San Diego Estate Planning Lawyer Blog

Given the state of the economy, many people are giving loans to their children. While it is very generous of parents to loan money to their children, it can create several problems down the road. Most parents give money to their children but do not expect to ever be paid back. Even if the parents expect to be paid back many children do not make any payments on the loan or they consider it a gift that does not need to be repaid. This can can cause tension and resentment between those children who did not receive a gift or loan from their parents and those who did.

It also causes problems after the parents have passed away. Typically, the child who did not receive any money will expect their siblings share of the estate to be reduced by the amount of the debt. The child who did receive the money usually will say that the money was a gift or that it was paid back a long time ago. If disputes arise, it would be up to the probate court to resolve them.

If you do want to loan money to your children it is important to have the amount of the loan and the interest in writing. If it is not in writing, it is important to keep evidence of the amount that was loaned and whether any payments were received over time. The biggest problem occurs when the child stops making payments on the loan. The law has a statute of limitations, meaning that a claim for money must be brought within a specific time period. The statute of limitations on loans is six years after the due date of the loan. Therefore, if a child does not pay on a loan, the parents have to enforce the loan within six years of the last payment due date. Most parent will not sue their children for not paying on the loans while they are still living and thus the claim to the money by the parent's estate will be barred by the statute of limitations.

The existence of the loan usually does not come up as an issue until after the parents have passed away. The administrator or executor of an estate or trustee of a trust, is charged with collecting all the assets belonging to the estate. A loan is an asset of the estate; however, the administrator can have difficulty collecting on the loan if the statute of limitations has expired.

One solution to this problem is for the parents to update their estate plan whenever they loan money to a child or beneficiary of their estate. The parents would state in their will or trust that the child’s share of the estate is reduced by the amount of money currently owed to the parents. In Cook v. Cook, 177 Cal. App 4th 1436 (2009), the court held that the testamentary intent overcame the normal statute of limitations that would apply to loans. As always, it is important to ensure your estate plan is updated and to consult with an attorney about your estate plan.

The decision to disinherit a child can be very difficult for some people. Other people just want to give less to one child and more to another. There are usually valid reasons behind the decision and it is not one people take lightly. Most clients I see are reluctant to share their reasoning behind their decision. They think, correctly, that “they can leave money in their will or trust to whomever they wish.” However, it is very important to discuss your reasoning with your attorney. Once you pass away your estate planning attorney is in the best position to testify about the language and intent of your estate plan.

You intent is crucial to determine the validity of your will and trust if it is ever contested. Many people think, incorrectly, that a will or a trust cannot be challenged. However, any estate planning document can be challenged by a disinherited heir on two grounds. The first is undue influence, meaning that the person who benefited from the will or trust exerted too much influence over the person leaving them an inheritance. The only other ground is lack of capacity meaning that the person making the will or trust did not understand what they were doing when they executed their estate plan.

There are a few ways to prevent a contest of an estate plan. One is to have a ‘no-contest clause’, sometimes referred to as an ‘in terrorem clause’ in the will and trust. Basically this states anyone contesting the terms of the estate plan gets nothing. The other popular phrasing is the person contesting gets one dollar. The problem is these clauses only work if you give the person you are disinheriting something in the first place. I always advise clients who want to disinherit children completely to leave them some amount of money so that a disinheritance clause will work. The purpose of the clause is to take an emotional decision about being disinherited and making it an economic decision.

If someone is disinherited there first reaction is to be angry and they take the news very personally. They will fight because there is an injustice in their eyes and something needs to be done about it. However, if they realize they get a sum of money if they do not fight, this makes them pause and decide rationally if it is worth fighting over.

Another technique I have seen is for the client to write a letter to the disinherited child to be delivered after their death. No- contest clauses can be very harsh in a will or trust. They often just state a particular person is disinherited. This can leave a void and the disinherited person is left wondering why. A letter can spell out in detail the reasoning behind the decision and provides the needed explanation.

The recent power outage in San Diego left the entire population of the county in the dark. Many people were unprepared and did not have basic resources including food, water and gas. Only after the power went out did people rush to the stores and gas stations only to find them closed as well. We are always told to be prepared but rarely to people heed that advice.

Preparation is also essential to estate planning. Many people wait until too late to draft a will, trust or power of attorney and the consequences can be disastrous. If you do not have an estate plan it can lead to very costly probate fees or result in other expensive court proceedings such as a conservatorship.

Even if you have a will or trust already, it is important to make sure they are updated. Most people make a will or a trust and then forget about it for years. Did your family member pass away? Is the person you named still capable of acting as trustee or executor? Were there any changes in the law that would effect your estate plan?

You need to have an emergency kit in the first place but it also needs to be maintained and the same is true for your estate plan.

TMZ has an article which discusses the probate issues with Dennis Hopper. Probate is the process by which a court administers an estate. Dennis Hopper recently died. He was married and filed for a divorce but his divorce was not final when he died. He also had a prenuptial which specified certain terms and conditions.

When Dennis Hopper died, the divorce action terminates as a matter of law and the case goes into probate court where the litigation will continue. The division of the estate's assets and debts will be decided by a probate Judge and not in a family law Judge. The factual pattern of a person passing away while going through a divorce is not as uncommon as one would imagine. It is very important, when going through a divorce, to consider whether or not modification to your estate plan is recommended. In a divorce case, since there are automatic temporary restraining orders when the petition and summons is filed and served, this needs to be considered in any change in the estate plan.

Continue reading "Dennis Hopper: Probate" »

The San Diego Superior Court has a probate court in the North County Branch in Vista. Department N-23 hears probate matters and the only other court in San Diego County is at the Madge Bradley Court House in downtown San Diego. Each probate court has its own policies and procedures and this will focus on the department in Vista.

For ex parte applications, there must be compliance with with requirement that there is a factual affirmative showing in the form of a declaration with competent testimony of personal knowledge that there is immediate danger, irreparable harm or any other statutory basis or local rule which permits ex parte relief. Ex parte hearings are heard on Mondays at 1:30pm and Thursdays at 2:00pm and notice needs to be given by 10:00am the day prior to the ex parte except under exceptional circumstances which requires a different showing. The pleadings must be filed with the business office by 10:00am the day before the hearing. Ex parte applications which do not include an Order specially prepared will not be considered.

There are also procedures for law and motion, evidentiary hearings and trials.

Continue reading "San Diego Probate Court N-23: Policies and Procedures: August 2011" »

The San Diego Superior Court website has information about probate and other areas of the law. For probate, each department has its own policies and procedures. This article will focus on some of the procedures and policies for Department 2.

For ex parte, or emergency hearings, which are contested are heard on Tuesday and Friday at 8:45am by reservation only. All moving papers and declarations must be filed in the business office no later than 10:00am the day preceding the hearing. The procedure for the reservation can be obtained at the business office and can be complicated. All parties asking for emergency relief must provide notice and meet other requirements which include a declaration and the necessary attendant pleadings. There must be an affirmative factual showing in the declaration which contains competent testimony based on personal knowledge of immediate danger, irreparable harm or other legal basis for the emergency.

Law and motion matters are heard on Tuesday at 1:45pm and are governed by the California Code of Civil Procedure and the California Rules of Court.

Continue reading "San Diego Probate Court 2: Policies and Procedures: August 2011" »

In San Diego, the San Diego Superior Court has three probate departments. Each department is different for the policies and procedures. This will be a series of three postings with links to the San Diego Superior Court website page with that probate court policies and procedures. These can change without notice so make sure to confirm that these are still in effect for your pending case. For Probate Court 1, the policies and procedures are very detailed.

For emergency relief, also referred to as an ex parte, the moving papers must show extraordinary circumstances as a prerequesite showing. This includes a written declaration under penalty of perjury showing that irreparable harm, immediate danger or some other extraordinary circumstances exists with personal knowledge. The pleadings must be filed in the business office and the ex parte applications are only heard on Tuesdays and Fridays at 8:45am. A reservation must be made and this is a limit on the number of reservations. There is also a notice requirement which needs to be strictly followed.

There are also policies and procedures for law and motion, trials, evidentiary hearings, telephonic appearances and telecourt.

Continue reading "San Diego Probate Court 1 Policies and Procedures: August 2011" »

The United States Supreme Court, on June 23, 2011, decided that the order from the Bankruptcy Judge did not have the consitutional authority to "reach" into probate court. In San Diego, there are different courts for different issues. The San Diego Superior Court decides probate cases and the United States Federal Court decides bankruptcy issues.

USA Today posted an article about this case. Celebrity cases attract media attention and the case of Anna Nicole Smith has attracted a lot of attention. Anna Nicole Smith received millions of dollars during her life from her husband [E. Piere Marshall] however her estate asked for millions more. The United States Supreme Court is the highest court in the United States and the other courts are bound by their decision.

It is unknown whether this decision will end this case. It is clear that it is crucial, whether you are a celebrity or not, to have a valid estate plan so that your wishes are carried out after your death and to save your surviving heirs the cost and expense of extended litigation.

Continue reading "Anna Nicole Smith: United States Supreme Court Decision" »

The New York Times has many articles on estate planning. An article from 2010 is still very relevant and discussed six common questions regarding wills: do you need a will; can you do it yourself; do you need more than a will; what about a revocable living trust; how else can probate be avoided and where do you keep your will. Estate planning is a complicated area of the law and each estate plan needs to be tailored to your individual assets and requests for distribution of your estate.

All need a will. Without a will, the State will determine the disposition of your property. No one wants this and all would like to have their property go to who they want and not who the State determineds. A will can be done by yourself but this is not advisable for many reasons. A revocable living trust is designed to avoide probate and keep your estate private. Probate can also be avoided with strategies on certain assets such as life insurance polices. You should keep your will in a fireproof box and/or safe deposit box and make sure your executor knows where the will is kept.

Continue reading "2010 New York Times Article: Getting a Will: Six Common Questions" »

Choosing an executor for your estate can be one of the most challenging decisions in the creation of drafting your will. An executor will administor your estate and continue to do so until the estate is closed. A will should be part of an estate plan and not "stand alone". If a will is part of a revocable living trust, then probate and the costs and time involved to administer the estate may be much less in both money and the period of time.

An article in the New York Times in 2011, discusses the qualities for an executor. According to the article, an executor can be a family or non family members. There are advantages and disadvantages to both strategies. In addition, an executor should be honest, well organized and able to work with the family members. The litmus test used by an attorney quoted in the articles is whether the executor files his/her income taxes every year on a timely basis. Clearly, this is one of the most important decisions you can make.

Continue reading "How To Choose An Executor: 2011 New York Times Article" »

The New York Times, in an article from 2011, discusses that avoiding probate with a revocable living trust is a very good strategy. Using a revocable living trust can avoid the probate system in which a will is determined to be valid or not valid and the estate is administered by the Court. It is important to note that only assets in the trust avoid probate. As such, it is very important to have your trust updated and to include assets into to your trust which were acquired after the trust was executed.

Even if you have a revocable living trust, some assets will avoid probate even though not placed into the trust. Examples of this are retirement assets, life insurance, savings bonds as well as some jointly titled accounts such as bank and brokerage accounts. It is very important that your wishes are carried out, after death, and having joint accounts allows access by another which may not be the testator's wishes after death.

Continue reading "Probate: New York Times Article: Risks to Avoid: 2011" »

The Los Angeles Tmes, in an article from 2011, has an extremely short article on this issue. In the article, it is stressed that understanding probate and trusts can make it easier to manage assets after death and during life. The probate administration process can be very complicated and legal representation is essential to analyze any probate estate.

It is also important to understand the strategies to avoid probate. Probate administration can be expensive, time consuming and allows the estate to become public knowledge. Many would prefer not to have their life exposed in such a public way upon their death and also not to have the distribution of their estate take months, or years, with the attendant costs. One strategyy to try and avoid probate is a revocable living trust. A revocable living trust can avoid the probate fees and costs, take much less time in the trust administration and keep the assets and distribution from becoming public.

Continue reading "Probate Administration: Understanding Trusts: Los Angeles Times Article: 2011" »