San Diego Estate Planning Lawyer Blog

The Los Angeles Times recently reported on the plight of Marianne Blend, a 78-year-old woman facing the loss of her home due to what the Times called “probate confusion.”

Bland's problems arise from the 2011 death of Fernando Neri, her longtime partner. Bland and Nerri lived together as husband and wife but never married. California does not recognize common-law marriages, however, and Bland does not have the same rights as a surviving spouse under probate law.

Nerri left a handwritten will leaving his Highland Park house to Bland, who was also named executor of the estate. For reasons not made clear in the Times article, the will was apparently never filed with the probate court, and the Los Angeles County Public Administrator took control of the estate. Public administrators are appointed in each California county to manage the estates of decedents and “at-risk individuals” who are deemed unable to make decisions for themselves. A public administrator may act if a person leaves no will or there is no person available to otherwise act as executor.

The Los Angeles Public Administrator put the Nerri home—where Bland continues to reside—up for sale at auction in April 2013 in order to pay the estate's debts. The public administrator told Bland there were delinquent property taxes on the property. Bland disputes that, telling the Times she went to the county tax assessor's office, which told her there were no unpaid taxes.

The Times reported at least two dozen potential buyers expressed interest in the Nerri house. The successful bidder has to appear within 60 days at a confirmation hearing at the probate court. At that time, Bland will have a chance to fight her possible eviction.

A Hand-Written Will May Not Be Sufficient

Marianne Bland may be the victim of bureaucratic incompetence, but her situation was not helped by her late partner's estate planning. Fernando Nerri reportedly left a holographic will—that is, a will written in a person's own hand without any witnesses. While such wills are valid in California and accepted by probate courts, they are not advisable, especially for estates that include real property.

It also appears, from the Times account, that Nerri's holographic will made no provision for an executor beyond Bland. She was hospitalized for a significant period of time after suffering a stroke in 2012 and was unaware of the legal proceedings regarding Nerri's estate until two men posted a “for sale” sign in her yard. The public administrator acted because no other executor could be found.

One of an estate executor's most important jobs is dealing with creditors. The executor must review and pay all legitimate claims made within a certain time after the estate is opened. If the estate includes real property, the executor must pay all expenses and maintenance costs until the house is either sold or transferred to the beneficiaries named in the will (or the heirs provided by law for an estate without a will).

Finally, Los Angeles officials claim Boland is merely a “renter” on the property that, presumably, was owned entirely by Nerri at the time of his death. Careful estate planning can avoid such situations. If Nerri intended for Boland to remain in their shared home—and remember, they were not spouses or domestic partners under California law—he could have signed a new deed designating her as a joint tenant with right of survivorship. That means Boland would automatically become full owner of the property upon Nerri's death without the need for probate.

Taking Estate Planning Seriously
Hopefully Marianne Boland's story may still have have a happy ending. But her situation is a cautionary tale for anyone who doesn't take estate planning seriously. The best way to ensure your property and loved ones are provided for after your death is to work with an experienced California estate planning attorney. If you live in the San Diego area and are thinking about preparing a will or other estate planning documents, please contact the Law Office of Scott C. Soady at 1-877-435-7411.

The executor of a British estate was recently caught transferring the deceased’s car, worth about $1,240, to his own stepdaughter for the private use of her and her boyfriend. The fraud became public knowledge when the couple broke up and the boyfriend subsequently told his friends, who in turn informed the executor’s employers, a local law firm. John Patson, the executor in question, received a suspended four-month jail sentence from a local magistrate in the English town of Ipswich.

This odd little tale may lead you to ask what will happen to your car after you’re gone. The California Department of Motor Vehicles regulates all automobile transfers and sales in the state and there are specific procedures for probate and non-probate transfers following an owner’s death.

Transfers Without Probate

In many cases a deceased individual’s vehicle can be transferred to a successor in interest without going through the formal probate process. DMV rules allow for such transfers when the total value of the deceased’s property (real and personal) located in California does not exceed $150,000 and at least 40 days have passed since the person’s death. (If the vehicle’s existing registration will expire before the 40-day waiting period, renewal fees must still be paid to avoid penalties.) The heir can transfer title to any California-registered vehicle by filing an affidavit with the DMV.

The affidavit states there is no probate proceeding involving the deceased person’s property in California and that there no creditors of the deceased who have not been paid. If the vehicle had two or more deceased co-owners, the affidavit need only be filed on behalf of the most recently deceased co-owner. The successor in interest must, however, file copies of death certificates for all vehicle owners together with the affidavit. The successor must also sign the vehicle’s certificate of title on behalf of the deceased owner, e.g. “Danielle Smith by Mary Smith.”

If the value of the estate exceeds $150,000.00, title to the vehicle must be transfered through the probate process.

Transfers Under Probate

If the vehicle owner dies without a will, an heir or other interested party may apply to the probate court for letters of administration. This opens a formal estate whereby the court appoints an administrator to dispose of the estate’s property. In lieu of the affidavit discussed above, an administrator can assume title to a deceased person’s vehicle by presenting his or her letters of administration to the DMV and signing the title as “Mary Smith, Administrator of the Estate of Danielle Smith.”

When the deceased leaves a will and nominates an executor, the probate court will issue letters testamentary, which function the same as letters of administration. The only difference here is that the vehicle title is signed, “Mary Smith, Executor of the Estate of Danielle Smith.” If the estate is opened in another state, the California DMV will accept letters issued by that state for purposes of transferring title to California-registered vehicles. Likewise, an administrator or executor appointed in California would need to re-register vehicles registered in other states with the local motor vehicle departments.

Transfers On Death

Alternatively, a vehicle owner may designate a transfer on death beneficiary during his or her lifetime. Unlike a probate or non-probate transfer, a TOD beneficiary is listed on the vehicle title as such. The DMV only permits a sole owner to name a single TOD beneficiary, which may be an individual, corporation, trust or other legal entity. The owner must complete a new title listing himself or herself along with the TOD beneficiary. (The owner can revoke or change the beneficiary designation at any time.) After the owner’s death, the TOD beneficiary then applies to the DMV for a duplicate title.

Whether you dispose of your car through a will, trust or beneficiary designation, it’s important to treat your vehicles as a critical part of your estate planning. If you’re in the San Diego area and would like to speak with an experienced San Diego probate attorney, contact the Law Office of Scott C. Soady at 1-877-435-7411 today.

If you're an author, musician, painter or anyone who engages in creative activity for profit, then your California estate planning should include disposition of any intellectual property rights attached to your works. While most copyrights, patents and trademarks are governed by federal law, they remain intangible personal property subject to the jurisdiction of California probate. Therefore, it's important to understand the scope of your intellectual property rights and how they can affect the value of your estate.

Distinguishing Copyrights, Patents, Trademarks & Publicity Rights

Copyrights are the most common form of intellectual property recognized in the United States. For most works created on or after January 1, 1978, copyright exists from the moment of creation and lasts until 70 years after the author's death. So if a person dies in 2013, any post-1978 copyrights she holds as author will not expire until 2083. It is not necessary to formally register a copyright, but doing so creates a public record that can be helpful if there is subsequent litigation. All copyrights are registered with the United States Copyright Office, a department of the Library of Congress.

Copyright only applies to original works of authorship, such as books, movies, songs, computer programs, plays and even architectural designs. It does not apply to mere facts, ideas or names. Nor does it apply to methods of production, which may be covered under patents. Similarly, while copyright applies to the original content of your website, it would not apply to your domain name, which might be protected by a trademark.

Unlike copyright, a patent is not automatic and must be recognized by the federal government. Patents apply to the invention of “new and useful” manufacturing processes, industrial designs or plants. If granted, a patent lasts only 20 years from the date of the original patent application. Trademarks (or service marks) include words, names and symbols used to identify a commercial product or business. Both the United States Patent and Trademark Office and the California Secretary of State maintain registries of trademarks. Trademarks generally do not expire so long as they remain in active use.

Finally, California law also recognizes a form of intellectual property known as “publicity rights.” This includes the use of a person's name, voice, signature, photograph or likeness for commercial purposes. Like copyright, a person's publicity rights last until 70 years after his or her death (assuming they have commercial value). If, however, there is any conflict between publicity rights and copyright—say, the use of a copyrighted song that includes a person's voice—the latter controls as it is federal law.

Treating IP Like Any Other Property

All intellectual property may be disposed of in a trust or last will and testament like any other type of personal property. If your intellectual property has commercial value—i.e., you own the copyright to a book or song earning substantial royalties—then your estate may need to do an appraisal for federal estate and gift tax purposes. You may also consider the value of intellectual property in determining the most equitable distribution of your estate among chosen beneficiaries.

It's important to distinguish intellectual property rights from ownership of the physical works. For example, let's say you're a professional artist. You might leave the original of a favorite painting to a relative. But the copyright to the painting—that is, the right to authorize the sale of replicas of the original—might be left to another relative or business partner. Your estate planning should make clear your intent regarding intellectual property rights. If you have any questions about how your intellectual property may impact your estate planning, please contact the Law Office of Scott C. Soady at 1-858-618-5510.

A revocable living trust is a common estate planning device where a person, called a settlor, transfers his or her assets to a trustee, usually themselves. The settlor can amend or revoke the trust at any point during his or her lifetime. At the settlor's death, a designated successor trustee distributes the trust's assets as directed.

Unlike a last will and testament, which only deals with the disposition of assets after death, a living trust may operate for years, even decades, while the settlor is still alive. If another person serves as trustee during the settlor's lifetime, there is a fiduciary relationship similar to that of an attorney and client. But what about the relationship between a trustee and the future beneficiaries of the trust? The California Supreme Court recently had to address that issue in a long-running dispute among the family of the late William Giraldin.

Can Beneficiaries Sue a Trustee for Misconduct?

Giraldin, a wealthy banker, established a living trust in 2002 with his son Timothy as trustee. William Giraldin was the only beneficiary of the trust during his lifetime. Upon his death, which occurred in 2005, he directed the trust assets be divided among his nine children.

During the three-year period between the trust's formation and William Giraldin's death, Timothy Giraldin, acting as trustee, funneled approximately $4 million into a business operated by Patrick Giraldin, Timothy's twin brother. The business turned out to be worthless, and following William Giraldin's death, four of his children sued Timothy Giraldin for, in effect, squandering their father's money and reducing the value of the trust they all stood to benefit from.

Under California law, Timothy Giraldin owed a fiduciary duty to his father while he was still alive, not his siblings. William Giraldin had the sole power to revoke his trust during his lifetime. So even if Timothy Giraldin's actions reduced his father's assets, the siblings generally could not sue based on their claim to the remainder of the trust after his death.

In this case, however, the Supreme Court said that the trust beneficiaries could challenge a trustee's breach of fiduciary towards the settlor after the settlor has died. In other words, if a trustee deliberately ignored the settlor's instructions to the detriment of the beneficiaries, then the beneficiaries should be allowed to hold the trustee accountable in court. The court said a trustee should not be allowed to simply loot a trust for his own benefit without affording the beneficiaries some legal remedy.

Take Care In Selecting, Monitoring Trustees

The Supreme Court's decision was only an intermediary step in the ongoing Giraldin litigation. California Court of Appeals issued an opinion in April of this year disposing of some additional legal questions and the case is now back before a trial court. The Supreme Court's clarification of beneficiaries' standing, however, will affect many more California living trusts in the future.

The Giraldin trust was notable in that the settlor did not also serve as trustee during his lifetime. Since the point of a living trust is to maximize control over one's assets, both before and after death, the settlor typically maintains control as trustee. Selecting a third party to act as trustee raises the possibility of fiduciary misconduct, as was alleged against Timothy Giraldin. As a cautionary tale, therefore, it's important to work with a qualified California estate planning attorney in setting up any revocable living trust, including the selection of trustees and putting sufficient protections in place to ensure your wishes are carried out both before and after your death. If you have any questions, please feel free to contact the Law Office of Scott C. Soady at 1-858-618-5510.

Traditionally, California estate planning addresses distribution of real and tangible personal property. But in the Internet age, intangible personal assets such as social media accounts are an essential part of many estates. Google, Facebook and Twitter may all contain personal data that you might want to dispose of in a particular manner after your death. Media companies have implemented different policies to deal with deceased users, and it's critical to understand these protocols as part of your own “digital” estate planning.

Google

Mountain View-based Google is one of the world's most popular online service providers. Millions of people use Google Mail, the Google + social network and the storage service Google Drive. Recently, Google announced the addition of an “Inactive Account Manager” feature that allows a user to give the company specific instructions on how to handle any personal data stored on the company's servers.

The Interactive Account Manager lets you set a “timeout period” of between three, six, nine or twelve months. If there is no activity under the user's login for any Google service before the timeout period expires, the Manager will proceed to follow additional instructions. This includes notifying a “trusted contact” that your account is inactive. Google allows you to specify what types of data—email, videos posted to YouTube, etc.—can be downloaded by this contact. You may also instruct Google to delete all of your data once the timeout period elapses.

Facebook

Menlo Park-based Facebook does not provide login information to a deceased person's next-of-kin. Instead, the company's policy is to “memorialize” the decedent's account. A family member or friend may inform Facebook of the person's death and provide appropriate proof, such as a link to an obituary or news article, after which the account will be frozen and access to certain information restricted.

In order to delete a deceased person's account, the executor of the estate or an immediate family member—a parent, spouse, sibling or child—must provide verification of the death to Facebook. This includes a copy of the deceased person's death (or birth) certificate or, in the case of an executor, a copy of the testamentary letters from the probate court authorizing that person to act on behalf of the deceased.

Twitter

Like Facebook, San Francisco-based Twitter will not provide any account access to an estate or family member of a deceased user. Twitter will deactivate an account if it receives documentation of the user's identity and death. Company policy mandates a requester provide the decedent's username and death certificate along with a copy of the requester's government-issued identification.

The requester must also present a signed statement that provides contact information along with details of his or her relationship to the deceased user, a copy of any obituary or death notice, and “a brief description” connecting the Twitter account in question to the deceased. This is important because many Twitter accounts are aliases or contain different names than what might appear on a person's birth certificate or government ID. Also keep in mind, a person may have more than one Twitter account.

Taking Digital Inventory

The above only summarizes policies for three of the most popular online services. If you rely on other email and social media providers, it's important to research their individual policies regarding next-of-kin access. As part of your estate planning, it's also advisable to take inventory of your digital accounts and passwords. You may wish to include specific instructions regarding access and data retention in your will, trust or other estate planning documents. If you have any questions or concerns, feel free to contact the Law Office of Scott C. Soady at 1-858-618-5510.

Divorce entails not only dividing a couple's assets but undoing potentially complex estate
planning entered into during the marriage. In the case of trusts, where asset titles are legally
transferred to trustees, things can get even more complicated. That's why it's important to
work with an experienced San Diego estate planning attorney to revise your will, trust and other
documents as part of the divorce process.

A recent decision by a California Court of Appeals panel in San Jose demonstrates the
problems that may arise from a divorce where the couple previously created a revocable living
trust as part of their estate planning. Please note, this decision is only applicable to the parties
in the case and will not be considered binding precedent in future cases. The description
provided here is purely for informational purposes.

Dividing Trusts During a Divorce

Theodore and Janet Trebowski were married in the 1960s. In 1999 the couple created a
revocable trust and transferred into it their home and other personal assets. The Trebowskis
filed for divorce in April 2008. The court overseeing the divorce issued a standard order that
enjoined either party from creating or modifying a “nonprobate transfer,” such as a trust, that
would change the disposition of any marital property without the written consent of the other
party.

In August 2008, while the Trebowskis continued to negotiate their divorce settlement, Janet
Trebowski moved to buy a new house. She needed to access some of the trust assets in
order to close escrow on the purchase. Theodore Trebowski wanted to wait until he could
amend his estate planning to establish a new trust for himself. By September 2008, Janet
Trebowski signed papers to transfer half of the 1999 trust's securities and funds into a Theodore
Trebowski's new trust. Theodore Trebowski then signed new estate planning documents
revoking the 1999 trust in its entirety.

Theodore Trebowski died six months later. In September 2009, Janet Trebowski filed a petition
to declare her late husband's prior revocation of the 1999 trust invalid. She claimed that she
never received written notice of the revocation, and that since the couple was still married at
the time of his death and the status of their marital home had yet to be adjudicated by the court,
the home remained in the 1999 trust. That would put the house under Janet Trebowski's sole
control as successor to the 1999 trust. Theodore Trebowski's successor trustees to his 2008
trust, his son and sister, objected. They filed their own petition to establish their ownership of the
home and other properties.

Court Looks to Actual Knowledge, Not Formal Service

Both the superior court and the court of appeals ruled in favor of the 2008 trust and against
Janet Trebowski. The court found Theodore Trebowski properly revoked his interest in the
1999 trust. While he did not “file and serve” the revocation in formal terms, there was no dispute

that Janet Trebowski had “actual knowledge” of the revocation and made no objection while
her husband was still alive. It was Janet Trebowski's desire to access funds from the trust that
prompted her late husband to complete his own estate planning and make the revocation in the
first place. In addition, the court said Theodore Trebowski “delivered” his revocation to his wife
in accordance with the written terms of the trust.

The court's decision means Theodore Trebowski's 2008 trust was lawfully entitled to half the
sale proceeds of the marital home and other assets. Unfortunately, it took nearly four years of
litigation to reach this conclusion. While Theodore Trebowski's death in the middle of his divorce
is an atypical complication, it's important for anyone undergoing divorce to settle estate planning
questions with their soon-to-be-ex-spouse. If you're faced with revising an estate plan during or
after divorce and need to speak with an experienced San Diego estate planning attorney, please
contact the Law Office of Scott C. Soady at 1-858-618-5510.

Most people see a last will and testament simply as a vehicle for distributing their property after they are gone. But a properly drafted will must also address the more technical details of the probate process. For instance, who will pay for the expenses incurred in administering your estate? Even relatively simple matters must deal with certain basic expenses, including attorney's fees, payment of a probate referee for any required appraisals, filing fees with the probate court and preparation of tax returns. If you have any enforceable debts at the time of your death, the estate must find a way to pay those as well.

The Importance of the Residuary Estate

A last will and testament generally distributes property in two ways. The first is through a specific bequest naming the property and beneficiary, e.g. “I give my jewelry to my daughter, Mary Smith.” The other is through your residuary estate. As the name implies, this is the “residue” or leftover property that is not distributed through specific bequests. In theory, you could use one form of distribution exclusively. You could make specific bequests of all property and leave no residuary estate, or, vice-versa, make no specific bequests and leave everything to the residuary estate.

The latter option—leaving everything to your residuary estate—is not an uncommon estate planning practice. Leaving nothing to the residuary estate, however, is generally inadvisable. This is because a last will and testament typically directs the executor to pay all normal estate administration expenses from the residuary estate before making a final distribution to the named beneficiaries. If there's nothing (or not enough) in the residuary estate to pay these expenses, then the money must be found in the specific bequests.

Consider the Estate of Smith, whose property includes a house valued at $100,000, furniture valued at $5,000, and a checking account with a $20,000 balance. If Smith's will makes specific bequests of all these items—say, the house and furniture to his sister and the checking account to his brother—then there's nothing left in the estate to pay administrative expenses. Let's say those expenses come to $10,000. In order for Smith's executor to settle the estate, he must deduct the necessary funds in proportion to each sibling's inheritance. That's easy enough to do with a liquid asset like a checking account. But how does one “deduct” part of a house? It would be necessary either to sell the house, giving the sister the remainder of any cash proceeds, or the sister could advance the necessary cash to the executor to pay the estate's bills. Either way, the executor and heirs are left with a headache that Smith probably didn't intend to cause.

Equity in Estate Planning

It's also important to consider how payment of expenses might alter what you think is an equitable distribution of your property. Suppose Smith decided to leave all his property to his residuary estate with his sister as the sole beneficiary. Smith also took out a life insurance policy, worth roughly the same as his home and bank account, and named his brother as beneficiary. This way both siblings would be equally provided for, right? Not necessarily. While this estate plan simplifies things for the executor, who now has ample funds to pay expenses, the sister may get short-changed. This is because the life insurance policy is not an estate asset. Smith's brother is not obligated to pay any share of the estate administration expenses from his life insurance proceeds (although he could certainly offer to do so). All expenses are deducted from the sister's inheritance from the residuary estate.
This is just a simple hypothetical scenario. Your own estate planning may be far more complex in terms of the assets and individuals involved. Even if you think you've come up with a fair distribution of assets, it's easy to overlook issues like how to pay for inevitable estate administration expenses. That's why you should always work with an experienced San Diego estate planning attorney who can walk you through all the details of a last will and testament and help avoid any later confusion. If you have any questions or concerns, please call the Law Office of Scott C. Soady at 1-858-618-5510.

It's an unfortunate reality that death often results in litigation. If a person dies as the result of
injuries caused by others, that person's estate may seek restitution in the courts. There may
also be litigation over debts owed to the deceased. The possibility of postmortem litigation is
just one factor that should inform your choice of an executor and the need for an experienced
California probate lawyer to advise the estate of its rights and obligations.

Confusion over an estate's representation can prove especially costly. A recent high-profile
decision by a federal judge in Los Angeles offers a cautionary tale. The case involves the Estate
of Derek Boogaard, a Canadian hockey player who played for the National Hockey League's
Minnesota Wild and New York Rangers. Boogaard was addicted to prescription narcotics and
sleeping pills. In May 2011, he died in his sleep from a combination of these drugs and alcohol.

Boogaard previously signed a four-year contract with the Rangers in 2010. Player contracts are
guaranteed for their full term under the collective bargaining agreement between the NHL and
the NHL Players Association, the union to which Boogaard belonged. Due to Boogaard's death,
however, the Rangers informed the estate it would not pay any compensation owed for the
remaining three years of the contract.

The collective bargaining agreement gives the NHLPA the exclusive right to file a grievance on
behalf of a union member. The estate worked with Roman Stoykewych, and NHLPA attorney,
to develop a possible grievance. Ultimately, the NHLPA did not pursue the matter and informed
the estate accordingly in December 2011.

The estate then sued the NHLPA in September 2012 for “breaching its duty of fair
representation” by failing to file a grievance against the Rangers and the NHL. The suit was
originally brought in California state court and later removed to federal court. On March 20 of
this year, U.S. District Judge Otis D. Wright, II, granted the NHLPA's motion to dismiss the
lawsuit.

Ignorance of the Law Is No Excuse

The dismissal was not based on the merits of the estate's claims, which never reached
trial. Instead the estate lost because it failed to file its lawsuit within the prescribed statute
of limitations. Federal law dictates that a claim against a labor union must be filed within
six months of the disputed action. The NHLPA notified the estate of its decision not to file a
grievance on December 2, 2011. The estate filed its lawsuit on September 21, 2012, more than
nine months later.

The estate argued before Judge Wright that the six-month limit should not apply here because
of a legal excuse known as equitable tolling. Basically, the estate argued it was unaware of
the six-month deadline because it lacked independent counsel and relied on the NHLPA's
Stoykewych for legal advice. Judge Wright didn't buy this. He noted that equitable tolling only
applied in “extreme situations” where a reasonably diligent party was somehow tricked into
missing the deadline.

In this case, Judge Wright said the estate was presumed to have “constructive knowledge” of
the filing deadline because it previously retained counsel for the probate process. This occurred
in June 2011 just after Boogaard's death. The mere fact the estate had its own attorney at some
point means it should have been aware of any filing deadline related to a possible claim against
the union. Furthermore, Judge Wright said, the NHLPA had no legal duty to inform the estate
about the six-month deadline and that there was no evidence Stoykewych misled it in any way
on this subject.

Planning Ahead Can Avoid Later Confusion

The Boogaard estate may have been honestly confused about the nature of its relationship
with the NHLPA and its counsel. The lesson here is that you should never rely on an outside
attorney to fully apprise you of your legal rights. In the context of an estate, where an executor
may be not be legally savvy, it's even more important to immediately retain counsel whose only
professional interest is protecting the estate.

If you're in the process of creating or revising an estate plan, you should consider the potential
impact of your professional relationships with an employer or union and apprise your designated
executor about any issues that might arise. If you have any questions or concerns, please feel
free to contact the Law Office of Scott C. Soady at 1-858-618-5510.

How much is your estate worth? Most of us don’t contemplate this question on a daily basis. But in California estate planning, determining the “market value” of your assets is critical. When a will is filed, the probate court needs to see an inventory of the assets you’ve left behind and their estimated value at the time of your death.

California has a unique system for appraising probate estates. In almost all cases, the court requires appointment of a probate referee, a person authorized by the State of California to appraise all real and personal property in an estate. All probate referees must pass a licensing exam administered by the California State Controller’s office and complete yearly continuing education requirements. The probate court in each county then appoints probate referees to serve a term of not more than four years.

When an executor opens a new estate, he or she must file a list (or inventory) of the estate’s assets with the probate court. The probate referee then must prepare an appraisal of within a 60-day period for all properties (excluding cash). The estate, not the court, pays the probate referee’s fees, which is 1/10 of 1% of the value of all appraised property. For example, if the probate referee appraises an estate where the only asset is a home valued at $500,000, the estate would owe the referee a fee of $500.

Appraisals Outside of Probate

If your estate planning includes a trust, you can also take advantage of the probate referee system, although it is not required by state law. Probate referees may conduct appraisals in trust and other non-probate matters, such as liquidation of businesses. One advantage of using a probate referee for a trust is the trustee is protected from any claims that assets were improperly valued. A probate referee’s appraisal is considered fair, impartial and accurate. Also, when engaging a probate referee outside of probate, their fees are negotiable.

There are alternatives to probate referees for non-probate appraisals. There are private appraisers who focus solely on real estate valuations. Like probate referees, real estate appraisers must be licensed by the state, in this case the California Office of Real Estate Appraisers. (Congress mandated the states license real estate appraisers in 1989; probate referees are exempt from this requirement.) There are different tiers of licensing based on an appraiser’s education and experience.

For appraisers of personal property, including furniture, jewelry or vehicles, there are no statewide licensing requirements. Instead private nonprofit groups like the International Society of Appraisers provide credentials and training. If your estate includes antiques or other collectibles, you should look for an appraiser who specializes in those types of items.

It’s always a good idea to know the current value of your assets before starting or revising an estate plan. Even though asset prices inevitably change over time, an appraisal can give you a good starting point to decide how to distribute your property after you’re gone. If you have any questions or concerns about the appraisal process, contact the Law Office of Scott C. Soady at 1-858-618-5510.

The political and legal debate over California's policy towards same-sex marriage reached the Supreme Court on March 26 when the justices heard arguments in Hollingsworth v. Perry. This is the first of two cases where the Court may address the federal constitutional rules governing same-sex marriage. The Hollingsworth decision in particular may finally provide some California estate planning guidance for same-sex couples, and their families, trapped in legal limbo.

The Hollingsworth case deals with California Proposition 8, a voter initiative adopted in November 2008 amending the state constitution to define a marriage between and a man and a woman as legally valid. This overturned a May 2008 by the California Supreme Court declaring a statutory ban on same-sex marriage unconstitutional. After Proposition 8 passed, opponents filed a federal lawsuit seeking its invalidation under the “due process” and “equal protection” clauses of the Fourteenth Amendment to the United States Constitution.

The San Francisco-based Ninth Circuit U.S. Court of Appeals agreed with Proposition 8 opponents that limiting marriage to opposite-sex couples violated the federal Constitution. However, the appeals court stayed its decision pending a final decision from the Supreme Court, meaning no same-sex marriages may be performed until and unless the justices affirm the Ninth Circuit's order. The Supreme Court is expected to issue its decision in Hollingsworth sometime in late June.

Protecting the Interests of Children?

At the March 26 oral arguments, attorneys for both sides faced questions from the justices. Charles J. Cooper, the attorney representing Proposition 8 supporters, warned the justices not to interfere with the democratic process. Cooper said the question of “whether the age-old definition of marriage should be changed to include same-sex couples” had to be be decided on a state-by-state basis.

Cooper argued that Proposition 8 supporters had a legitimate interest in protecting “the State's interest and society's interest” in traditional marriage, especially its role in supporting procreation. Justice Antonin Scalia, the court's longest-serving member, added that redefining marriage would inevitably mean permitting same-sex couples to adopt children despite claims by some sociologists that such adoptions may be harmful to children. However, as Justice Ruth Bader Ginsburg noted, California already permits same-sex couples to adopt irrespective of Proposition 8. In that vein, Justice Anthony Kennedy pointed out that “there is an immediate legal injury” to the approximately 40,000 children in California living with same-sex parents. Kennedy said those children “want their parents to have full recognition and [marital] status.”

U.S. Solicitor General Donald Verilli, representing the Obama administration, argued that while the federal Constitution should not require any state to extend the benefits of marriage to same-sex couples, when a state does offer such benefits, it cannot then withhold the status of “marriage.” If the court adopts the administration's views, therefore, any state that allows for “civil unions” would be constitutionally required to offer same-sex marriage.

Theodore Olson, a former solicitor general himself and the attorney representing Proposition 8 opponents, understandably took a harder line that Verilli in arguing for full constitutional protection of same-sex marriage. Olson declared marriage is “an individual right” that is inseparable from the constitutional protections of “privacy, association, liberty, and the pursuit of happiness.” Any legal ban on same-sex marriage, Olson said, discriminates against homosexuals as a class.

Will the Court Even Decide the Case?

It's always difficult to judge the Supreme Court's likely decision from oral arguments. However, it's notable that the justices questioned all three attorneys about a jurisdictional issue unrelated to the constitutional merits of the case. While Proposition 8 is a California law, state officials declined to appeal the Ninth Circuit's decision. This left the original supporters of Proposition 8 to file their own appeal. Several justices were skeptical this satisfied the federal Constitution's requirements for standing. It's entirely possible the court will ultimately dismiss the Hollingsworth case for lack of standing. This would leave the Ninth Circuit's decision—which overturned Proposition 8—intact without setting any nationwide precedent.

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Charitable giving is a common part of estate planning. In addition to supporting organizations
you deem worthwhile, charitable gifts can reduce the taxable value of your estate. Just as
charitable gifts are deductible from personal income taxes while you're alive, similar gifts made
after death are deductible from the gross estate subject to federal gift and estate taxes.

The important thing to remember is not all charitable donations qualify as tax-deductible. The
Internal Revenue Code recognizes 28 different types of “nonprofit” organizations that do not
have to pay any income taxes. Only one of these classifications—known as a 501(c)(3)—
is considered “charitable” whereby a donor may deduct contributions from his or her taxable
income or estate.

The 501(c)(3) classification actually applies to a broad range of groups that engage in
charitable, educational, religious, scientific, and amateur athletic activities. The IRS interprets
charitable to include any activities aimed at relief of the poor, distressed and underprivileged.
Charities are distinguished from action organizations, which are groups that exist primarily to
influence the political process through legislation or the election of particular candidates. A
501(c)(3) organization may engage in limited lobbying activities but may not support candidates
in any election.

Within the 501(c)(3) classification there are two types of exempt organizations—private
foundations and public charities. A private foundation is an organization principally funded
through a single major donor. Many individuals establish such foundations as part of their estate
planning. The foundation then distributes the income from its endowment as grants to other tax-
exempt organizations.

In contrast, a public charity receives a “substantial” portion of its income from the general
public, private foundations or the government. Public charities engage in fundraising and may
receive additional income from activities designed to further its mission. The more sophisticated
public charities have staff dedicated to planned giving, working with individuals who want to
incorporate gifts as part of their estate planning.

Learning More About a Charitable Organization
If you're thinking about making a gift to a public charity in your will or trust, the first step is to
make sure the recipient is properly recognized by the Internal Revenue Service. The IRS has
an online search tool that can tell you which organizations are eligible to receive tax-deductible
donations. Some organizations may lose their tax-exempt status if they fail to file required
annual returns with the IRS.

Most public charities have to file a tax return called a Form 990. Unlike personal income tax
returns, which are confidential, a public charity's Form 990 is a matter of public record. The
organization must keep its three most recent returns on file and produce them upon request to
anyone who asks. (You can also request copies directly from the IRS.) The only information on

the Form 990 not subject to public disclosure are the names and addresses of donors.

It's a good idea to review the organization's Form 990 to gain insight into how the charity
spends its money—that is, how much is spent on the group's mission versus fundraising and
administrative overhead. You can also learn more basic details from a Form 990 such as who
sits on the organization's board of directors and what subsidiary groups, if any, may exist.

As with all aspects of your estate plan, it's important to consult with an experienced California
estate planning attorney before you commit to a major postmortem gift to a charitable
organization. If you have any questions about charitable gifts and IRS rules governing tax-
exempt organizations, contact the Law Office of Scott C. Soady at 1-858-618-5510.

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The estate tax—also known as the “death tax”—is often misunderstood. Despite its prominent place in the political debate over tax policies, the estate tax only affects a small number of estates each year. According to Internal Revenue Service records, there were 4,588 estate tax returns filed nationwide in 2011, including 806 estates in California. That represents an infinitesimal fraction of the estimated 233,000 annual deaths in the state.

Nonetheless, it's still useful to understand when and how the estate tax applies. Unlike the federal income tax we're all familiar with, the estate tax is a levy against the property of a deceased individual. The assessment is based on the gross estate of the decedent's property as of the day of his or her death. (If the decedent's property earned any income after death, a separate income tax return must be filed by the estate.) The executor or personal representative of the decedent's estate is responsible for assessing the date-of-death value of all property and, if necessary, reporting it on the federal estate tax return.

Probate Estate vs. Gross Estate

It's important to note that the gross estate for estate tax purposes is not necessarily the same as the probate estate under California law. The probate estate only includes property disposed of by the decedent's last will and testament (or under California intestacy law if there is no valid will). This often excludes property the decedent either held jointly with other individuals or property automatically transferred upon death. For example, if you and your spouse have a joint checking account, then the surviving spouse automatically becomes the sole owner upon the other spouse's death. The account itself will not be part of your probate estate, but it may be part of your gross estate for estate tax purposes.

As noted above, the executor of the estate must determine the date-of-death value for all property in the gross estate. In the case of real estate, a professional appraiser must be hired to make that assessment. Some items, like checking accounts, can be valued simply by reviewing bank statements. For assets that fluctuate in value like stocks, the IRS sets forth rules governing date-of-death appraisals. In some cases an estate may elect alternate valuation, which means the assets are valued six months after the decedent's death rather than the day of death. This can reduce the value of the gross estate and thus the tax owed.

Deductions and Exemptions

Once the gross estate is determined the executor may then claim various deductions to reduce the taxable amount of the estate. This includes any debts owed by the decedent, funeral and other estate administration expenses, outstanding mortgages on property and any property bequeathed to a surviving spouse. This last item is known as the marital deduction. It allows an unlimited transfer of property from one spouse to the other. (Special rules apply if the surviving spouse is not a United States citizen.)

On top of deductions, federal law exempts a certain portion of all estates from taxation. This amount changes frequently at the whims of Congress. For persons who die in 2013, the first $5.25 million of their estates is exempt. The current maximum tax on any amount over the exemption is 40%. Some states also assess their own estate tax. California phased out its estate tax in 2005.

Even if you don't expect to leave a multi-million dollar estate to your heirs, it's still important to understand how the estate tax may affect your ongoing estate planning needs. This article provides just a brief overview of the estate tax process. It's important to consult with a qualified California estate planning attorney who can advise you on the constantly changing estate tax rules. Contact the Law Office of Scott C. Soady at 1-858-618-5510 if you have any questions.