Articles Posted in PROBATE

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There are many questions you may have when thinking about estate planning. In addition to worrying about making a will, or setting up a trust, and dealing with decisions about whom to leave your property, there are also more mundane issues to consider. For example, do you still have to file tax returns after your death?

It probably will not come as a surprise that the answer is “yes.” Tax obligations do not end at death. In fact, death raises a number of tax issues that your surviving spouse (if you are married) or the executor of your estate will need to handle.

Personal Income Taxes

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If you co-own real property with others, it is important to clearly establish each party’s interest. Among other reasons, this can have a significant impact on your estate planning because your will or trust can only dispose of your own interest in real estate. Your estate plan will not affect the rights of the other co-owners in most situations.

Brothers Fight Over Share of Mother’s Property

Here is an illustration from a recent California case. In 1978, a mother and her three children–two sons and a daughter–acquired a piece of real estate in Los Angeles. There were a number of title changes made to the property over the years. According to a 1986 deed, ownership was divided as follows: a one-third interest belonged to a revocable trust established by the mother, a one-third interest belonged to the daughter, and the final one-third interest belonged to one of the sons (who is the defendant in the lawsuit discussed below). In 2002, the daughter effectively transferred her one-third interest to her mother’s trust.

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Some people decide to write their own last will and testament without the assistance of an estate planning lawyer. While such wills are generally valid, provided they comply with the requirements of California law, there is always the risk that ambiguity in a will drafted by a non-attorney may lead to misunderstandings. Such misunderstandings can lead to litigation, which largely defeats the purpose of having a will in the first place.

Handwritten Will Leads to Lawsuit Over Woman’s Intentions

A recent South Dakota case illustrates the types of problems that may arise from self-drafted wills. The will in this case was written by a woman who was serving a jail term at a South Dakota women’s prison. The will was “holographic,” meaning it was handwritten by the woman. Holographic wills are considered valid in most states provided they are signed and in the testator’s own handwriting.

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California allows the spouse or heirs of a deceased individual to file a wrongful death lawsuit against anyone whose negligence caused the individual’s death. In many cases the personal representative or executor of the estate brings a wrongful death claim on behalf of the persons entitled to recover. If successful, wrongful death claimants may recover losses attributed to the estate, such as the decedent’s medical bills and funeral costs, as well as economic and non-economic losses suffered by the individual heirs.

Utah Court Rules Executor May Sue Herself for Wrongful Death

While most wrongful death lawsuits involve third parties unrelated to the estate or the decedent, the Utah Supreme Court recently examined an unusual case where the executor of an estate filed a wrongful death claim against herself. This may sound illogical, but the court said the case could proceed.

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Many parents do not get along with their children. It is an unfortunate reality, but in the context of estate planning, there is nothing that compels a parent to leave any of his or her property to an adult child. Nor is a poor parent-child relationship, in and of itself, evidence of a mental disability or a sign that the parent was not in his right mind when he excluded a child from his will.

Bad Relationship With Children is Not Evidence of “Delusion”

A recent California appeals court decision helps illustrate this point. This is an unpublished decision, so it is not considered binding precedent, but the case explains the law in this area. The case involves a 79-year-old man who died in 2011.

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A revocable living trust is a document appointing a trustee to assume custody of certain assets that you designate. You can serve as your own trustee during your lifetime. Upon your death, the successor trustee you name is then required to manage or dispose of the trust property as specified in the trust instrument.

San Diego Zoo Seeks Removal of Ineffective Trustee

Unfortunately, there are cases in which a trustee may fail to carry out the trust settlor’s instructions in a timely fashion. This, in turn, can lead to extended litigation. A recent case from here in San Diego presented such a scenario. This case is only an illustration and should not be construed as a complete statement of California law.

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Estate planning for married couples in California often involves making a clear distinction between community and separate property. Community property generally refers to any asset acquired by either spouse during the course of the marriage. Under California law, when one spouse dies, half of the community property automatically goes to the surviving spouse, while the other half is distributed according to the terms of the deceased spouse’s estate plan (or if there is no applicable plan, according to California’s intestate succession laws).

Wife’s Separate Property Not “Re-Transmuted” to Community Property

Any confusion or disagreement over whether a particular asset is community property should be resolved before one spouse dies. Otherwise there may be litigation over who actually owns the asset. Here is a recent example from Orange County.

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

The Basics of Opening and Administering a Probate Estate

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

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

How California Sets Compensation Levels

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

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Elder abuse remains a major problem in California estate planning. Relatives, caregivers, and other parties often exploit their relationship with someone who is ill or dying in order to obtain an inheritance from their estate. Such undue influence is against the law, and an interested party may ask a probate court to nullify any provision in a will or trust that benefits the abuser.

Court Holds Disclaimer Does Not End Elder Abuse Petition

A California appeals court in Santa Clara recently emphasized the public policy importance of discouraging elder abuse in a recent decision involving an ongoing contest to a revocable living trust. The trust was originally created by a married couple in 1990. Upon the wife’s death, the trust was subdivided into two trusts, one of which remained subject to amendment or revocation at the husband’s discretion.

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