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A revocable living trust allows you to maintain control over your property during your lifetime. Although you transfer the title of your property to a trustee, that trustee can be you, and more importantly, you are free to add or remove property from the trust as you see fit. Upon your death, however, the terms of your trust generally become irrevocable, and your successor trustee is bound by any instructions that have you left.

Trustee Not Permitted to Extend “Option Agreement” After Settlor’s Death

California courts will strictly construe the terms of your revocable living trust in an attempt to carry out your stated wishes. This means that a successor trustee’s discretion may be limited depending on how the trust is worded. A recent California appeals court decision offers a helpful illustration.

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When a person dies, some or all of their property is disposed of through a legal process known as probate. If the deceased left a valid last will and testament, that document appoints a person to oversee the probate estate—a personal representative—and names one or more beneficiaries to receive any property. In some cases there may be little or no property in the probate estate, particularly if the deceased created a separate revocable living trust, an entity that is not subject to probate.

The Basics of Opening and Administering a Probate Estate

In California, the person who has custody of a deceased individual’s will must either send the document to the named personal representative or bring it to the probate court clerk’s office in the county where the deceased lived at the time of his or her death. An interested party, such as the personal representative or one of the beneficiaries, must then file a petition for probate with the court. If the deceased failed to leave a will for some reason, a petition should still be filed, and the court will name an administrator to manage any probate estate.

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There are a number of estate planning methods to transfer assets outside of the normal probate process. For instance, the California Uniform TOD Security Registration Act allows the owner of securities, such as corporate stocks, to designate a beneficiary who assumes ownership upon his or her death. This transfer occurs automatically at the original owner’s death, so the securities do not pass under the terms of their last will and testament.

Courts Reject Son’s Efforts to “Transfer” Mother’s Mutual Funds to Him

In order for the TOD Securities Registration Act to take effect, it is essential to clearly designate the desired securities as “transfer on death,” “pay on death,” “TOD,” or “POD.” Failure to include such a designation may lead a court to determine the Act does not apply, in which case the security will pass under the decedent’s will, trust, or other estate planning device.

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There are some estate planning situations in which you may want to protect a family member’s potential inheritance from his or her creditors. For example, many trusts contain what is known as a “spendthrift clause,” which restricts a beneficiary’s access to the trust principal. In other words, the trustee maintains control—subject to the terms of the trust—over how and when to make payments to the beneficiary. Since the beneficiary does not have direct access to the principal of the trust, it is not considered the beneficiary’s property and therefore is not subject to a court process in satisfaction of a judgment against the beneficiary. A spendthrift clause also typically prevents the beneficiary from assigning his or her interest in the trust to satisfy a creditor’s judgment.

Shutdown” Clause Does Not Protect Beneficiary From Child Support Judgment

At least that is how a spendthrift clause works in theory. In practice, there are circumstances in which a court may still order a trust to pay a beneficiary’s creditors. A California appeals court recently addressed such a situation in a published opinion.

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If you have minor children, it is important to consider the estate planning implications of providing for them before they reach the age of 18. If you leave your children a substantial inheritance, it will be necessary to name a guardian for their estate until they reach the age of majority. A guardianship of the “estate” is separate from a guardianship of the “person.” The latter refers to the person who has physical custody of the child and oversees his or her daily care. A guardianship of the estate, in contrast, only deals with property owned by the minor child.

Family Member or Professional Fiduciary?

In many cases, a guardian of the person will also serve as guardian of the estate. But depending on the size and complexity of the inheritance that you plan to leave, it may make sense to name a separate guardian of the estate. For example, you might name a close relative to serve as guardian of the child’s person while designating a professional fiduciary to serve as guardian of the estate.

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There are many stories about people who make unusual bequests in their last will and testament. Perhaps the strangest story involved a wealthy Portuguese aristocrat who passed away several years ago at the age of 42. The man was unmarried and had no children. But he did leave a will, which named 70 different people to share in the proceeds of his estate.

What made the will unique was that the 70 people were complete strangers. According to a 2007 BBC report, the man sat in the presence of two witnesses and selected the 70 beneficiaries “at random” from a local telephone directory. These individuals had no idea they were the man’s beneficiaries until they were contacted after his death.

American vs. European Rules Governing Heirship

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Administering a California probate estate is often a time-consuming affair. The personal representative (or executor) of your estate is responsible for gathering and maintaining all of your assets, paying any legitimate creditor claims, and ultimately ensuring all property is distributed according to the terms of your last will and testament. Depending on the size and complexity of your estate, the personal representative may end up spending up hundreds of yours settling your affairs.

How California Sets Compensation Levels

For this reason, California law recognizes the personal representative’s right to receive compensation for his or her services. The maximum allowable compensation for “ordinary services” is determined as a percentage of the total value of the estate. For estates valued at $100,000 or below, the personal representative’s compensation cannot exceed 4%. This means that, for instance, if you leave a probate estate worth $80,000, your personal representative cannot receive more than $3,200 in compensation.

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Many younger people think they do not need to concern themselves with making a last will and testament. A will is something that older people make when they are in poor health or even on their deathbed, right? Of course, that is ludicrous thinking. Every day we see reports of people cut down in the prime of their lives due to an accident, and in many cases those individuals died without taking the time to make a proper estate plan.

Star Trek” Actor’s Sudden Death Highlights Legal Effects of Dying Without a Will

Anton Yelchin, a 27-year-old actor residing in Los Angeles, died this past June after he was accidentally crushed by his own car. Yelchin was best known for his appearances in the recent “Star Trek” feature films, the most recent of which premiered shortly after his death. Recently, Yelchin’s parents filed a petition to open a probate estate for their son, who they say died without leaving a will.

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Many people pledge money to charity as part of their estate planning. In California, charitable pledges are generally not enforceable in court unless the donor receives some consideration, thereby creating a binding contract. For example, if a college offers to name a building after you in exchange for your gift, that would be consideration for your pledge. If you pledge money contingent on other people making similar donations, that would constitute mutual consideration among all of the donors.

If you do make a binding pledge as part of your estate plan, however, make sure you consider the wishes of your spouse. Under California law, any community property held by a married couple is owned one-half by each spouse. This means you may not make a gift of your spouse’s share of such property without his or her consent.

Ex-Husband Cannot Pay for Pledges With Ex-Wife’s Share of Community Property

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For many of us the “paperless office” is a reality. Our personal and professional lives reside online through our laptops, smart phones, and cloud storage. But what does this mean for our estate planning?

An article on discussed the growing popularity of “digital document archives,” which offer specialized cloud storage for estate planning materials including wills, powers of attorney, and health care directives. The idea behind such services is to make it easier for family members or other fiduciaries to locate important estate planning documents. For example, if a person dies, his or her executor could go to a digital archive and promptly download a copy of the will.

Are “Digital Wills” Admissible in California?