San Diego Estate Planning Lawyer Blog

Articles Posted in PROBATE

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Many spouses choose to execute a joint estate plan. For example, they may sign wills at the same time and promise to distribute property a certain way after the first spouse dies. Such agreements may be enforceable under California law, but it is important to follow certain procedures in the event the surviving spouse deviates from the plan. Things can get especially complicated when different family members in different states are involved.

Stepchildren Unsuccessfully Challenge Stepmother’s Trust

Here is a recent example. This case involves the application of California law to a complaint made before a federal court in New York. A husband and wife executed a joint estate plan in 1995. They agreed the surviving spouse would inherit all of the deceased spouse’s property, and upon the surviving spouse’s death, any remaining property would go to the husband’s two children from his first marriage. At the time of this agreement, the husband’s property included two apartments in New York City.

The husband died in 1998. The wife probated her husband’s will and, according to its terms, received all of his property, including the two apartments. Four years later, the wife created a revocable trust under New York law and transferred both apartments into it. She served as co-trustee together with her attorney. Unlike her will, which left her probate estate to her stepchildren, the trust provided a university located in New York would receive all of the trust assets upon her death.

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Although you often hear stories about people contesting a will, it is not a simple process. Under California law, a person contesting a will has the burden of proving “lack of testamentary intent or capacity, undue influence, fraud, duress, mistake, or revocation.” In contrast, the person offering the will for probate only has the burden of proving “due execution,” that is, that the purported will meets the formal requirements of California law. So in most cases, proper estate planning can thwart a will contest.

Surviving Witness Proves Will 14 Years Later

Like most states, California law requires a will be signed by the person making it (the testator) and two witnesses. The witnesses need not read the will or understand its contents. Their role is simply to witness the testator declare the document in question is, in fact, his or her will. The witnesses must then sign the will in the presence of the testator and each other.

One reason wills must be witnessed by two people is that in the event of a contest, at least one of them will hopefully be available to testify in court as to the authenticity of the document. Here is an illustration from a recent case in San Diego which is discussed here for informational purposes only and should not be taken as an accurate statement of the law. This actually involved a contest to a will nearly 14 years after the testator’s death.

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You may think estate planning is unnecessary because California intestacy law automatically provides for the distribution of assets to your heirs, but intestacy law does not eliminate the need for an estate. Someone must still take responsibility for administering those assets and ensuring your heirs receive their fair share. Even when dealing with family members, this can fail to happen, leading to years of costly and unnecessary litigation.

Brothers Attempt to Exclude Sister from Father’s Estate

Here is a recent example from here in California. This case involves a man who died nearly 24 years ago without a will. Under California intestacy law, his three surviving children-two sons and a daughter-were entitled to equal shares of his estate. The estate itself included over 760 acres of timber property.

In the absence of a will nominating an executor, the probate court appointed one of the sons as administrator of the estate. Rather than sell the land and distribute the proceeds to his siblings, he decided instead to continue managing the property through the estate. According to court records, during this time he “did not communicate with his sister [], failed to file an accounting, failed to cooperate with or contact his attorney, and evaded service of citations to appear in court.” Seven years after his father’s death, the probate court suspended the son as administrator.

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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.

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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.

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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.

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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.

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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.

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A will is a formal document. California law requires a will be typewritten and signed by two competent witnesses. There are exceptions to this rule, but it is generally a bad idea to try and take advantage of them. A recent case from Arizona illustrates the potential pitfalls of trying to prepare your own will without the help of a qualified estate planning attorney.

Court Case in California

An Arizona woman died in 2012. The previous year, she began drafting a last will and testament on her computer. One of the beneficiaries named in the draft will was the woman’s natural granddaughter. The use of “natural” here is significant, because the granddaughter was actually adopted after her birth mother-the woman’s daughter-passed away. Grandmother and granddaughter later met and formed a close relationship.

The woman eventually made handwritten revisions to the typed draft of her will and signed it before a notary in July 2012, shortly before her death. The woman’s sister then moved to open a probate estate. Although she acknowledged the existence of the 2012 document purporting to be her sister’s will, she maintained it was invalid as it was never properly witnessed. The granddaughter objected, arguing it should be treated as a valid “holographic will” under Arizona law.

The Arizona courts disagreed. In a May 2015 decision, a three-judge panel of the Arizona Court of Appeals agreed with a lower court’s finding the purported holographic will was not valid. A holographic will normally means the document is entirely in the handwriting of the person making it. Arizona’s Supreme Court has recognized an exception for preprinted will forms filled out by a testator, but that was not the case here. The fact the deceased woman made handwritten revisions to a document she partially drafted on her own computer negated its potential status as a holographic will.

The appeals court also rejected the granddaughter’s argument that even if the will is invalid, she was still entitled to a share of her grandmother’s estate under Arizona intestacy law. As noted above, the granddaughter was adopted, which means as a matter of law, she was no longer related to her natural grandmother and thus had no right of inheritance. The fact she had a “close relationship” with her natural grandmother was legally irrelevant.

Get Help In Drafting Your Will

Although this was an Arizona case, the legal lessons are equally applicable in California. A last will and testament should be typewritten and witnessed by at least two other persons. Holographic or handwritten wills may be necessary in an emergency, but they are not reliable estate planning devices, especially if you wish to leave your estate to persons you are not legally related to. And while you may wish to write down ideas for drafting your will, the final document should be prepared in consultation with an experienced California estate planning attorney. Contact the Law Office of Scott C. Soady in San Diego if you would like to speak with an attorney today about these matters.

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Estate planning includes not just how to dispose of your assets, but also how to deal with any creditors you may still owe money to after your death. This includes lawsuits which may be pending or occur as a result of your death. In some cases, even if you leave no assets as part of your probate estate, an estate must still be opened in order to address such litigation.

Estate of DeMotto

Here is a recent example which is discussed only as an illustration and should not be taken as a correct statement of the law. A man died in 2013. The man was living with a woman-not his wife-at the time of his death. Their relationship began in 2001. Although the woman claimed he intended to provide for her in his estate planning, he did not name her as a beneficiary of his will or trust.

The probate estate itself had no assets, presumably because the man transferred all of his property into the trust. The woman then filed what is known in California as a “Marvin action” against the estate. A Marvin action refers to a 1976 California Supreme Court decision holding contracts between unmarried partners who lived together are legally enforceable. Here, the woman sought enforcement of the alleged promises made to her through judicial imposition of a “constructive trust” against both the man’s estate and his children, who were the successor trustees of his trust.

Since no estate was opened-as, again, there were no probate assets to speak of-the woman simultaneously filed a petition for appointment as administrator of the estate. The children objected. They claimed the woman was nothing more than a “gold-digger” trying to “enrich herself to the detriment of a no-asset estate.” Indeed, the children claimed the probate court had no jurisdiction to appoint an administrator over a no-asset estate, and in any case at least one other person-the public administrator-had priority right to appointment over their father’s lover.

The courts did not see it that way. Both the probate judge and the California Court of Appeal agreed the woman could be named administrator of the estate. As the Court of Appeal explained, although this was a “no-asset” estate, it actually did contain “property” in the form of the woman’s Marvin action. That is to say, under California law, a claim against an estate is considered its “property” for probate purposes. A person may open an estate simply to resolve a potential lawsuit against it.

It may seem counterintuitive that the person suing the estate could also be its administrator, but as the Court of Appeal noted, a creditor is an “interested person” and may be appointed if nobody with a higher priority files a competing petition. Here, the children suggested the public administrator had higher priority. That is true, the appeals court said, but the public administrator did not file a competing petition-nor, for that matter, did the children, who also have priority. Objecting to a creditor’s petition is not the same thing as filing a competing petition.

Need Advice On Your Estate Plan?

The above case is just an illustration and not a complete statement of California law. But it does highlight the importance of proper estate planning. If you need advice on drafting your will or trust from an experienced California estate planning attorney, contact the Law Office of Scott C. Soady in San Diego today.