a living trust and names themselves as trustee. When he or she dies, the trust names a successor trustee who distributes the trust's assets. This is similar to a probate estate, except there is no need for a formal court proceeding. A trust may be kept private, while a probate estate becomes a matter of public record. A trust may also be wound up more quickly than a probate estate, where the executor must comply with certain legal deadlines and requirements.

The Need for a Pour-Over Will

A living trust involves more than signing a trust document. A person must actively transfer all of his or her assets into the trust. For example, if you own a home, you would sign a deed transferring the property from yourself to you as trustee of your living trust. If all of your assets are titled in the name of the trust, then upon your death there may be no need to open a probate estate at all.

However, trusts are rarely complete. A person may acquire many assets between the time they created the trust and their death. Even with careful estate planning, some assets may remain outside the trust. In that case, a pour-over will is necessary to complete the trust. The pour-over will directs your executor to transfer any assets remaining in your name to the trust.

This does not mean you should rely on a pour-over will in lieu of transferring assets into a living trust during your lifetime. Like any will, a pour-over will is subject to formal probate. This means the executor may have to wait several weeks or months before making the final transfer to the trust. This can defeat the very purpose of the trust, which is to expedite the distribution of a person's assets after their death.

Deciding the Best Option

A pour-over trust is only necessary when a person chooses to include a living trust as part of his or her estate plan. Depending on your circumstances, a simple will may be the better option. Before you commit to anything, you should always consult with an experienced California estate planning attorney. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

What Happens to an Estate With No Heirs?

August 17, 2014

Dying without a will is never a good idea. In California, like all states, there are laws governing the succession of intestate estates—that is, estates where the deceased failed to leave a will. The intestate succession law directs the distribution of property to your closest living relatives. But what if you have no living relatives or they fail to make themselves known to the probate court? In such cases your estate is “escheated” or transferred to the state as unclaimed property.

If a living heir appears within five years of the initial escheat, he or she may file a petition in court to claim your estate. After the five-year period expires, however, your estate becomes the permanent property of the State of California. And once a distribution is made to a claimant, it excludes any rival claims that may arise, as one recent California appeals court decision demonstrates.

Estate of Dickson

This case is discussed here merely as an illustration and should not be treated as a conclusive statement of California law on this subject. Alvin Dickson, Jr., died in 2009 without a will. At the time of his death no living heir had appeared to claim the estate, so it was escheated to the unclaimed property office of the California State Controller.

In September 2012, Kent Orr filed a petition in San Bernardino Superior Court to recover the estate from the Controller. Orr was Dickson's second cousin, once removed, and claimed to be his closest living relative. The court granted Orr's petition in an October 2012 order.
Two months later, another man, Reginald Watkins, appeared and claimed he was Dickson's first cousin. In fact, he said there were 17 living first cousins who all had higher priority to claim Dickson's estate than Orr, who was only a second cousin. Watkins said the Controller's office was aware of his competing claim but never informed him about Orr's petition in San Bernardino. Watkins therefore asked the court to reverse its order in favor of Orr and award the estate to the first cousins.

The court denied this motion. The judge said the Controller had no legal duty to inform Watkins about Orr's petition. Nor did any action (or inaction) by the Controller reasonably interfere with Watkins' ability to learn about the Orr petition. The Court of Appeals, which upheld the trial judge's decision, noted California's escheat law created a “first come, first served policy,” with respect to previously unknown heirs. Unless Orr deliberately misled the court about the existence of other unknown heirs—and the appeals court said there was no evidence of this in the record—his petition was validly granted.

Avoiding Confusion

It's unknown what Alvin Dickson's wishes were regarding his estate since he never left a will. This unfortunately led to litigation years after his death. To avoid a similar situation, you should always work with an experienced California estate planning attorney to prepare a will or trust specifying the heirs of your choice. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions

When a person dies without a will, California law specifies an order of precedence for individuals entitled to act as executor or administrator of the estate. A surviving spouse or domestic partner has top priority over all other persons, including the ch

August 15, 2014

When a person dies without a will, California law specifies an order of precedence for individuals entitled to act as executor or administrator of the estate. A surviving spouse or domestic partner has top priority over all other persons, including the children or parents of the deceased. Obviously, this assumes the spouse or domestic partner has a legally recognized relationship. In some cases, California courts will recognize a “putative” spouse or domestic partner—someone who has a good faith belief they were the deceased's spouse or domestic partner despite the failure to obtain legal recognition.

A recent California Court of Appeals decision illustrates the confusion that can arise when a person claiming to be a spouse or domestic partner fails to support his or her claim. This case is discussed here for informational purposes only and should not be construed as a complete statement of California law on this subject.

Estate of Langman

Kirk Langman and Michael Greene had been friends since they both attended elementary school in the 1960s. From the late 1980s forward, they lived together on-and-off, with Greene moving in with Langman permanently in 2008. In 2010, they moved into a house in Pebble Beach paid for by Langman's father and owned by Langman.

Langman died in September 2011 after collapsing in his home. Thereafter, Langman's father asked a probate court to name him administrator of the estate, as his son did not leave a will. Greene objected, claiming he was Langman's domestic partner—or, in any event, his putative domestic partner—and therefore entitled to priority appointment as administrator.

According to Greene's testimony before the probate court, he and Langman signed a domestic partnership declaration after moving in together in 2008. Greene said he did not previously have an intimate relationship with Langman, although they did after signing the declaration. Greene said the domestic partnership was Langman's idea and that, as far as Greene knew, Langman had taken care to ensure the declaration was properly filed with the state.

In fact, no such declaration was ever recorded. Unlike marriage, which requires a license from a county clerk, a domestic partnership need only be registered with the California Secretary of State. (Same-sex marriage, of course, was not permitted in California until June 2013.) By the time the probate court tried Greene's objection, he acknowledged there was no registration on file. Still, he said he had a good-faith belief he was Langman's domestic partner at the time of his death, and therefore he should be appointed administrator as Langman's “putative domestic partner.”

The probate court and the Court of Appeal rejected Greene's claim. As the Court of Appeal explained, the available evidence showed Greene and Langman “were merely friends and roommates and not domestic partners or putative domestic partners.” The court pointed to a number of inconsistencies in Greene's statements after Langman's death, which damaged his credibility before the probate judge.

Protecting Your Partner's Interests

A committed couple need not enter into a legal marriage or a domestic partnership. But if one partner wishes the other to oversee his or her estate, it is imperative to prepare a will, trust or other estate planning documents that override the defaults established by state law. An experienced California estate planning attorney can advise you on the best option for your relationship and situation. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

Making Charitable Bequests In Your Will or Trust

August 3, 2014

Many people wish to “leave a legacy” by making a charitable contribution through their estate plan. The Internal Revenue Service, which collects data from large estates required to file a federal estate tax return, reported more than $1.6 billion in charitable bequests from California residents alone in 2012. Charitable bequests are popular precisely because they are deductible from the value of an estate for federal estate tax purposes. (California does not impose an estate tax at the state level.)

What Is a “Charitable Organization”?

There are many ways to provide for a charity in your will or trust. First, you should understand what is meant by “charity.” The IRS is responsible for recognizing charitable organizations. Broadly defined, a charitable organization is one that operates not-for-profit—that is, there are no shareholders who receive dividends—and fulfills one or more “exempt purposes” as defined by law. These exempt purposes include:

- Relief of the poor and underprivileged;

- Advancement of religion;

- Advancement of education or science;

- Building and maintaining public works;

- Promoting civil rights;

- Sponsoring amateur sports competitions; and

- Preventing cruelty to children or animals.

Two common recipients of charitable bequests are churches and schools. Most colleges and universities are charitable organizations, as are most types of religious institutions, including synagogues and temples. And while charitable organizations may not engage in significant political activity or lobbying, many activist groups maintain a separate charity to receive tax-deductible contributions. The Internal Revenue Service maintains a searchable online database, so you can check to see if your favorite group is a charitable organization or has an affiliated charity.

Forms of Charitable Bequests

Once you have decided to include one or more charitable organizations in your estate plan, what are your options for actually making a bequest? The most common gift is a straightforward gift of money. For example, your will might include a clause that says, “I give, devise, and bequeath to XYZ CHARITY, INC., the sum of Ten Thousand Dollars ($10,000.00), for the general purposes of the organization.” The “general purposes” language means the charity can use the gift as it sees fit.

However, there may be cases where you wish to direct your contribution to a specific purpose. Perhaps you wish to leave money to your college to fund a scholarship in your honor. Your will or trust should contain exact language detailing the purpose of your bequest, as well as instructions on what to do if the specific purpose cannot be honored.

Instead of a specific gift of cash or other property, you might also name a charitable organization as the residuary legatee of your estate. This means the charity receives the “rest, residue and remainder” of your estate after all other specific bequests are made. Alternatively, you could name the charity as a contingent beneficiary, meaning it would receive a portion of your estate if your first-named beneficiary (such as a family member) dies before you.

These are just some of the options to consider when including a charitable organization in your estate plan. A qualified California estate planning attorney can advise you of all your options and help decide what is best for your needs and interests. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

Bernard Madoff ran one of the largest Ponzi schemes in history. Madoff ran his own brokerage firm for nearly 50 years, claiming unusually high returns on investments. In reality, Madoff's company stopped trading in stocks in the early 1990s. Instead, he s

August 1, 2014

Bernard Madoff ran one of the largest Ponzi schemes in history. Madoff ran his own brokerage firm for nearly 50 years, claiming unusually high returns on investments. In reality, Madoff's company stopped trading in stocks in the early 1990s. Instead, he simply used money provided by new clients to pay off fabricated returns to existing customers. In late 2008, in the midst of a credit crunch, Madoff's scheme collapsed, leaving roughly 4,800 clients holding $65 billion in phantom assets.

The estates of some of these now-deceased former clients now face unusual probate issues. An estate must always take inventory of a deceased person's assets and determine the date-of-death value for tax and probate purposes. But how does one value an investment based on a lie? The Internal Revenue Service and several estates are presently struggling to answer that question.

Estate of Kessel

Bernard Kessel was a Madoff client. In 1982, Kessel established a pension fund with himself as sole beneficiary. Kessel initially invested about $600,000 with Madoff.

Kessel died in July 2006, about two-and-a-half years before the Madoff scheme collapsed. Iris Steel, Kessel's longtime partner, was named executor of his estate. As is standard procedure in an estate administration, Steel asked Madoff's company for a list and valuation of all assets held in Kessel's account. Based on the information provided, an appraiser hired by Steel valued the Madoff account at approximately $4.8 million at the date of Kessel's death.

Of course, as everyone subsequently learned, the assets in the Madoff account were an elaborate lie. In fact, Steel and Kessel's son—the beneficiaries of the account—actually withdrew more money from Madoff's scheme than had been deposited.

This created an estate tax problem. The estate had previously paid federal estate taxes based on the appraised value of the Madoff account. After the scheme's collapse, the estate asked the IRS for a $1.9 million refund based on its view that the appraised value of the Madoff account was now zero. The IRS rejected that argument and the estate appealed to the United States Tax Court.

On May 21 of this year, the Tax Court ruled the estate could proceed with its case. Rejecting an IRS motion for summary judgment, the court found there was a genuine dispute over the value of the Madoff account. The IRS argued the original valuation of $4.8 million was correct because it reflected the “fair market value” of the account at the time of Kessel's death. The IRS said that a reasonable buyer would not have been aware of the fact the account was part of a Ponzi scheme. The estate argued that a buyer exercising due diligence could have uncovered Madoff's chicanery. However the Tax Court ultimately resolves this case, it will affect not just Kessel but other Madoff investors who lost money.

In effect, the IRS wants estates to pay taxes on assets that never existed in the first place. And while the federal estate tax only affects a small percentage of estates, such aggressive activity only highlights the importance of careful estate planning. If you need advice on any estate planning matter, contact the Law Office of Scott C. Soady in San Diego today.

Who Owns Your Blog Posts After You Die?

July 22, 2014

Copyrights are a unique form of intellectual property recognized by the federal government. A copyright exists in an “original work of authorship” fixed in any form. Copyright is not the same thing as ownership of a material object. Under federal law, a copyright can be transferred by will (or intestate succession) like any other item of personal property. It is important to understand that copyright exists separately from the actual object that is the subject of the copyright. For example, if you write a novel, and your will leaves “all copies of the novel in my possession” to someone, that does not transfer the copyright as well. This is because, as the term implies, copyright refers to your right as the author to decide who may or may not make copies of your work in the future.

You may not think copyright will matter much after you're gone. But U.S. copyrights continue for 70 years after an author's death. So if you anticipate future royalties from your artistic or literary works, it is essential to make the appropriate provisions for your copyrights as part of your will or living trust.

An Unusual Situation

Copyrights and estate planning can also intersect in more unusual ways. In March, a probate judge in Arlington County, Virginia, authorized the executor of an estate to “take any reasonable action necessary to access, remove and destroy any web postings” authored by the deceased. The executor was actually the deceased man's ex-wife. He allegedly made several posts to his personal blog criticizing his former spouse.

The posts were subsequently republished on several other websites. The ex-wife, acting as executor, sent notices under federal copyright law demanding the posts' removal. Some websites complied. Others have not, citing an exception in federal copyright law permitting “fair use” of otherwise protected works.

Eugene Volokh, a law professor at UCLA who writes for the Washington Post, suggested the enforcement of copyright here might not be appropriate, given that the deceased “voluntarily published the works” and the posts presently have no commercial value. Copyright law is principally concerned with protecting an author's ability to profit from his or her works.

The Virginia case is by no means a definitive statement of the law. But it does raise interesting questions about how far an executor may go in “erasing” a deceased individual's online works. Many popular social media websites have terms of service that grant the website a “perpetual” license to continue publishing anything a person voluntarily and legally posts. If you post an update to Facebook, for example, you cannot then sue Facebook for violating your copyright in that post, because in agreeing to Facebook's terms of service you grant the website a non-exclusive license to publish that post.

Does this mean you should bequeath the copyright to your Twitter feed in your will? No, but it is important to ensure you appoint fiduciaries you can trust to manage your online and intellectual property portfolios after you pass away. At a minimum, your will or trust should make clear who inherits any copyrights of possible commercial value. If you have questions about this, or any other California estate planning topic, contact the Law Office of Scott C. Soady in San Diego today.

Using a Trust to Control Your Assets After Your Death

July 22, 2014

One benefit to using a trust as part of your estate plan is that it allows you to exercise greater control over the distribution of your assets even after you're gone. As the name implies, a trust exists when you transfer assets to the control of a trustee, who is then bound to follow your instructions in managing and distributing those assets. A trust may last for many years after the maker's death, depending on the conditions specified in the original trust instrument.

It is not uncommon for a trust to make conditional bequests to beneficiaries. For example, a person making a trust (a grantor) may want certain assets used for the benefit of his children, but for one reason or another, he may decide it is not advisable to simply give the children everything upon his death. One solution would be to structure the trust distributions based on age: the children get one-third of their share upon turning 21, another third upon turning 25, and the remainder upon turning 30. In this way, the grantor of the trust has some assurance his children will not receive a large sum of money before they are mature enough to handle it.

Another example of a conditional bequest is a trust established to defray certain types of expenses. A grantor may decide she wants to set aside funds to pay for her grandchildren's college education or the medical expenses of a child with ongoing special needs. In these circumstances, the trust should instruct the trustee on how and when to distribute trust assets to fulfill these specific purposes. The trust should also contain clear provisions on when to terminate the trust, and who to distribute any remaining assets to; otherwise the trust may continue indefinitely, which may not be the grantor's intent. There is, in common law, a “rule against perpetuities,” which holds a trust should terminate no later than 21 years after the death of the last person identified as a beneficiary at the time the trust was made, but this rule may be overruled by the express terms of the trust.

Unusual Conditions

Some grantors go even further and condition trust distributions on the beneficiary taking (or not taking) a particular action. There are, for instance, cases where a grantor requires a child to marry within a specific religious faith as a condition of receiving a bequest under a trust. In a recent California appeals court decision, a grantor instructed his trustee to make annual distributions to his children based on how much they earned working that year. The grantor's son challenged the trustee's determination that he failed to present sufficient evidence of his income. The appeals court found the trustee acted within his discretion.

One thing to keep in mind is the more unusual the conditional bequest, the more likely there will be litigation by an aggrieved beneficiary. Even under the best of circumstances, imposing specific conditions may add years to the administration of a trust, which only decreases the assets available for distribution. Before considering any such conditional bequests, it is always best to consult with an experienced California estate planning attorney. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

Can a Tenant Object to the Probate of a Landlord's Estate?

July 20, 2014

In preparing a last will and testament, you need to be conscious of the location of any property you own. In the United States, wills and estates are handled on a state-by-state basis. If, for instance, you live in California but own a second home in Arizona, your will must be admitted to a secondary (or ancillary) probate in Arizona to dispose of any property located in that state. And if you own property in another country, your will may have to comply with foreign laws.

You must also be aware of any other persons who may be affected by the disposition of property in your will. This can include creditors or persons renting a property you own. A recent case from the California Court of Appeals illustrates the type of dispute that may arise when probating a will in more than one jurisdiction.

Estate of Dubs

Kathleen Dubs was a college professor living in Hungary. She owned a residence in San Francisco that had been rented by Timothy Murphy, a local attorney, since 1994. Murphy initially a signed a one-year lease that converted to a month-to-month basis.
Dubs died in 2011. Her sister, Laurel Scrivani, filed a petition for probate in San Francisco. Dubs signed a last will and testament in 1991 leaving her entire estate to Scrivani. According to Scrivani's petition, Dubs's Hungary estate was disposed of through an affidavit rather than a formal probate process. (California has a similar procedure for small estates.) There was also an ancillary probate in Oregon to dispose of some real property Dubs owned in that state.

Scrivani decided to sell the San Francisco property. Murphy, the tenant, filed an objection with the probate court. He maintained he was a “creditor” of the estate due because Dubs held his security deposit at the time of her death. Murphy also alleged technical defects in Scrivani's paperwork to establish the probate estate.

The probate court dismissed Murphy's objections and approved the sale, subject to his rights as a tenant under the lease. Murphy still appealed. The Court of Appeal upheld the probate judge's decision.

The core of Murphy's complaint was that the sale of the property might “reduce the value of his leasehold interest,” because the new owner might evict him or raise his rent. But the Court of Appeal said this had nothing to do with probate. Murphy “is not legally aggrieved by the sale,” the court explained, and his legal rights as a tenant are still protected under California and San Francisco law.

Planning Ahead

Murphy's case may not have had merit, but there's a good estate planning lesson here for all landlords. Make sure your tenants understand what succession procedures are in place should you pass away during the term of a lease. This can minimize confusion and, hopefully, avoid unnecessary litigation. Contact the Law Office of Scott C. Soady today if you need advice on any estate planning matter.

How to Self-Prove a Will

July 18, 2014

A last will and testament is a legal document that must be filed with a probate court after your death. California law normally requires a will must be signed by the maker (testator) and at least two other persons as witnesses. The witnesses need not read or understand the contents of the will, but they must witness the testator's signature and his declaration that the document is, in fact, intended to serve as a last will and testament.

In most cases, the witnesses play no further role once they have signed the testator's will. But if a dispute emerges after the testator's death, a probate judge may require one or all of the witnesses to testify as to the authenticity of the will. Since it may be difficult to locate witnesses what may be years after the fact, California and most states permit what are known as “self-proving” wills. A self-proving will includes an affidavit—that is, a declaration witnessed by a Notary Public—attesting to the authenticity of the document. In other words, the affidavit “proves” the will is authentic without the need to locate and produce the witnesses.

Dealing With Deceased Witnesses

What happens, however, if there is a disputed will without a self-proving affidavit? A recent decision by the Supreme Court of Georgia offers a cautionary tale. The Georgia justices reviewed a will purportedly made by the late Eulady Thomas in 2007, leaving her entire estate to her two caregivers. After Thomas died in 2011, members of her family challenged the validity of the will, in particular the signatures of Thomas and the two witnesses.

In Georgia, a will contest may be tried before a jury. (In California such contests, like all probate matters, are tried before a judge.) Unfortunately, by the time the jury heard the case, both witnesses had died. The jury still returned a verdict in favor of the will and its proponents, but the trial judge chose to overrule the jury and entered a directed verdict in favor of the Thomas family.

The Georgia Supreme Court ultimately found the trial judge erred in substituting his judgment for that of the jury. There was enough of a factual dispute surrounding the validity of the will's signatures to justify the jury's decision. The justices noted that at least one of the witnesses testified during a pre-trial deposition, which was then read to the jury. That alone could prove the will's validity under Georgia law.

Avoiding Unnecessary Litigation

Of course, if the will had a self-proving affidavit, none of this would have been necessary. Just one extra step can prevent years of litigation, which, after all, is one of the key reasons to have a will in the first place. That is why when you choose to make a will, or any other legal document, you should work with an experienced California estate planning attorney. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

What Is a “Small Estate”?

July 16, 2014

Not every estate requires a formal probate process. Most states, including California, have simplified procedures for administering “small” estates. The actual definition of a small estate varies from state to state. California law defines a small estate as one where the real and personal property owned by the deceased, valued as of the date of death, does not exceed $150,000. Some types of property are excluded from this $150,000 threshold, including unpaid salary or benefits owed the deceased (up to $15,000) and many types of vehicles.

In a regular estate, a probate court must appoint a personal representative or executor to gather the decedent's assets and distribute them to the appropriate heirs or beneficiaries. In a small estate, by contrast, the person entitled to receive those assets may simply file an affidavit with the court acknowledging the transfer of ownership. There are separate processes for collecting personal and real property.

If the Small Estate Includes Only Personal Property

If the small estate has no real property (i.e., a house), the person filing the affidavit must wait at least 40 days from the date of the decedent's death. After that, he or she may file the affidavit, which must identify all personal property owned by the decedent as well as the “successors” entitled to receive that property.

Who is a “successor”? That depends on whether or not the deceased person left a valid last will and testament. If there is a will, the successors are the persons named as beneficiaries. This might include a living trust made by the decedent during his or her lifetime. Normally, a small estate will only have a handful of successors. For example, if you make a will leaving your entire your estate to your spouse, then he or she is the sole successor who should file the small estate affidavit.

If the deceased did not leave a will, then any successors are determined by the intestacy law of the state or country where the personal property is located. In most California small estates, that means California intestacy law. Keep in mind California, unlike most states, recognizes marital as well as separate property.

For personal property, like a bank account, a small estate affidavit is generally sufficient to authorize a transfer from the deceased to the successor. The affidavit must be notarized and delivered to the person holding the property. If the holder refuses to transfer the property, or requires additional proof of the claim, the successor may need to seek a court order.

If the Small Estate Includes Real Property

A successor may still use a small estate affidavit if the deceased owned real estate as well as personal property; however, it will still require a petition to the Probate Court. California law does require a formal appraisal of any real property, however, to determine its market value. The state appoints special officials known as probate referees to appraise property in each county. The referee prepares an appraisal that the successor must then file together with the affidavit.

There may still be cases where a small estate requires a formal probate. And even if you expect to leave a small estate, that is not an excuse to avoid making a will or trust. Estate planning is for everyone. If you require assistance, contact the Law Office of Scott C. Soady in San Diego today.