Why Is It Important to Make Your Estate Plan As Soon as Possible?

September 17, 2015

It is never advisable to wait until you are on your deathbed to finish (or start) your estate planning. This is especially true if there are potential complications with your estate, such as a pending bankruptcy, divorce or other issues that might affect the distribution of your property. By waiting until the last minute, your estate plan may lead to confusion—and litigation—among your heirs.

Bankruptcy, Last Minute Estate Planning Leads to Litigation

Here is a recent example from here in California. This case involves a man who suffered a stroke in July 2011 and died in the hospital a few weeks later. While hospitalized, the deceased signed a will and revocable trust, as well as a quitclaim deed purporting to transfer 22.5 acres of land to the trust, with his sister serving as trustee. The will, meanwhile, named the deceased's daughter as executor. Complicating matters somewhat was the decedent's Chapter 13 bankruptcy petition, which was still pending at the time of his death but later discharged at the daughter's request.

Following the bankruptcy discharge, the decedent's son recorded the quitclaim deed transferring the land to the trust. The daughter, acting as executor of the probate estate, asked the probate court to determine whether the deed was valid; if it was not, the land would pass to the estate and not the trust. She further argued the quitclaim deed did not accurately reflect her father's wishes and conflicted with the terms of his bankruptcy discharge.

A probate judge ultimately rejected these arguments and held the quitclaim deed was valid. The evidence presented showed the decedent's main objective was keeping the land under family control. The son testified he had “tax problems,” and his father “intended to transfer the real property in such a way that the government would not seize the property.” And while the decedent was in a weakened state during his hospitalization, there was no medical evidence he lacked sufficient capacity to execute an estate plan. Indeed, at trial the daughter conceded her father was competent to make a will, even while simultaneously arguing he lacked capacity to sign the quitclaim deed.

Nor did the decedent's bankruptcy present any obstacles to the transfer by quitclaim deed. In a bankruptcy case, the debtor's property is given to a court-appointed trustee unless and until the bankruptcy is discharged by the court. Here, the bankruptcy court confirmed the land had been “revested” to the decedent, meaning he had full legal authority to transfer the property at the time he signed the deed.

The daughter appealed the probate court's decision. In an unpublished decision, the California Court of Appeal rejected the appeal and affirmed the probate court's confirmation of the deed.

Need Help Organizing Your Estate?

The case above illustrates how unusual circumstances may complicate an estate plan. If you have similar issues, it is imperative you act now and not wait until you are lying in a hospital bed to settle your affairs. A qualified California estate planning attorney can advise you on the best way to organize your estate or trust. Contact the Law Office of Scott C. Soady in San Diego today if you would like to speak with someone right away.

How Multiple Trusts May Complicate an Estate Plan

September 16, 2015

Although living trusts are a common estate planning tool, they can be quite complex. In fact, many estate plans include several trusts. Some of these trusts help with tax planning. Others keep a married couple's individual and community property separate. It is therefore important when creating multiple trusts to understand what each one involves and the appropriate use of any assets contained therein.

Judge Cites Spouse for Mismanaging Community Property Trust

Here is a recent California case that illustrates the difficulties which can arise when administering multiple trusts as part of a single estate plan. The case revolves around a man who passed away in 2014. While married to his first wife, they executed an estate plan which included no fewer than five separate trusts. Things became more complicated after the wife died in 1999 and the husband remarried. This added two more trusts to the estate plan—one for the second wife's separate property and another including the new couple's community property.

By 2005, the husband was diagnosed with Alzheimer's disease. The following year, the second wife told a California probate court her husband could no longer take care of himself or make financial decisions. At some point in 2007, the second wife took over as sole trustee of the couple's community property trust. Wells Fargo assumed control of the husband's other trusts.

In 2009, the husband's court-appointed legal guardian filed an objection to the wife's accounting of the community property trust. The guardian argued the wife made “improper expenditures” and illegally treated community property as her separate property. For example, the wife failed to deposit rental income from a property owned by one of her husband's separate trusts with Wells Fargo. She also loaned her son $300,000 from the community property trust, yet specified in the promissory note repayment would be made to her separate trust. The wife also invested $260,000 from the community property trust in one of her son's real estate ventures, and used other funds from the trust to make gifts to her daughter-in-law and grandchildren.

Called to account before the probate court, the wife argued her husband approved all of these expenditures. But as the court noted, these expenditures occurred well after the wife herself declared her husband was legally incompetent to make financial decisions. Ultimately, the court determined the husband was legally “incapacitated” as of January 1, 2006, meaning he could not give legal consent after that date. Accordingly, the court ordered the wife to reimburse Wells Fargo, as trustee for the husband's separate trusts, for her husband's share of the money wrongfully taken from the community property trust. The California Court of Appeal affirmed the probate court's decision in an unpublished opinion.

Need Advice on Setting Up a Trust?

Even where a trustee does not, as in the example above, make “improper expenditures” from a trust, it can still be confusing to manage multiple trusts as part of an estate plan. That is why it is important to work with an experienced California estate planning attorney who can guide you through the process of creating and maintaining a trust. Contact the Law Office of Scott C. Soady in San Diego today if you would like to speak with someone right away.

Is an Adopted Adult Child a Person's Legal “Issue”?

August 19, 2015

Words matter when making a will or trust. Any ambiguity in the meaning of your estate planning documents may lead to protracted litigation among your family members or other designated beneficiaries. And even in cases where you think you are being clear, different courts may look at the meaning of certain words differently. This is especially true when your estate plan is enforced in more than one state.

For example, a California appeals court recently had to determine the meaning of the phrase “adopted children” in a trust. On the surface this does not sound too difficult, yet probate courts in California and Texas disagreed as to how to define this term.

The case centered around a 1975 will executed by a woman then residing in California. She had one daughter with her then-husband. Upon the woman's death, which occurred in 1976, most of her property went into a testamentary trust. The trust's income goes to the daughter during her lifetime. Upon the daughter's death, the trust would terminate and its remaining assets distributed among her “then living issue.” The trustee may also make payments out of the trust's principal during the daughter's life for the benefit of her or “any issue.”

The word “issue” is commonly used in estate planning and other legal documents to refer to a person's lineal descendants, i.e. children, grandchildren, great-grandchildren and so forth. As used in the will here, “issue” also includes any “legally adopted children” or other descendants.
In 2013, the daughter, who was living in Texas, adopted the adult son of a close friend. A Texas court declared the man the daughter's son “for all purposes.” The daughter subsequently filed a petition in California probate court seeking a declaration the newly adopted son was her “issue” and therefore a beneficiary of the mother's trust.

The probate court rejected the daughter's request. It held the mother never intended “the term 'issue' in her will to include adopted adults whose adoptive status lacked essential elements of what such status would entail under California law.”

On appeal, the Sixth District Court of Appeal in San Jose reversed the probate court's decision. The Sixth District noted the probate court's decision relied heavily on a 2004 decision by the Fourth District Court of Appeal in San Diego, which held two adults adopted by a trust beneficiary in Colorado were not “issue” entitled to share in the trust. In that case, the Fourth District noted Colorado's adult adoption law failed to create the same “mutual support obligations” between parent and child as required by California law. In the present case, the Sixth District observed the Texas adoption was different because it unambiguously treated adopted adults the same as any other adopted child, whereas the Colorado law only defined an adopted adult as a “child” for purposes of inheritance. And in any event, the Fourth District said, “California cannot devalue a parent-child relationship simply because it was created, whether by biology or adoption, in a sister state that imposes different rights and duties as parts of parent-child relationships subject to its jurisdiction.”

The Sixth District's decision highlights how different courts may view similar sets of facts. Even common words like “issue” may take on different meanings depending on the circumstances. If you need advice on how to avoid potential problems with your own estate plan, contact the Law Office of Scott C. Soady in San Diego today.

Confusion Over Mother's Estate Plan Leads to Siblings' Court Battle

August 17, 2015

A mother of six adult children owned a home in San Luis Obispo County. She lived in the house with one of her sons and his wife. The couple, together with two of the other children, gave their mother money each month to help pay her mortgage.

In 2007, the mother signed a form will in the presence of an attorney. The will left the house to the son and daughter-in-law who lived with her. She simultaneously signed a deed transferring the house to the son while reserving a “life estate” for herself. This is a common estate planning device, but not usually favored given the problems that arise in this case. Basically, the mother became a “life tenant” of the house, and upon her death, the son would assume sole ownership.

Two years later, the relationship between the mother and her daughter-in-law deteriorated. The daughter-in-law told the mother she no longer owned the house and could be kicked out. At this point, three of the mother's daughters arranged for her to meet with a new estate planning attorney. The daughters were aware of the 2007 will leaving the house to their brother, but not the deed conveying the property to him with a life estate for their mother. The mother told the new attorney she now wished to leave the house to one of her daughters. Accordingly, she signed a new will, together with a document giving her daughter power of attorney.

A few months after that, the daughter wanted to arrange a reverse mortgage on the house. This is another common estate planning tool. A reverse mortgage is a loan that the borrower does not have to pay back during his or her lifetime. After their death, the lender has priority claim on the mortgaged property, which may be sold to pay the balance of the loan.

Because of the 2007 deed, the mother no longer held legal title to the property. The son nevertheless agreed to transfer the property back to his mother, because he wanted to be free of his obligation to financially support her. He signed a new deed in June 2010. The mother died about three weeks later.

The mother's estate planning attorney quickly moved to probate the new will, which left the house to the daughter. The son was properly notified of the probate. He did not file an objection with the probate court, and the will was formally admitted.

After the fact, the brother sued the sister, arguing the second deed conveying the house back to their mother should be rescinded. But it was too late. The probate court, and later the Court of Appeal, explained the earlier probate order admitting the will was binding. The son already had an opportunity to object and failed to do so.

How to Avoid This Scenario

The above case is merely an illustration and should not be treated as a complete statement of California probate law. Sibling arguments over an inheritance are commonplace. Good estate planning should prevent such arguments from spilling over into court after a parent's death. That is why it is important you seek advice from an experienced California estate planning attorney who can help you navigate the potential minefield of their children's squabbling. Contact the Law Office of Scott C. Soady in San Diego if you would like to speak with an attorney right away.

Late Actor's Estate Prompts Litigation Between Sister, Biological Daughter

August 14, 2015

Many people avoid making a will because they assume they will die without leaving a probate estate. And while estate planning can help keep many assets out of probate, you should always prepare for unexpected claims that may arise after your death. For example, if your death is the result of medical malpractice or a defective product, a probate estate may be necessary to pursue civil litigation against the responsible parties. Recently a California appeals court addressed such a case involving the estate of a one-time Hollywood star whose death prompted an extended legal fight between his sister and a biological child he later acknowledged as his own.

In re Estate of Johnson

Troy Donahue was a well-known Hollywood actor during the 1950s and 1960s best remembered for co-starring in the 1959 film A Summer Place with Sandra Dee. Although married four times, Donahue died unmarried in 2001. In 1987, Donahue met a woman who claimed to be his biological daughter. She was adopted at birth in 1964. Donahue nevertheless accepted the daughter as his own and maintained a relationship with her and her children until his death.

Donahue, whose real name was Merle Johnson, died without a will. Donahue's obituary reported the cause of death was a heart attack. But the daughter later received information suggesting the use of the prescription drug Vioxx caused her father's death. In 2005, the daughter hired a lawyer to join a class action against Vioxx's manufacturer. But this required opening a probate estate for her father in California.

As the daughter lived in Arizona, she asked Donahue's sister, his closest living relative, to open the estate and serve as administrator. The daughter covered the estate's legal fees. The probate petition further explained the daughter's relationship to Donahue.

The daughter acted under the belief the sister was acting solely to help her recover any proceeds from the Vioxx litigation. Accordingly, the daughter accepted a settlement netting $190,000 for the estate. At this point, the sister and the estate's lawyer informed the daughter since she was adopted by another couple at birth, she had no legal right to inherit from Donahue's estate.

The sister filed a petition in California probate court seeking a declaration she was Donahue's only legal heir, and therefore the settlement money belonged to her. The daughter objected, arguing the sister was “equitably estopped” from challenging her right to inherit.

Equitable estoppel is a legal term that basically means a party to a lawsuit cannot say one thing and do another. More specifically, California law states, “Whenever a party has, by his own statement or conduct, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he is not, in any litigation arising out of such statement or conduct, permitted to contradict it.” In cases of equitable estoppel, a court may act to prevent an “intolerably unfair” outcome.

Here, the probate court, and later the Court of Appeal, determined the sister “manifested the intent to relinquish any of her inheritable stake in the Vioxx litigation.” Based on this, the daughter “paid the legal fees necessary to have [the sister] named estate administrator in order to pursue the Vioxx litigation, and then invested time and effort in moving that case along.” The court said the sister had acted out of “a sense of moral obligation to her late brother's presumed wish” to benefit his biological daughter, regardless of her inability to inherit from him under law. Accordingly, the court awarded the daughter the proceeds of the Vioxx litigation “as Donahue's heir.”

It should be noted absent the application of equitable estoppel in this case, the sister was correct to argue the biological daughter had no statutory inheritance rights under California law. Even if Donahue would have wanted her to have the money, his failure to leave a will contributed to the subsequent litigation. A will certainly would have clarified who was responsible for the administration of the probate estate.

If you need advice on making a will or any related subject from an experienced California estate planning attorney, contact the Law Office of Scott C. Soady in San Diego today.

What Happens If a Spouse Gives Away Community Property Without the Other Spouse's Consent?

August 13, 2015

California is a community property state. This means that unless a married couple specifies otherwise, property acquired during their marriage belongs to both spouses. (There are some exceptions, such as property inherited by one spouse from someone else.) Accordingly, when one spouse dies, his or her estate owns one-half of any community property belonging to the couple, while the surviving spouse retains ownership of the other half.

Married couples should discuss how to dispose of their community property as part of the estate planning process. It is important for one spouse not to unilaterally dispose of such property, especially when both spouses are still alive. In fact, California law expressly prohibits a spouse from giving away community property “for less than fair and reasonable value” without the written consent of the other spouse.

Failure to follow this rule can lead to complicated litigation after a spouse's death. Here is a recent example which is discussed for informational purposes only and should not be considered an accurate statement of the law. This case arises from the aftermath of a tragic 2009 incident. A woman murdered her daughter and grandchildren before killing herself. The daughter was estranged from her husband at the time of her death. We previously discussed a California court decision from last August dealing with the daughter's estate.

The present case directly involves the mother's estate and her former son-in-law. It also implicates the wife's estate. During the couple's marriage, the husband and wife purchased a Lexus automobile using funds from their joint checking account. The Lexus was therefore community property. The couple separated in 2008. The following year, the wife and the couple's children relocated from California to Texas. At that time, the wife took the Lexus and demanded the husband “remove any claim” to the vehicle.

In 2008, the wife unilaterally filed a change of title with the California Department of Motor Vehicles, purporting to transfer the Lexus to her mother. At the time, the daughter states she was making a “gift” of the car to her mother. The husband was not aware of this transfer until after the mother and daughter's deaths in December 2009.

The husband subsequently filed a petition with the probate court overseeing the mother's estate. He argued the gift of the Lexus to the mother was void under California law. The probate court agreed. The court did not immediately return the car to the husband, however; rather, it held the car was properly part of the daughter's estate, which was not a party to this case. The husband will therefore need to separately litigate against his wife's estate.

It is important to note just because a couple may be estranged or separated, that does not entitle one spouse to simply give away community property to keep it from the other spouse. Unless and until a couple obtains a divorce decree, which includes a court order dividing any community property, each spouse is legally obligated to maintain said property.

Of course, a pending divorce should prompt a reconsideration of any estate planning arrangements previously made by each spouse. If you need advice from a qualified California estate planning attorney on how to deal with community property in your will or trust, contact the Law Office of Scott C. Soady in San Diego today.

What Happens to My Business When I Die?

August 7, 2015

People often look at their estate plan in terms of purely personal assets—their house, bank accounts, etc. But your estate also includes any businesses you own or co-own. So what happens to these assets after you die? The answer to this question largely depends on how you choose to organize your business.

Sole Proprietorship

If you run a one-person business out of your house, it is likely a sole proprietorship. This means the business has no legal existence separate and apart from you. If you have a will, this means your sole proprietorship becomes the responsibility of your personal representative (executor), who may keep the business going for up to six months under California law. A probate judge may subsequently order the personal representative to continue the business for a longer period of time or wind it down.


But suppose you operated your business with one or more partners. Like a sole proprietorship, a partnership is an unincorporated business. In a general partnership, each partner is individually responsible for any business liabilities. There are also limited partnerships, where one or more general partners actually run the business, while limited partners function more like investors.

Any partnership should be governed by a written agreement among the partners. This partnership agreement should provide for how to address the death of one or more partners. For example, the agreement might specify the partnership will terminate in the event of a partner's death, with the remaining partners selling the business and dividing the proceeds between the survivors and the estate. In the absence of a written partnership agreement, a probate court may authorize a personal representative to continue acting in the name of the deceased partner, with all the accompanying “rights, powers, duties, and obligations” under law.


Unlike a partnership or sole proprietorship, a corporation is a distinct legal entity under California law. This is true even if the corporation only has one shareholder. If that sole shareholder dies, her stock in the corporation passes according to the terms of her will. Whoever inherits the shares is then responsible for deciding what to do with the business.
There may be situations where you want someone to have beneficial ownership of a corporation without making them responsible for the actual operations. One way to deal with this is to establish a trust. This allows you to leave the corporation's stock to a trustee who can then manage the business for the benefit of your chosen beneficiaries.

Do Not Overlook Business Assets

Whatever form of business you own or co-own, it is important to make provisions for the disposition of those assets as part of your estate plan. There are many legal (and tax) issues to consider when dealing with business assets. An experienced California estate planning attorney can advise you on the best way to handle those assets in accordance with your wishes. Contact the Law Office of Scott C. Soady in San Diego today if you would like to speak with an attorney right away.

Is There Any Difference Between the Executor and Administrator of an Estate?

August 6, 2015

A key function of an estate plan is to designate a person to act in your name after you're gone. This person must be responsible for gathering your assets, paying off any valid debts and costs of administering your estate, and distributing the remaining property to your chosen beneficiaries. If you fail to designate such a person, California law will determine who fulfills this critical role.

Generally, the person who oversees your estate is known as your “personal representative.” California law also refers to a personal representative as an “executor” or “administrator.” All three terms describe the same function, although there is a legal distinction between their method of appointment.


An executor is a personal representative named in your will. You can name just about anyone as your executor. It does not have to be a relative or a beneficiary of your estate. Some people choose to name a professional, such as an attorney or trust company, as executor. However, a person under the age of 18 cannot serve as an executor, nor can anyone under a conservatorship (i.e., someone deemed mentally competent or unable to manage their own affairs).

You may also name two or more persons to serve as co-executors. Think carefully before you do this, because under the law, multiple executors must act in unison. This means one co-executor can effectively veto the actions of the other co-executors, which can lead to significant delays in the administration of your estate.

Your will should also name alternate executors in the event your first choice is unavailable for some reason. If none of your named executors is available then the court will appoint and "Administrator with Will Annexed." They are called an Administrator since they were not named in the Will, but they will still carry out the terms of the Will as an Executor would.


An administrator is a personal representative appointed by the probate court to oversee the estate of someone who died without a will. The actual duties of an administrator are the same as an those of an executor. The critical difference is an administrator is determined by an order of priority established by California law.

If you have a surviving spouse or registered domestic partner, that person has highest priority to seek appointment as administrator, followed by your children, grandchildren or other descendants. If you died without a spouse or children, your parents would have priority, followed by your siblings and their descendants. If you have no living family members willing to assume the role of administrator, the court will appoint a county official known as the Public Administrator to oversee the estate. In some cases, the court may also named a creditor of the deceased person as administrator.

Don't Leave It Up to the Court

You may be fine with leaving your estate in the hands of a court-appointed administrator. But if you want to exercise any control over who manages your affairs after your death, it is critical you sign a last will and testament naming an executor. A qualified California estate planning attorney can help you decide who the best person is to serve as executor. Contact the Law Office of Scott C. Soady in San Diego today to speak with an attorney right away.

What Happens When Your Spouse Undermines Your Estate Plan?

August 5, 2015

Even the best laid estate plan does not execute itself. It is essential that your chosen fiduciaries carry out your wishes. If they depart from your plan, even inadvertently, it can have repercussions that last years, and in some cases decades.

Failing to Follow the Will as Written

Here is a recent example. Actually, “recent” is misleading given the decedent in this case died over 25 years ago. The decedent was a married man with three children. He signed his first will shortly after his marriage in 1942. Forty years later, in 1982, he signed a new will, which he amended once in 1987.

Of note here, the 1982 will provided each of the man's three children would receive a distribution upon his death equal to the maximum federal estate tax deduction at the time. The rest of the estate would then be placed in a marital deduction trust, an estate planning device commonly used to defer federal estate tax liability. The man's wife would enjoy the income from the trust during her lifetime, and upon her death the trust would terminate and be divided equally among the three children.

But after the man died in 1989, his wife failed to probate the 1982 will. Instead, she claimed her husband died without a will and filed a petition to receive his entire estate—about $28 million—under a spousal property order. This is a simplified probate process used to transfer community property to a surviving spouse. A probate judge issued the spousal property holder, determining no probate of the husband's estate was necessary.

About a year later, however, the husband's two sisters attempted to probate the original 1942 will, which left them half of his estate. (The husband made no provision for either sister under the 1982 will as amended.) At this point, the wife suddenly discovered the 1982 will, which was then probated. Although the wife was appointed executor under the will, she never administered her husband's estate or created the marital deduction trust, instead assuming direct control of the estate's assets under the previous spousal property order.

The wife eventually created her own living trust. Unlike her husband's trust, the wife did not provide for an equal distribution to her children upon her death. Instead, she left a larger share to one daughter. After the wife died in 2014, her son asked a probate court to enforce his father's original 1982 will, demanding his mother's estate essentially reimburse his father's (still-open) estate for misappropriating the father's share of the couple's community property. The daughter then filed an objection to her brother's petition.

But the probate court held the daughter's objection would violate a “no-contest” clause in her father's will. This means she would be disinherited for challenging her brother's efforts to enforce the will. As the California Court of Appeal explained in an order upholding the probate court, the daughter is effectively trying to frustrate the intent of her father's estate plan by upholding her mother's improper reliance on the original spousal property order.

Get Help With Your Estate Plan

The above case is merely an illustration and not a complete statement of California law. But it is still a useful illustration of how an estate plan may be delayed or defeated by an executor's failure to adhere to the written terms of a will. That is why you should always work with an experienced California estate planning attorney who can help you avoid such pitfalls. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions or concerns.

California Supreme Court Says Judges May Consider Outside Evidence to Correct “Mistakes” in Wills

August 4, 2015

A last will and testament is supposed to express your wishes regarding the disposition of your estate. But sometimes a will is not clear about a testator's wishes. If there is ambiguity in the language of a will, a California probate court may look to “extrinsic” evidence—facts or information outside the text of the will itself—in determining what the testator really meant.

That said, a court should not rewrite a person's will to mean something it doesn't actually say. For that reason, the California Supreme Court held in 1965 probate judges may not consider extrinsic evidence when interpreting an unambiguous will. In that case, Estate of Barnes, the testator's will provided for the distribution of her estate to her husband, but he predeceased her. The will made no provision for such a scenario, and the Supreme Court said the probate court could not consider extrinsic evidence to ascertain the testator's intent.

The Supreme Court Alters Course

But in a landmark July 27 opinion, the Supreme Court unanimously modified its 50-year-old Barnes decision and held there were circumstances where a court may consider extrinsic evidence to interpret an unambiguous will. Specifically, the Court said there may be cases where judicial “reformation” of a will is justified to correct a drafting error by the testator.
The testator in this case was a 95-year-old man who died in 2007. Twenty-three years earlier, he drafted a holographic (handwritten) will naming his wife as the beneficiary of almost his entire estate (he left his brother $1.00). The will further stated if “my wife...and I die at the same moment,” his estate would be divided equally between two charities. The will also named his wife as executor.

The wife died in 2002, five years before her husband's death. He never updated the will to account for his wife's passing. After his death, the Los Angeles County public administrator located the will in the testator's safe deposit box. The two charities then filed a petition to probate the will, claiming they were entitled to the proceeds of the estate. The testator's two closest living heirs, his nephews, claimed they should inherit the estate. Although they agreed the will was valid, the nephews argued it made no provision for any contingency beyond either (1) the testator's wife surviving him or (2) the testator and his wife dying “at the same moment.” Therefore the estate should pass under intestacy law to them.

The probate court and the California Court of Appeal rejected the charities' efforts to introduce evidence that the testator always intended for them to inherit his estate should his wife die before him. They argued “his intent was inartfully expressed in his will,” and the court should rectify what amounts to a drafting mistake. The lower courts, holding to the Supreme Court's Barnes decision, said that was not possible.

But the Supreme Court decided Barnes was no longer valid. Without ruling on the merits of the charities' claims, Chief Justice Tani Cantil-Sakauye said on behalf of the Supreme Court, “We hold that an unambiguous will may be reformed to conform to the testator's intent if clear and convincing evidence establishes that the will contains a mistake in the testator's expression of intent at the time the will was drafted, and also establishes the testator's actual specific intent at the time the will was drafted.” In other words, if the charities can prove the testator always intended for them to benefit from his estate, regardless of when his wife predeceased him, they can still inherit from the estate.

No Substitute for Good Estate Planning

The Chief Justice was careful to note the Court's decision should not introduce any “uncertainty” into the estate planning process. To the contrary, a well-drafted will is always the best way to discourage costly and unnecessary litigation over a testator's intentions. The Court's decision only provides a means of correcting a drafting error where the evidence otherwise proves the testator’s intentions. But the best way to avoid such errors in the first place is to work with an experienced California estate planning attorney. Contact the Law Office of Scott C. Soady in San Diego to speak with an attorney today.

Is a Promise to Leave Your Estate to Someone Legally Enforceable?

June 26, 2015

A probate court in New York recently addressed an unusual will contest. An 82-year-old Roman Catholic nun died in 2012, leaving a surprisingly large estate worth over $2 million, the product of a 1982 personal injury settlement. The sister signed a will in 1994 dividing her estate among her siblings, her congregation and various other Catholic charities.

The congregation actually contested the will. When the sister entered the congregation back in 1959, she signed a declaration agreeing to abide by the order's requirements, which included a “vow of poverty.” To that end, the sister signed a will in 1979 leaving her entire estate to the congregation. This will, of course, predated the 1982 personal injury settlement and the subsequent 1994 will which, if valid, revoked the 1979 document.

Among other arguments, the congregation maintained admitting the 1994 will constituted a breach of contract, as it violated the sister's 1959 vow of poverty. In June 2015, a New York probate judge denied the congregation's motion for summary judgment on this issue. Without addressing the underlying breach of contract claim, the judge held under New York law, the purported 1959 contract did not affect the admissibility of the 1994 will.

Contracts to Make a Will

This case highlights an important point about estate planning. Under California law, a person can make “a contract to make a will.” This can, like the case above, be a purported written agreement to leave your estate to a particular person or organization. Or it could be a simple oral promise. A contract to make a will can also be a contract not to make a will—that is, to die intestate—or to revoke a previously signed will.

The easiest way to prove a contract to make a will in California is to incorporate the terms of such an agreement directly into your will or trust. Alternatively, your will or trust can refer to a separately signed contract. You can also sign a standalone document “evidencing the contract.” Absent any such express, written proof, a person who claims to have made a contract with a deceased person, orally or otherwise, must offer a judge “clear and convincing” evidence such an agreement was made.

Why Sign a Contract to Make a Will?

There are many circumstances where a contract to make a will might prove useful as part of your estate planning. If you own a business, such contracts can facilitate succession planning. If you are elderly or in declining health, you might promise someone a share of your estate in exchange for having them take care of you. And if you are getting married, a prenuptial agreement might include promises to make reciprocal wills naming each other as beneficiaries.

But as noted above, contracts to make a will should be in writing. Oral promises may be enforceable in court but they are never ideal. And before entering into any contract regarding your will or trust, you should consult with an experienced California estate planning attorney. Contact the Law Office of Scott C. Soady in San Diego today to speak with an attorney right away.

Dealing With Break Ups in Your Estate Plan

June 25, 2015

Estate planning is often a snapshot of your life at a particular moment. The beneficiaries or agents named in your will and other estate planning documents reflects your relationships at that point in time. And as those relationships change, so should your estate planning.

Say you draft a will and name your best friend as executor. If you later have a falling out with her, it is probably a good idea to revise your will and name a new executor. Or suppose you leave a relative a large inheritance in your will. If you later learn that relative is irresponsible with money, you might decide it prudent to revoke your gift.

How Divorce Affects A Previously Signed Will

There is one circumstance where California law assumes a major life event alters your estate planning. If you are married, make a will, and subsequently divorce, any gift to your ex-spouse or any provision naming him or her as executor of your estate is considered revoked. This does not prevent you from making a new will after the divorce naming an ex-spouse as executor or leaving him or her property. But absent an express declaration on your part, the law simply presumes you no longer want your ex-spouse to participate in or inherit from your estate.

Note this presumption only applies to legally married spouses who later obtain a divorce or annulment. If you are living with your long-term boyfriend and subsequently break up, that has no immediate effect upon any estate document you have naming him as an agent or beneficiary. You must sign new documents to reflect the change in your relationship.

To illustrate this legal principle in practice, consider a recent New York case. Like California, under New York law a divorce revokes any appointment or gift under the ex-spouse's will. In this case, a man signed a will naming his longtime male partner as executor and principal beneficiary of his estate. A year later, they held a “commitment ceremony,” as same-sex marriage was not recognized in New York at the time. The couple parted company on good terms in 2011, however, he did not amend or revoke his original will.

After his death in 2013, the man's mother and sister asked a Manhattan probate judge to revoke the ex-spouse's appointment as executor and nullify his inheritance. They argued the couple effectively married when they held their commitment ceremony, notwithstanding New York did not recognize same-sex marriage at the time. In other words, the probate court should treat their subsequent break up as a divorce and alter the man's will accordingly.
The court rejected this argument. For one thing, the judge observed, New York's same-sex marriage law did not apply retroactively. Second, the former partners were “under no illusion” they were ever legally married. Finally, and most importantly, the deceased had “ample time” to alter his estate planning documents after his break up. He chose not to do so, thereby demonstrating the will accurately reflected his intentions at the time of his death.

As this case demonstrates, there may be circumstances where you wish a former partner or spouse to still be a part of your estate plan. Still, whenever there is a major change in your personal situation, it is always a wise course of action to consult with an experienced California estate planning attorney. Contact the Law Office of Scott C. Soady in San Diego today if you would like to speak with an attorney right away.