What Happens When Children Fight Over a Parent's Estate?

October 7, 2015

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.

Even after this suspension, the son continued to control—and ultimately sell—the property without informing his sister, who was now the court-appointed administrator. The son refused to provide any accounting of the estate until 2011, some 20 years after the estate was opened. The accounting itself was riddled with problems. The probate court later determined the son failed to list the estate's liabilities, primarily loan debt and back taxes owed on the timber property dating back to the father's death. Nor did the son properly document expenses he allegedly paid on behalf of the estate.

The probate court held a trial in 2012 to determine whether the son owed the estate any money for his mismanagement. Sadly, the judge ordered a mistrial after the court learned the son had killed himself at some point before the trial began. The case continued against the son's estate, which was administered by the surviving brother.

After a second trial, the probate court concluded the two brothers effectively ran the father's estate for their own benefit to the exclusion of their sister. The court ordered a $260,000 surcharge against the son's estate, which wiped out his share of the inheritance from the father's estate. And, more than two decades after the father's estate began, the court ordered a final distribution, dividing the four remaining properties between the sister and her surviving brother.

Need Help With a Will?

As the case above illustrates, it is generally a bad idea to leave an estate with significant property assets to the whims of your heirs. A will allows you to not only decide how your estate is distributed, but also who will likely be the most responsible person to carry out your wishes. If you need help in preparing or revising a will from a qualified California estate planning attorney, contact the Law Office of Scott C. Soady in San Diego today.

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

September 17, 2015

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

Bankruptcy, Last Minute Estate Planning Leads to Litigation

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

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

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

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

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

Need Help Organizing Your Estate?

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

How Multiple Trusts May Complicate an Estate Plan

September 16, 2015

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

Judge Cites Spouse for Mismanaging Community Property Trust

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

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

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

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

Need Advice on Setting Up a Trust?

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

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

August 17, 2015

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

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

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

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

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

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

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

How to Avoid This Scenario

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

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

August 14, 2015

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

In re Estate of Johnson

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

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

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

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

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

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

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

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

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

What Happens When Your Spouse Undermines Your Estate Plan?

August 5, 2015

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

Failing to Follow the Will as Written

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

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

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

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

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

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

Get Help With Your Estate Plan

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

Should I Write My Own Will?

June 15, 2015

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.

Can My Creditors Control My Estate?

June 13, 2015

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.

Can One Estate Inherit from Another Estate?

June 12, 2015

One thing to consider when making a will or other estate planning arrangements is how your actions (or inactions) may affect other people's estates. Consider a recent story from North Dakota. A Fargo dentist died after another man brutally attacked him with a hammer. It turned out the dentist's father-in-law hired the killer. Both men were convicted of murder and sentenced to life in prison.

Local prosecutors said the father-in-law wanted to obtain custody of his three-year-old granddaughter. Several months before the murder, the dentist's wife passed away. The dentist himself did not leave a will. Like California, in cases of intestacy North Dakota law requires dividing the deceased's estate equally among his three surviving children. Yet nearly six years after his death, the estate remained open before a North Dakota probate court.

Why the unusually long delay? According to a local newspaper, the executor of the estate was still waiting to receive an inheritance from another estate, that of the deceased dentist's father, who died before his son. The father's estate remained pending before a probate court in Louisiana. The news reports did not elaborate on the reasons for the delay in the administration of the Louisiana estate.

Survivorship and Simultaneous Death

While the delay in the above example is uncommon, it is not unusual for one estate to have a vested interest in another estate. Even in a routine estate administration where there is no disagreement among heirs, it can still take several months to fully probate an estate. During this time, it is conceivable one or more heirs may themselves pass away, making their estates heirs or beneficiaries of the first estate.

There are also many cases where two or more people die simultaneously, say in a common accident. This can present significant challenges, especially when there is no reliable way to prove which person died first. For instance, if a husband and wife die in a car accident, does the wife inherit from the husband or vice versa?

One way to minimize the chance for such confusion is to include a survivorship clause in your will or trust. Also known as a “simultaneous death clause,” this basically says in order to inherit from your estate, a person must survive you by a certain number of days. Some states automatically impose a survivorship period (usually 120 hours or five days). California does not, so it is up to the person making the will or trust to make that determination. The typical survivorship clause is for around 45 to 60 days. Federal tax law discourages survivorship periods of more than 120 days.

But even with survivorship clauses, there will still be situations where an heir or beneficiary dies before receiving a distribution from another estate. This emphasizes the importance of estate planning. Your executor is responsible for gathering your assets after you die, which includes any inheritance not barred by a survivorship clause or similar provision. Similarly, you may wish to include language in your will or trust to prevent your estate from passing through someone else's estate. Whatever your wishes, if you need to consult with an experienced California estate planning attorney on this or any related issue, contact the Law Office of Scott C. Soady in San Diego today.

Dealing With People to Whom You Owe Money – After You Die

January 14, 2015

The administration of an estate includes not just distributing a person's property, but collecting any debts owed to the deceased. This is why it is important to make a will naming an executor who can act in your name after you are gone. The executor stands in your place and can take any legal action to collect what is owed to you—and, by extension, the designated beneficiaries of your estate.

Here is an illustration from a recent California case of a situation where an executor must act to protect a deceased individual's property interests. This case is discussed for information only and should not be taken as a statement of the law in California. The deceased in this case passed away in 2010. Sometime prior to his death, he and his wife divorced. In the course of divorce proceedings, the couple's marital residence was sold. The husband's share was deposited into a client trust account maintained by his divorce attorney. For some reason, the attorney never released the funds to his client.

After the man's death, his executor sought payment of the funds, totaling more than $300,000. The executor obtained a court order directing the attorney to pay over the funds and provide a full accounting of his trust account. The attorney did not comply. Instead, he filed for bankruptcy.
This created a significant hurdle for the estate's recovery. Bankruptcy is governed by federal, not California law. Once a person or business files a bankruptcy petition, a federal bankruptcy judge enters what is known as an automatic stay—an order preventing any creditor from pursuing further collection against the bankruptcy filer until the judge directs otherwise.

This led to more confusion. While the bankruptcy petition was still pending, the probate court held a hearing on the estate's motion to double the attorney's liability as punishment for failing to comply with the previous orders. Although the probate court granted this motion after the bankruptcy stay was lifted, a California appeals court later held this was inappropriate. The probate court had no authority to conduct further proceedings while the stay was in effect. The appeals court therefore negated the double-liability award.

Getting Your Own Affairs in Order

This case illustrates just one example of the type of legal problem an estate may face. It also emphasizes the importance of careful estate planning. A will enables you to designate the person you believe most capable of managing your affairs. If you do not make a will, you forfeit the ability to make that choice.

It is also critical to your estate planning to maintain a current accounting of any assets and debts you have, including moneys owed to you. Such an accounting will make it much easier for your executor to quickly get up-to-speed on the financial condition of your estate. There are too many cases where an estate must be initiated years after a person's death because some previously unknown debt or property was discovered and requires administration.

A qualified California estate planning attorney can advise you on all of these issues. If you have any questions, contact the Law Office of Scott C. Soady in San Diego today.

Dealing With Real Property During Probate

December 14, 2014

It is common practice in estate planning for an individual to make specific gifts of property. Perhaps you wish to leave your house to your children or a particular family heirloom to a sibling. But what happens if the property described in your will is no longer part of your estate at the time of your death? In such cases, the gift is moot; your executor cannot distribute property that is not there.

A more complicated question may arise if your will specifies a distribution of property that conflicts with actions taken during your lifetime. A Connecticut court recently addressed such a situation. A woman left a piece of real estate in her will to a local church. However, shortly before her death, she entered into a contract to sell the property to another person. The woman's executor wished to proceed with the sale. The church sued to enforce the gift made in the will.

A Connecticut appeals court ultimately ruled for the church. Although the woman signed a contract to sell the house, the terms of the agreement were not fulfilled by the time of her death. Specifically, the putative buyer failed to secure mortgage financing. This meant the woman still owned the property on the day of her death, and Connecticut law required it be distributed in accordance with the terms of her will. The executor could only sell the property with the consent of the church, which was the designated beneficiary.

Planning Ahead to Avoid Confusion Later

California probate law requires an executor to follow the instructions contained in the deceased individual's will. Even if the deceased expressed his or her intentions to dispose of the property in a different way prior to death, what matters post-death is the signed will. The executor, after all, is acting as a fiduciary for the deceased under the terms of the will.

If a will does not direct a specific distribution of real property, the executor must petition a probate court for permission to sell during the administration of the estate. In some cases, this may be necessary to pay the expenses of the estate. For instance, if the deceased's home was his or her only asset, a sale may be required to provide sufficient funds for the payment of any debts, taxes, funeral expenses and court costs. Even where other assets can cover these expenses, a sale may still be preferable depending on the will's distribution of the remainder (or residue) of the estate. Say the deceased had four children, and left her residuary estate to all of them in equal shares. It might make more sense to sell the home and divide the cash proceeds four ways than to convey the property to all four children as co-tenants.

As always, the executor is bound by the terms of the will. It is in your interest—and the interest of your beneficiaries—to make your wishes as clear as possible in writing. If circumstances change, such as deciding to sell a property, it is incumbent you review and revise your estate plan accordingly. If you need to consult with an experienced California estate planning attorney, contact the Law Office of Scott C. Soady today.

Winding Down Your Business Through Estate Planning

December 12, 2014

A comprehensive estate plan can address the disposal of your personal assets, such as your home or retirement accounts, and any business interests you may hold. Many Americans are self-employed or participate in a business partnership. Winding down these business arrangements is a critical component of the estate planning process.

As with property, you may transfer your ownership of a business to another through a will or trust. In some cases, however, this may not be practicable. If you are a self-employed professional, such as an attorney or physician, and you do not have a surviving partner or successor, it is essential that you leave your executor or trustee with instructions on how to terminate your business—informing clients, disposing of confidential files, et cetera. If you are in a partnership or similar arrangement, such as a multi-member limited liability company, you should also make sure any agreements governing such businesses contain appropriate language dealing with your or a partner’s death.

A Family Legal Dispute

A recent California case involving the disposition of a disputed partnership illustrates what can go wrong in the process of winding down a deceased’s business. This case is discussed for informational purposes only, and should not be considered a complete statement of California law. The case involves the law practice of an attorney who passed away in 2010.

The attorney, Joseph Galligan, previously created a joint living trust with his wife as part of his estate plan. Galligan's wife died two months prior him, leaving a successor trustee to administer the trust. The trust directed the successor trustee to divide the couple's assets among six of their eight children. The trust made no provision for the other two children, including Patrick Galligan, also an attorney.

Patrick Galligan claimed he was a 50 percent owner of his late father's law practice, Galligan & Biscay. Joseph Galligan's the firm was essentially dormant at the time of his death. According to the trustee, the firm had “little or no economic value.” Nonetheless, Patrick Galligan filed a creditor's claim against the trust, arguing his 50 percent share was worth upwards of $800,000. The parties to the ensuing litigation ultimately settled in 2011. In exchange for releasing all further legal claims against it, the trust agreed to give Patrick Galligan full ownership of the law practice and $30,000.

Galligan, now acting as owner of the law practice, filed a second lawsuit against two of his siblings in late 2011, alleging they contributed to the destruction of the firm's business. A California superior court threw out the lawsuit, citing the terms of the 2011 settlement, and awarded the two siblings attorney fees. On August 19 of this year, a California appeals court panel upheld the dismissal but reversed the awarding of attorney fees.

Taking Care of Business

Careful attention to the disposal of business interests during the estate planning process can help head off disputes such as those in the Galligan case. If you operate your own business, or participate in a business partnership, it is critical to make sure all interested parties are on the same page with respect to succession. If you need assistance on this or any other estate planning question, contact the Law Office of Scott C. Soady today.

Failure to Leave a Will Can Lead to More Than Just “Sibling Rivalry”

December 5, 2014

It is important to make a last will and testament before your declining health renders you incapable of doing so. In a deteriorating physical or mental state, you may be subject to the undue influence of others who may wish to take control of your property for their own benefit. And while the law in California and other states will not recognize a will signed as the result of undue influence, settling this may require long and often costly litigation which can deplete your estate and deprive your chosen beneficiaries of the fruits of your labors.

Green v. McClintock

Here is a recent example from another state. This involved the estate of Kenneth Green, who died of cancer in 2010. Green and his brother, Albert, had fought for years over the disposition of their mother's estate. She died in 1995 without leaving a will. She did, however, leave a substantial farm in Allegany County, Maryland, and other cash assets. Neither brother bothered to open an estate for their mother until 2002, when Kenneth Green decided to take action.
The mineral rights under the Allegany farm belonged to a corporation. The president of the corporation advised Kenneth Green to obtain sole title to the farm. He also advised Green to make a will of his own, which the company's lawyer did for him in 2003.

Albert Green claimed 50% ownership of the Allegany farm. This led to litigation with Kenneth Green, who claimed the entire farm for himself. The brothers settled in 2004. Kenneth Green kept the farm while his brother retained other assets from their mother's estate.

Meanwhile, Kenneth Green's 2003 will excluded his brother and his family entirely. Kenneth Green wished to leave his entire estate to Betty McClintock, a longtime friend and co-worker. The 2003 will reflected as much.

By 2009, Kenneth Green was dying of cancer. In August of that year, Albert Green and his son, Andrew, took Kenneth Green from his hospital in Maryland to their farm in Kentucky. Andrew Green had his uncle sign a power of attorney and a new will, both naming him (Andrew) as agent and excluding McClintock. Shortly thereafter, Andrew Green used the power of attorney to transfer the Allegany farm and Kenneth Green's other assets to Albert Green.

After Kenneth Green's death, McClintock and Andrew Green each tried to probate the 2003 and 2009 wills, respectively. A Maryland circuit court eventually ruled for McClintock. It found Andrew Green committed fraud and exercised undue influence over his uncle. A Maryland appeals court upheld that decision in an opinion issued August 1 of this year, nearly four years after Green's death.

Preventing Family Disputes

It is notable this family feud began not with Kenneth Green's death, but with his mother's. Her failure to make a will led to litigation between her sons, which continued with the probate of Kenneth Green's estate. The lesson for the rest of us is to always make a will and make sure all family members are aware of your express intentions. If you need the assistance of an experienced California estate planning attorney, contact the Law Office of Scott C. Soady today.

Collecting Payments After Your Death

September 26, 2014

Although you might think of an estate plan simply as a way to dispose of your existing assets, in fact your future estate might also be responsible for collecting additional income generated after your death. If you work in the entertainment industry, for example, your estate may still collect residual payments for years—even decades—after you're gone. According to a recent report by the entertainment website Deadline Hollywood, the Screen Actors Guild (SAG-AFTRA) currently holds more than $40 million in unpaid residuals that belong to living and deceased members. In these cases, the union simply cannot locate the person or his or her estate to make the payments.

What Is a “Residual”?

A residual is any payment made to a performer in a television show or movie for the rebroadcast of that work. For actors, residuals are governed by a series of labor agreements between the studios and SAG-AFTRA. Since the 1970s, residuals have been unrestricted, meaning the performer must receive a payment for each rebroadcast without limit. This means residual payments may continue well after the performer's death.

Although SAG-AFTRA is responsible for administering these payments, residuals are the personal property of the performer, who may leave them to anyone in a will or trust. If a performer fails to make an estate plan, residuals would then pass under the intestacy laws of the state governing the person's estate.

Under SAG-AFTRA rules, neither the union nor the studios are obliged to split residual payments among multiple beneficiaries. So if a performer chooses to name multiple beneficiaries, those persons must agree upon a single “nominee” to receive the residual payments after the performer's death. The nominee is then responsible for dividing the residuals as specified by the performer's will or trust. This nominee may be a bank or other corporate trustee.

Unclaimed Property

As the Deadline report noted, SAG-AFTRA has been unable to locate the estates or beneficiaries of many well-known deceased performers, such as comedian Andy Kaufman, who died in 1984. A Deadline writer managed to locate Kauffman's daughter, who said she was unaware SAG-AFTRA had continued to collect her father's residuals. While SAG-AFTRA has an entire department dedicated to locating heirs and estates, it is apparently overwhelmed by the sheer number of “missing” recipients.

It is important to note that while performers may earn residuals in perpetuity, once a studio makes a payment, SAG-AFTRA only has to hold it for three years. If it remains unclaimed by a performer's estate, the union may simply keep the money. This mirrors California's unclaimed property law, which requires banks and other financial companies to turn over a customer's account to the state controller if there has been no contact for three years.

Locating and collecting unclaimed property is actually a common duty of estate executors and trustees. That is why it is essential you prepare a proper estate plan and designate a person or persons to ensure every asset in your name is properly accounted for. Contact the Law Office of Scott C. Soady in San Diego today if you have questions about this or any other estate planning matter.

Establishing Paternity for Probate Purposes

September 25, 2014

When the law speaks of “heirs,” it refers to those individuals entitled to inherit a person's estate in the absence of a valid last will and testament. For example, if you live in California and die without a will or a spouse, but you do have children, those children are your heirs and inherit your estate. “Children” includes your biological offspring, as well as any children you legally adopted during your lifetime.

But what about children whose paternity is unsettled? California law states, for purposes of inheriting an estate, paternity must be “established by clear and convincing evidence that the father has openly held out the child as his own.” A court may also enter an order during the father's lifetime establishing paternity, whether or not he acknowledges a child as his own. If for some reason the father was unable to acknowledge paternity, it may be established after his death, also by the “clear and convincing evidence” standard.

Different States Have Different Rules

In some states, it is not enough for an alleged father to simply acknowledge a child as his own. An appeals court in Georgia recently dealt with such a situation. The deceased, James Hawkins, died without a will or spouse. He had, however, acknowledged his girlfriend's son as his child. In fact, Hawkins was not the biological father. He did acknowledge paternity on an official state form, but the document was not notarized. Georgia law requires a “sworn statement” to prove paternity, and both a trial court and the Georgia Court of Appeals agreed the un-notarized form did not qualify.

One of the appeals court judges noted this case illustrated the problem with “administrative legitimation,” which has been permitted in Georgia since 2005. The judge explained the process enables couples to “create a wholly fictitious father-child relationship, which is tantamount to an adoption without any of the procedural and due process safeguards of the adoption statutes for the actual, biological father.”

Plan Ahead to Avoid Confusion Later

Like Georgia, California allows a person to acknowledge paternity via a properly notarized form. But unlike the case discussed above, California does not necessarily require written proof paternity in order for a child to inherit. As a California Court of Appeal panel noted in a 2011 decision, the law only requires a putative father “acknowledge” the child as his own: “A written acknowledgment [is] not required, and proof by way of a word or act will suffice.” Again, a court would look at all of the available evidence in determining whether a parent-child relationship existed

Of course, issues regarding legitimacy only matter if you die without a will. If you make a proper estate plan, you can leave your estate to whomever you wish, regardless of your specific legal relationships. A good estate plan is especially important if you have property in different states—say you live in California but own real estate in Georgia—and you want to avoid a complicated examination of your family situation under possibly conflicting state laws. If you have any questions about this, or any other estate planning issue, contact the Law Office of Scott C. Soady in San Diego today.

Medi-Cal and “Estate Recovery”

August 31, 2014

An estate is not only responsible for distributing property after your death. It must also pay any valid debts to the extent your assets allow. Medical debts are a common expense most estates must pay. And if the deceased received health care benefits from the California Medical Assistance Program (Medi-Cal), the estate may have to reimburse the State of California for some of those expenses.

Estate Recovery

This is known as estate recovery. Medi-Cal is part of the federal Medicaid program. Medicaid rules require states to try and recoup the costs of certain long-term care from the estates of now-deceased recipients. California law goes even further and seeks recovery of costs for most covered services provided to people ages 55 and over. The Affordable Care Act (aka “Obamacare”) prohibits California from conducting estate recovery if the beneficiary was under 55 and received coverage under the low-income expansion to Medicaid and Medi-Cal.
If a beneficiary, regardless of age, is permanently institutionalized and owns a home, Medi-Cal may place a lien on the beneficiary's residence during his or her lifetime. Otherwise, estate recovery may not begin until after the beneficiary's death. If the beneficiary was married, recovery may not begin until after the spouse's death. There may also be no estate recovery if the beneficiary left minor or disabled children.

Estate recovery is limited to the lesser of the costs claimed by Medi-Cal or the value of the estate's assets. There are also hardship exemptions available for certain low-income individuals.

Estate Recovery In Practice

A recent California appeals court decision illustrates how estate recovery works. Merver Lee Mays died in 2006. She owned a home in Stockton. She left no will but two surviving children. One of the children, Betty Bedford, was named administrator of the estate, which consisted mostly of the house, which was valued at about $245,000.

The Department of Health Care Services (DHCS), which administers Medi-Cal, filed a creditor's claim to recover approximately $84,000 for services provided to Mays. Bedford should have paid this claim from the proceeds of the sale of her mother's house. However, Bedford's brother had deeded the house to himself, using a power-of-attorney signed by their mother just before her death. A probate judge later held the estate still owned a 50% interest in the house. Bedford later waived this interest in exchange for cash payable to her, not the estate.

Meanwhile, nobody bothered to pay the DHCS. The Department ultimately filed a civil suit against both siblings, maintaining they were now personally responsible for the unpaid $84,000 claim. The probate court—and the Court of Appeal—sided with the DHCS and found that Bedford was personally liable for paying back the DHCS since she personally benefited from her mother's estate without first bothering to properly administer it.

Planning Ahead

This was a case where a personal representative's carelessness proved costly. In developing your own estate plan, it is essential you select agents who will comply with the law and not try to circumvent legitimate creditor's claims. This goes doubly so when dealing with a potential Medi-Cal recovery. If you have any questions, contact the Law Office of Scott C. Soady in San Diego.

The Importance of Safekeeping Your Will

August 29, 2014

A last will and testament does little good if nobody can find the document after you pass away. It is important to safeguard your signed, original will as it must be filed with a probate court in order to formally open an estate. As a general rule, California courts will not accept photocopies of wills.

Any delay in locating a will may produce significant complications for your estate. As an illustration, consider a recent California appeals court decision which is discussed here for informational purposes only. The case arose from a horrific 2009 murder-suicide that resulted in the death of Elizabeth Fontaine, her mother and Fontaine's two small children. Fontaine left a will naming her cousin, Jennifer Hoult, as executor.

At the time of her death, Fontaine worked as an attorney at a prominent Los Angeles-area law firm. Hoult made several attempts to locate Fontaine's will, which she believed the firm held for safekeeping. But it was not until 2013—four years after Fontaine's death—that the will was found. (The law firm entered bankruptcy in 2011, and the trustee assigned to distribute the firm's assets ultimately found the will.)

The will named Fontaine's two deceased children as beneficiaries. Hoult still moved to probate the will, as there were creditors with potential claims against Fontaine's estate. Those creditors included Fontaine's estranged husband, who filed a rival petition seeking appointment as executor of the estate.

A probate judge rejected the husband's petition and agreed Hoult had priority appointment as executor under the will. The Court of Appeal, in a June 25 decision, reversed the probate court's order and directed the judge to conduct an evidentiary hearing on the husband's objections to Hoult's appointment. The litigation over Fontaine's estate will therefore continue nearly five years after her death.

Safekeeping Your Own Will

Setting aside the husband's still-pending objections, this case emphasizes the importance of locating a will in a timely manner. Normally, an attorney's office is an ideal place for keeping a person's will, and but for the bankruptcy issues faced by Fontaine's firm, her will should have been located shortly after her death.

In lieu of keeping a will with your estate planning attorney, you might also consider a safe deposit box. The important thing to remember here is that your intended executor should have easy access to the box. Ideally, you would name the executor (and maybe your alternate executor) as a co-owner of the box. Otherwise, the bank may not release the contents of the box without a court order.

You might also keep your will at home among your personal effects. It is still a good idea to keep a will in a home safe or other locked and secure area that your executor or family can access when necessary. A will should be treated like any other important personal document, such as a passport or birth certificate.

Your estate planning attorney can advise you on all the best options for preparing and safekeeping your will. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

What Happens to an Estate With No Heirs?

August 17, 2014

Dying without a will is never a good idea. In California, like all states, there are laws governing the succession of intestate estates—that is, estates where the deceased failed to leave a will. The intestate succession law directs the distribution of property to your closest living relatives. But what if you have no living relatives or they fail to make themselves known to the probate court? In such cases your estate is “escheated” or transferred to the state as unclaimed property.

If a living heir appears within five years of the initial escheat, he or she may file a petition in court to claim your estate. After the five-year period expires, however, your estate becomes the permanent property of the State of California. And once a distribution is made to a claimant, it excludes any rival claims that may arise, as one recent California appeals court decision demonstrates.

Estate of Dickson

This case is discussed here merely as an illustration and should not be treated as a conclusive statement of California law on this subject. Alvin Dickson, Jr., died in 2009 without a will. At the time of his death no living heir had appeared to claim the estate, so it was escheated to the unclaimed property office of the California State Controller.

In September 2012, Kent Orr filed a petition in San Bernardino Superior Court to recover the estate from the Controller. Orr was Dickson's second cousin, once removed, and claimed to be his closest living relative. The court granted Orr's petition in an October 2012 order.
Two months later, another man, Reginald Watkins, appeared and claimed he was Dickson's first cousin. In fact, he said there were 17 living first cousins who all had higher priority to claim Dickson's estate than Orr, who was only a second cousin. Watkins said the Controller's office was aware of his competing claim but never informed him about Orr's petition in San Bernardino. Watkins therefore asked the court to reverse its order in favor of Orr and award the estate to the first cousins.

The court denied this motion. The judge said the Controller had no legal duty to inform Watkins about Orr's petition. Nor did any action (or inaction) by the Controller reasonably interfere with Watkins' ability to learn about the Orr petition. The Court of Appeals, which upheld the trial judge's decision, noted California's escheat law created a “first come, first served policy,” with respect to previously unknown heirs. Unless Orr deliberately misled the court about the existence of other unknown heirs—and the appeals court said there was no evidence of this in the record—his petition was validly granted.

Avoiding Confusion

It's unknown what Alvin Dickson's wishes were regarding his estate since he never left a will. This unfortunately led to litigation years after his death. To avoid a similar situation, you should always work with an experienced California estate planning attorney to prepare a will or trust specifying the heirs of your choice. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions

Can a Tenant Object to the Probate of a Landlord's Estate?

July 20, 2014

In preparing a last will and testament, you need to be conscious of the location of any property you own. In the United States, wills and estates are handled on a state-by-state basis. If, for instance, you live in California but own a second home in Arizona, your will must be admitted to a secondary (or ancillary) probate in Arizona to dispose of any property located in that state. And if you own property in another country, your will may have to comply with foreign laws.

You must also be aware of any other persons who may be affected by the disposition of property in your will. This can include creditors or persons renting a property you own. A recent case from the California Court of Appeals illustrates the type of dispute that may arise when probating a will in more than one jurisdiction.

Estate of Dubs

Kathleen Dubs was a college professor living in Hungary. She owned a residence in San Francisco that had been rented by Timothy Murphy, a local attorney, since 1994. Murphy initially a signed a one-year lease that converted to a month-to-month basis.
Dubs died in 2011. Her sister, Laurel Scrivani, filed a petition for probate in San Francisco. Dubs signed a last will and testament in 1991 leaving her entire estate to Scrivani. According to Scrivani's petition, Dubs's Hungary estate was disposed of through an affidavit rather than a formal probate process. (California has a similar procedure for small estates.) There was also an ancillary probate in Oregon to dispose of some real property Dubs owned in that state.

Scrivani decided to sell the San Francisco property. Murphy, the tenant, filed an objection with the probate court. He maintained he was a “creditor” of the estate due because Dubs held his security deposit at the time of her death. Murphy also alleged technical defects in Scrivani's paperwork to establish the probate estate.

The probate court dismissed Murphy's objections and approved the sale, subject to his rights as a tenant under the lease. Murphy still appealed. The Court of Appeal upheld the probate judge's decision.

The core of Murphy's complaint was that the sale of the property might “reduce the value of his leasehold interest,” because the new owner might evict him or raise his rent. But the Court of Appeal said this had nothing to do with probate. Murphy “is not legally aggrieved by the sale,” the court explained, and his legal rights as a tenant are still protected under California and San Francisco law.

Planning Ahead

Murphy's case may not have had merit, but there's a good estate planning lesson here for all landlords. Make sure your tenants understand what succession procedures are in place should you pass away during the term of a lease. This can minimize confusion and, hopefully, avoid unnecessary litigation. Contact the Law Office of Scott C. Soady today if you need advice on any estate planning matter.

What Is a “Small Estate”?

July 16, 2014

Not every estate requires a formal probate process. Most states, including California, have simplified procedures for administering “small” estates. The actual definition of a small estate varies from state to state. California law defines a small estate as one where the real and personal property owned by the deceased, valued as of the date of death, does not exceed $150,000. Some types of property are excluded from this $150,000 threshold, including unpaid salary or benefits owed the deceased (up to $15,000) and many types of vehicles.

In a regular estate, a probate court must appoint a personal representative or executor to gather the decedent's assets and distribute them to the appropriate heirs or beneficiaries. In a small estate, by contrast, the person entitled to receive those assets may simply file an affidavit with the court acknowledging the transfer of ownership. There are separate processes for collecting personal and real property.

If the Small Estate Includes Only Personal Property

If the small estate has no real property (i.e., a house), the person filing the affidavit must wait at least 40 days from the date of the decedent's death. After that, he or she may file the affidavit, which must identify all personal property owned by the decedent as well as the “successors” entitled to receive that property.

Who is a “successor”? That depends on whether or not the deceased person left a valid last will and testament. If there is a will, the successors are the persons named as beneficiaries. This might include a living trust made by the decedent during his or her lifetime. Normally, a small estate will only have a handful of successors. For example, if you make a will leaving your entire your estate to your spouse, then he or she is the sole successor who should file the small estate affidavit.

If the deceased did not leave a will, then any successors are determined by the intestacy law of the state or country where the personal property is located. In most California small estates, that means California intestacy law. Keep in mind California, unlike most states, recognizes marital as well as separate property.

For personal property, like a bank account, a small estate affidavit is generally sufficient to authorize a transfer from the deceased to the successor. The affidavit must be notarized and delivered to the person holding the property. If the holder refuses to transfer the property, or requires additional proof of the claim, the successor may need to seek a court order.

If the Small Estate Includes Real Property

A successor may still use a small estate affidavit if the deceased owned real estate as well as personal property; however, it will still require a petition to the Probate Court. California law does require a formal appraisal of any real property, however, to determine its market value. The state appoints special officials known as probate referees to appraise property in each county. The referee prepares an appraisal that the successor must then file together with the affidavit.

There may still be cases where a small estate requires a formal probate. And even if you expect to leave a small estate, that is not an excuse to avoid making a will or trust. Estate planning is for everyone. If you require assistance, contact the Law Office of Scott C. Soady in San Diego today.

Understanding Death and Taxes

June 4, 2014

Benjamin Franklin famously wrote, “in this world nothing can be said to be certain, except death and taxes.” And the latter does not cease upon the former. Death introduces a number of tax issues that must be dealt with as part of your estate. Proper estate planning can help ease the burden, however, and minimize tax difficulties arising from an uncertain world.

Income Taxes

Your estate must still file a final individual income tax return—the common federal Form 1040 or California Form 540—for the tax year you die. This return should only reflect the income and deductions accrued through the date of death. Any income or losses earned after your death are credited to your estate.

An estate or trust is a separate legal and taxable entity from your person. The executor of your estate, or the successor trustee of your trust as the case may be, must therefore file a separate fiduciary income tax return—known as Form 1041—to record any taxable income earned after your death. This would include any profits earned from a business that remains in operation after your death, interest accrued on bank accounts, dividends paid on your stock holdings, and rents paid on real property. Until your estate is able to distribute all of your assets to the intended beneficiaries, the IRS will hold the estate (or trust) responsible for managing these assets and paying the necessary income taxes. The estate or trust must also file a separate California fiduciary income tax return, which is known as a Form 541.

Gift and Estate Taxes

California does not impose any separate taxes on estates, gifts or inheritances. But there is a “unified” federal gift and estate tax. Under the unified tax rules for 2014, a person may transfer by gift—that is, during his or her lifetime—or inheritance up to $5.34 million with no tax liability. This means, for example, if you make $2 million in gifts to your children during your lifetime, you may still leave up to $3.34 million to them in your will without having to pay either gift or estate tax.

Actually, most gifts you make during your lifetime are excluded from tax. Each year, you may give up to $14,000 in gifts without having to report them to the IRS. Gifts made from one spouse to the other are also excluded in their entirety, as well as gifts made to political or charitable organizations and gifts made to pay another person's medical or educational expenses.

And while there is no state-level estate tax in California, some states continue to impose such levies. If you own real property in a state where a state-level estate tax still applies, your trust or estate may still have to file returns even for that state. This is because some states have a lower gift-and-estate tax exemption than the federal exemption of $5.34 million.

Planning Ahead Can Save Money

These are just some of the tax issues you need to consider as part of your estate planning. A qualified California estate planning attorney can provide you with a more detailed overview of the potential tax traps your trust or estate may face. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

Who Can Be Held Responsible for an Estate's Debts?

June 2, 2014

The Washington Post reported recently the Internal Revenue Service has “intercepted” hundreds of tax refunds to repay decades-old debts. What is disturbing is that these are not debts owed by the taxpayers, but by their long-deceased parents. The IRS claims that in the past, families of deceased Social Security beneficiaries received overpayments from the government.

Even more shocking, the government now claims the right to collect those “overpayments” without having to prove the validity of the debt. According to the Post, the IRS makes no effort to determine who actually benefited from the alleged overpayment; instead “the policy is to seek compensation from the oldest sibling and work down through the family until the debt is paid.” After public outcry over the Post report, the IRS subsequently announced it would suspend its collection program.

Not the Normal Way to Satisfy Debts

A story like this may leave you asking, “Can other creditors force me to pay my parents' debts?” The answer is no. Non-government creditors generally have no recourse against the heirs of a debtor. Obviously, the government tends to exempt itself from its own rules in this regard, and the IRS is no typical creditor.

In an estate proceeding, creditors must present a claim to the executor or administrator of the estate. Unlike the IRS, a private creditor cannot simply take what it wants. Nor can it refuse the estate's request for documentation verifying the debt. The executor or administrator ultimately decides whether or not to pay a debt. If the creditor disagrees with the estate's decision, both sides may seek a judicial resolution before a probate judge.

There is also a strict time limit for private creditors to present their claims. In California, a creditor must notify the executor or administrator within four months of his or her appointment. After that, the claim is barred by law. By contrast, Congress lifted the statute of limitations for collection of debts against the federal government, which is why the IRS is now pursuing claims that would be long barred under state law.

Who Is Responsible for What Debts?

If the estate will not or cannot pay a debt, the creditor generally cannot seek payment from heirs or family members of the deceased. Under federal law, a creditor may only contact the spouse or executor of a deceased debtor's estate (or the parent of a deceased minor). But the creditor may not discuss the debts with any other third party, including the debtor's children or siblings, in an attempt to force payment.

This does not mean there are never cases where a family member may be liable for an unpaid estate debt. If you co-signed the obligation, you are just as responsible as if the deceased was still alive and simply defaulted on the debt. And if you live in a community property state like California, a surviving spouse may be held responsible for some of the deceased spouse's debts.

Understanding your debts is a key part of estate planning. You should always work with an experienced California estate planning attorney who can advise you on the best way to ensure all of your creditors are paid after your death. Contact the Law Office of Scott C. Soady in San Diego if you have any questions.

Failing to Leave a Will Can Cause Confusion Among (Alleged) Heirs

May 22, 2014

Many people fail to make a last will and testament because they simply assume their heirs, such as a spouse or child, automatically inherit their property under the law. While it is true the law provides for persons who die intestate—that is, without a will—it is never a good idea to rely on this process, as it may produce outcomes you do not intend. This is especially true when dealing with atypical family situations.

Jones v. Brown

Here is a recent illustration from the California Court of Appeals. Lonza Jones died in 2009 at the age of 81. Jones had one surviving sibling, Mathis Jones. Another sibling died several decades earlier; Lonza Jones raised that sibling's children, including Elinda G. Edwards.

If Jones died without leaving a spouse or any biological children, California intestacy law would give his entire estate to Mathis Jones as the only surviving sibling. But shortly after Jones' death, Elinda Edwards filed a petition to probate her uncle's estate in which she claimed he had two biological children, Wallace L. Wright and Johnniese Peterson Exum.

Wright was apparently deceased. Stephanie Brown, Wright's daughter, filed her own petition for appointment as administrator of her purported grandfather's estate. Mathis Jones opposed the appointment of either Brown or Edwards. Jones further claimed neither Wallace Wright nor Exum were his brother's child.

The probate court appointed Brown as administrator for the estate, which had assets of about $60,000. Mathis Jones claimed some of those funds were improperly transferred from a joint account he held with his late brother. Jones demanded Brown's removal as administrator and continued to challenge the paternity of Exum, the sole surviving heir.

The probate court denied all of Mathis Jones' motions. The California Court of Appeal affirmed the probate court on all issues. The appeals court said Jones waited too long to appeal Brown's appointment as administrator. He also failed to provide an adequate evidentiary record to challenge the probate judge's findings on the other issues.

With respect to the question of Exum's paternity, the Court of Appeals noted that “snippets of the record show the probate court had evidence that, during his lifetime, decedent acknowledged Exum as his daughter, including taking her into his home and claiming to be her father in school records.”

Establishing Paternity

If a child's biological paternity is not naturally presumed—i.e., the child is born to married parents or the father's name is listed on the birth certificate—California intestacy law requires some other evidence that the person is an heir. In the Jones case, Exum established paternity through “clear and convincing evidence that the father has openly held the child as his own.” However, a prior court order declaring paternity or clear and convincing evidence that the person is a child's father is also sufficient.

Of course, paternity becomes less of an issue when the deceased leaves a will specifying his chosen beneficiaries. Had Lonza Jones signed a will leaving his entire estate to Exum—assuming that was his wish—his brother would have had no legal grounds to challenge that decision. It wouldn't matter whether or not Exum was Jones' biological daughter.
This is just one example of how a lack of a will creates unnecessary confusion among heirs and family members. You can avoid a similar circumstance by working with an experienced California estate planning attorney. Contact the Law Office of Scott C. Soady in San Diego today for a consultation.

Florida Justices Warn of the Dangers of Estate Planning Without an Attorney

May 18, 2014

Many people think they will save time and expense by using pre-printed forms to meet their legal needs such as a last will and testament. But pre-printed forms carry significant risks, especially when individuals fill them out without obtaining the advice of an experienced California estate planning attorney. In fact, the Florida Supreme Court recently warned people of the risks of using pre-printed wills in a decision that illustrates the perils of relying on commercial forms.

Basile v. Aldrich

In April 2004, Ann Aldrich purchased a commercial pre-printed last will and testament form. She prepared the form herself, apparently without any legal advice. Under a section marked “Bequests,” Aldrich identified several specific items of real and personal property. She left all of the listed property to her sister, Mary Jane Eaton. Aldrich named her brother, James Aldrich, as alternate beneficiary of those particular assets if her sister did not survive her. Aldrich apparently had no children or heirs aside from her two siblings.

Indeed, Eaton died in 2007, two years before Aldrich herself passed away. Because Eaton died first, her estate left property to Aldrich, including cash and land. Aldrich placed the cash in a brokerage account. She did not revise her 2004 pre-printed will to reflect the additional property in her estate.

James Aldrich was appointed executor of the Estate of Ann Aldrich. He argued that, as he was the only surviving named beneficiary in the will, his sister intended he should inherit the entire estate, including the cash and land received from Eaton's estate two years earlier. But Eaton's two children challenged this. They argued that since Ann Aldrich's pre-printed form contained no residuary clause—a designation of who should receive any property not specifically disposed of in the will—the property from their late mother's estate should pass under Florida intestacy law. That would mean the cash and land would be divided, with half going to James Aldrich as the surviving brother, and the other half to the nieces and heirs of the predeceased sister.

Ultimately, after several years of litigation, the Florida Supreme Court sided with the nieces. The justices unanimously agreed that absent a residuary clause or specific language disposing of the Eaton inheritance, the disputed property had to pass under intestacy law.

Justice Barbara J. Pariente, writing separately from the rest of the Court, noted that “although this is the correct result under Florida's probate law, this result does not effectuate Ms. Aldrich's true intent.” There was evidence that Aldrich intended to leave her entire estate solely to her brother. But that evidence was not admissible under Florida law. Justice Pariente added, “This unfortunate result stems not from this Court's interpretation of Florida's probate law, but from the fact that Ms. Aldrich wrote her will using a commercially available form … which did not adequately address her specific needs—apparently without obtaining any legal assistance.”

Don't Do it Alone

Justice Pariente cautioned that while using a pre-printed form may save money in the short term, the long-term costs will negate any savings, especially if the will ends up in litigation over questions of the deceased person's intentions. Speed and convenience should not be paramount concerns when it comes to a will or any other estate planning document. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

The Importance of Funding a Living Trust

May 1, 2014

A living trust is a useful estate planning tool that can help avoid extended probate proceedings after your death. Basically, a living trust is an entity you create and transfer property into through a declaration of trust. This declaration specifies how the property within the trust should be distributed after your death. Unlike a last will and testament, trust declarations are not submitted to a probate court. The declaration simply appoints a successor trustee to carry out your wishes.

During your lifetime, you can still control all of the property transferred into the living trust. In most cases, the trust is not even considered a separate legal entity for tax purposes, so your Social Security number remains tied to trust assets like bank accounts. You can revoke or amend a living trust at any point during your lifetime. After your death, however, the trust generally becomes irrevocable, meaning your successor trustee is bound by the declaration of trust.

Always Fund a Trust Properly

It is important to understand that creating a trust involves more than signing a declaration of trust. You must take affirmative steps to fund a living trust. Even though assets put into a living trust remain under your control, you must still take steps to amend the legal title, say from “John Doe” to “John Doe, Trustee of the John Doe Living Trust.” Without taking this important step, the declaration of trust is nothing more than an empty shell.

Here is an illustration taken from a recent California Court of Appeals case, this case is only discussed to illustrate the concepts involved and should not be taken as a statement of the law. In December 2000, Rose D. Bozigian had her estate planning attorney prepare a living trust. Bozigian, a widow with three adult children, transferred a single asset into the new trust, her Los Angeles County residence. To that end, Bozigian signed a new deed transferring the property from herself to the trust.

But in 2003, Bozigian decided to transfer her residence out of the trust. She did this in order to refinance the property. According to court records, Bozigian wanted to help one of her children, Steve Bozigian, pay off some credit card debt. Bozigian, acting as trustee, signed a new deed transferring the residence from the trust to herself and her daughter, Susan Saputo, as joint tenants.

Normally, a joint tenancy means that when one co-owner dies, the surviving co-owner automatically assumes title without having to go through probate. This is known as a joint tenancy with right of survivorship. But in this case, the courts determined Rose Bozigian never intended to create a true joint tenancy; rather, she added her daughter to the deed in order to help secure the refinancing loan.

Rose Bozigian died in 2006. Since she removed the house from the trust three years earlier, the living trust had no assets. Litigation ensued among the siblings over this. The probate court, and later the California Court of Appeal, confirmed the trust was empty. That meant the residence had to go through normal probate.

Don't Leave Behind an Empty Trust

A living trust may not be right for your estate planning needs. But if you decide to create a living trust, it is important to make sure it is funded, if for no other reason than to avoid unnecessary confusion after your death. An experienced California estate planning attorney can help you determine the best way to protect your assets and minimize legal complications. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

Never Wait Until the Last Minute to Make a Will

April 11, 2014

Ideally, estate planning is something you do long before it becomes necessary. It is never a good idea to wait until you are on your deathbed to make a will. You may run out of time before you can execute a will that meets with the legal requirements of California or another state where you reside.

Piper v. Dimmers

A recent Michigan case illustrates the perils of last-minute or incomplete estate planning. Grace Reid died in 2011 at the age of 69. Reid was unmarried and had no children. Absent a will, Michigan law would distribute her estate—which consisted primarily of some land—to her siblings. After she was diagnosed with heart disease, Reid met with an estate planning attorney to discuss her will. For some reason, she never followed up with the attorney prior to her death.

However, three years earlier, Reid made some handwritten notes regarding her estate. As described by the Michigan Court of Appeals, “The document consists of barely legible notes on two sides of a single sheet of personal stationary bedecked with birds, butterflies and a bible quote.” Several names were written and crossed out or changed. Basically, it was a list of people with dollar amounts, presumably gifts Reid intended to leave through her estate. Among the names were two friends, Sandra and Amy Piper. Reid gave the document to Sandra Piper for safekeeping.

After Reid's death, Piper asked a Michigan probate court to admit the handwritten notes as a valid last will and testament. Michigan does recognize “holographic wills”--documents that are signed, dated and in the handwriting of the person making the will. Unlike traditional wills, holographic wills are not typed and lack the signatures of at least two witnesses.

The Michigan courts rejected the alleged will. At best, the Court of Appeals explained, the document was a draft designed to “organize [Reid's] thoughts and determine how to divide her estate.” There was insufficient evidence to prove the document accurately expressed Reid's intent to make a final disposition of her property.

The Perils of “Holographic” Wills

Like Michigan, California law does permit the probate of handwritten or “holographic” wills. Such wills must be entirely in the person's handwriting should be dated. Failure to date a holographic will may lead a court to declare it unenforceable, especially if it conflicts with another will found among your effects.

While there may be certain emergencies that necessitate the use of a holographic will—such as the man who wrote a will on the side of the tractor he was trapped under—in almost all circumstances, it is better to draft a proper will with the assistance of a qualified California estate planning attorney. Wills don’t need to be complicated. It is only important that the will clearly expresses your intentions and is signed in the presence of at least two witnesses. This minimizes the chances of any confusion (and litigation) after your death. If you have any questions about making a will, please contact the Law Office of Scott C. Soady in San Diego.

Family Heirlooms Can Lead to Family Litigation

April 9, 2014

We often read stories about heirs fighting over a deceased relative's multimillion-dollar fortune. But some estate disputes arise over seemingly trivial matters. The common thread in many of these disputes is insufficient direction from the deceased person's estate plan.

A One Hundred Dollar Case

Recently, the Supreme Judicial Court of Maine had to settle an argument between relatives over the possession of a single item valued at just $100. The deceased was Ada Greenblatt, a Maine realtor with no children, but two surviving siblings and several dozen nieces and nephews. Upon Greenblatt's death in 2008, her will made several specific gifts and left the remainder of her estate to her siblings in equal shares. If any sibling died before her, that share would be divided among his or her children.

The will did not provide further instructions on how to divide the residuary estate. Instead it was left to the judgment of Greenblatt's executors—her brother Owen and a nephew, Stephen Singer—to apportion the estate's real and personal property. As the Maine Supreme Court noted, “Many of the personal property items do not have significant monetary value but have sentimental value to members of the family.” The executors made a list of all personal property items and allowed individual beneficiaries to select items. However, Owen Greenblatt and his only surviving sibling reserved the right to claim certain items for themselves before allowing the other beneficiaries to select. Most of the items were family heirlooms that originally belonged to the parents of Ada and Owen Greenblatt.

In the end, the executors fulfilled the requirements of the will. Each beneficiary received a share of equal monetary value. But one beneficiary, Mark Levine, was still dissatisfied. Levine was Ada Greenblatt's nephew. He wanted to claim a mizrah—a traditional Jewish wall plaque used to facilitate prayer—but Owen Greenblatt had reserved that item for himself. Levine challenged this action in court.

Both the probate court and the Maine Supreme Court rejected Levine's challenge. He claimed that the executors abused their authority by preferring some beneficiaries over others in distributing the personal property items. But as the Supreme Court explained, it was reasonable for the beneficiaries to prefer those beneficiaries who were most closely related to the deceased, in this case Ada Greenblatt's siblings. Furthermore, Owen Greenblatt was unaware of Levine's interest in the mizrah at the time he made the distribution, so there was no bad faith on his part.

Preventing Petty Arguments

It may seem ridiculous that anyone would go to court over a $100 wall plaque. But sentimental value often trumps economic considerations. If you are making your own estate plan, you can avoid such disputes by making explicit who you wish to receive certain family heirlooms. This need not be done in the text of your will; you might simply attach a list of items for the benefit of your executor. You could also include a clause in your will that clearly states the executor has sole discretion to distribute such items as he or she sees fit.

However you choose to address these issues, it is important you work with an experienced California estate planning attorney who can help you avoid any legal pitfalls. Contact the Law Office of Scott C. Soady today if you have any questions.

$4.2 Million Judgment, Lack of Proper Probate Lead to Family Feud

March 27, 2014

Court judgments are an asset that must not be overlooked as part of your estate planning. For example, if you are receiving the proceeds of a personal injury lawsuit, that is an asset you must factor in to your will or trust. Similarly, if any litigation is pending at the time of your death, your executor becomes your legal successor in continuing the lawsuit. Therefore, it's imperative you leave a will and name an executor, rather than leaving such decisions up to a probate court.

Unfortunately, large personal injury awards can breed further discord among relatives seeking a piece of the pie. This was evident in a recent California appeals court decision. The case, which is discussed here solely for informational purposes, nevertheless highlights the importance of estate planning as it relates to managing court judgments.

Kitchen v. Foxford

Loree Isenberg was the victim of a terrible accident in 2001, when an Anheuser-Busch beer truck struck the car in which she was riding. She subsequently required constant at-home nursing care. Isenberg eventually died in 2003.

Isenberg filed a personal injury lawsuit against Anheuser-Busch. In early 2003, a jury ruled in her favor and awarded over $4.2 million in damages. Anheusher-Busch's appeal was still pending when Isenberg died. The appeal was ultimately denied.

Isenberg left a will that she signed in April 2002. The will left Isenberg's entire estate to one of her children, Deborah Collis, and two other individuals. Collis was the only one of Isenberg's six children to inherit under the will. Collis herself passed away in 2004.

The attorneys who represented Isenberg in her Anheuser-Busch lawsuit apparently did not open a probate estate to receive the proceeds of the judgment. Instead, they simply collected their fees and distributed the remainder of the $4.2 million to the heirs named in the will.
Toni Kitchen, one of Isenberg's disinherited children, challenged the will. She claimed her sister, the late Deborah Collis, exercised “undue influence” over their mother. A probate judge rejected the lawsuit and held that the will was valid. The California Court of Appeals affirmed this decision in an opinion issued on February 21 of this year.

Appointing Responsible Agents

It's highly unusual that Isenberg's personal injury attorneys failed to open a probate estate. As the Court of Appeals noted, without an estate, Isenberg's creditors never had an opportunity to present their claims, which is their right under California law. The lack of an estate also meant no personal representative was ever appointed to represent Isenberg's probate interests. (In contrast, after Deborah Collis' death, a probate estate was opened—as the inheritance from her mother was a substantial asset—and her son named personal representative.)

Estate planning doesn't mean much if proper agents are not appointed and don’t carry out their duties under the will. In preparing a will, it's essential to nominate responsible agents who won't take shortcuts or shirk the requirements of California law. It's also important to work with an experienced California estate planning attorney who understands the probate process. Contact the Law Office of Scott C. Soady today if you have any questions.

Striking Oil Prompts Lawsuit Over Long-Dormant Estate

March 21, 2014

Many people do not bother to create a will because they don't have much property. Why go to the trouble and expense when you own so little? But a will—and estate planning in general—isn't just about what you own today, but what you might own in the future, and failing to leave a will can lead to legal complications, even years after your death. That's especially true when your heirs discover property interests that were not obvious at the time of your death.

Estate of Huston v. Huston

A recent case from North Dakota illustrates the problems associated with not making a proper will. The case involved a Wyoming man, Virgil Huston, who died 14 years earlier. Huston's heirs included his wife, Wilma Russell, and three adult children from a prior marriage. At the time of his death in 2000, the family believed Huston owned nothing except a car worth about $200. Not surprisingly, he left no will.

At the time, there was seemingly no need to open an estate. But years later, Russell learned her late husband owned some mineral rights in McKenzie County, North Dakota. “Mineral rights” refer to a property interest in raw materials—such as oil or gold—beneath the surface of the land. In many cases, different owners may control the surface and mineral rights to a given parcel. Typically, mineral rights are leased to companies that actually extract the raw materials; the mineral rights’ owner then receives a royalty in addition to the lease payment.
In 2005, Russell and her stepson, James Huston, leased the mineral rights to the McKenzie County property, to an oil and gas company. Seven years later, the company struck oil. Russell then moved to open a probate estate in North Dakota, as the mineral rights remained her late husband's property.

As Virgil Huston left no will, the ultimate distribution of the mineral rights royalties will be decided by North Dakota's intestate succession law. This has already led to litigation between Russell and her stepson. James Huston claims his stepmother is trying to cheat Virgil Huston's children out of their share of the mineral rights proceeds. So far, the courts have sided with Russell. In North Dakota, the spouse of a person who dies with no will is entitled to the first $100,000 of the estate. It has yet to be conclusively determined if there is more than $100,000 in royalties at issue.

Planning for Future Success

Of course, at the time of Virgil Huston's death, the mineral rights were valued at about $160. There was no way to know if the rights would ever amount to anything. But Huston's failure to make a will means that at least some of the oil fortune recovered from the North Dakota site will go to lawyers rather than his family.

None of us can ever know what our financial futures will be. Regardless of your present situation, it's always important to consult with an experienced California estate planning attorney who can help you provide for the future. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

What Happens If I Accidentally Sign My Spouse's Will?

February 27, 2014

It's common for spouses to execute a joint estate plan, signing their respective wills at the same time under the advice of the same estate planning attorney. What's uncommon is when the spouses inadvertently sign each other's wills. While it may sound ridiculous that such an error would go unnoticed, just such a situation occurred in the United Kingdom—and it required a decision by that country's Supreme Court to correct the mistake.

Marley v. Rawlings

Alfred and Maureen Rawlings made their wills in 1999. They hired a solicitor—an English lawyer who specializes in estate planning—to prepare the documents. The wills were not complicated. Each spouse left his estate to the other, and if the other spouse was already dead, the estate would pass to Terry Marley, a family friend. The Rawlings had two children but, for whatever reason, they chose not to include them in their estate plan.

The solicitor accidentally mixed up the Rawlings wills, so that Alfred signed Maureen's will, and vice versa. The mistake went unnoticed when Maureen Rawlings died in 2003 and her estate passed to Alfred Rawlings. But when Alfred Rawlings died in 2009, his sons challenged the will. They argued it was not validly executed under British law as Maureen Rawlings was the person named in the document.

The children had good reason to challenge the will. Like California, under British law, if a person dies without a will, his children automatically inherit the estate as next-of-kin. Terry Marley, the sole beneficiary named in the will, obviously objected to the children's' contest.

An English probate judge rejected Marley's efforts to probate Alfred Rawlings' erroneous will. The Court of Appeal for England and Wales upheld the probate judge. Both courts agreed the will was not executed in accordance with the applicable English law. (Similar to American states, England and Scotland have distinct probate law systems.) Marley then appealed to the Supreme Court of the United Kingdom.

That court unanimously ruled for Marley and held the will could be admitted to probate. Lord Neuberger, the president of the Supreme Court (the equivalent of our Chief Justice) said that British law permitted courts to rectify “clerical errors” in wills in order to carry out the intent of the person making the document. Nobody disputed Alfred Rawlings intended to sign a will leaving his estate to Marley. The solicitor's mistake should have been corrected by the lower courts, according to Lord Neuberger.

Read Before You Sign

Obviously, this extended litigation would have been unnecessary had the Rawlings taken time to read their wills 15 years earlier before signing them. A simple “clerical error” proved anything but simple to correct.

In California, a will that is not properly executed may still be admitted if the person presenting the will can show “by clear and convincing evidence that, at the time the testator signed the will, the testator intended the will to constitute the testator's will.” That suggests an error like the one in the Rawlings case would not be fatal. But again, it's best not to leave it up to the courts. That's why it's important to work with an experienced San Diego estate planning attorney when drafting a will. Contact the Law Office of Scott C. Soady today if you have any questions.

Presumptions Regarding a Lost or Missing Will

February 25, 2014

A last will and testament is an important legal document. It is not something that should be drafted or signed without careful consideration. And once a will is signed, it's essential to keep the original in a safe place where it may be located after the person's death.

As a matter of law, an executor must file a signed, complete, and original version of a purported last will and testament. In many cases, an estate planning attorney will have a client sign duplicate originals. While a photocopy of a will has been admitted to probate in some cases, it is never advisable or ideal. California law presumes that a missing will is presumed revoked, assuming it was last in possession of the person who made it. This is only a presumption that can be overcome by additional evidence, such as a photocopy, but again this is neither advisable nor ideal, especially in cases where a will is contested by one or more parties.

In re Estate of Dixon

A recent Texas case illustrates the problems with missing original wills. In this case, the deceased was Floyd Dixon. He signed a will in 2000 naming one of his eight children, Rosalyne, as executor. Dixon placed the signed original in a safe deposit box that only he and his daughter could access. He also gave his daughter a photocopy of the original will.

After Dixon's death, his daughter searched the safe deposit box but could not find the original will. She then tried to probate the photocopy her father had given her. Neither the trial court nor the Texas Court of Appeals would allow this.

Like California, Texas law presumes that a missing original will has been revoked by its maker. The Texas courts said Dixon's daughter failed to present sufficient evidence to rebut this presumption. To the contrary, the Court of Appeals noted that by all accounts, Dixon voluntarily removed the will from his safe deposit box and destroyed it. Testimony before the trial court suggested Floyd simply wanted to amend his estate plan to provide a greater inheritance for his third wife. And in any case, Dixon's daughter presented no evidence to the contrary.

In many respects, Floyd Dixon executed a model estate plan. He kept his original will in a safe place that his intended executor could access. But he apparently neglected to tell his family that he revoked his will just before his death. This omission led to costly litigation.

A person is always free to amend or revoke a will during his or her lifetime. It's also important to maintain a clear chain of custody with respect to any original documents: When you make a new will, it should revoke the prior will, but I can be beneficial to keep the old will. That way there is no confusion about which document specifies your wishes. As always, an experienced California estate planning attorney can advise you of the best course of action. Contact the Law Office of Scott C. Soady today if you have any questions.

Unmarried Couples May Face Unique Estate Planning Issues

February 10, 2014

Estate planning is an important subject for all married couples. It is also an issue though for unmarried couples in long-term relationships. If you are living with a non-spouse partner—and especially if you own property or enter into a business venture with that partner—your estate planning should provide for an orderly distribution of any assets acquired in the course of the partnership.

Married and unmarried couples are treated quite differently under the law. In California, married couples may own community property, or property acquired in the course of the marriage and jointly held by both spouses. Upon the death of one spouse, his or her estate plan may only dispose of up to 50 percent of any community property, with the remainder staying in the possession of the other spouse.

Unmarried couples cannot own community property, but they can hold property as joint owners. For example, they could co-own a home as joint tenants (or tenants in common) or open a joint bank account, but these assets are not community property. Typically, when one co-owner dies, the survivor automatically inherits the deceased partner's interest. This can be a useful estate-planning tool, as such assets are generally not considered part of a probate estate. For example, if you and your unmarried partner open a joint checking account, you would automatically assume sole title upon your partner's death without having to go through a formal estate.

Mixing Business and Personal Relationships

A recent case from Arizona demonstrates the complex estate planning issues facing unmarried couples. The deceased in this case was Dr. T. Marie Smith. Smith lived with her long-time boyfriend, Lee Martin Del Giorgio. They maintained joint and separate bank accounts, which they used indiscriminately to pay their expenses. The couple also held several parcels of real estate in Arizona and Canada.

In May 2009, Smith and Del Giorgio signed an agreement dividing their real estate interests. Some property was to be transferred into a trust that Smith created as part of her estate plan, with the trust benefiting Smith's children. Smith died in June 2009, however, before all of the transfers were complete. Del Giorgio then halted one of the scheduled transfers to the trust and instead sold the property. Del Giorgio also “diverted” $100,000 intended for deposit in a joint account owned by Smith and her daughter to one controlled solely by Del Giorgio.

Smith's son, Ronald, was named personal representative of her estate. He rescinded the May 2009 agreement between his mother and Del Giorgio. Litigation then ensued over a number of issues related to Smith's assets. An Arizona probate court ultimately ruled against Del Giorgio. The court found the sale of the Canadian property and the diversion of the $100,000 improper and ordered him to pay damages to Smith's estate.

Take Charge of Your Property

The Arizona probate court noted “there was no written business partnership agreement or verbal agreement” between Smith and Del Giorgio governing their various investment properties. This no doubt contributed to the confusion—and litigation—that arose after her death. Had Smith and Del Giorgio been married, the legal situation would have been quite different (Arizona, like California, is a community property state). But as it stood, their relationship as unmarried partners had no particular legal significance to their relationship as business partners.

Your own estate planning should take account of all business relationships. It's important to review the legal status of all of your property and, where appropriate, take action to ensure that your intentions regarding the disposition of that property are carried out. Whether you plan to leave a large or small estate, your first step, as always, should be working with an experienced California estate planning attorney. Contact the Law Office of Scott C. Soady in San Diego today.

Distinguishing Between a Conservatorship and a Probate Estate

January 31, 2014

A conservatorship is a court-ordered relationship whereby one adult assumes responsibility for the finances and/or personal care of another adult. In California, conservatorships fall under the same law as probate estates, that is, the estates of deceased individuals. Indeed, the same branch of California's superior courts hear probate and conservatorship matters.

Once a person under a conservatorship dies, the conservatorship also terminates, and a separate probate estate must be established. This may lead to some confusion, as a recent decision by the California Court of Appeals illustrates. This case is discussed here for informational purposes only and should not be treated as a comprehensive statement of California law on the subject.

Borden v. Dise

This case began with two sisters, Bessie Moore and Catherine Bradley, both of whom are now deceased. In 2004, the Los Angeles Superior Court granted Moore's petition to establish a conservatorship for Bradley. Among other issues, Moore believed her sister had been defrauded out of some real property she owned. Once appointed conservator, Moore hired attorney Alex Borden to sue the persons responsible for the fraud.

The litigation succeeded in recovering the property. The court awarded Bradley's conservatorship estate over $300,000 in damages and costs. Unfortunately, the defendants never paid the judgment, which included approximately $60,000 in attorney's fees owed to Borden.

Bradley died in 2007, terminating her conservatorship. Borden advised Moore that she needed to file a final accounting with the probate court to formally close the conservatorship. Borden further advised that one of the properties belonging to the conservatorship estate was subject to a foreclosure proceeding. That made it imperative that someone open a probate estate in order to prevent the foreclosure.

Moore released Borden as the attorney for Bradley's conservatorship estate so that he could seek appointment as administrator of Bradley's probate estate. Borden had standing to open the estate as one of its creditors (as he was still owed the $60,000 in attorney's fees from the original litigation). The court made the appointment, and Borden proceeded to settle the probate estate by early 2010.

In the interim, Moore closed her late sister's conservatorship estate. Moore herself then passed away. Veronica Dise, acting as personal representative of Moore's estate, then filed objections to Borden's final account for the Bradley probate estate. Additional litigation followed.
The probate court ultimately approved Borden's account. The Court of Appeals affirmed that decision. Dise's objections proved meritless. It's worth noting, however, that the appeals court said that there was no reason that probate and conservatorship proceedings related to the same person could not take place at the same time. Dise argued Borden should not have been allowed to open Bradley's probate estate before her conservatorship estate was formally closed. The court said that was incorrect.

Avoiding Confusion

This type of confusion can be avoided through proper estate planning. A power of attorney can designate a person (or persons) to supervise a person's financial affairs when he or she is unable to do so. Similarly, a last will and testament can appoint a personal representative to take charge of a person's estate after they die. In tandem, these documents can make it clear to a probate court who you wish to manage your affairs. In many cases, you may wish to name the same person as a conservator and a personal representative. Whatever your situation, it's important you consult with an experienced California estate planning attorney who can advise you on all of your legal options. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

How Do You Define “One Acre of Land”?

January 26, 2014

When leaving real estate to someone under a trust or last will and testament, it's important to describe the property in precise enough detail so as to avoid conflicting interpretations. California courts try to construct wills and trusts strictly in conformance with the maker's wishes. The clearer your wishes, the easier it will be for a court to determine them—and, ideally, the less chance anyone will seek a judge's interpretation in the first place.

Smith v. Smith

Here's a recent example—a case from Alabama—where imprecise language in a will spurred litigation between family members. The deceased in this case is Billy Ernest Smith, a horse trainer, who married his second wife Elizabeth in 1996. Smith had two adult children from a prior marriage. When Smith died in 2009, his will gave Elizabeth Smith a life estate in his “house and the one acre of land on which same is situated.” This meant she could continue to live in the house until she left voluntarily, died or remarried. A separate paragraph in the will also allowed Elizabeth to have “her pick of all my horses.”

Smith's children and Elizabeth Smith disagreed over whether the life estate in the residence included the use of the barn and horse pens surrounding the house. The will itself only referred to “one acre of land,” but Smith's total property was much greater. Nor did the will define specific boundaries for the one acre. That meant a probate judge had to make a determination.
The court ultimately ruled the “one acre of land” included the barn, even though it resulted in an “odd-shaped parcel.” Based on all the available evidence, the probate judge concluded Billy Smith intended for his wife to have use of the barn for the horses he left her. The Alabama Court of Civil Appeals said the judge acted well within his discretion to make such a determination. The appeals court, however, did reverse the trial court's decision to award Elizabeth Smith the horse pens near the residence. While the trial court could define the “one acre” awarded in the will to include the barn, it could not do so to include the horse pens, because that would give her more property than her husband stated.

Always Be Clear

If you plan to dispose of real property through a will or trust, it's important you define the exact boundaries of any such gift, especially if you intend to divide a single property between multiple persons. A good practice is to include the language of any deed or other existing instrument that define a property's borders. Never leave it to your heirs—or a probate judge—to guess what you meant.

Estate planning is not simply a matter of signing a will. It's a process that involves taking inventory of exactly what you own. In undertaking this process, it's important to work with a qualified California estate planning attorney. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

Dealing With Litigation After Your Death

January 14, 2014

After your death, the executor of your estate is responsible for paying any valid claims made by your creditors. California probate law governs how and when such claims must be presented to your executor. For instance, if a lawsuit is pending against you at the time of your death, the other party may only continue the case if he or she presents a claim against your estate, your executor rejects that claim, and the other party then moves to substitute the executor as a party in the lawsuit. If these conditions are not met, the lawsuit dies with you.

There are cases where the issue is not so cut-and-dry, however. One recent decision by the California Court of Appeals demonstrates how a judgment against a deceased individual may survive even when the aggrieved party failed to make a proper claim against the estate. This case is not considered binding precedent by the California courts and is only discussed here to illustrate the underlying legal principles.

Hammer v. Hammer

Curiously, this case involves a claim against an estate over a dispute arising from the administration of another estate. The original parties were two brothers, Michael and Charles Hammer. Their mother, Carol Hammer, died in 2008. Carol Hammer owned a house in Burbank. In 2001, she transferred the house into a living trust she created as part of her estate plan. She named her sons as successor co-trustees and equal beneficiaries upon her death.
By the time of Carol Hammer's death, there was a $250,000 line of credit secured by the Burbank residence. The brothers had long fought over the state of their mother's finances. Charles Hammer accused his brother of improperly using some of the line of credit for his personal benefit, including $52,000 that Michael Hammer distributed to his own children after his mother's death. In response, Michael accused Charles of failing to account for another $100,000 from the line of credit.

Litigation ensued. Both brothers asked a probate court to sell the Burbank home and divide the proceeds equally among them, accounting for any money that one accused the other of misappropriating. While the lawsuit was pending, Charles Hammer died, leaving his son, Steven Hammer, to serve as executor of his estate.

Steven Hammer asked the court to substitute himself for his father in the lawsuit. His uncle did not object. The litigation continued, and in June 2012, the judge ordered the property sold and issued surcharges against both sides. The Estate of Charles Hammer was surcharged well over $150,000.

Steven Hammer then appealed, arguing the probate court lacked the authority surcharge his father's estate as his uncle failed to properly file a creditor's claim first. He also argued the judge's decision to order the surcharges was not supported by “substantial evidence.” The court of appeals rejected both arguments.

The problem, according to the appeals court, is that Steven Hammer expressly forfeited his own argument when he willingly participated in the litigation and failed to object to the lack of a creditor's claim before the probate court. In fact, the appeals court noted Steven Hammer “expressly maintained” that the trial judge had the authority to rule on his uncle's claims related to misuse of the line of credit on the Burbank residence. In general, a person cannot raise arguments on appeal that he failed to raise first before the trial court.

Appointing the Right Executor

Procedural issues aside, the appeals court said the trial court's substantive findings were supported by “substantial evidence.” So the Estate of Charles Hammer would likely still have been liable even if Steven Hammer had objected at the proper time. But the lesson here is that an executor or personal representative needs to be responsible when dealing with potential creditors. In determining your own estate planning needs, it's important you appoint an executor who is competent and trustworthy. An experienced California estate planning attorney can help you determine the best person for such an important role. Contact the Law Office of Scott C. Soady today in San Diego if you have any questions.

Complications May Arise When Providing “Equally” For Children

January 1, 2014

If you have multiple children, preparing your estate plan involves answering a not-so-simple question: How should I divide my estate among them? There may be cases where an equal division of assets is not your wish. You may be estranged from one child, operate a business with another, or simply favor some children over others. In those cases your estate plan can be tailored to reflect the circumstances. Especially if all of your children are adults, there is no legal requirement you treat them equally in your will or trust (or that you provide for them at all).

But even if you decide all of your children should inherit equally, that's not the end of the matter. An “equal” division of assets may sound simple on paper, but in practice that can prove difficult, particularly when your estate includes a large number of non-liquid assets like real estate. It's important your estate plan contemplates these execution issues, because failure to do so can lead to time-consuming and costly litigation between your children.

Four Executors, No Easy Resolution

A recent case from the State of Georgia illustrates the pitfalls of a poorly conceived estate plan. O.C. Hubert and his wife, Ruth Swann Hubert, left a substantial estate for their four children. The Huberts prepared a detailed estate planning involving various trusts. Mr. Hubert died in 1986; Mrs. Hubert lived another 20 years.

Mrs. Hubert's last will and testament named all four children as co-executors and expressly stated they were to “equalize” the distributions from her and her husband's estates. As you might expect, the children couldn't come to an agreement on how to accomplish this. Eventually, a judge came in to mediate between the four and produced a settlement agreement. Litigation then ensued over how to enforce the settlement.

A Georgia probate judge ultimately made that determination, and in the process he removed all four children as co-executors, citing the “eminent distrust” among them. The Georgia Court of Appeals affirmed that decision. The appeals court, however, rebuked the probate judge for taking it upon herself to depart from the terms of the settlement agreement. The agreement called for an independent accountant to audit the estate's books. The judge was then supposed to resolve any “open issues” identified by the audit before returning the matter to the accountant, who would then perform the final calculations to equalize the distributions to the children. Instead, the judge performed the calculations herself. While the appeals court sympathized with the lower court judge's desire to “bring an end to this protracted litigation between family members,” the terms of the settlement had to be honored.

Avoiding Disputes Before They Arise

The best way to avoid such protracted litigation is through careful estate planning. Two key lessons from the Hubert case are (1) be wary of appointing multiple executors and (2) always specify a procedure for distributing the estate and/or resolving disputes. In a situation where you plan to leave substantial assets to multiple children, it may be advisable to appoint a non-family member—or even a professional fiduciary—as your executor or trustee. As always, the first step should always be to engage an experienced California estate planning attorney who can present you with all of your options. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

Widow Ordered to Pay Restitution to Estate of Murdered Husband

December 26, 2013

Most of us don't make an estate plan on the assumption we'll die as the result of murder or other criminal behavior. But when such unexpected events do occur, an estate plan becomes even more valuable in assuring your interests are represented. Untimely death often means litigation where your estate becomes the central player.

No matter what your will or trust may provide, a person cannot inherit anything from your estate if he or she is responsible for killing you. Under California law, a person who “feloniously and intentionally” kills another is legally presumed to have predceased the victim, thereby eliminating any bequest under a will or trust. This is not limited to persons convicted of murder in a criminal trial; a probate judge may make a separate finding in a civil proceeding by a “preponderance of the evidence.” However, it should go without saying that a criminal conviction automatically negates a person's right to inherit from the victim. A recent California appeals decision, discussed here for illustrative purposes only, demonstrates how an estate may recover from the person responsible for its creation.

People v. Jessee

In 1998, Sandra Jessee paid her son and a friend $50,000 to murder her husband, Jack Jessee. In 2012, a Santa Ana jury convicted Sandra Jessee of conspiracy to commit murder and special circumstance first-degree murder. She is currently serving a life sentence without the possibility of parole.

Following her conviction, prosecutors asked the trial judge to order Jessee to pay restitution to her late husband's estate and other affected parties. The court agreed and ordered Jessee to pay the Estate of Jack Jessee the following amounts: $311,858, representing the proceeds of a life insurance policy Sandra Jessee collected on the life of her late husband; $131,291, representing one-half of Jack Jesse's retirement benefits paid to his widow; and $45,335, representing one-half of the proceeds from the sale of the couple's jointly owned home.

On appeal, Sandra Jessee argued these restitution orders were improper as the Estate of Jack Jessee was not a “direct victim” of her crimes. In July 2012, the California Supreme Court held in another case that “for purposes of restitution, the estate itself was not a 'direct victim' of the crime that caused the decedent's death.” That case involved a man convicted of a drunk-driving homicide. The trial court ordered restitution paid to the victim's estate, as he had no family or other identifiable heirs. The Supreme Court reversed the restitution award, finding that after a person has died “he or she does not incur, or continue to incur, personal economic loss subject to mandatory restitution” under California law.

In Sandra Jeessee's case, however, the Court of Appeals said the estate merely “stepped into the shoes to collect restitution owed” Jack Jessee that he could not personally collect owing to the fact his wife murdered him. Since the object of Sandra Jessee's conspiracy was to obtain possession of the life insurance proceeds and other assets rightfully belonging to her husband, his estate could legally recover said assets as restitution.

Always Have a Plan (and a Backup Plan)

Obviously, your estate plan can't account for the possibility of spousal homicide. But this case still emphasizes the importance of having an estate plan. In any circumstance where your death is the result of another person's misconduct, you'll want a personal representative you trust to be in charge of managing your estate's affairs—and if the need arises, one or more alternate personal representatives. Contact the Law Office of Scott C. Soady in San Diego if you have any questions.

Taking Care When Revoking or Amending a Living Trust

December 22, 2013

A living trust provides a flexible estate planning tool that can shield many assets from the probate process. Most living trusts used in estate planning are revocable, meaning the person (or persons) making the trust can modify or revoke the trust at any point during his or her lifetime. The trust document itself should specify a procedure for amending or revoking the trust; in the absence of such provisions, California law may apply.

Frelo v. Opfer

It's important to be clear in modifying or revoking a trust. A recent California appeals case provides one example of what can happen when there's ambiguity. This case is merely an illustration of one trust and should not be construed as a general statement of California law on the subject.

Roy and Margaret Opfer, a married couple, made a joint revocable trust in 1983. They were both the settlors and co-trustees. Upon the death of one partner, the other could continue to serve as sole trustee. When both died, the successor trustees and beneficiaries would be Jeffrey Opfer, their only common child, and Linsey Frelo, Margaret Opfer's daughter from a prior relationship.

In 2006, Roy Opfer established a second revocable trust for himself. He then transferred some real property from the 1983 trust to the 2006 trust. Unlike the 1983 trust, the 2006 trust named Jeffrey Opfer as sole successor trustee and beneficiary.

Roy Opfer died in 2008. Margaret Opfer, who had been diagnosed with Alzheimer's in 2007, died in 2009. After her death, Linsey Frelo sued her half-brother, alleging the transfer of properties from the 1983 trust—where she was a co-beneficiary—to the 2006 trust was illegal. Frelo argued that her mother was legally incapacitated and never consented to the transfers and, in any case, her stepfather never followed the procedure for amending the 1983 trust specified in that document.

A Superior Court judge tried the case in late 2011 and partially agreed with Frelo. Since the real properties at issue were community property under California law, the 1983 trust retained the 50% interest representing Margaret Opfer's share. Roy Opfer, however, was free to transfer his 50% to the new trust, and in doing so he did not violate the terms of the earlier trust.

The Court of Appeals, which agreed with the Superior Court's decision, said Frelo was reading the 1983 trust too narrowly. That document said it “may be revoked...with respect to community property...by an instrument in writing” signed by one spouse and delivered to the other. Frelo said her stepfather never delivered such an instrument to her mother, making his amendment invalid. The appeals court said that while the trust language provided one method of modifying the trust, it was not the only legal method. Under California law, Roy Opfer need only sign a written instrument to himself—as he was a co-trustee—for his amendment or revocation to be effective.

A trust can specify an exclusive method of revocation, but it must do so explicitly. In the case of the 1983 trust, the qualifier “may be revoked” made it non-exclusive in the eyes of the court. Had the clause read “shall be revoked,” then Frelo's argument might have prevailed.
As this case show, a single word can alter the meaning of a document, and in some cases prevent or initiate litigation. That's why it's important that you periodically review any trust or will you may have with an experienced San Diego estate planning attorney. Contact the Law Office of Scott C. Soady today if you have any questions.

New York Appeals Court Orders Estate to Return Artifact Stolen from German Museum

December 18, 2013

An important part of estate planning is taking stock of what you own. After your death, your executor will have to prepare an official inventory and account of your property. You can facilitate that process by keeping an updated list of your assets with your will, trust and other estate planning documents.

It's equally important to have some idea of what your property is worth. Under California law, most probate estates must have its assets valued by a probate referee, a person authorized by the state to conduct appraisals. (Trusts can also use a probate referee, but are not required to.) The probate referee’s appraisal then becomes the official valuation for probate and federal estate tax purposes.

As part of your estate planning, you might wish to engage private appraisers who specialize in real property or personal property like jewelry. These appraisals won't be official for later probate purposes, but they can give you an approximate value to help you determine how best to distribute your estate. If nothing else, the appraisal process will encourage you to take stock of your assets.

In The Matter of Riven Flamenbaum, Deceased

Once there is a probate estate, the courts will require a full and accurate accounting of all property owned by the deceased. Many probate disputes begin when an executor fails to include, or properly value, an estate asset. An unusual case recently decided by New York State's highest court helps illustrate this principle.

Riven Flamenbaum was a Holocaust survivor who later emigrated to New York. When he died in 2003, Hannah Flamenbaum, his daughter and executor, found a credit-card sized gold tablet among several items in his safe-deposit box. Riven Flamenbaum's will made no mention or bequest of the tablet, and Hannah Flamenbaum failed to specifically identify it in the estate accounting she made to the New York probate court.

The tablet, it turned out, was actually a 3,000-year-old artifact from the Middle Assyrian Empire, an ancient kingdom that ruled much of the Middle East. German archaeologists discovered the tablet during an expedition in the early 20th century. The tablet was later taken back to Germany and displayed at the Vorderasiatisches Museum Berlin from 1934 until the outbreak of the Second World War. When the war ended, the tablet and several other items were missing from the museum's inventory, most likely pilfered by the occupying Soviet army.

Somehow Riven Flamenbaum ended up with the tablet. The estate's attorney told the New York Daily News, “Family lore is that he traded a Russian soldier two packs of cigarettes for it.” In any case, Hannah Flamenbaum only identified the item as part of a “coin collection” in her probate inventory.

Hannah's brother, Israel Flamenbaum, filed a written objection in court to the accounting. He also notified the Vorderasiatisches Museum, which then filed a claim with the probate court to recover the tablet. Several years of litigation followed to establish legal ownership of the tablet. On November 14 of this year, the New York Court of Appeals ruled in favor of the museum.

Make Sure Your Property Is Really Yours
Aside from the obvious lesson of, “Don't lie to a probate court about an estate inventory,” another takeaway from this story is always make sure you have clear title to your property. The estate lost here because it could not prove Riven Flamenbaum ever acquired legal title to the tablet. Instead, the estate cited “family lore” and speculated that the Soviet government must have acquired title as a “spoil of war” and then transferred it to Flamenbaum. (Indeed, even if that were true, U.S. law does not permit the “pillaging of cultural artifacts” during wartime.)

While most of us aren't harboring stolen war booty, any valuable asset you own should be properly titled and documented for the benefit of your future executor and heirs. And if you're dealing with antiquities—that you legally acquired, of course—an appraisal by a qualified professional should also be part of your estate planning. As always, a California estate planning attorney can advise you on the best way to inventory and value your assets. Contact the Law Office of Scott C. Soady today with any questions.

The Dangers of Not Naming a Personal Representative for Your Estate

December 13, 2013

Naming an executor or personal representative is a critical element of preparing your last will and testament. If you die without leaving a will, California law authorizes a probate judge to appoint an “administrator” for your estate, who functions the same as an executor or personal representative. In theory, any person can petition the court for appointment as administrator of an estate where there's no will, but state law establishes a priority for such claims. That does not mean, however, that disputes don't arise, as one recent decision by the California Court of Appeals illustrates.

Tice v. Noroski
This case is discussed here for informational purposes only and should not be construed as legal advice. Ulrike Schenider died in 2009 without a will. Schneider's next-of-kin was her mother, Erika Schneider. Under California probate law, Erika Schneider heir to her daughter's estate. She would also be entitled to priority appointment as administrator of the estate except for the fact she was a resident of Germany. California, like most states, does not permit non-U.S. residents to serve as administrators or personal representatives of estates.

Recently, the California legislature amended the Probate Code to allow excluded foreign residents to nominate administrators to serve in their place, but unfortunately this rule did not apply retroactively to Ulrike Schneider's estate. Instead, two competition petitions were filed with the court seeking appointment.

The first petitioner was Daniel Noroski. He'd been Schneider's live-in boyfriend for several years. Noroski initially misled the court about the relationship, claiming he'd married Schenider in Germany. In fact, they were neither spouses nor registered domestic partners, either of which would have entitled Noroski to priority appointment status. As it was, he had no special claim to serve as Schneider's administrator.

Erika Schneider objected to Noroski's petition. Her attorney, Jim Travis Tice, filed his own petition for appointment as administrator. Like Noroski, he also had no priority right to the job. It was therefore up to the court to decide which petition to grant.

Noroski argued that the Orange County Public Administrator should be named as the administrator. Each California county has a public administrator who can serve as a personal representative of “last resort” when there is no will and no other qualified person is available. In this case, however, the Orange County Public Administrator was not required to serve and it declined to do so. The probate court, finding Noroski unreliable, granted Tice's petition and named him administrator. Noroski appealed, but the California Court of Appeals found no reason to reverse the lower court's decision.

Make Sure You Have a Personal Representative
Cases like this reiterate the importance of making a will and nominating a qualified personal representative. If you're contemplating naming a personal representative who might not reside in the United States (or California) in the future, always make sure you name one or more alternates. Don't let a probate judge decide who should be in charge of your affairs! Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

First or Second Wife? How Divorce and Remarriage Can Affect Estate Planning

December 5, 2013

Divorce complicates estate planning, especially when one or both former spouses decide to re-marry. If questions over community property linger from the first marriage, they can spill over into probate court should either party die. A recent case from the California Court of Appeal, discussed here for informational purposes only, shows just how complicated remarriage can be with respect to probate and estate planning.

Burwell v. Burwell

Gary Burwell purchased a term life insurance policy in 1996 on his own life, naming his then-wife, Becky Burwell, as the beneficiary. In 2004, Becky Burwell sued her husband for divorce. In serving her husband, a number of restraining orders took effect, including one preventing Gary Burwell from changing his life insurance policy or disposing of any property via will or trust. These orders were meant to conserve the Burwells' community property until their divorce became final.

In August 2005, the court granted the Burwells a “status only” divorce judgment. This legally dissolved the marriage without resolving other issues including the division of property. While the now-divorced Burwells continued to resolve those issues, Gary Burwell married his second wife, Cynthia Burwell, in 2006.

It was not until August 2008 that Gary and Becky Burwell resolved some, but not all, of their property issues. Two months later, Gary Burwell changed the beneficiary on his 1996 life insurance policy from Becky Burwell to Cynthia Burwell. Gary Burwell had omitted this insurance policy in the property disclosures made to his ex-wife as part of their divorce proceedings.

Gary Burwell committed suicide in April 2010. Becky Burwell filed a civil suit to prevent Cynthia Burwell from collecting on the 1996 life insurance policy. Becky Burwell argued she was entitled to the proceeds from the policy. She argued Gary Burwell's 2008 change of beneficiary violated the terms of the initial restraining order that in effect since the divorce case began. She also said her ex-husband's failure to disclose the policy remained active violated state divorce law. Finally, she said the policy remained “community property” under the partial 2008 settlement, so she was at least entitled to half of the proceeds.

The trial court agreed with Becky Burwell and ordered half of the insurance policy be paid out to her as her share of community property. The remaining half was assigned to Gary Burwell's estate, where Becky Burwell might have a claim as a creditor. Cynthia Burwell appealed this decision. Becky Burwell also appealed, claiming she was entitled to 100% of the insurance proceeds outright.

Ultimately, the court of appeal determined the trial court needed to do some more work. The factual record created by the trial court did not give the appeals court a clear “characterization” of the disputed insurance policy as either community property or the late Gary Burwell's separate property. The appeals court vacated the trial court's earlier decision declaring the policy community property and returned the case so that additional evidence could be submitted.

Dealing With Divorce and Remarriage

As with any major life event, divorce or remarriage should prompt a complete review of your California estate planning needs. An experienced estate planning attorney can advise you on the best way to amend your estate plans to ensure there is no confusion among current and former spouses. Contact the Law Office of Scott C. Soady in San Diego if you have any questions.

When Is a Surviving Spouse Responsible for a Deceased Spouse's Debts?

November 28, 2013

When a person dies, his or her estate is liable for any valid debts incurred before death. But what if there is no estate as such? In California, an estate need not be opened—or administered—if the deceased person's property passes to a spouse. Can the deceased person's creditors then demand the spouse pay off the debt?

Yes, actually. California law treats such situations as if the deceased person never died. As with any other debt incurred by a married individual, the creditors may claim (1) the community property belonging to both spouses and (2) any separate property of the deceased spouse, even though such property has now passed to the surviving spouse.

The California Court of Appeals recently addressed a case involving this principle. The case is discussed here for informational purposes only and should not be treated as a binding statement of law. As with any question of probate law, you should speak with an experienced California estate planning attorney.

Massoyan v. Otto
John Otto ran an illegal Ponzi scheme through a number of corporate alter egos. After the scheme finally collapsed in 2009, Otto committee suicide. Two weeks later, the investors Otto defrauded filed a class action complaint. The named defendants included the corporate alter egos and “the Estate of John Otto,” even though Otto's widow, Kathleen Otto, never opened an estate.

A civil jury ultimately found John Otto liable for over $114 million in damages to the class plaintiffs. The trial court entered the judgment against Kathleen Otto. While the jury found she was not a part of her husband's Ponzi scheme, under California probate law, she was personally liable for her husband's debt since there was no estate.

Kathleen Otto appealed the judgment, but the court of appeals found nothing wrong with the trial court's decision. As explained above, when a person dies and no estate is opened, the surviving spouse can be held personally liable up the amount of any community property or individual property inherited from the deceased spouse. In this case, the class plaintiffs established John Otto owed them a debt incurred by his fraud. Therefore, the trial court was correct in demanding Kathleen Otto pay the debt.

The appeals court further pointed out that, contrary to Kathleen Otto's claim, the creditors were not required to open an estate for John Otto and pursue their claims against it first. It is true that creditors may petition a court to open a probate estate to seek repayment of debts. However, the law applicable in this case is the exception to the general rule that a person's property must pass through probate. The whole point of California law is that property may pass from one spouse to another without the need for probate—and when that occurs, the creditors can then pursue their claims against the surviving spouse directly.

Again, it should be clear that creditors may not go after the individual assets of a surviving spouse, only community property and individual assets inherited from the deceased spouse. And this law applies regardless of whether the deceased spouse had a will. But even if you don't anticipate leaving your estate to anyone other than a spouse, you should still work with a qualified attorney who can advise you on the best way to protect your assets after you're gone. Contact the Law Office of Scott. C. Soady in San Diego if you have any questions.

How a Joint Tenancy Can Affect Your Estate

November 26, 2013

Joint tenancy is a form of property ownership that often factors into estate planning. If two people own a piece of real estate, for example, they can either be joint tenants or tenants in common. Under the latter, a tenancy in common, each person separately owns his or her share of the property. Thus, when one co-owner dies, his share passes through his estate like any other property. But under a joint tenancy, when a co-owner dies, his or her share simply ceases to exist; the surviving co-owner (or co-owners) acquire full title immediately upon the deceased co-owner's death. Nothing passes through a will, trust or probate process.

A joint tenancy requires four conditions, known as the “four unities”: (1) the co-owners acquire the property at the same time; (2) the co-owners share identical same title to the property; (3) each co-owner has an identical share of the property; and (4) the co-owners have an equal right to possess the property. If any of these conditions are not met, or cease to exist, there is no longer a joint tenancy, but a tenancy in common.

Recently, the California Court of Appeals addressed a dispute over a joint tenancy that was dissolved shortly before one of the co-tenants died. The surviving co-tenant argued the joint tenancy remained in force. The probate court and the Court of Appeals disagreed. The case is discussed here for informational purposes only.

Woods v. McBeth

Timothy Woods II and Sandra McBeth were siblings. They co-owned several properties as joint tenants. In 2008, Woods sued McBeth to acquire sole title to the properties. About two years later, they signed a Settlement Agreement to end the litigation. The agreement required McBeth to convey sole title to one of the properties in Los Angeles to Woods. In exchange, he would pay her $25,000 and transfer sole title to her over five other properties.

Woods died in late 2010 before the settlement was fully executed. His widow, acting as special administrator for the estate, filed a petition in probate court to enforce the Settlement Agreement. McBeth objected. She argued that she and her brother remained joint tenants over the Los Angeles property at the time of his death. Therefore, as surviving co-tenant, she automatically acquired sole title.

The probate court rejected this argument. It held that although Woods failed to complete a deed formally disclaiming his interest in the Los Angeles property before his death, the fact the two siblings signed a Settlement Agreement stating their intent to end the joint tenancy was, in combination with other actions, enough to dissolve said joint tenancy. McBeth argued the joint tenancy should continue until her brother fulfilled the conditions of the agreement. But as the Court of Appeals noted in its decision affirming the probate court, that's an issue of contract law regarding the enforceability of the settlement. It had nothing to do with determining whether the joint tenancy existed.

While this was an unusual case, it shows the importance of clearly establishing (and dissolving) a joint tenancy to avoid postmortem confusion. As with any decision that may affect your estate, you should always consult with an experienced San Diego estate planning attorney before acquiring new property as a joint tenant. Contact the Law Office of Scott C. Soady today if you have any questions.

Understanding the Implications of Disclaiming an Inheritance

November 21, 2013

In preparing an estate plan, you need to consider not just the intended beneficiaries of your will or trust, but alternates in the event your first choices either die before you or reject their inheritance. Yes, there are many situations where a beneficiary might disclaim a gift made under a will or trust. Often this has to do with the tax implications of receiving an inheritance. But whatever the reason, it's important to understand what happens if you leave part of your estate to a person who then turns around and says, “No thanks!”

Wait v. Wait
The California Court of Appeals recently considered a case dealing with this subject. The underlying dispute involved two brothers with different interpretations of their late mother's trust. Please note, the case is discussed here for informational purposes only and should not be read as a complete statement regarding California law.

Beverly June Wait made a living trust in 2007. Wait was unmarried with two adult children, Stephen and Rexford Wait. The trust named Stephen Wait as successor trustee upon Beverly Wait's death, and directed her estate be divided 65% to Stephen and 35% to Rexford.

Beverly Wait died in June 2010. In October, Rexford Wait informed his brother, now trustee, that he wished to file an irrevocable disclaimer of his interest in their mother's trust. Rexford Wait intended his 35% share to go to his two daughters, Geena Wait and Kierstin Ross, instead.

The next year, after Rexford Wait signed his disclaimer, Stephen Wait asked a probate court in Alameda County for instructions on how to distribute the 35% left to Rexford Wait in the trust. Rexford Wait assumed his daughters would receive the full 35%. Stephen Wait disagreed. He maintained that his nieces were only entitled to 17.5%. Both the Superior Court and the Court of Appeals agreed.

Death In a Purely Legal Sense

Under California law, if a trust makes no specific provision for handling a disclaimer, then the disclaimed interest must be distributed as if the person making the disclaimer predeceased the settlor. In plain English, once Rexford Wait signed the disclaimer, he's considered dead for purposes of distributing his mother's trust.

In this case, Beverly Wait's trust said that if one of her sons died before her, his share would be divided equally between the deceased son's children and the other, living son. Thus, the 35% share Rexford Wait disclaimed must be divided into two 17.5% shares, one for Stephen Wait and one to be split equally between Geena Wait and Kierstin Ross. This was not what Rexford Wait intended to happen, but that was irrelevant, as he executed a valid—and irrevocable—disclaimer.

Had Beverly Wait wanted to, she could have written her trust to preserve the full 35% share in the event of her son's disclaimer and avoid this unnecessary litigation. This is why it's important to work with a California estate planning attorney who can advise you, and your family members, of the potential issues that might arise in administering a trust or estate. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.

Omitting a Residuary Clause From Your Will Makes No Sense

November 16, 2013

A last will and testament is an important legal document that provides for the distribution of your property after your death. A will is not something to be prepared casually or haphazardly. You should always work with a qualified San Diego estate planning attorney before preparing or revising a will. Even if you think you understand the requirements of a will, an estate planning attorney can ensure there are no drafting mistakes that may lead to confusion—and litigation—down the line.

Banner v. Vandeford
Consider a recent decision by the Supreme Court of Georgia. Three adult siblings argued over the meaning of their father's will. John Huscusson signed his will in 2012. The document was prepared by an attorney and executed in full compliance with Georgia law (which is similar to the law of California). There was no question the will was valid.

But there was an ambiguity due to the omission of a standard clause. A will generally makes two types of gifts: First, specific bequests of property to named individuals; second, a residuary clause (or residue clause) that disposes of any property remaining in the estate. Huscusson's will made specific bequests but contained no residuary clause.

In Georgia, as in California and most states, if a will contains no residue clause, then the residuary estate is distributed according to the state's intestacy law—that is, the automatic distribution of property to legal heirs in the absence of any valid will directing otherwise. Since Huscusson left three children, they were his heirs-at-law and the residuary estate should then be divided equally between them.

One of Huscusson's daughters, Tina Banner, disagreed with this outcome. Banner was named executor in her father's will. She argued Huscusson intended to disinherit his other two children and leave his entire estate to her. Banner pointed to the fact that Huscusson 's will made specific bequests of $10 each to Banner's two sisters, with the admonition he was “extremely disappointed” in them. He made no specific gift (or expression of disappointment) to Banner.

But as the Georgia Supreme Court said, the terms of the will were “plain and unambiguous and must control .” And there was no language expressly disinheriting any of the three children. More importantly, there was no residuary clause naming Banner as sole beneficiary. “[A]lthough it may be unusual for a testator to omit a residue clause,” Georgia Chief Justice Hugh P. Thompson wrote, ”this Court cannot supply one. ” The Supreme Court therefore affirmed a lower court's decision awarding the residuary estate equally to the three children.

Always Include a Residuary Clause

There's little point in going to the trouble of preparing a will if you don't include residuary clause. It's impractical to make specific bequests for all property that you own, both now and in the future. And if the intent of your will is to ensure an equitable division of property among certain heirs, the absence of a residuary clause may defeat that purpose. It's only common sense that your will should reflect a complete distribution of your property. Please contact the Law Office of Scott C. Soady today in San Diego if you have any questions.

Joint Accounts Can Help Avoid Probate, If Registered Correctly

November 9, 2013

One way to bypass the probate process is to title your assets jointly with another person. For example, you might register your bank account in the name of you and your son. When you die, your son would automatically assume sole ownership of the bank account without having to go through probate. The joint account would not be considered a probate asset passing under your estate.

It's important to make sure, however, that any asset you intend to hold with another person is properly titled and registered. Informal agreements between family members are not sufficient to prove joint ownership in many cases. A recent decision from the California Court of Appeals, discussed here for informational purposes only, helps illustrate this point.

Mahmood v. Bank of America, N.A.

Aslam Mahmood and his brother Masood Mahmood held a number of accounts with Bank of America. The brothers held some joint accounts while maintaining others in their individual names. In 2006, Aslam Mahmood opened a new certificate of deposit account via telephone.

Banks typically require all account holders to complete a signature card, which identifies the accounts as individual or joint and lists all account owners. Since Aslam Mahmood opened this particular account over the telephone, no signature card was filed. The bank therefore registered the account as solely in the name of Aslam Mahmood.

Aslam Mahmood died in 2009 without leaving a will. Masood Mahmood requested Bank of America pay him the proceeds of the certificate of deposit account opened by his brother three years earlier. Masood Mahmood claimed he was “a party to all financial transactions regarding” his brother and that they always intended their accounts to be either joint or payable upon death to the surviving brother.

Bank of America rejected Mahmood's claims. He, in turn, sued the bank in Los Angeles County Superior Court. The court ultimately dismissed the lawsuit. Mahmood appealed.

The California Court of Appeals sided with the trial court and Bank of America. It was an open-and-shut case as far as the appeals court was concerned. There was no dispute that the account at issue was registered in the sole name of Aslam Mahmood. Masood Mahmood presented no evidence disputing this fact. Whether or not the brothers intended the account to be joint was irrelevant.

Lessons for Your Own Estate Planning
The obvious lesson from this case is that it's essential to establish joint ownership of a bank account, or any asset, in writing and preferably at the time the account is opened. You should look at joint registration (or re-registration) as part of your overall estate planning. There are many issues to consider. For instance, while jointly titled assets may not pass as part of your probate estate, they may still be subject to federal estate taxes. That's why you should always work with an experienced San Diego estate planning attorney in determining the best course of action for your assets. Contact the Law Office of Scott C. Soady today if you have any questions.

Understanding the Consequences of a “No-Contest” Clause In Your Will or Trust

October 25, 2013

The whole point of making a will or trust is to prevent disputes over the disposition of your estate after your death. One way to protect your estate plan is to include a no-contest provision in your trust or will. Basically, a no-contest provision states that if a person tries to challenge any part of your trust or will in court—and fails—he or she forfeits any inheritance from your estate. No-contest provisions have long been recognized by courts, and in 2010, the California legislature expressly recognized such provisions in the state's Probate Code.

A recent California Court of Appeal decision demonstrates how this works in practice. In this case, the court upheld a no-contest clause. Please note this case is discussed for illustrative purposes only and should not be construed as a binding statement of California law.

A Son Tries to Change His Mother's Trust (and Loses)
Edward and Nancy Bellezzo executed a trust in 1995. Upon Edward Bellezzo's death the following year, the trust was divided into two sub-trusts. The first trust was irrevocable, while the second remained under Nancy Bellezzo's control until her death in 2007. Nancy Bellezzo was free to amend or revoke the second sub-trust during this period.

Upon Nancy Bellezzo's death, the remaining trust assets were to be divided equally between her two sons, Edward and Donald Bellezzo. The trust also contained a no-contest provision stating a beneficiary would forfeit his share if he should “contest in any court the validity of this trust” or attempt to nullify any of its provisions. In such a case, the contesting beneficiary would be treated as if he (and all of his descendants) had predeceased Nancy Bellezzo.

Donald Bellezzo filed a petition in 2008 asking a probate court to rule on the validity of what he claimed was an amendment to his mother's sub-trust that she purportedly signed in 2000. The amendment said Donald Bellezzo would receive $100,000 from the trust upfront, with any remaining assets divided equally between him and his brother. The court ultimately ruled against Donald Bellezzo's petition, finding he could not prove the amendment was authentic.

Edward Bellezzo then filed his own petition seeking to enforce the no-contest clause. He argued his brother attempted to “change a material term of the trust” and, in doing so, mounted a failed contest. The probate court agreed. It found Donald Bellezzo “did not have probable cause to believe the alleged amendment was authentic,” and therefore enforcement of the no-contest clause was appropriate.

The court of appeal agreed with the probate judge's decision. It noted that Nancy Bellezzo's trust included a clear no-contest provision and that Donald Bellezzo's attempt to pass off a “non-genuine amendment” altering the trust's distribution in his favor was clearly a “contest” as defined in the Probate Code. The appeals court further rejected a number of other arguments Donald Bellezzo offered to save his now-forfeited inheritance.

An experienced California estate planning attorney can advise you on whether or not to include a no-contest clause in your will or trust. While such clauses are standard, you should always ensure that your will or trust reflects your precise wishes. Contact the Law Office of Scott C. Soady today in San Diego if you have any questions.

California Appeals Court Clarifies Burden of Proof In Will Contest

October 11, 2013

It's called a last will and testament because the document is meant to serve as a final disposition of property upon death. When a person makes a new last will and testament, he or she thereby revokes of any previous testamentary instrument. But what happens if a person dies and it's not clear whether or not he's revoked his will? The California Court of Appeals recently addressed this situation in a case arising from a family tragedy.

Satish Trikha died in 2009. He was in the midst of a nasty divorce from his wife, Suchitra Trikha. The couple's problems began in 2008, when Suchitra Trikha discovered her husband had resumed contact with two of his children from a prior relationship. Suchitra Trikha believed these other children were a “black mark” on her traditional Indian family. At one point, she offered to end divorce proceedings if Satish Trikha formally disinherited the two older children and placed his assets in a trust for the benefit of their own two children.

Satish Trikha checked into a Yorba Linda hotel on October 25, 2009. A hotel clerk found his dead body three days later. The coroner's inventory of Trikha's personal items recovered the room did not include either a suicide note or a will. Suchitra Trikha and her son, Neel Trikha, subsequently searched Satish's car and later testified there were no legal documents inside.

After Satish Trikha's funeral, his attorney produced a copy of a will signed just three weeks before the suicide. The original will was never found. The will made provisions for all four of Satish Trikha's children. Suchitra Trikha's contested the will's probate. She maintained her husband destroyed the original. The probate court agreed and upheld the contest.

Overcoming Legal Presumptions
Satish Trikha, Jr., one of the children from his father's prior relationship, appealed the probate court's decision. The legal question was whether the trial court incorrectly applied California law governing the burden of proof in this case. This involves two distinct issues. First, there is a presumption that a will is destroyed if (1) it was last in the possession of the person who made it; (2) that person was competent until the moment of death; and (3) neither the original nor duplicate original can be found. If all three of these factors are present, there is a legal presumption that the will was destroyed “with intent to revoke it.”

This is only a starting point for the court's analysis, however. Parties to a will contest may introduce evidence rebutting this presumption. And, in fact, the appeals court here found an “abundance” of such evidence. The testimony in probate court showed Satish Trikha “repeatedly expressed his desire to provide for his older children in his will,” and that he would not disinherit them even at the cost of his marriage. Furthermore, Suchitra Trikha had motive and opportunity to destroy the will herself.

That's not to say she did destroy the will. The appeals court was careful to explain that circumstantial evidence implicating Suchitra Trikha only rebutted the presumption that Satish Trikha destroyed his own will. This leads to the second issue, which the appeals court returned to the probate court for further consideration—whether Satish Trikha, Jr., can prove Suchitra Trikha destroyed the will.

Protecting Your Will
If you intend to revoke a previously signed will, it is best to consult with an experienced estate planning attorney who can draft a new will that will declare your old will revoked. If you have have any questions, contact San Diego estate planning attorney Scott C. Soady today.

“She's Just Like a Daughter to Me!” But Is That How a Probate Court Will See It?

October 4, 2013

Under California probate law, adopted children are treated no differently than biological children. So, for example, if a person dies without a will, his adopted and natural children are afforded the same status as heirs under California's intestacy law. But that presumes the adopted children are, in fact, adopted in accordance with the law of California or another jurisdiction. What about children who are informally—i.e., not legally—adopted?

Many common law jurisdictions recognize “equitable adoption.” This means that if a person fulfills the role of a child, and the “parent” reciprocates, the courts may recognize a contractual relationship exists for the purposes of establishing intestate succession. As recognized by California courts, equitable adoption establishes the child's right to receive property from the parent if he or she dies without a will.

It's important to note that equitable adoption has no affect on estates where there is a valid will. Nor does it affect trusts. The only application of equitable adoption is to estates subject to intestacy law.

The Limits of Equitable Adoption
In 2002, the California Court of Appeal addressed the limits of equitable adoption doctrine. The case involved a woman, Nanette Leach, whose mother divorced and remarried. Leach's step-father attempted to initiate adoption proceedings but was thwarted when her biological father could not be located. Leach declined to complete formal adoption proceedings even after she reached majority and no longer needed her biological father's consent.

When Leach's step-grandmother—that is, the mother of her step-father—died without a will, Leach asked the probate court to declare her an heir under the equitable adoption doctrine. (Leach's step-father died years earlier.) The probate judge, and later the appeals court, declined to do so. In its opinion, the appeals court noted that equitable adoption could only establish a contractual right to receive property from the “parent”; it created no right of inheritance through the parent. Any contractual agreement between Leach and her step-father could not extend to third parties.

Different Rules In Different States
Equitable adoption is a common law principle, meaning it is established and maintained by judicial decisions. That means that individual state legislatures can modify or eliminate equitable adoption if they so choose. This was the case in Utah, where that state's Supreme Court recently held equitable adoption—which the courts there had recognized since the 1960s—conflicted with the language of the Utah Probate Code, adopted by the legislature in the 1970s.

Basically, the Utah Supreme Court said the Probate Code defined “child” in such a way as to make any application of equitable adoption untenable. The Court added that equitable adoption doctrine, at least as defined, in Utah, was itself “vague” and “boundary-less.” The justices decided it was easier to simply “jettison” the whole thing.

In contrast to Utah, the California legislature wrote into its probate code a statement that “Nothing in this chapter affects or limits application of the judicial doctrine of equitable adoption for the benefit of the child or the child's issue.” So the courts may continue to enforce equitable adoption as the facts warrant. But keep in mind, if you die without a will and leave property outside of California, such foreign property may be subject to that state's intestacy law.

Ultimately, the best way to avoid legal wrangling over equitable adoption is to prepare a valid will (or trust) that clearly spells out who will inherit your property. If you want to treat someone as a child, even if they're not as a matter of law, that's your decision. Contact San Diego estate planning attorney Scott C. Soady today if you have any questions.

Unsolved Murder Prompts Litigation Over Life Insurance Proceeds

September 27, 2013

A four-year-old unsolved murder in the Harbor Gateway neighborhood of Los Angeles created a legal headache for the victim's life insurance company. The victim's husband was the only named beneficiary of her life insurance policy, but he was also an active suspect in her murder. Since the victim left no will or other instructions regarding her affairs, the insurance company was forced to ask the courts to intervene.

Frank and Rosamaria Rees each held life insurance policies for $150,000 from Farmers New World Life Insurance Company. Rosamaria Rees' policy insured her life and named her husband as sole primary beneficiary. She did not name any contingent beneficiaries. If Frank Rees predeceased his wife, then her life insurance proceeds would be payable to her estate.

On September 18, 2009, Rosamaria Rees was walking to her car parked on the street outside of her home. According to the Los Angeles Police Department, “an unknown suspect or suspects approached on foot and shot her,” killing her instantly. The LAPD has never made an arrest in the case.

Shortly after his wife's death, Frank Rees filed a claim on the Farmers insurance policy. A Farmers claims manager contacted a detective at the LAPD, who reported that “no one has been ruled out” as a suspect in Rosamaria Rees' murder, including her husband. Based on this information, Farmers informed Frank Rees it would not pay out his claim until the police concluded their investigation.

Frank Rees continued to push his claim with Farmers for several more months. By July 2010, he'd retained counsel, who advised Farmers to inform him of whether or not his client had actually been accused of killing his wife. At this point, Farmers decided to seek judicial intervention through what's known as an interpleader action.

Insurance Company Caught in the Middle

Rosamaria Rees did not have a will. Nor did she name any contingent beneficiaries for her life insurance policy other than her estate. Since she had no children, her next-of-kin was her mother, who would inherit her entire estate under California intestacy law should her husband be disinherited.

When an insurance company is unsure who to pay a claim to, it may file an interpleader action. This means that while the insurance company initiates a lawsuit, it is not a party to the suit. Rather, the interpleader forces the actual parties to the dispute to litigate their claims against one another. In this case, those parties were Frank Rees and Rosamaria Rees' mother. (Had Rosamaria Rees left a will and named an executor, that person would have been the second party.)

Rosamaria Rees' mother never contested the litigation. The trial court entered default judgment against her and in favor of Frank Rees. The insurance proceeds, which Farmers paid to the court when it initiated the interpleader action, were released to him.

The California Court of Appeals was later called upon to settle a secondary issue. As a third party that incurred legal fees and costs, Farmers requested and received about $8,000 from the amount previously paid over to the court. Frank Rees objected to this reimbursement, arguing the life insurance proceeds were never “in dispute,” since his mother-in-law never appeared in court. The Court of Appeals overruled the objection, noting that had Frank killed his wife—an issue that “could have been litigated in the interpleader proceeding”--he would not have been legally entitled to collect the life insurance benefits. Therefore, the funds were “in dispute,” and Farmers acted appropriately in filing an interpleader action, for which it was entitled to reasonable attorney's fees and costs.

Preparing for Contingencies

While it was the unsolved murder that prompted the disputed life insurance claim, the absence of a will, or even contingent beneficiaries on the policy, only frustrated matters further. An executor or personal representative is someone who can act in your estate's interest. It's important to not just name one person, but also one or more alternates who can act if your first choice is unavailable or legally compromised. The same holds true for potential beneficiaries of your estate. These are all issues you should address in consultation with an experienced California estate planning attorney. Contact the Law Office of Scott C. Soady in San Diego if you have any questions.

Court Considers Challenge to Reclusive Heiress' Will

September 17, 2013

A New York City jury may soon determine the fate of an estate valued at over $300 million. The deceased, Huguette Clark, left a last will and testament, but her relatives have contested the document as fraudulent. At least 19 distant relatives—most of whom never even met Clark—could share in the estate if the New York County Surrogate's Court determines her will is invalid. Recent news reports indicate the estate may settle with the would-be heirs to avoid a trial.

Clark died in May 2011 at the age of 104. Clark's father, a former U.S. senator from Montana, left her an immense inheritance from his copper mining fortune. Huguette Clark's estate included mansions in Santa Barbara and Connecticut as well as a 10,000 square-foot apartment in Manhattan. But Clark herself was rarely seen by anyone. A 2012 report by MSNBC documented Clark's isolation and the mystery surrounding her final years.

Clark's distant relatives long believed she was under the undue influence of her financial advisors, particularly her attorney. Clark's last will and testament, dated 2009, left the bulk of her estate, including her California property, to a private foundation established under the will. Clark also left over $15 million to her longtime nurse, and made gifts to her attorney and other employees, but left nothing to any of her distant relatives. Before her death, Clark made gifts totaling more than $44 million to her nurse, attorney and others; the executor of Clark's will now contends those gifts were coerced and has asked the court to order repayment of all funds back to the estate.

Clark had no spouse, children or surviving siblings. Indeed, there were no surviving relatives on her mother's side. But there were at least 20 surviving descendants from her father's first marriage, mostly grandnephews and grandnieces. According to MSNBC, 14 of these survivors never met or spoke to Clark, and none could recall seeing her in person in the past 50 years. Legally, however, you don't have to a know a relative to inherit from them. If the Surrogate's Court throws out the will, all would inherit a share of Clark's estate under New York intestacy law.

Determining “Interested” Persons

In making your own will or trust as part of a California estate plan, it's a good idea to make (and update, as necessary) a family tree. Even if you plan to exclude most relatives from your estate, it's important to know which of them might have standing as an interested person in your estate. An interested person includes anyone you name as a beneficiary in your will, as well as any person that might inherit if your will is declared invalid.

If you have a spouse or children, then your list of interested persons usually begins and ends with them. If, like Huguette Clark, you had no living spouse, children or siblings, things can get infinitely more complicated. You'll have to keep track of distant cousins. It's especially important to note what relatives are still living. A person who dies before you generally cannot inherit from your estate.

Understanding the laws governing intestate succession will help strengthen your own estate planning. To speak with an experienced California estate planning attorney, contact the Law Office of Scott C. Soady in San Diego today.

Prosecutors Allege Will Forgeries Led to Fraud Against Estates

August 30, 2013

Under the probate laws of California and every other state, if a person fails to make an estate plan or leave a last will and testament, his or her estate will automatically pass to the next-of-kin, as defined in law. That may lead you to think of estate planning as unnecessary. After all, why bother when I would just leave my estate to my next-of-kin anyways? Unfortunately, there are cases where unscrupulous individuals take it upon themselves to “plan” your estate without your knowledge or consent.

IRS, U.S. Attorney Pursue Ohio Properties
Recently, prosecutors in Ohio and Pennsylvania uncovered evidence of forged wills and other estate planning documents used to steal the estates of wealthy decedents. The Ohio case involves the estate of the late Martin Fewlas, a Toledo real estate investor who died leaving more than $2.2 million in assets. Fewlas died in 2010 while residing in one half of a Toledo duplex that he owned. The other half was rented by Margaret McKnight; her boyfriend, Kurt Mallory; and his father, Gary Mallory.
In September 2010, McKnight filed Fewlas's purported last will and testament, which named her as the executor and sole beneficiary of the estate. Both Mallorys were listed as witnesses. Although Fewlas was a widower at the time of his death, court records identified at least three living relatives who would have inherited the estate absent a valid will. Nevertheless, the Lucas County Probate Court admitted the will and declared the estate closed in 2012.

In April of this year, Gary Mallory told the Internal Revenue Service that the Fewlas will was, in fact, a forgery. He said McKnight and his son drew up the will about a week after Fewlas died and that he personally forged the dead man's signature. The IRS later conducted its own forensic examination of the will and concurred that Fewlas's signature had been forged.

On April 26, the United States Attorney for the Northern District of Ohio filed civil forfeiture proceedings against four properties, including the duplex, purchased or inherited by McKnight from the proceeds of the Fewlas estate. A separate criminal investigation remains pending. According to the forfeiture petition, McKnight has fraudulently transferred over $2 million in assets from the Fewlas estate to her personal accounts.

Pittsburgh-area Woman Accused of Stealing Neighbor's House
A similar story is unfolding in McKeesport, Pennsylvania, just outside of Pittsburgh. On August 2, police arrested Mary Mechelli on charges that she forged the last will and testament of her deceased neighbor, Margaret Dorn. According to the Allegheny County District Attorney, Mechelli forged a number of estate planning documents while Dorn was hospitalized for several weeks prior to her death in May 2010. Mechelli allegedly forged $3,800 in checks from Dorn's account before her death, obtained a life insurance policy on Dorn, and assumed ownership of Dorn's house after her death. A notary public later testified before a grand jury that she did not properly witness the signatures on Dorn's alleged will and other estate planning documents.

It's important to remember that neither Mary Mechelli nor Margaret McKnight have been convicted of any crime and everyone is presumed innocent until proven guilty. But these stories should serve as a potent reminder that estate planning is not something to be taken lightly. It's up to you to take charge of your assets and make sure your wishes are carried out after your death. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions or concerns.

Court Rejects Late Challenge to Previously Admitted Will

August 29, 2013

Jose Marbaix died in March 2011. Marbaix, who was in her 80s, apparently had no living heirs, and her estate plan apparently consisted of a handwritten—or holographic—will found after her death by the Los Angeles County Public Administrator's office. Every California county has a public administrator to oversee estates where the deceased has no known heirs and there is no executor named. Accordingly, the Los Angeles Public Administrator filed Marbaix's holographic will and asked a probate judge to admit it to probate.

Marbaix's will left a “significant” portion of her estate to a variety of charitable organizations, including the American Lung Association, the ASPCA, Paralyzed Veterans of America and the World Wildlife Fund. After the court admitted Marbaix's will to probate on October 14, 2011, these organizations filed a petition for an official determination of the “persons entitled to distribution of the decedent's estate.” When such a petition is filed, any “interested person” in the estate—which would include any heirs or beneficiaries named in the will—may file a statement in support of, or opposition to, the request for distribution.

In this case, a man named Vincent Bagby appeared with an unusual claim. In July 2012, he filed a statement with the court objecting to the proposed charitable distributions and the probate of Marbaix's will. Bagby, whose relationship to Marbaix was not established in the court record, said that Marbaix had signed a will in 2009—the probated will was dated 2006—that left the bulk of her estate to him. Bagby produced this alleged superseding will and asked it be admitted to probate in place of the 2006 will.

Probate Courts Strictly Enforce Time Limits

Even if Bagby's claims were true, he made them too late for purposes of California law. The probate court, and later the court of appeals, dismissed Bagby's objections as untimely. Once a will is admitted to probate, a person seeking to revoke that probate has 120 days to petition the court. Bagby's petition came nine months later, more than twice the statute of limitations. The only exceptions to the 120-day limit are if the court incorrectly determined the person who made the will is actually dead—which was not the case here—or if there was “extrinsic fraud” in obtaining the probate.

“Extrinsic fraud” means a party is deprived of its day in court because of some other party's misconduct. But here, Bagby never presented any evidence of such third party misconduct. He also presented contradicting claims to the probate and appeals courts. At one point, he said he had only “recently” learned of Marbaix's death before filing his objections. Later, he said he was not informed of her death because he was serving a military tour in Iraq (a story that was inconsistent, according to the appeals court). In any event, Bagby never presented any evidence that the public administrator, acting as Marbaix's personal representative, failed to follow proper procedures.

Don't Represent Yourself

The Marbaix case is discussed here for illustrative purposes only and should not be treated as a binding statement of California law. One notable feature of this case is that Vincent Bagby represented himself in court, which is rarely a good idea. Whether you're making a will or a family member objecting to a will, it's essential to work with a qualified California estate planning attorney who can ensure you follow all legal requirements. Contact the Law Office of Scott C. Soady today at 1-877-435-7411.

Can “Tony Soprano” Instruct His Children From Beyond the Grave?

July 26, 2013

James Gandolfini, the film and television actor best known for his starring role in the HBO series The Sopranos, died on June 19 while vacationing in Italy. The New York Post reported on July 3 that Gandolfini, a New York City resident, left an estate valued at nearly $70 million. According to the terms of Gandolfini's last will and testament, filed in New York County Surrogate's Court, most of the late actor's estate will go to his two children.

Gandolfini's will identified two principal real properties, a New York City condominium and a house in Italy. Gandolfini directed his executors to grant the first option to purchase his New York condo to a trust created for the benefit of his son. His Italian home, and the surrounding land, will be held in trust until his children reach 25 years of age, at which point they will each receive a 50% interest in the property.

Precatory Language & Beneficiaries
The Post noted that Gandolfini's will stated it was his “hope and desire” that his children keep his Italian property “in our family for as long as possible.” But is such a statement legally binding? Generally, the answer is no. When a person makes a will and includes statements regarding hopes or intentions, it is called precatory language. Such language does not impose a legal duty or create a binding obligation.

As the California Supreme Court noted in a 1941 decision, the courts should treat language as precatory when it is directed at the intended recipients of a person's estate rather than the executor, who acts as a fiduciary:

It has been stated frequently that when words of recommendation, request and the like are used in direct reference to the estate, they are prima facie testamentary and imperative, and not precatory. While the desire of a testator for the disposal of his estate is a mere request when addressed to his devisee, it is to be construed as a command when addressed to his executor. All expressions indicative of his wish or will are commands.

In the case of Gandolfini's estate, his will directs his Italian property placed in trust until each child turns 25. That is a command that his executors (and trustees) they must follow. His wishes regarding what his children do after they turn 25 and receive a final distribution of the property from the trust is precatory; the will imposes no legal duty on them to keep the property once it is free of trust.

Precatory Language & Charities
Precatory language is commonly used in wills with respect to specific bequests to individuals or charitable organizations. For example, Gandolfini's will made a gift of $50,000 to a friend “with the hope that he will use it for the benefit of his son.” This is clearly precatory language; the friend need not prove to the executors or the Surrogate's Court that the gift is used as Gandolfini wished.

When making a gift to charity is common for a will to state the bequest should be used “for the general charitable purposes of the organization.” There may be some cases where a bequest is made to benefit a specific program administered by the charity, such as a scholarship fund. Many large charities employ planned giving officers who can work with you and your estate planning attorney to devise appropriate language. If you have any questions regarding precatory language and how it can affect your own will, please contact the Law Office of Scott C. Soady anytime.

Brothers Fight in Court When Mother's Will Fails to Name an Executor

July 24, 2013

A key element of a well-drafted last will and testament is the appointment of an executor to manage the affairs of your estate. If you fail to name an executor, or the person or persons you name are unable to serve, a probate court must intervene and appoint a person to run your estate based on the provisions of California law. This can lead to prolonged litigation between interested who may compete for the right to manage your estate.

A recent California appeals case highlights the dangers of failing to name an executor in your will. This case is discussed here purely for informational purposes and should not be treated as legal advice or a binding statement of California law. The facts are unique to this case.

Estelle Manwill died in March 2011. Shortly before her death she executed a holographic (hand-written) will in the presence of several witnesses. The will divided Manwill's real property among her five children. Unfortunately, Manwill failed to name an executor in her will. Two of her sons, David G. Manwill and Mark Manwill, each filed petitions to be named personal representative of their mother's estate. (In this context, executor and personal representative both refer to a person who manages an estate, with the former referring to a person specifically named in a last will and testament.) Their siblings objected.

Under California law, each of the children had equal priority to claim appointment as personal representative. Since the children could not agree on whether David or Mark Manwill should serve, the probate court named a professional fiduciary to temporarily serve as special administrator for the estate. The brothers continued to fight one another, and the special administrator, in probate court on various issues related to their mother's estate.

David G. Manwill became ill during the course of the litigation. He signed a power of attorney naming his son, David J. Manwill, as agent. David J. Manwill then purported to act on his father's behalf in probate court. The court rejected this effort, as a “power of attorney” does not confer upon a non-lawyer the authority to act as an attorney-at-law.

A Second Death Further Complicates Matters
In June 2012, the probate court upheld Estelle Manwill's will over Mark Manwill's continuing objections. He appealed the probate court's decision to the 1st District Court of Appeal in San Francisco. Shortly thereafter, David G. Manwill died. The probate court then named Mark Manwill as administrator of his mother's estate, as there was no longer a competing petition from his now-deceased brother.

David J. Manwill continued to pursue the appeal, purportedly in his father's name. The appeals court rejected this for the same reason as the probate court—a power of attorney does not confer upon the agent the right to represent someone in a judicial proceeding. Since David G. Manwill had died, only the executor or administrator of his estate could maintain such a claim. David J. Manwill was not the executor of his father's estate, nor was he an interested person in his grandmother's estate, as her will only named her children as beneficiaries.

Had Estelle Manwill named an executor in her will in the first place, much of this subsequent litigation could have been avoided. In making a will, it's important you make your intentions clear. Don't rely on your children or other families to figure things out for themselves after you're gone. If you'd like to speak with an experienced San Diego estate planning attorney about preparing a proper will, contact the Law Office of Scott C. Soady today at 1-877-435-7411.

Sibling Rivalry Spills Over Into Probate Court

July 11, 2013

Estate planning requires you to appoint one or more people to act as your agent or fiduciary under a number of conditions. A power of attorney designates an agent to act in your name while you're still alive. If you create a revocable trust, a trustee manages those properties you choose to transfer into the trust. And after you've passed away, a personal representative or executor supervises your probate estate.

You may have cause to change the appointments and designations of these agents during your lifetime. When, as is often the case, your intended agents are family members, bad blood can lead to significant conflict that may be exasperated by your death. A recent California case illustrates this. Please note this example is provided purely for informational purposes and should not be construed as a binding statement of California law.

Sisters Fight Over Fate of Their Mother's House

The case revolved around a house in Ventura County formerly owned by the late Mary Schwarz. Schwarz had two daughters, Paulette Kimball and Danita Christie. In 1991, Schwarz and her husband created a revocable living trust and signed a deed transferring their home into said trust. Schwarz and her husband served as trustees during their lifetimes, with their daughters as successor trustees.

Fourteen years later Scwarz, apparently a widow by this point, amended the 1991 trust to name Christie as sole successor trustee. Schwarz also signed a power of attorney authorizing Christie to manage her financial affairs. Christie also lived in the Ventura County home.

In 2007, Schwarz decided to live with her other daughter, Kimball, in Montana. Christie continued to act as Schwarz's agent under the 2005 power of attorney and she remained successor trustee under the amended trust. But by mid-2007, Schwarz had decided to alter her estate planning. She revoked the power of attorney and signed a new document naming Kimball as her agent with Christie as the successor agent.

Schwarz told family members she was unhappy with the way Christie had managed her finances. Christie believed her sister and brother-in-law were exercising undue influence on her mother. Although her power of attorney had already been revoked, Christie nonetheless withdrew over $130,000 from her mother's bank account.

Kimball then advised Schwarz to consult with a local estate planning attorney in Montana. The attorney met privately with Schwarz and, at her request, drafted a new will. The attorney also advised Schwarz to remove her Ventura County property from the trust. The attorney believed Schwarz would benefit from selling the property, which would make her eligible for Medicaid.

As the grantor trustee of a revocable trust, Schwarz had every right under California law to remove the property and re-title it in her name. She signed a deed to that effect in late 2007. Schwarz died in December 2008.

Challenging a Person's Mental Capacity
Kimball filed a petition to probate her mother's 2007 will in Ventura County probate court. Christie replied by challenging the deeds transferring her mother's home out of her trust. She argued her mother lacked mental capacity when she signed the deeds and, as previously noted, she maintained Kimball and her husband exercised undue influence. Neither the trial court nor the California Court of Appeals found any merit to Kimball's arguments.

As the Court of Appeals noted in an unpublished June 2013 opinion, California law presumes a person always has the capacity to make a will, deed or other estate planning document. It's not enough to show a person is elderly or suffers from forgetfulness. Nor does it matter if a person's condition deteriorates after signing the document in question. All the courts look to is the person's capacity at the moment she signed the document.

Christie failed to present any convincing evidence to the trial court in this regard. Nor did she prove her sister and brother-in-law exercised undue influence. The court afforded significant weight to the fact Schwarz consulted with an estate planning attorney, who in turn testified her client appeared competent and possessed the capacity to sign a new will and deed.

And if there's an overriding lesson from this case, it's that you should always work with an experienced San Diego estate planning and probate attorney before making any changes to your estate plan. Acting alone or only in concert with family members may lead to significant problems later. If you have any questions, please contact the Law Office of Scott C. Soady in San Diego at 1-877-435-7411.

Dealing With Social Security and Final Benefits & Expenses

July 5, 2013

In May the Inspector General of the Social Security Administration reported that the government continued to pay benefits to over 182,000 people previously reported as deceased. It’s only a small percentage of the estimated 2.5 million deaths reported to the SSA each year, but it shows how even death can become lost in the bureaucracy. If you’re on the other end--as the executor or administrator of a deceased loved one’s estate--it’s equally important you understand the law as it relates to “last” benefits.

Social Security and Pension Benefits After Death
Let’s say your widowed, elderly mother recently died. She was receiving Social Security and her monthly check came in a few days after her death. Can you cash the check? No. Under the Social Security Act, the federal law governing benefits, a person must be alive for the entire month covered by the check. So if you’re mother normally received her check on the 15th of the month and she died on the 12th, you must return the check. Likewise, if Social Security direct deposited your mother’s benefit into her bank account, the government will instruct the bank to debit her account to reverse the transaction.

Keep in mind, other benefits your mother received, such as a pension from a private employer, may prorate payments for the month of her death. You’ll need to contact the pension plan administrator. And if your mother was still working at the time of her death, she would be entitled to a final paycheck and, in many cases, a lump-sum payment for any accrued benefits earned. Again, that is something you will need to check with the specific employer.

Dealing With Final Rent and Related Bills
On the other side of the equation, if your mother had any regular outstanding utility bills, those charges may also be prorated to exclude the days of the month following her death. Rent is a different story. Under California law, if your mother had a month-to-month lease on her apartment, her tenancy would automatically terminate 30 days after the last rent payment she made before death. You would not have to provide any further notice to the landlord. However, if your mother had a lease with a specified term, like a year, her estate would be responsible for fulfilling the full term. That means if you’re executor of your mother’s estate, you would have to make arrangements with the landlord.

What About Credit Cards?
If your mother had unpaid credit card bills, that debt transfers to the estate and not you or her other heirs. As executor, you would publish a notice to any creditors to present their claims against the estate within a certain time period. If the estate doesn’t have sufficient assets to cover the debts, the credit card companies may not get paid in full or at all. In many cases, if you notify a creditor that the estate is insolvent, they will decline to even pursue a claim.

Be Prepared
These are just a few of the hundreds of details that arise after a person’s death. That’s why it’s important to get your affairs in order before a loved one has to sort through your final bills and payments. A qualified San Diego probate attorney can walk you through all the details involved in preparing your future executor for his or her role in managing your affairs. Contact the Law Office of Scott C. Soady in San Diego today at 1-877-435-7411.

The Ramifications of Disinheriting a Child

June 26, 2013

Disinheriting a child sounds like a harsh act. The word conjures up images of an angry parent taking out a lifetime of disappointment with a child by denying him or her any inheritance. Yet there are many cases where disinheritance is simply based on the testator’s appraisal of his children’s relative financial positions.

An interesting historical example of disinheritance involved the former king of Great Britain, Edward VIII, who succeeded his father, King George V, in January 1936. The new king was surprised to learn he inherited nothing from the £3 million estate of his father. King George reasoned that since Edward would enjoy the income from properties held in trust for him as king, he would leave his private fortune to his other four children. (This later became an issue when Edward abdicated the throne in favor of his brother.)

While your own estate may not amount to a king’s ransom, it’s not uncommon to intentionally exclude a financially secure child from a will or trust in favor of providing for other children or family members. California law, however, requires clear manifestation of your intent to disinherit a child. If you make a will or trust and subsequently have additional children, California presumes you intended to provide for those children in your estate unless you amend your estate planning documents accordingly. Absent such explicit language, those children will automatically inherit the same share of your estate as if no will or trust existed at all.

Can a Disinherited Child Fight Back in Court?

A disinherited child might attempt to contest your will in probate court. Such challenges cannot be based on the disinheritance itself. Rather, the child would have to prove your will was improperly made or the product of fraud. A disinherited child has limited standing to appear in court based on his or her status as an heir who would receive part (or all) of your estate if you died without a valid will.

Recently a California appeals court panel clarified just how limited a disinherited child’s standing is in probate matters. This case is presented purely for illustrative purposes and should not be construed as a binding statement of law. At issue here was the Estate of Eugenia Ringgold, a California resident who died in 2006. Ringgold previously established a living trust to dispose of her assets. She concurrently signed a pour-over will, a document conveying any remaining assets at her death to the trust. Ringgold expressly excluded her daughter, Dorian Carter, from any inheritance under the will and trust.

After Ringgold’s death, a dispute broke out over who should be appointed successor trustee of the trust, and later who should be appointed executor of the will. A probate judge eventually named a special administrator for the will. At this point, Carter filed her own application to reverse the special administrator’s appointment.

The California Court of Appeals ultimately held Carter lacked standing to even make such a request. Carter never contested the will itself, and since both the will and the trust expressly disinherited her, she had no legal interest in the disposition of her mother’s estate. She might as well have been a stranger as far as California law was concerned.

Whether you’re disinheriting a child for personal or financial reasons, it’s important you work with an experienced San Diego estate planning attorney to ensure your intentions are clearly manifested in your will or trust documents. Contact the Law Office of Scott C. Soady today if you have any questions.

California Court Rejects Improperly Witnessed Will of Man Found in Apartment Wall

June 25, 2013

Truth is often stranger than fiction when it comes to California probate cases. In May a state appeals court ruled on a particularly strange case involving a contested last will and testament. The case started with the 2004 disappearance of a Berkeley man who was found more than four years later stuffed into the wall of his own apartment building.

The man was Taruk Joseph Ben-Ali. Taruk’s father, Hassan Ben-Ali, was a real estate investor who owned and operated a number of properties. In 1993, Hassan transferred title to an apartment building on Ashby Avenue in Berkeley to his son (apparently due to Hassan’s failure of losing the property due to unpaid federal taxes). Hassan continued to manage the building even after transferring legal title to his son.

On August 3, 2002, Taruk married Wendelyn Wilburn over his father’s strenuous objections. In June 2004, Wilburn was in Las Vegas on business. She attempted to call her husband back in California but could not reach him. Subsequently, Hassan told Wilburn that Taruk had left her to “start a new life somewhere else,” according to court records. Taruk was never reported missing and Hassan continued to manage the Asbury Avenue building.

In late 2008, Hassan revealed to his attorney, Ivan Golde, that in fact Taruk died from a drug overdose in 2004. Hassan discovered his son’s body in a hotel room. Because Hassan did not want to lose control of the apartment building to Wilburn--who would inherit Taruk’s estate if he died without a will--he hid the body in the wall of storage area in the Asbury Avenue building. A person who assisted Hassan was now attempting to extort money from him, prompting this confession to the attorney. Shortly thereafter, Hassan committed suicide. Police obtained a search warrant for the building and discovered Taruk’s remains.

A Suspicious Will

The police search of Hassan’s apartment revealed a document purporting to be Taruk’s last will and testament. It was dated August 16, 2002--two weeks after his marriage and just before he went on his honeymoon--and left his unnamed “wife” all his personal property with the remainder of his assets, including the apartment building, to Hassan. The will further named Hassan as executor and his attorney Golde as alternate.

Of critical interest was the attestation. Under California law, a will must normally be witnessed by two people in the presence of the person making the will, who must declare that the document they are signing is in fact his last will and testament. The attestation for Taruk’s alleged will included the signature of “Wendy Ben-Ali” and a second person whose writing was illegible. While Wendy Ben-Ali apparently refers to Taruk’s wife, Wendelyn Wilburn, she later testified that she normally did not use her husband’s surname following their marriage. The second witness has never been identified.

Golde, as the named alternate executor, petitioned the probate court to admit the will. Wilburn filed her own petition to be be appointed administrator of the estate on the grounds that the will was not valid and her husband died intestate. The probate judge ultimately found that both signatures were valid and ordered the will admitted. Wilburn and Brittany Desmond, Taruk’s daughter from a prior marriage who is also an heir to his estate, appealed. Golde and Ann Jackson, Hassan’s ex-wife and the sole beneficiary of his estate, opposed the appeal.

Unlike the trial court, the appeals court determined Taruk’s alleged will was never properly executed. A will is presumed to be properly executed in California if the signature of the testator and both witnesses are valid. In this case, the probate court only found the signatures of Taruk and his wife were valid. The second witness couldn’t even be identified. Thus, the probate court erred in admitting the will.

The appeals court went on to explain that “no reasonable trier of fact” could look at this situation and presume Taruk’s will was genuine. Among the problems noted by the court was that Hassan had a documented history of forging his son’s name, the will itself was not found among Taruk’s possessions, and of course, the fact Hassan hid his son’s body in a wall and concealed his death for more than four years.

Make Sure Your Will Is In Order

While this is a highly unusual case, the legal lessons here are fairly simple. A valid will requires two witnesses. The witnesses should write legibly and should also print their name and, where possible, provide a current address so they can be located at a later date. And once you’ve executed a valid will, make sure to keep it in a secure location where your executor or attorney can find it after your death. As always, you should work with a qualified San Diego estate planning attorney who can help you avoid any potential legal pitfalls. Contact the Law Office of Scott C. Soady in San Diego if you have any questions or concerns.

Should a Family Member Draft My Will?

June 17, 2013

When it comes to drafting your last will and testament or other California estate planning documents, it’s important you work with an attorney who is not only knowledgeable and experienced, but also someone who is impartial and not looking to benefit financially from your future estate. To that end, the California Probate Code specifically prohibits making a transfer by will, trust or similar instrument to the person who drafted that instrument or anyone related to that person. This means, for example, that a probate court will not honor a will leaving a person’s estate to the attorney who drafted that will--or the attorney’s wife, law partner, child, et cetera.

There is an exception, however, for attorneys who are already related by blood, marriage or civil partnership to the person making the will. If your son is an attorney and drafts a will for you where he’s a beneficiary, that would be valid under California law. Things can become more complicated when dealing with attorneys related by marriage, as a recent California Court of Appeals case demonstrates. This case is only discussed here for informational purposes and should not be construed as a statement of the law and is only for illustrative purposes.

Step-Children Can Complicate the Process

In early 2013, an appeals panel in Ventura upheld a trial court’s decision to admit the last will and testament of Oligario Lira into probate. Lira died in July 2010. Four months earlier, he divorced his wife of over 40 years. Both Lira and his ex-wife had children from prior marriages. In 2009, before his divorce became official, Lira executed a new will and trust. He named his three children and three of his soon-to-be-ex wife’s children as the primary beneficiaries. Robert Terrones, one of the stepchildren, was named personal representative of the will and successor trustee of the trust. Glenn Terrones, a child of one of the step-children, was the attorney who drafted Lira’s will and trust.

After Lira’s death his daughter, Mary Ratcliff, filed a petition with the probate court declaring her father died without a will (intestate) and asked to be named administrator of the estate. Robert Terrones then appeared with Lira’s will and asked to be named personal representative. Ratcliff objected, citing the fact Glenn Terrones drafted the will, which directly benefitted three of his relatives. Ratcliff argued that because her father was in the process of divorcing his wife, and any transfer of property would not occur until after the divorce became final, the exemption did not apply. In other words, since the Terrones were not related by marriage to Lira at the time of his death, any transfers to them were invalid.

The trial court and the court of appeals disagreed. Both ruled that the key is when the will was made and not when the person making the will died. When Lira signed his will, he was still legally married, and thus the Terrones were related by marriage. Thus they were exempt from the general ban on attorneys drafting wills to benefit themselves or family members.

Avoiding Family Squabbles

The above case is provided only as an illustration and should not be taken as a definitive statement of the law. Nor should it be construed as advice to hire family members as estate planning lawyers. The best way to avoid the type of litigation after your death is to work with an independent estate planning attorney from the outset who can advise you of any potential hazards. If you have any questions or concerns, please contact the Law Office of Scott C. Soady in San Diego at 1-877-435-7411.

Dying Without a Will Can Leave Your Estate Vulnerable to Unscrupulous Relatives

May 31, 2013

If you die without leaving a last will and testament, your estate may be left at the mercy of unscrupulous relatives who will take advantage of the situation. While California law does provide for cases of intestacy--estates where the deceased left no will--relatives without legal knowledge may be unaware of their right to inherit part of your estate. That’s why it’s important to work with an experienced San Diego estate planning attorney who can help you and your relatives prepare a will that, hopefully, keeps everyone out of court after you pass on.

Taking Advantage of Intestacy

A recent case from the California Court of Appeals shows what may happen when relatives exploit the confusion that can arise from an intestate estate. (Please note this case is only discussed here for illustrative purposes and should not be taken as a definitive statement of current California law.) David Mack left an estate valued at approximately $700,000. He died without a wife, children or will, so California intestacy law required the division of his estate among his living siblings and the heirs of any previously deceased siblings.

Since there was no will naming an executor, Mack’s great niece, Tina McGlorie, and her cousin, Henry Hunter, filed a petition with the probate court to gain control of the estate. McGlorie and Hunter told the court that Mack’s only other surviving relatives were a brother and sister, who had one child each. After the court granted McGlorie and Hunter’s petition, they convinced the siblings to “assign” their interest in Mack’s estate to them. Thus, McGlorie and Hunter claimed to be Mack’s sole heirs, and the court allowed them to divide the estate equally between themselves.

As it turned out, Mack had other living relatives, including as many as ten nieces. One of those nieces, Leveda Jackson-Jones, asked the probate court to reverse its earlier order distributing Mack’s estate to McGlorie and Hunter. Jackson-Jones accused the two executors of “extrinsic fraud” by never informing the other heirs that there ever was a probate proceeding. Jackson-Jones said she didn’t learn about the estate’s distribution until after the fact.

Too Little, Too Late

Unfortunately, Jackson-Jones waited too long to object. The court approved the distribution of Mack’s estate in 2003. Jackson-Jones said nothing until 2009, when she wrote a letter to the probate court asking it to reopen the estate. But another two years elapsed until she filed a formal petition. While the probate court acknowledged the executors probably committed fraud, the judge found there was no excuse for Jackson-Jones’ delay in seeking relief. In fact, there was evidence that Jackson-Jones was aware of the original probate proceeding in 2003, eight years before she took action. The probate court said it could not alter its final decision after such an unreasonable delay. The California Court of Appeals affirmed the probate court’s decision in May of this year, finding it acted well within its discretion to deny Jackson-Jones’ petition.

Take Control of Your Estate

A key lesson from the Mack estate litigation is that when you fail to make a will, the first relatives to the courthouse door might end up with control of your estate--to the detriment of other potential heirs. A will enables you to decide who should be entrusted with the duty and responsibility of serving as executor. It’s important to select an executor who will deal fairly and equitably with all persons who might have an interest in your estate. If you’re looking for assistance in drafting a will and selecting an appropriate executor, please contact the Law Offices of Scott C. Soady today.

What Happens to My Car After I Die?

May 23, 2013

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.

How Will My Estate Pay Administration Expenses?

April 26, 2013

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.

Failure to Promptly Secure Counsel Can Prove Costly in Estate Litigation

April 24, 2013

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
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

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.

Probate Referees Can Settle the Value of Your Estate

April 23, 2013

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.

How Does Owning Property in More Than One State Affect My Estate Planning?

March 14, 2013

If you’ve just moved to the San Diego area from another state, it’s a good idea to consult with a California estate planning lawyer to revise your Last Will and Testament. You should do the same if you’re leaving for another state. Every state has its own probate laws that can affect your estate differently. And if you own property in more than one state, it may become necessary for your executor to open an ancillary estate, which can significantly add to the costs of probate.

The most common reason for an ancillary probate is a deceased person owns real estate outside of his or her home state. For instance, let’s say you live in California and own a house here, plus you own a vacation home in Arizona. After your death, your executor will open a primary estate in California to dispose of your home and personal property here, and an ancillary estate in Arizona just to do deal with the vacation home.

Personal Property May Require Separate Probate Proceeding

Ancillary probate may still be necessary even when there’s no real property. Here’s a recent example from the California Court of Appeals. In this case, Jean Hayes lived in California for 40 years before relocating to Maryland to be closer to her children. Hayes died in 2011 while residing in Maryland. Richard Wall, the executor of Hayes’s estate, discovered that while Hayes owned no real property in California, she did have an interest in a California-based limited partnership, as well as several uncashed checks and savings bonds located in San Francisco.

Under the California Probate Code, Wall could open an ancillary estate in San Francisco County solely based on the existence of this personal property. (The probate court initially refused to grant Wall’s probate petition for reasons the court of appeals later rejected in an unpublished opinion.) The Probate Code specifically provides for ancillary probate of non-residents in any California county where a deceased person had personal or real property. If the deceased owned property in more than one county, the county where a probate petition is first filed has jurisdiction.

Pitfalls of Ancillary Probate
In the Hayes case, the deceased left a Last Will and Testament. That will’s provisions are equally applicable to the disposition of property in California and Maryland. However, if a person dies without a will, his or her property is then subject to distribution under the intestacy laws of the state where the property is located. This could mean that personal property located in California will go to different heirs than similar property located in Maryland or another state.

That’s why it is critical not only to have a will, but also to update your estate plan regularly to reflect changes in your living situation and account for property located outside of your home state. Remember, something as simple as owning a car or boat registered in another state can trigger ancillary probate. If you have any questions or concerns about how out-of-state property may affect your California estate planning, please contact the Law Office of Scott C. Soady right away.

Related Links

Ancillary Probate Can Increase the Cost of Probate
Estate Planning Especially Important for Californians with Second Homes

Who Can Contest a Will?

February 21, 2013

You often read news stories (or see fictional dramas) where aggravated family members “contest” the will of a relative. But can anyone contest a will? In California the established law is that a person cannot contest a will unless he or she is an “interested person” in the estate of the deceased.

So what constitutes an interested person?

Interested persons include those named as beneficiaries under the will and those who would stand to inherit if there is no will (or the purported will is declared invalid). Members of the former group are legatees while the latter are heirs. Since a valid will normally controls the distribution of a deceased person’s property, heirs may be excluded from inheriting altogether. Conversely, if a will is successfully contested and declared invalid, any legatees (who are not also heirs) may lose their claim to an estate.

A Contestant Must Show How She Will Gain
Even if a person is both a legatee and an heir, the will may alter his or her share of an estate relative to what is provided for under intestacy law--that is, California law dictating how property must be distributed if the deceased did not leave a valid will. A case recently decided by the California Court of Appeals helps explain this concept. While this case cannot be relied on as a statement of the law, it can be used to illustrate the concept. The case involved a contest to the will of Daisy Gregory, who died in 2008. Gregory was a widow with no children. Her will, signed in 2001, divided her estate among various persons, including an 8% share to Beverly Seghezzi, the niece of Gregory’s late husband.

Seghezzi contested the will. She claimed Gregory had made known her intent to revoke the 2001 will. The probate court dismissed Seghezzi’s contest on the grounds that even if the will were declared invalid, Seghezzi would inherit nothing, because she was not an heir under California law. Seghezzi was related to Gregory’s husband, not Gregory.

But the court of appeals noted that the California Probate Code contains a provision that may give Seghezzi standing after all. Section 6402.5 says that if a person dies without a valid will and has no children but a predeceased spouse, the spouse’s heirs may inherit part of the estate. Seghezzi did not raise this claim with probate court initially, but the court of appeals said she could amend her contest and, in effect, take a second bite at the apple.

That still doesn’t mean she has standing to contest the will. The court of appeals said the burden is on her, when appearing again before the probate court, to show that she would gain more from the estate if the will was declared invalid than if it was admitted. In other words, under the will she’ll receive 8% of the estate; she must prove there’s some other possible outcome that would result in her receiving more than 8%.

Avoiding a Similar Situation

It may not always be possible to prevent a disgruntled relative from contesting your will after your death. But to minimize the risk of a legitimate contest--and lengthy court proceedings that can deplete your estate’s assets--you should make sure your will is regularly reviewed by an experienced California estate planning attorney. Contact the Law Office of Scott Soady if you would like to discuss your estate planning needs.

Related Links
Ensuring Your Will Is Properly Witnessed
The Challenge of Contesting a Will

Does a Domestic Partnership Agreement Apply After Marriage in Probate?

February 12, 2013

While the status of same-sex marriage in California remains pending before the United States Supreme Court, domestic partnerships remain a legal option for any two adults--regardless of gender--who wish to register their relationship with the state. California law affords registered domestic partners the same “rights, protections, and benefits” as spouses. And as one recent California case demonstrates, courts will look at domestic partnership agreements in much the same way as premarital or prenuptial agreements.

However, there is still some confusion about how different relationship status may affect legal issues, such as probate matters.

In December 2012 a California Court of Appeal panel in San Francisco rejected an appeal brought by Johnlang Konou against the Estate of Philip Timothy Wilson. Konou and the late Dr. Wilson had registered as domestic partners in California in 2006. In mid-2008 when same-sex marriage was legal in the state--before the passage of Proposition 8--Konou and Wilson married. Wilson committed suicide in November 2008, three days after Proposition 8 passed.

Under the couple’s 2006 domestic partnership agreement, which was drafted by attorneys for both men, Wilson and Konou each waived any claim or interest in the property of the other. This included a waiver of any transfer of property on death unless expressly provided for in the partner’s estate planning documents.

Changing Your Mind After the Fact
After Wilson’s suicide, his brother moved to probate his will, which had not been updated since 1986. Konou signed a waiver in early 2009 disclaiming any interest in Wilson’s estate, but he later reversed course and filed a petition seeking to invalidate that disclaimer and a determination of what rights, if any, he could claim as Wilson’s spouse.

The key question for the courts was whether the marriage invalidated the earlier domestic partnership agreement. If it did, Konou could claim a share of the estate as a pretermitted spouse--someone who married a deceased person after he made his will--under California law, his earlier waivers notwithstanding.

Both a trial court and the California appeals court ruled against Konou. They found the original domestic partnership agreement remained in effect throughout the subsequent marriage. A marriage license does not, in and of itself, terminate any pre-existing agreement between the parties regarding the disposition of property. The language of the Konou-Wilson agreement was quite explicit regarding this subject and could only be modified by a subsequent written document. There was no provision for ending or amending the agreement in the event same-sex marriage became legal in California.

A Warning for All Couples

Even if you find yourself in a “traditional” marriage that is not the subject of a Supreme Court case, Johnlang Konou’s situation is still a cautionary tale for anyone who enters into a domestic partnership or premarital agreement with their loved one. It’s essential to consult with a qualified California estate planning attorney, not just when such agreements are made, but when subsequent events may alter the parties’ wishes. It is also important to review your estate planning needs with an attorney on an ongoing basis. The late Dr. Wilson hadn’t updated his will for 20 years--indeed, he’d left half of his estate to a former partner. Whatever your current (or potential future) situation, feel free to contact the Law Office of Scott Soady if you want to discuss your estate planning needs.

Court Rules That Woman Must Give Up Inheritance of Kafka Papers

November 5, 2012

An international court ruled this week that a large amount of extremely valuable and historical
papers be turned over to the Israeli national library. A recent New York Times article delved into
the high-profile case. Of course, it is important to keep in mind that the way this international
court ruled may not have been the same as an American court. Nevertheless, this case is a
wake up call to all that without careful estate planning in relation to how an individual wants to
handle his or her personal property that it could end up in a bitter and costly legal battle.

The Story

Franz Kafka was a famous and influential author in the early 20th century. His papers included
tens of thousands of pages, written by Kafka and his long-time friend and journalist, Max Brod.
Kafka died in 1924 but when his friend, Mr. Brod escaped from Europe and the Nazis in 1939 he
took a suitcase of the Kafka papers with him to what was then Palestine (now Israel). Mr. Brod
was the executor of Kafka’s estate. The Israeli government believes that these papers have
tremendous historical and literary significance. The documents included sketches, notes, diaries
and letters that were written by Kafka but were not discovered for over 40 years.

Mr. Brod died in 1968 and he bequeathed to his secretary, Esther Hoffe, all of his and Kafka’s
papers and documents that he was keeping. Ms. Hoffe kept them in her Tel Aviv (Israel)
apartment. Ms. Hoffe sold one of Kafka’s manuscript that she was given for $2 million in 1988
after a scholar was allowed to examine them for authenticity.

When Ms. Hoffe died a few years ago, the documents and manuscripts passed on to her
daughters. One of the daughters, Eva Hoffe, became embroiled in the legal battle that ensued
between her family and the Israeli government contending that the documents belonged to their
history and should be located in their national library or museum.

The Legal Battle

Ms. Hoffa’s daughter claimed that she was destitute and that the papers were a gift from Mr.
Brod to her mother. On the other hand, the government argued that Mr. Brod didn’t really give
the papers to Ms. Hoffe as a gift, but that his secretary was given these documents to keep in
trust and to be disposed of per his wishes. Since Mr. Brod’s will did not specifically state what
was supposed to be done with these papers and valuable documents, the Israeli government
pursued their argument and persuaded the judge that the materials should be sent to the
Hebrew University. The judge took note that Mr. Brod’s will from 1948 instructed his estate that
his archive is to go to a “public Jewish library or national library” is housed. Ms. Hoffe plans to
appeal the judge’s decision.

While most local residents may have have valuable documents to pass along, the basic
principles apply to all regarding the need to clearly delineated wishes for personal property.
You need to be very careful and specific with respect to personal property and estate planning.
Possession of documents or property does not mean that you have a legal right to keep

them. For help with these matters in San Diego or surrounding communities please consider
contacting the estate planning attorney at the Law Office of Scott Soady for guidance.

Basic Steps Following the Death of a Loved One

September 7, 2012

The first experience some have with estate planning issues occurs immediately after a loved one
has passed away. This is unfortunate. Without any prior planning, a death comes with a range of
complicated paperwork tasks--grieving relatives are often forced to handle complex affairs in the midst of
great emotional turmoil. This is one reason why family feuds and in-fighting are quite common after the
death of a loved one.

There remains a huge difference between no end-of-life planning and some planning.

A story on end-of-life planning in the upcoming issue of Consumer Reports offers some helpful guidance
on the critical difference between dealing with the consequences of a death ahead of time and waiting
until afterwards to figure it all out. Some matters have to be handled by family members and others can
be dealt with by professionals.

The differences between planning and no planning begin to show immediately after a passing. For
example, if a senior dies at home, a call to 911 is usually the first step. If a “Do Not Resuscitate”
document is in hand, the arriving paramedics will likely be able to pronounce death at that
time. However, if the legal document does not exist, then the responders will likely be forced to begin
emergency support (no matter how unnecessary) and take the body to the emergency room. It is only
there that a doctor will be able to make an official declaration of death.

What happens next?

First off, certain individuals must be informed of the passing--this includes family, friends, and the
coroner. Any dependents of the deceased--children or pets--must be taken care of. If plans were already
laid out, then alternate caregivers would already be in place to help.

Funeral and burial arrangements must then be settled. This can sometimes result in added stress if
survivors have little guidance on the individual’s wishes regarding services (religious or otherwise) and
burial or cremation plans. Some individuals who plan a little may have a pre-paid burial arrangement,
which allows survivors to entirely avoid any complications regarding payment for the services.

Afterwards, many different financial and estate issues must be finalized. If there is a will, it must be taken
to the appropriate office to begin the probate process. The complexity of the subsequent probate process
depends on how much work was done ahead of time. A trust and estate planning attorney is crucial at
these times. For example, some asset transfers to others may be automatic, while others have to wait
to go through the probate process. Estate tax issues or final income tax issues must be handled. Bank
accounts and potential life insurance issues must be taken care of. Social Security and Veteran’s Affairs
offices must often be consulted.

Of course, help is available with all of these matters. In our community, the Law Office of Scott C.
Soady, A.P.C.
can work with residents to ensure there is a clear roadmap to address all of these issues
well ahead of time and to provide professional support after a passing. Eliminating the stress, confusion,
and potential feuding following a death should be a priority for all local community members.

Bucking the Odds: Michael Jackson’s Will Leaves Little Legal Uncertainty

August 21, 2012

Most stories about celebrity estate planning have one thing in common: they involve planning errors
and drawn-out legal battles. But it is important not to overlook the other examples--where planning
documents are straight-forward and opportunity for challenges are few and far between. At the end of the
day, when knowledgeable experts are used to create effective plans there is little or no confusion about
how to handle affairs. This is true for celebrities and non-celebrities alike.

Take, for example, legendary pop star Michael Jackson. Considering Jackson’s colorful life and well-
known family controversies, one might assume that the battle over his estate would be fraught with
similar drama. Not quite. Surprisingly, most familiar with the case explain that there is very little wiggle
room for involved parties to challenge his will.

A recent Forbes article summarizing the situation notes that the singer’s latest will (which is publicly
available) is very similar to three previous versions of the will. All of them essentially say that all of the
singer’s assets be placed in the “Michael Jackson Family Trust.” Those assets are then to be split: 20%
goes to charity and the rest divided into trusts for his mother and any children. Upon his mother’s death
any remaining funds would go to the children. No other relatives are named in any version of the will
dating back more than 17 years.

The will was admitted to probate shortly after the singer’s death. All witnesses verified the document’s
validity shortly thereafter. California Probate Code requires a petition to challenge the probate of the will
within 120 days--a timing requirement that has long-since passed in this case.

In other words, while news stories keep surfacing about potential new challenges to the will by Jackson’s
father or other siblings left out of the will, it is highly unlikely that anything will change the final
resolution. Jackson’s father did seek to overturn the will shortly after the death, but the judge in the case
swiftly dismissed the challenge.

All of this is not to say that Jackson’s planning was without problems. There were some initial concerns
about the funding of the trust and the conduct of the executors in making business deals immediately
following Jackson’s death. Yet, most of those details were worked out shortly after the death.

The bottom line is that the consistent and clear wishes laid out in estate planning documents over a period
of years has worked to minimize the potential complications in this case. Considering the size of the
assets involved, it is somewhat surprising that so little controversy exists.

This is undoubtedly a lesson for all local residents on the benefit of proper planning. Disagreement and
feuding are quite common in the aftermath of all deaths, not just for celebrities. Nipping the potential
controversy in the bud by putting strong legal wishes in place is important for all community members.

To receive help getting a will or trust set-up in our area, take a moment to contact a San Diego estate planning attorney at the Law Office of Scott C. Soady.

Common Confusion: The Difference between a Trustee and an Executor

July 16, 2012

Having a basic understanding of estate planning terms can be helpful when working through the process. However, it is easy to get confused. For example, two terms often used (and misunderstood) are “trustees” and “executors.” Both a trustee and an executor are persons selected to hold and manage assets of a decedent. The difference between the two is the manner and source of their appointment as well as the extent of their authority.

A trustee is named in a trust as the person (or one of several) in charge of the assets held in the trust, whereas an executor is named and appointed by the probate court to administer the estate of the decedent under the supervision of the court.

Whether he/she is named in a testamentary trust or a living trust, the trustee enters into an agreement to manage the trust assets and distribute the latter for the benefit of the beneficiaries of a trust. An executor is charged with protecting a decedent’s property until all debts and taxes have been paid. The executor must then transfer assets to the designated parties.

The basics are the same: executors are appointed by the court for the primary responsibility of administering the estate of the decedent, where trustees are nominated to administer the assets of a trust. Trustees owe fiduciary duties to the beneficiaries of the trust just as executors owe fiduciary duties to the beneficiaries and creditors of the estate.

The difference appears in the extent of their responsibilities: trustees of living trusts often do not deal with probate process whereas executors must work through the court proceedings. In fact, once probate is settled, the executor’s job is done whereas the trustee may have to manage the trust assets for a longer period, if they have not yet been distributed.

Selecting an Executor or a Trustee
Some consider the selection of a trustee or executor to be an easy process and often choose to nominate a family member or friend to hold and manage their assets. Yet, estate planning attorneys know that this is a common mistake that often leads to disputes among family members and misadministration or destruction of assets.

It is important to understand the value of giving a person the authority over your estate. Not everyone is qualified to assume such a task. Serving as a trustee or executor requires someone:

• Honest, trustworthy and conscientious
• Available and willing to do the work
• Organized, attentive to details
• With basic knowledge about investments and taxes
• Vigilant about keeping records
• Able to resolve any conflicts
• Neutral/unbiased

Many feuds have erupted because of problems with those who are managing a trust or named executor of an estate. Considering one of the main goals of estate planning is to transfer assets without conflict, it is critical to make executor and trustee selections that facilitate smooth asset management.

If you do not have an updated estate plan or have not yet created one, it is crucial to predetermine who is capable of administering your estate. To get tailored help with these issues in our area it is important to speak to a San Diego estate planning lawyer as soon as feasible.

Debts Owed by Beneficiaries in an Estate Plan

October 27, 2011

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.

Dennis Hopper: Probate

August 18, 2011

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" »

San Diego Probate Court N-23: Policies and Procedures: August 2011

August 16, 2011

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" »

San Diego Probate Court 2: Policies and Procedures: August 2011

August 11, 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" »

San Diego Probate Court 1 Policies and Procedures: August 2011

August 9, 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" »

Anna Nicole Smith: United States Supreme Court Decision

August 4, 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" »

Probate: New York Times Article: Risks to Avoid: 2011

July 26, 2011

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" »

Probate Administration: Understanding Trusts: Los Angeles Times Article: 2011

July 21, 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" »

Probate Mediation: San Diego Superior Court: 2011

June 30, 2011

In San Diego, many parties involved in probate litigation would like to settle their case. In some cases, emotions and other factors may prevent this. The San Diego County Superior Court has a probate mediation program. Mediation, in probate court, is a non binding and confidential process in which a trained mediator will act as a neutralk to assist in reaching a settlement of all issues as much as possible.

The parties can resolve the matter with the assistance of the mediator. The mediation process may avoid a trial which would save the parties thousands on legal fees and also the uncertainty of the trial result. Mediation can include guardianships, conservatorships, trusts, estates and probate. For the selection of the mediator, the San Diego Superior Court maintains a binder in each probate courtroom and also the business office at both the Madge Bradley Courthouse and the Vista courthouse.

The selection of the mediator can be crucial in the outcome of the case.

Continue reading "Probate Mediation: San Diego Superior Court: 2011" »

San Diego Probate: Transferring a Vehicle without Probate: 2011

June 28, 2011

The San Diego Superior Court has instructions on how to transfer a vehicle without probate. On the probate section, there is a section discussing the transfer of a vehicle without probate. The California Department of Motor Vehicles also has a section on the transfer of a vehicle without probate. To transfer a motor vehicle without probate, the below is the procedure.

The following documents must be submitted to the California Department of Motor Vehicles [DMV]: a title certificate; odometer disclosure statement; statement of facts with the applicable provisions completed; affidavit for transfer without probate and, if owned jointly by two or more deceased person a death certificate for each owner who is deceased. The transfer of ownership cannot be sumitted until 40 days after the death of the owner. If registration fees are due before this period, then these should be paid to avoide penalties.

There is a fee for the transfer of the vehicle ownership. These fees could include any past due amounts or penalties.

Continue reading "San Diego Probate: Transferring a Vehicle without Probate: 2011" »

San Diego Superior Court Probate Timeline: 2011

June 23, 2011

The San Diego Superior Court has a probate timeline on their website. The administration of probate can be very complicated and time consuming. The timeline guidelines below are not necessarily what will happen in your case and is used for a general outline of the process and probate timeline.

The first step is to file a probate petition. A hearing will be set and will be from 4-6 weeks after the petition is filed. During this time, you will need to publish the notice of the petition to administer the estate and mail notice of the petition to administer the estate to all persons who are entitled to receive notice. There are very strict time periods and an attorney can assist.

The second step is to check the probate notes, before the hearing, to make sure that there are no defects in the petition and that all necessary documents have been filed.

After the Probate petition is approved, you must submit your Probate Orders, letters and a bond if required. After a minimum of four months from the date of the hearing, you may prepare your inventory and appraisal and file with the San Diego Superior Court, Probate Division and send to the San Diego County Probate Referee. In addition, there must be notice given to all known creditors and you will either accept or reject these creditor claims. Debts will be paid and tax returns filed and, again, there are strict deadlines. Usually 12-18 months from the date of appointment, there will be a final accounting and distribution.

Continue reading "San Diego Superior Court Probate Timeline: 2011" »

Duties and Liabilities of a Personal Representative in Probate Court: San Diego, California

June 16, 2011

In San Diego, the filing of a petition for probate is the beginning pleading to allow the San Diego Superior Court to obtain jurisdiction over the decedent's estate. When the court appoints a personal representative, there are many liabilities and duties. In probate litigation, it is very important to understand your rights and also your responsibilities.

Some duties include managing the assets of the estate. Considerations for this are as follows: interest bearing accounts and other investments; keeping estate assets segregated; prudent investments and there are other restrictions. There may be a bond equired in order to be appointed at the personal representative.

Other duties include an inventory of the property of the estate. Considerations for this include filing an inventory and appraisal, determining the property value, locating any property of the estate and filing a change of ownership if necessary. There are many duties in addition to these and also included in this general description and also liability if the law is not followed.
The personal representative may also have to give notice to creditors, obtain insurance and keep accurate and complete records.

Continue reading "Duties and Liabilities of a Personal Representative in Probate Court: San Diego, California" »

San Diego Probate Court: Wills, Trust and Estate: 2011

June 14, 2011

The San Diego Superior Court has a lot of information on different areas of the law. The divisions are broken down by area of law and there is a section devoted to probate which has information on many probate issues.

Information includes the definition for probate as a court supervised process for gathering and identifying the assets of the decedent as well as distributing the balance to beneficiaries after paying expenses, debts and any taxes owed to the IRS. Probate also involves the transfer of property of the decedent to beneficiaries. Probate can also involve deciding if a will is valid and other issues brought before the Court.

Not every estate has to go through probate. In San Diego, California, for estates under $100,000, there are procedures to transfer property without a court order. The valuation of an estate can be difficult and needs to be completely accurate.

Continue reading "San Diego Probate Court: Wills, Trust and Estate: 2011" »

2011: San Diego Probate Court Rules

June 9, 2011

In San Diego, the San Diego Superior Court has jurisdiction regarding probate cases. One division is the Probate Court. The Probate Rules are very important as they must be complied with any probate case.

The Probate Court Rules include the probate rules under title seven, the probate local rules, the San Diego County Superior Court rules which are effective January 2, 2011, the Probate Court 1 polices and procedures, the Probate Court 2 policies and procedures as well as Probate Department N-23 polices and procedures. It is very important to fully comply with all of the rules and they can be very complicated.

Probate administration can be a very stressful experience for the parties. One of the probate procedures includes the Probate Examiners. There may be a tentative ruling and/or a telephonic court conference before the hearing. The court calendar can often have many parties appearing on the same morning or afternoon and cases can also be continued.

Continue reading "2011: San Diego Probate Court Rules" »

FAQs In California Probate

May 24, 2011

The estate planning attorneys at Scott C. Soady, A Professional Corporation handle not only estate planning, conservatorships, guardianships, and will and trust litigation, but also many probate matters. We receive a lot of calls from individuals who have a lot of questions about probate. Here are some the frequently asked questions about probate in California and more specifically in San Diego.

1. What is Probate? Probate is the court process in which the estate of a deceased person is inventoried, appraised, and distributed to either the beneficiaries of a will or to the heirs at law of a person who has died without a will or trust (ie. intestate).

2. Why is Probate Necessary? When someone has died, whether there will be a probate depends on whether the decedent had all of his assets in a living trust or joint tenancy. If so, then there is no necessity for probate. If a person has died with a will rather than a trust, there will have to be a probate. If the person had no estate plan, ie. no trust or his assets were not in joint tenancy or in payable on death accounts, his estate will have to go through the probate process to distribute the assets to the decedent's heirs at law. The probate procedure in the county where the individual died will see that the estate is inventoried and appraised, debts of the decedent are paid, and that the property is distributed to the proper individuals.

3. What Happens During the Probate Process? The first step in a probate is for the Court to appoint a personal representative, either someone who has been named as executor in a will, or in the case of no will, someone who petitions the Court to be the administrator of the estate. Once appointed, the personal representative will identify all the assets, usually post a bond, determine what debts need to be paid from the estate, appraise all the assets, pay any taxes due, sell any property that needs to be sold, and eventually distribute the assets to the beneficiaries or heirs. The personal representative needs to keep accurate records and usually is required to file an accounting with the Court unless an accounting is waived.

4. How Long Does Probate Take? Probate in San Diego can take anywhere from seven to eight or nine months to over a year. Part of the reason is takes so long is that there are time periods which are set by the Probate Code. Once the petition is filed to probate an estate, it can take 4 - 6 months for an administrator or executor to be appointed. Sometimes the hearing on the petition gets continued from the original date set for hearing because of “defects” in the petition which have to be corrected before the Court can rule. Sometimes other individuals besides the Petitioner want to be appointed the administrator or executor and there has to be a court hearing on who will be appointed. Once someone is appointed, notice has to be given to the deceased’s creditors who then have 4 months to file a claim. Other issues can arise which lengthens the time before probate is involved such as the number or type of assets which have to be appraised, whether the property is going to be sold, if an ongoing business is involved, or disputes between the beneficiaries or heirs.

5. How Much Does Probate Cost? The expenses of probate include fees paid to the executor or administrator, fees paid to the probate attorney, and court costs. Fees for acting as an executor or an administrator are set by the California Probate Code and are based on the gross value of the estate. Currently the fees are 4% of the first $100,000; 3% of the next $100,000; 2% of the next $800,000 and ½ % of the next $15 million. The personal representative (administrator if there is no will and executor if there is a will) are entitled to the same fees as the attorney. Court costs include filing fees, publication costs, bond cost, fee for probate referee, and recording costs.

6. How Can I Avoid Probate for My Beneficiaries or Heirs? The simplest way to avoid the probate process is to create a revocable living trust. Read more about the importance of trusts and how they avoid probate on our website. Other ways to avoid probate are to have all of your assets in joint tenancy or in assets that have designated beneficiaries upon your death.

We assist clients everyday to create an estate plan to avoid probate. We also can handle your probate matter if a loved one has died and you are the executor of their will or want to be appointed an administrator of an estate. Call us with any questions and to schedule a complimentary consultation.

Deceased Chest Champion May Soon Rest in Peace

May 20, 2011

Bobby Fischer, the former world chess champion, died in 2008 and yet the fight over his estate goes on. You may remember Bobby Fischer won the world chess championship in 1972 when he beat the Russian Boris Spassky in Iceland during the period of the cold war.

Fischer was born in the United States but was living in Iceland when he died in 2008 with no will. Four individuals were fighting over his probate estate, said to be worth between $2 and $3 million. Two are Fischer’s nephews Alexander and Nicholas Targ who live in California. The third is Marilyn Young who claims to have a daughter by him, named Jinky Young. Fischer had apparently been giving Jinky’s mother money for Jinky’s support and wrote postcards to the child which he signed as “Daddy.” The fourth is Miyoko Watai, a Japanese woman who married Fischer in 2004 and therefore is his widow.

To resolve the issue of the competing claims, the Court in Iceland ordered that Fischer’s body be exhumed to obtain a DNA specimen to determine if Jinky Young is in fact his daughter. Those results showed that she was not his daughter so then the contest continued between the widow Miyoko Watai and the two nephews. In March of this year, the court in Iceland ruled that his Japanese widow is his heir and entitled to his estate. The new nephews had claimed that the widow did not produce sufficient documentation that they were married and may appeal the court's ruling.

Once again these kinds of will contests occur because seemingly intelligent and knowledgeable people do not create an estate plan. This protracted litigation could have been avoided had Fischer had a will or better yet, a trust. You don't need to be wealthy to need a trust. Evem people with a small to moderate estate can benefit from a trust. A trust not only provides for the distribution of your estate upon your death but also has provisions for any periods of incapacity and provisions for the care of your minor children should something happen to you. Contact us at Scott C. Soady, A Professional Corporation to set up an appointment to get started on your estate plan.

Taxes in Probate and Trust Administration

April 11, 2011

As the successor trustee of a trust, executor of a will, or the administrator of an intestate estate (ie. no will or trust), one of your duties will be to pay all taxes due the federal government and the state of California.

Personal Income Tax Returns Once someone has died, a personal income tax return will have to be prepared and filed for the year of the decedent’s death. Income received by the decedent from January 1 until the date of death will have to be reported. If the estate receives income however, after the date of death, that will be reported on the estate tax return. Deductions for medical expenses of the decedent can be taken for one year after the date of death, to take into consideration expenses of a last illness. All other deductions, such as for mortgage interest, property taxes, etc. must have been expenses incurred prior to the date of death.

Fiduciary Tax Return The estate income tax return, call a fiduciary tax return, is filed annually as long as the estate is open. Dividends, interest, capital gains, and rents are all reported on this return. Deductions can be taken for mortgage interest the estate pays on real property and legal and administrative fees. This return, unlike the personal return, can be filed on a fiscal year basis. The duty to file a fiduciary return exists as long as the trustee, executor, or administrator is administering the estate. The final fiduciary return can be filed when the estate is in a position to be closed and final distributions made to beneficiaries.

Estate Taxes If a person dies in 2011 with over $5 million in assets, an estate tax return also has to be filed within 9 months of the date of death. Extensions for 6 months can be obtained. If there are gifts to qualified charities, those can be deducted as can debts of the decedent such as funeral expenses, last illness medical expense, and legal fees. The current federal estate tax exemption is $5 million which will last until 2013. Congress can act before that date to keep the exemption at the current rate or to change the exemption Keep in mind that it is the federal estate tax exemption in the year of death that governs.

Other Taxes Another type of tax that will have to be paid by the trustee, executor, or administrator of an estate is property taxes if the estate owns real property. A gift tax may also be necessary if the decedent made gifts in excess of the gift allowance for the year of death.

To help you with tax issues, the attorneys at the Law Office of Scott C. Soady, A Professional Corporation will work with the decedent’s CPA or the trustee, executor, or administrator’s CPA. We also have CPA’s we can refer you to for assistance with tax issues. It is an extremely important that all tax issues are handled competently and efficiently since there may be substantial penalties and interest that may be incurred if not handled correctly.

What is a Spousal Property Petition?

April 8, 2011

A simplified probate procedure may be possible with a spousal property petition. Such a petition can be used to transfer assets from the deceased spouse to the surviving spouse or domestic partner without the time and cost of a formal probate.
The spousal property petition can be used if the decedent had a will and the only beneficiary was the surviving spouse or domestic partner. If other beneficiaries are named in the will, however, this procedure cannot be used and a formal probate will be necessary to transfer the assets to all the beneficiaries. If the decedent died without a will, leaving only a surviving spouse or domestic partner, the procedure can also be used. The property is distributed in accordance with the laws of intestate succession. Community property will be transferred to the surviving spouse or domestic partner through the spousal petition. Separate property, if there is any, will have to be distributed through formal probate. If there is property in joint tenancy, that will be distributed to the joint tenant without any probate.

The surviving spouse or domestic partner files a petition with the Probate Court setting forth the facts as to why he or she is entitled to the community property, listing the property to be distributed, the decedent’s date of death, date of marriage, etc. A court hearing is set in the probate court after notice is given to everyone mentioned in the will and the heirs of the decedent. If the court grants the petition, the order is then recorded with the County Recorder in each county where there is real property. Copies of the order may be used to show financial institutions and investment companies to complete the transfer.

The spousal property petition is a good way to distribute community property to the surviving spouse when the only assets to be distributed are community property. One big advantage is that the cost of such a petition is much less than a formal probate. There are some reasons however, why the spouse may not want to take advantage of the spousal property petition. One reason might be that there are creditors who will be making claims, or it is likely that there will be a will contest, or litigation. Also if the decedent created a trust, there is no reason to use the spousal property petition or probate at all. Trust administration is usually done without the assistance of the probate court.

The estate planning lawyers at Scott C. Soady, A Professional Corporation can assist with determining if a spousal property petition would be available for you. If you have lost a spouse and need information about trust administration or probate, contact us for a complimentary consultation.

Summary Probate for Small Estates

April 4, 2011

If the value of an estate is less than $100,000, California law provides a way to transfer the assets of the decedent without formal probate. The procedure is outlined in Probate Code section 13100, a process sometimes called a “small estate affidavit.” This method can be used to distribute assets such as cash accounts, stock, bonds, personal property, or even real property if valued below the limit.

How do you calculate whether the estate is valued at less than $100,000? The assets of the decedent that must be counted are bank accounts, brokerage accounts, stocks, bonds, mutual funds, real property, other investments, and personal property. Assets that you don’t have to count are property in joint tenancy, assets held in trust, IRAs, 401(k)s, and other pension plans, life insurance proceeds, automobiles, and payable on death (POD) accounts.

What is required to transfer assets? The process requires an affidavit with information about the gross value of the decedent’s real and personal property, the allegation that the decedent’s assets do not exceed $100,000, and that 40 days have passed since the decedent’s death. The person completing the affidavit, the “affiant” must also allege that there has not been a probate administration, must describe the property to be transferred and allege that the affiant(s) are the persons entitled to the property as the beneficiaries under a will or because they are heirs of the decedent who had no will. The affidavit must be signed under penalty of perjury and notarized. Sometimes banks or companies which hold stock will also require that the beneficiaries or heirs get their signatures guaranteed by a medallion. The affidavit and other paperwork is sent to the institution that holds the assets who then transfer the assets into the names of the beneficiaries or heirs.

The small estate affidavit procedure should not be used when there are significant assets in the decedent’s estate (more than $100,000) or where there is significant debt. The procedure should also not be used there the estate is insolvent or close to insolvent because the estate can benefit from the creditors’ claims procedures available with ordinary probate. Ordinary probate may also be necessary if the beneficiaries or heirs dispute how the property should be distributed.

For other questions about California probate, contact us at Scott C. Soady, A Professional Corporation. We can answer all your probate questions and guide you through probate or one of the summary probate procedures.

Where Do You Open a Probate Estate or Administer a Trust?

March 11, 2011

A family member has died and you have to open a probate estate (if he died with a will or with no estate plan) or administer the decedent’s trust (if he had created a revocable living trust). In what county do you open the estate?

The county where an estate is handled is the county where the decedent was domiciled. Domicile is the permanent residence of an individual. In most cases, it is clear where the decedent was domiciled but in a few instances it may not be so clear.

If a decedent died in a hospital while on vacation, from accident, surgery, or illness, his domicile is still where he lived permanently, so if that is San Diego county, then the San Diego Probate Court would be where the will is admitted to probate or San Diego would be where the trust is administered. On the other hand, what if the decedent decided to move to another county to live with relatives or to live in an assisted living facility? Then domicile has to be determined by looking at such factors as where the decedent owned property; where was the residence of the decedent; where did the decedent receive mail, where was the decedent registered to vote; in what state was the decedent’s driver’s license issued. These factors may lead a court to conclude that the intent of the decedent was to change his domicile to another county.

Another situation in which domicile can be an issue is when the decedent was in the military. People in the military may be stationed or deployed at one location and maintain a residence elsewhere. The general rule is that the county of domicile is where the decedent resided, whether at the time of enlistment or where his family lives and owns the family home at the time he died.

For questions about where to file for probate or administer a living trust, call the estate planning lawyers at Scott C. Soady, A Professional Corporation for a free consultation.

Assets That Are and Are Not Subject to Probate

February 4, 2011

Probate in California is the legal process whereby the Probate Court supervises the distribution of assets of someone who has died with a will OR a person who has died without a will or turst (i.e. intestate). The Court also determines the validity of creditor's claims and sees that taxes are paid. After all the decedent's assets are inventoried and valued, and debts and taxes paid, the Court distributes the decedent's assets in accordance with the will or in the case of no will, according to the Probate Code provisions for intestate heirs.

What assets are subject to probate?
1. Assets that are in the name of the decedent.
2. One-half of each community property asset owned by the decedent and spouse.
3. The decedent's interest in real property owned with others as tenants in common.
4. Personal property of the decedent such as cars, furniture, artwork, books, etc.

What assets are not subject to probate?
1. Assets held in a revocable living trust.2. Assets held in joint tenancy with other joint tenants.
3. Assets which have designated "payable on death" beneficiaries or "transfer on death" beneficiaries.
4. Assets held with your spouse as community property with right of survivorship.
5. Assets with named beneficiaries such as life insurance, IRAs, retirement plans, and pensions.

Many people have difficulty handling a probate by themself. There are many deadlines and tasks that people have to do as an executor or an administrator that they feel more comfortable with retaining a lawyer to assist them.. The estate planning lawyers at Scott C. Soady, A Professional Corporation can help you with the probate procedure. Call us if you have a loved one who has passed away with a will or without a will or trust and we will help you get through the process with ease.

How the Lack of an Estate Plan Can Affect Your Loved Ones

January 4, 2011

If you do not have a will, or better yet, a trust, your estate will be distributed according to the laws of “intestacy” set forth in the Probate Code. There may be a difference between how your estate is distributed according to your wishes and how it will be distributed pursuant to the Probate Code. Here are some disadvantages of intestacy you might want to consider:

1. The Court chooses the individual who will distribute your estate. The Court will appoint someone called the administrator to manage your assets and distribute them to your heirs at law. Maybe the person appointed is the person you would have chosen anyway but maybe not. Maybe two or more individuals will apply to the Court to be named administrator causing discord in the family.

2. The process of probate takes a long time. When you die without a will or a trust, the probate process here in San Diego typically can take a year or longer. The administration of a trust usually progresses much faster. If there are issues that need court intervention, the trustee can petition the Court for assistance, but most trust administrations are handled without going to court.

3. The Court may have to choose a guardian for your minor children. If you create a will or trust, you will name the person or persons you want to raise your children. Without an estate plan, the Court will determine who will be the guardian from those individuals who agree to be the guardian. Again more than one family member or friend may petition to be the guardian causing disharmony. The Court will have to make the determination without any input as to who you would have chosen.

4. With probate, rather than administration of a trust, it can be difficult to come up with money to pay debts, funeral expenses, or a family allowance. With a properly drafted revocable trust, these issues are spelled out clearly in the trust so that the individual distributing the trust (the trustee) can quickly take care of these issues.

At Scott C. Soady, A Professional Corporation, we handle both probate and trust administration as well as custom revocable living trusts to fit your needs. Call us for assistance with these or any other estate planning needs.

Administration of a Missing Person's Estate

December 7, 2010

What happens when someone dies and they have property in California but the decedent can't be found? Sometimes people go missing and are never found. Sometimes it is asssumed that someone has died in an aviation accident with no remains found. Sometimes even criminals suddenly disappear with a suitcase full of money, never to reappear. That happens to their estate?

For the immediate needs of maintenace and protection of property, a trustee can be appointed for an individual who has been missing for 90 days and is presumed to be alive. What if the individual is presumed to be dead and has been missing for a long time? The famiy needs to be able to take care of debts and take over other financial matters of the decedent.

California Probate Code section 12400 - 12408 provides a method of administration and distribution of an estate of a decedent who has been missing continuously for 5 years. This "presumed dead" petition must be filed in the county where the missing person last lived if the person resided in California. If the decedent was not a California resident, the petition can be filed wherever the decedent owned property in California. The petition must state the time and circumstances of the disappearance, last known residence, and a description of what search and investigation occurred concerning his or her disappearance. The Court determines at a hearing whether the person can be presumed dead or there should be further investigation. If the Court finds that the missing person is presumed dead, the Court can also determine the date of death and appoint a personal representative to administer the estate in the same manner as any other decedent's estate.

If the missing person suddenly appears, he has the option of recovering his property from the beneficiaries under Probate Code section 12408 as long as it is within 5 years since the distribution of assets. Other factors the Court will consider are the reasonableness of the circumstances and the cost of legal fees and administration.

Cost of Probate Increasing in San Diego

November 3, 2010

As of November 1, 2010, the cost to file for probate is increasing to $395. This fee is set by the Court and the size of the estate is not considered. What other costs are involved in probate?

The person petitioning the Court to be appointed administrator or executor will also have to publish a notice in the local newspaper, showing the decedent's date of death, who is petitioning to administer the estate, and the contact information of the executor/ administrator so that creditors and other interested persons can contact them. The cost of publication is approximately $350 - $500.

Once the assets have been inventoried, they need to be appraised. Usually this is done by the probate referee who charges approximately 1/10 of 1% of the appraised value of the asset. If there are multiple real properties or items of personal property that have to be appraised, there may be several appraisals, adding to the cost of probate.

Sometimes a bond is required which insures against administrator or executor misconduct which causes a monetary loss. Obtaining a bond can be another cost and is in the discretion of the court if there is no will which waives bond. Bonds can cost anywhere from hundreds of dollars to thousands of dollars depending on the size of the estate.

Attorney's fees also add significantly to the cost of probate. Attorney's fees are set by the Probate Code: 4% of the first $100,000, 3% of the next $100,000, 2% of the next $800,000. Also keep in mind that the attorney's fees are computed on the gross value of the asset. For example if the decedent left a $500,000 house with a $400,000 mortgage, you might think the fees are based on $100,000 but that is not the case. Fees will be calculated on the $500,000 value.

Administrators and executors are entitled to claim the same amount of money for administering the probate estate as the attorney. As an example, with a $1 million estate, attorney's fees will be $23,000 and administrator/executor fees will also be $23,000 for a total of $46,000.

Probate can be a costly and time consuming process, which can be eliminated or substantially reduced by using a revocable living trust as your estate plan. Contact us if you have a probate matter or would like to prepare a trust to avoid probate.

Who Pays a Decedent's Debts?

October 24, 2010

Many people ask whether as family members they can be responsible for a loved one's debts. Often debts can rapidly accumulate especially if a decedent has had a long illness.

If the decedent left an estate that is solvent, the estate will pay the expenses of a last illness and any debt. The personal representative (trustee, executor, or administrator) will be the one to pay off the debts from the assets of the estate before any distributions are made to beneficiaries. A solvent estate is one where the value of the assets is more than the debts. The personal representative if the decedent had a trust will be the successor trustee. The personal representative if the decedent had a will is the executor. If the decedent had no will or trust, the personal representative will be the administrator.

If the estate is not solvent, it means there are not sufficient assets to pay all the debts of the decedent. If there are sufficient assets to pay some of the bills, the bills will be paid in a certain order. That order of payment is as follows:

1. Expenses of administration
2. Secured obligations such as mortgages and judgment liens
3. Funeral expenses
4. Expenses of last illness
5. Family allowance
6. Wage claims
7. General debts.

If there are insufficient assets to pay all the bills, the beneficiaries will not get a distribution and they will not be responsible for paying any of the debts unless other circumstances exist. For example, if a beneficiary or some other individual co-signed on a loan with the decedent or was a guarantor, that is a contractual obligation which will make the co-signer or guarantor liable for the debt. Without some contractual obligation however, family members are not liable for their loved one's debts. Even spouses are not liable for a debt that was solely their spouse's.

Probate and trust administration are a large part of our estate planning practice. We assist trustees, administrators, and executors handle all aspects of administration including payment of debts and distributing assets. Call us if you need assistance with these issues or any other estate planning concerns.

Ancillary Probate Can Increase the Cost of Probate

October 8, 2010

Probate is the legal process instituted in the Probate Court to determine the beneficiaries of a person’s estate and distribute the probate assets to the person's heirs or beneficiaries. Ancillary probate is an additional probate proceeding that is required in addition to the state where the decedent lived and died usually because the decedent owned property in another state. That property could be real property, a car, boat, farm, vacation home or timeshare. The laws of the state where the property is located will determine the costs of the ancillary probate and in some cases, who receives the property after the ancillary probate.

One of the disadvantages to having an ancillary probate in addition to the one in the home state is that it will add to the total cost of administering the probate estate because of additional filing fees, appraisal fees, and attorneys’ fees. Also if the probate estate is an intestate one, that is, a probate because there was no will or trust, the persons entitled to receive distributions could be different than those entitled to inherit in California.

For example, in California, the estate of a person dying with no will and leaving a spouse and one child would be distributed one-half of the community property to the spouse and one-half to the child. As to separate property, it would be distributed one-half to the surviving spouse and one-half to the person’s child. In New York, if a decedent is survived by a spouse and one child, the surviving spouse would receive $50,000 and one-half of the residue of the estate; the child would receive the balance.

In addition, the costs for the ancillary probate could be different in the ancillary state. In California, attorneys’ fees are set by the California Probate Code. A $500,000 estate in California would result in $13,000 in attorney’s fees. In states such as Nevada and Arizona, attorneys usually work by the hour. In other states such as Florida, attorneys’ fees are to be “reasonable” according to the guidelines of the statute. In Florida the attorneys’ fees for a $500,000 estate presumed to be reasonable are $15,000. Costs for each probate proceeding for such things as filing fees, postage, and copying can also vary from state to state.

If you own property in more than one state, a living trust would avoid the costs of probate in California and ancillary probate in the state where you own property. A revocable living trust also allows you to designate who you want to inherit your assets. If you do no estate planning, then the state or states where your property is located will determine who receives your property. Contact us at Scott C. Soady, A Professional Corporation to see if a revocable living trust is for you or if you find yourself involved in the probate process in San Diego.

Probate and the Heggstad Petition

September 27, 2010

In many past blogs, we have emphasized the importance of transferring all assets that are trust assets into the name of your revocable living trust. This is important because if you pass away and there are assets in your estate that were not transferred into your trust, those assets will be subject to probate. Probate can be long and costly and avoiding probate was probably one of the reasons you created a trust.

When you create a trust with Scott C. Soady, A Professional Corporation, LLP, the assets that are being transferred into your trust will be listed on your Schedule of Assets. This would include any real property, bank accounts, mutual funds, stocks, bonds, business interests, and personal property. After your trust is in place, you may acquire additional assets, open a new bank account, buy a second home or a different home, or purchase other assets that should be transferred into the trust. All of these "new" assets should be titled in the name of your trust and your Schedule of Assets updated.

If an asset is not properly transferred into the name of your trust, there potentially may be a way to avoid probate proceedings. There is an action called a Heggstad petition, named after a 1993 case entitled Estate of Heggstad. With this petition, it may be possible for the Court to determine that an asset not actually titled in the trust at the time of death is in fact a trust asset. The court looks to the Schedule of Assets to see if the asset was listed and if so, infers there was an intent to transfer it. If the court grants the petition, the court orders that the asset is a trust asset. The Heggstad petition thus avoids the full probate of the estate.

For assistance with your Schedule of Assets or to create a trust or amend a trust, contact us for a complimentary consultation. We also handle probate, trust administration, guardianships, conservatorships, and estate and trust litigation.

Attorney's Fees in Calfornia Probate

September 23, 2010

Attorney's fees for probate in California are set forth in the Probate Code Section 10810. The maximum fees that can be charged by the probate attorney are:
4% of the first $100,000
3% of the next $100,000
2% of the next $800,000
1% of the next $9 million.
The value of the estate for purposes of attorney's fees is the gross value of the estate, so that if the decedent owned a home valued at the time of death at $500,000 with a $300,000 mortgage, the $500,000 figure is used.

An attorney may also request extraordinary fees based on Probate Code sections 10801-10811 which allows additional compensation for "extraordinary services" in an amount that the Court finds is just and reasonable. Some services that set forth in those sections are:
1. Sales of real or personal property.
2. Contested or litigated calims against the estate.
3. Defense of a will contest after a will is admitted to probate, even if the defense was not successful.
4. Defense of a will contest before the will is admitted to probate, however, in this case, the defense has to be successful in the sense that it benefitted the estate.
5. Preparation of income tax returns, estate tax returns, or other tax returns or the adjustment, litigation, or payment of any of such taxes.
6. Litigation involving estate property.
7. Continuing on the decedent's business if ordered by the Court.
8. Other litigation or special services that are necessary to prosecute, defend, or assist the executor or administrator in the performance of his duties.
9. Filing an accounting for the administration of the estate when such an accounting is required.

Most people would rather see their heirs receive their inheritances in the most cost-effective way possible. Although a living trust costs a bit more to create initially, in most cases, after death, the administration of the trust and distribution to the beneficiaries is much less expensive than what probate fees would be. Call us if you are interested in a revocable living trust package which includes a trust, will, power of attorney, advance health care directive, certificate of trust, assignments, and deeding your real property into your trust. Internet clients receive a 25% discount.

Why Does Probate Take So Long?

August 31, 2010

In California probate proceedings are governed by the Probate Code which sets forth certain time limits. Once a petition for probate is filed, you will receive a date for the first hearing in which an administrator or executor is appointed. The hearing is often 2-3 months after the petition has been filed. Once the representative has been appointed, notice has to be given to creditors of the decedent. Creditors have four months after publication of the notice of probate or 60 days after receiving actual notice, whichever is later to file a claim. Then the process begins of collecting and valuing all of the decedent's asset, paying the debts, taxes, possibly liquidating some assets, and finally distributed the assets to the heirs or beneficiaries.

The normal time for probate in San Diego county is between 9 months and 18 months. There are a number of factors that may make the probate process take longer. Some of these are:

1. Many beneficiaries
2. Beneficiaries that cannot be found.
3. A will contest brought to dispute the validity of the will. If a contest is filed, it will have to be decided before the estate can be distributed. Sometimes this can take years if there are depositions that have to be taken and either mediation or a trial.
4. Disagreements among the beneficiaries such as who should be the administrator, whether the accounting is accurate, whether there are beneficiaries that should be disqualified, or having to set up a guardianship of the estate for minors. Each time a petition or motion is brought in the probate matter to resolve a disagreement, it lengthens the time for closing the estate.
5. A taxable estate. If the estate has to pay federal estate tax, this can delay closing the estate. This is not a problem for decedents who passed away in 2010, however in 2011, if the Legislature does not act, the federal estate tax threshold will revert to $1 million making many more estates subject to estate taxes.
6. A complicated estate with unusual assets. Typical estates consist of real property, bank accounts, investment accounts, etc. If one of the assets is a business, however, it can take time to appraise such an asset. The same is true of oil or mineral rights or other unusual assets. If there are many assets, it can also take additional time to appraise all the assets and liquidate them if they need to be.

The estate planning attorneys at Scott C. Soady, A Professional Corporation handle many probate matters and can make the whole process easier for an executor or administrator. We offer free consultations so if you have a probate matter, give us a call.

Appraising Trust or Probate Assets

August 24, 2010

When someone dies, either with a will or a trust, the assets owned by the decedent have to be valued to determine the fair market value. The date used for valuation of assets is usually the date of death. Sometimes the document, whether a will or a trust, will provide that another date can be used such as 6 months from the date of death. The important thing is that the date is consistent for all of the assets.

Assets that have to be valued can be real property, personal property, investments, bank accounts, IRAs, pension and retirement plans, stocks, bonds, mineral rights, and business interests. Some of these may not be trust assets but still have to be valued if there is going to be an issue with estate taxes. For example, assets held in joint tenancy may not be subject to probate or trust administration, but they still have to be valued for estate tax purposes.

Property such as real property is valued by obtaining a written appraisal by a licensed experienced professional appraiser. The appraisal should include descriptions and photos of the subject property, comparable sales, and a determination of value. Sometimes real property can also include having to appraise personal property as well such as farm equipment, livestock, crops, etc. or in the case of a professional building, the value of equipment and trade fixtures.

The value of personal property also is determined by an appraisal. For household furnishings, the IRS requires an itemized list of the furniture values. Items of jewelry or art should also be appraised by someone experienced in jewelry appraisals such as a gemologist or an appraiser that works in the art field. Other personal property that may need to be appraised may be automobiles, planes, or collections such as coins or stamps.

A business such as a family run business, a professional corporation, or a limited partnership also has to be appraised. Specialized appraisers may have to be retained to value the fair market value of the business and the decedent's interest in the business.

For stocks and bonds that have to be valued, their value on the date of death can be determined by the average selling price of the stock or bond on the date of death. Mutual funds can also be valued using the bid value or public redemption price of the fund on the date of death.

Bank accounts can be valued as of the date of death by bank statements.

Valuing assets can be a tricky and time consuming task requiring experienced consultants and an experienced estate planning attorney. We can assist with this task at Scott C. Soady, A Professional Corporation.
Call us if we can help.

True or False Quiz About Probate

June 23, 2010

Probate as you probably know is the court supervised process for transferring an estate to the beneficiaries of a will or transferring an estate to the heirs of someone who died without a will or a trust. Take the following quiz to see how much you know about wills and probate:

1. Probate only applies if you have a will. Answer: FALSE
If you die with a will, there will be a probate. If you die without a will and don't have a trust either, there will be a probate.

2. Probate applies to your entire estate. Answer: FALSE
Probate is necessary for your probate assets. Some assets are not considered probate assets. Examples are assets which have a named beneficiary like life insurance, payable on death accounts, and property you own in joint tenancy with a right of survivorship.

3. If you have a revocable living trust you always avoid probate. Answer: FALSE
Assets which are transferred into your revocable trust do avoid probate however many people create a trust and fail to properly fund it because they forget to title their assets in the name of the trust. The trust document is useless if you die with assets which should be in the name of your trust, and are not. Assets left out that are over $100,000 will be subject to probate.

4. If you die without a will and are married, everything goes to your spouse. Answer: FALSE.
In California if you die without a will (ie.intestate) your estate will be divided among your spouse and your children.

5. A will is cheaper than a trust. The answer to this question is, in most cases, FALSE.
It is true that a will is usually less expensive to establish than a trust, however a will has future costs. When you die with a will, the distribution of your estate will be through the probate courts. Your estate will incur statutory probate fees for the probate lawyer and for the executor. A trust is a little more expensive to prepare initially but your beneficiaries will not have the fees of probate.

For more information on probate or to create a will or a trust, contact the estate planning lawyers at Scott C. Soady, A Professional Corporation.

Is There a Will or a Trust? How Hard Should We Look?

May 11, 2010

When a person dies in San Diego, the Probate Court will determine to whom the assets of the decedent will be distributed based on the laws of "intestate" succession. "Intestate" means that the decedent died without a will or a trust. Before you decide to file a probate proceeding without a will, make sure that it is indeed the case that no will or trust can be found. It can make a difference.

Look for a will or a trust in the decedent's home and business files, safety deposit box, or safe. Ask other family members if they recall the decedent mentioning that he or she executed a will or a trust. Find out if the decedent had a family lawyer who may have drafted an estate plan or referred the decedent to an estate planning lawyer. Often estate planning attorneys will keep the originals of clients' estate plans in their fire proof safes. Look through the decedent's collection of business cards to see if a lawyer is among them.

If no will or trust can be found, the steps in the probate process will be the same as for a probate with a will. The difference is in the distribution of the assets. A couple of examples will illustrate the difference:

1. Tom dies with a will or trust leaving all his property, community and separate, to his wife Karen. Tom also has a son. All of the property is distributed to Karen. If Tom dies wihout a will or trust, Karen gets all the community property but only half of the separate property. The child gets the other half.

2. Sally, a single woman with no family, dies with a will leaving half of her estate to her best friend Jan and the other half to a number of charities. If Sally had died without a will and no heirs could be found, her property goes to the State.

3. Mary dies with a trust that sets up subtrusts for her minor children and names a guardian to take care of them and a trustee to manage the trust making distributions at intervals of age 21, 30, and 35. If Mary dies with no estate plan, the Probate Court will have to appoint a guardian with no input as to who Mary would have preferred to raise her children and a guardian of the estate to manage their money until they turn 18.

These examples demonstrate that it can be important to make sure that the decedent in fact died without an estate plan. He or she may have had wishes that will not be carried out through intestate succession. Scott C. Soady, A Professional Corporation would be happy to assist you with creating your estate plan or probating the estate of your loved one who did not.

But the Only Asset is a Home!

March 28, 2010

At Law Office of Scott C. Soady, A Professional Corporation, we often have people call us after reading our blog or website articles and ask such questions as "My father died but he didn't have much, just a home. Do I have to file for probate?" or "My grandmother left me her condo in her will but it isn't worth much? Do I still have to file for probate?"

The simple answer to these questions is probably "yes" in California. In other states where property values are lower, it may not be necessary but in California, if you are left real property and other assets valued at more than $100,000 and that property was not titled in the name of the deceased's living trust, or in joint tenancy with you, you will have to open a probate.

There is a summary procedure in California to transfer property after death if the total value of the probate estate is less than $100,000. A Petition to Determine Succession to Real Property can be filed pursuant to Probate Code section 13100 if the estate is less than $100,000 and more than 40 days have elapsed since the death. It is a rare case however where real property in San Diego County is worth less than $100,000. You could have a situation though where the real property was in a trust or in joint tenancy, and the remaining value of the estate not in trust or joint tenancy was less than $100,000 in which case those assets could be transferrred to an individual pursuant to this type of petition.

One of the ways to avoid probate or a small estate affidavit is to create a revocable living trust and put your home into the trust, which means titling the real property in the name of your trust by filing a deed with the county recorder. If your home is in your trust, your heirs won't have to worry about opening a probate to receive the property you leave them.

For probate issues and estate planning, call us to schedule a complimentary appointment.

Obtaining a Deceased Person's Credit Report

March 2, 2010

When a loved one dies, often family members need to obtain a credit report to find out what debts are outstanding, what accounts are still open and need to be closed, and to verify there has been no identity theft. Decedents are often targeted as victims of identity theft. Scam artists track the obituaries in the newspapers, steal death certificates, or obtain identity information on online. They open up new credit cards or run up charges on exisiting accounts. Identity thieves even steal information and sell it to another scam artist, sometimes across the country, to avoid detection. It can take months before a family of the decedent becomes aware of the fraud.

You can obtain a credit report on someone who has died by writing to the three big credit bureaus: Equifax, Experian, and Trans Union. Inform them of the death with the decedent's full name, social security number, address, and date of death. Include a copy of the death certificate and your name and relation to the decedent. Ask for a current copy of the decedent's credit report and that a notice such as "Deceased - Do not Issue Credit" be put in the file. You may also want to request that any suspicious activity be reported to you. Send the letter certified mail.

You can also print out a thorough form from the Identiy Theft Resource Center

Dealing with the death of a loved one can be difficult. You don't need the added headaches of identity theft. If we can help with the death of a loved one, call us. We handle probate and trust administration and can assist with the legal process of administering a will or a trust or the probate of an individual without a will.

A Family Allowance to be Given to Joe Jackson?

February 3, 2010

A family allowance is a amount of money which the Probate Court can order the estate of a decedent to pay to persons who the decedent was obligated to support or who the decedent was in fact supporting at the time of his death. Priority goes to family members such as a surviving spouse or minor children but parents and brothers and sisters can also request an allowance if they were supported in whole or part by the decedent. The family allowance must be reasonable in amount and is in the discretion of the judge based on the circumstances. The allowance, once ordered, continues until there is a final distribution of the estate or by further court order.

An unusual situation has arisen in the case of Michael Jackson' estate. Joe Jackson, the father of Michael Jackson, is seeking a family allowance in excess of $15,000 per month, claiming that he was dependent on his son for support. Michael did not provide for his father in his will or trust. The father and son had been estranged for years and Michael had stated he did not want his father to receive any part of his estate. Michael apparently was not supporting his father in the sense of writing him checks.

Jackson filed a petition in the Los Angeles Probate Court claiming his only income is $1770 from social security and his expenses exceed $15,000 per month. The Court has already ordered family allowances for Michael's children and mother. An evidentiary hearing will be he held in May, 2010. It will be interesting to see if the LA court orders an allowance on the theory that Michael supported his mother and she apparently gave some of that money to the father. As with many issues surrounding the singer's death, stay tuned.

Estate Planning Especially Important for Californians with Second Homes

December 13, 2009

In many San Diego communities, and especially at the beaches of La Jolla, Del Mar, Cardiff, Encinitas, and Carlsbad, there are people who own a home but make their residence in another state. Or maybe you live here in California and own a second home in Colorado, Oregon, Utah or some other state. Why is estate planning especially important for you?

If you own real estate or even tangible personal property in more than one state, each state will be involved in the distribution of your property upon your death unless you do estate planning. The state where real property or other assets is located has the authority to resolve issues of title to property. So if you make your residence in California but own a timeshare in Hawaii, a timeshare in Florida, and a cabin in Colorado, probate proceedings called ancillary probate will have to be set up in each of those states and in California. Ancillary probate could be necessary if you have cars, boats or airplanes registered in another state or oil, gas, and mineral rights. With the filing of a probate, comes additional costs and probate fees and additional time to conclude each probate.

There are several ways to avoid ancillary probate of property in another state. The best way to transfer title to out of state property upon your death is to have a revocable trust and record each piece of property in the name of your trust. Upon your death, there will be no probate, just the administration of your trust in California, a process that can be accomplished without multiple probates.

Another way is to title the real estate or personal property is to put the property in the joint names of you and your spouse with rights of survivorship, however if both you and your spouse die together, the property will need to be probated. If you want to title property in your name and some other individual as joint tenants, there are disadvantages. The joint owner can be sued and a judgment placed on the property which could keep you from selling the property. Also if you put another indidivual on title with you, the IRS could consider the transfer a gift, to which a gift tax may be applicable.

The bottom line is if you have real or personal property in different states, you need to plan carefully. If we can help with your estate planning, contact us.

Executors, Administrators, and Trustees Accountable to Beneficiaries

November 17, 2009

In addition to handling probate, trust administration, and preparation of all types of trusts, we often get inquiries from heirs and beneficiaries with concerns about the way an executor, administrator, or trustee is administering an estate in San Diego. Sometimes beneficiaries cannot get an accounting of the trust assets. Sometimes they have issues with the distribution of assets. In some cases, they may have suspicions that the individual handling the estate is self-dealing or guilty of outright fraud.

The executor, administrator or trustee of an estate has a fiduciary duty to the beneficiaries. This means that they must act with the highest degree of honesty and integrity. They have certain duties under the law that they must fulfill. Among those duties are the duty to collect and protect the assets; duty not to commingle estate assets; and a duty to be impartial. They also are required to communicate with the beneficiaries, provide an accounting of the assets, and distribute the assets according to the testamentary instrument (will or trust) or if there is none, according to the Probate Code.

Law Office of Scott C. Soady, A Professional Corporation represents heirs and beneficiaries as well as executors, administrators, and trustees. If you can concerned about the way an estate is being handled, you have options and remedies. One remedy could be filing a petition in the Probate Court to have the Court address the issue, order an accounting, or remove an executor, trustee, or beneficiary. There are also civil remedies for fraud, breach of fiduciary duty, or constructive trust. If you are over 65 years if age, you may have a action for elder abuse.

Contact us for advice about your options if you are a beneficiary and have concerns about the way a will or trust is being administered or if you are an heir and believe you are entitled to an inheritance.

An Heir is An Heir

November 3, 2009

When you die without a will or a trust, you are said to have died “intestate.” The Court in the probate proceeding ,which will have to occur when someone dies"intestate,'" will determine who receives your estate based on California law. So if, for example, you are single with no children, your parents are your heirs and your estate will be divided between your mother and father.

But what about a situation where a father abandons his child at birth, has had no contact with his child, never paid child support, i.e. not really much of a father. Should that type of father inherit his son’s estate when the son dies? You are probably hoping the answer is “no”. Unfortunately the answer is that the father will inherit from the son, no matter what kind of a father he has been.

In a California case called Estate of Shellenbarger, decided by the Second District Court of Appeal in 2008, there were similar facts. The son died intestate (without a will or trust). Since the son was unmarried with no children, his parents are his heirs under California law. The administrator appointed by the Court tried to argue that the father should not receive any inheritance based on fairness, because he had left the mother prior to his son’s birth and never made any child support payments. The Court ruled that intestate succession is purely based on statute and a Court cannot disinherit an heir even on equitable grounds.

A similar result would occur if a father died intestate with no wife and 2 sons, one of which he had no contact with after the son left home at 17. The other son took his father into his own home and cared for him before his death. The two sons would inherit equally even though it may have been the case that the father would not have wanted his wayward son to inherit anything.

What this illustrates is that if someone dies without a will or a trust, the heirs are set by law. The statute which is set out in California Probate Code Section 6402 doesn’t take into consideration whether that heir had a relationship with the decedent or any other factors. A “bad” heir is still an “heir”.

If you think you might have a situation similar to the above examples, it is so important to get a will or a trust. Law Office of Scott C. Soady, A Professional Corporation can help you with the process of
naming the specific beneficiaries who will share in your estate upon your death so that your assets will be left only to someone you would have wanted to receive them.

Appraisal Method to Change?

October 31, 2009

In trust administration and probate in San Diego County, appraisals of the decedent's real property are an important part of settling an estate. At Law Office of Scott C. Soady, A Professional Corporation, one of the first tasks is to obtain an appraisal of real property as of the date of death. The appraisal, in addition to valuations of the rest of the decedent's estate, form the basis for determining the total value of the estate for purposes of distribution to beneficiaries.

Recently, a bipartisan amendment approved in October by the House Financial Services Committee proposes a new set of rules for obtaining appraisals. The old rules imposed nationwide by mortgage giants Fannie Mae and Freddie Mac, according to realtors and mortgage brokers, produced appraisals often below the agreed-upon price, causing delays and disputes and the necessity for multiple appraisals. The new rules are more likely to encourage independent appraisals, not influenced by loan officers and mortgage brokers. The new amendment has the endorsement of President Obama and the House of Representatives but may face an uphill battle in the Senate.

Appraisals are just one part of trust administration and probate. We use independent appraisers for real property and can help with appraisals of valuable personal property as well. There are numerous tasks that must be done by a successor trustee of a trust or an executor or administrator of a probate estate. Our estate planning lawyers at Law Office of Scott C. Soady, A Professional Corporation can assist you with all aspects of trust administration or probate. Please call or email with questions or to set a complimentary consultation.

Executor Fees - Take them or leave them?

September 15, 2009

Last month our blog concentrated on Probate in San Diego. If you have been reading our blog, you know that fees for an executor or administrator are statutory in California. The fees are set by the Probate Code and are the fees for both the executor/administrator and the attorney for the estate. On a $500,000 estate, for example, the executor or administrator’s fee would be $13,000 and another $13,000 for the attorney. Therefore on a $500,000 estate, together the fees would be $26,000 plus there will be other costs and fees to probate the estate.

Just because you are entitled to an executor or administrator fee doesn’t mean you have to take your fee. There may be reasons not to accept a fee. As a beneficiary, your inheritance is tax free. Your executor fee is not; it is taxable income. So if you are the sole beneficiary of your parent’s will, it makes no sense to take a fee. Waiving it will increase your tax-free inheritance.

If you are one of many beneficiaries, waiving your fee will cause the other beneficiaries’ shares to be greater which you may want or maybe not. Sometimes in a family situation, executors choose to waive fees just to insure more harmony in the family.

Law Office of Scott C. Soady, A Professional Corporation handles many probate matters and can advise you about taking or waiving executor/administrator fees as well as guiding you through the probate process. We are happy to answer any questions you have.

Avoiding Probate

July 31, 2009

Aa you have learned from the recent series of blogs on probate, if you can avoid a probate after your death, your heirs will have an easier time settling your estate.

The best way to avoid probate is to have a revocable living trust into which you transfer all of your assets to yourself as the trustee during your lifetime. Upon your death, the successor trustee you have chosen will have immediate authority to administer your trust without a probate. It is critical however that you in fact transfer your assets into your trust by deed, changing title to accounts, etc. Other advantages of a trust are privacy and that if properly drafted, the trust will also have provisions for someone to manage your assets if you become unable to do that for yourself.

Other ways to hold title to avoid probate are:

1. Property held in joint tenancy with a right of "survivorship". An example might be a home you own with your spouse with a “right of survivorship.” Sometimes people own their cars in joint tenancy with other people or a bank account in joint tenancy. When a joint tenant dies, the other joint tenant(s) inherit the property without the probate process. Although assets held in joint tenancy avoid probate, holding title in joint tenancy can cause other problems such as the potential loss of a full step-up in basis which can result in capital gains. Another problem which can result when you own something in joint tenancy is that creditors of the other joint tenant may be able to enforce a judgment against the property.

2. Payable on Death Accounts (or POD accounts). This is a type of account where you choose a beneficiary who will receive the account upon your death. These accounts pass to the beneficiary without probate.

3. IRAs and Retirement Accounts. Benefits payable to beneficiaries under these accounts automatically pass to the named beneficiaries and avoid probate.

4. Life Insurance Proceeds. Just as with pension and retirement plans, life insurance proceeds are paid to the named beneficiaries and avoid probate.

For questions about probate, living trusts, transfers to trusts, or any other estate planning area, contact us at Law Office of Scott C. Soady, A Professional Corporation.

Probate FAQs

July 28, 2009

Frequently Asked Questions about San Diego Probate

1. How long will my probate matter take? As a general rule, most probates in San Diego are finished in a year to 18 months. However there can be many issues that may cause the probate to last longer. Common examples are litigation issues that develop such as an objection to the will, unusual property that has to be appraised or liquidated, difficulty finding heirs or beneficiaries, and larger estates with tax issues.

2. If I am an administrator or an executor, will I have to post a bond? A bond is for the purpose of protecting the decedent's estate in case the personal representative mismanages the estate. Depending on the size of the estate, bond premiums can be $2000 or more per year.If the will waives bond or you can get all the beneficiaries to waive bond, you probably won't have to post a bond, however the Court can always order the personal representative to be bonded if the Court believes it is warranted. Bonds are usually required if the administrator or executor live out of state. To obtain a bond, you have to provide information to the bond company about your employment, criminal convictions, bankruptcies, and civil judgments against you. Some people are not bondable if they have issues in these areas.

3. What should I do if I am a creditor of a probate estate? If someone has died owing you money and there is a probate opened, you can file a creditor's claim against the estate. You may receive a Notice of Administration if you are a known creditor in which case you have 60 days to file a claim. If you are not notifed of the probate, you have 4 months after the letters testamentary (probate with a will) or 4 months after the letters of administration (probate without a will) within which to file a claim.

4. What if my spouse died and all of his or her property is community property? If all of a decedent's property is held as community property with the surviving spouse, a petition can be used to pass the assets to the surviving spouse. This is a simple petition filed in the probate court but without all the formalities of regular probate and it can be heard in a relatively short time after it is filed.

These are general answers to general questions but remember each probate situation has its own facts and issues which may change the general rules. If you have specific questions about your probate matter, we offer a complimentay 30 minute consultation. Contact us at Law Office of Scott C. Soady, A Professional Corporation for probate and other estate planning issues.

What is Your San Diego Probate Matter Going to Cost?

July 23, 2009

The fees for a probate attorney to handle your probate matter are set forth in the Californa Probate Code. Section 10810 escribes the maximum fees an attorney can charge. These are as follows:

4% of the first $100,000
3% of the next $100,000
2% of the next $800,000
1% of the next $9 million
If the estate is worth more than $25 million, the Court will determine the fee.

Who is entitled to these fees? The statute allows compensation for both the attorney handling the probate and the executor or administrator (if you have read the previous blogs, you know the difference). So for example, if the estate is valued at $500,000, the statutory fees would be $13,000 for the attorney and $13,000 for the executor/administrator. With a $1 million estate, the fees would be $23,000 each, or $46,000 total. Fees can also be increased by the court if the probate is complicated by litigation or tax issues.

You may be asking how the fee is determined when there is an asset which is mortgaged. For example, you may have a home appraised at $400,000 but it has a $300,000 mortgage. The house is still considered an asset worth $400,000 for purposes of determining attorneys fees.

In addition to the statutory fees for attorneys and executors or administrators, there will aso be costs to file the probate, publication costs, and appraisal fees. For questions about probate or to assist you with the probate process, contact us at Law Office of Scott C. Soady, A Professional Corporation.

What if no will can be found? Is probate still necessary?

July 20, 2009

If a person dies and they have a will, there will have to be a probate proceeding to transfer the assets. As you know from reading the previous blog, a probate is simply the court supervised proceeding to determine who the heirs or beneficiaries are and transfer the assets to them.

If person dies and leaves no will ( ie. they died intestate), there will still have to be a probate. The Court will distribute your estate to your heirs at law to be distinguished from the situation where a will names the beneficiaries you want to inherit who may or may not be your heirs. As an example, if you want to leave money to a favorite charity, you have to name that charity in a will or a trust. Without either, your estate will be an intestate estate and be distributed to your heirs, not the charity you had in mind.

The distinction between a will and no will is simply that if no will is found, the estate will be distibuted according to the laws of intestate succession. In California with a decedent who is single, the beneficiaries will be the children; if no children, then to parents; if no parents, then to brothers and sisters or their children. If none of those individuals exist, then the estate will go to grandparents, if they are still alive. If none of those relatives exist, then the estate will go to the State of California.

If the decedent left a spouse, the community property will be distributed to the spouse and if there are no children, the separate property will also pass to the spouse. If there are children, the children will get a portion of the separate property.

The rest of the intestate probate administration will progress just as it does with a will. There will be a petition filed with the probate court to start the process and the court will appoint someone as the administrator of the estate. The assets will be inventoried and appraised, creditors notified, taxes paid if necessary, and assets distributed to the decedent's heirs at law.

At Law Office of Scott C. Soady, A Professional Corporation we handle both testate and intestate probate. Initial consultations about your probate matter are at no charge. Probate administration is based on the statutory fee schedule set forth in the California probate code, which we will talk about in the next blog.

Glossary of Terms for San Diego Probate

July 15, 2009

This blog entry is the first in a series of blogs about probate, what is is, who is involved, how long does it take, and what does it cost.

Estate planning lawyers use a lot of terms in probate that most laymen do not know the meaning of unless they have been a participant in the probate process. The following is a short glossary of terms used in probate so that you understand who the players are and what the definitions are of commonly used terms.

Administrator - the individual appointed by the probate court to administer the decedent’s estate when there is no will

Beneficiary - the person or persons named in the decedent’s will who are entitled to the distribution of the decedent’s assets. Usually the beneficiaries are the decedent’s heirs but there is no requirement that they be such. If the probate is one where the decedent did not have a will, California laws on intestate succession will determine the beneficiaries who are entitled to a distribution of the estate.

Bequest - a gift under a will

Bond - an insurance policy used to ensure that a legal representative such as an administrator or executor will do his or her job and not misuse or misappropriate funds he or she is in control of

Codicil - an amendment or supplement to a will that modifies, alters, or revokes the provisions of a prior will

Decedent - the individual who died

Estate - All the property that the decedent owned at the time of death

Executor - the individual named in the decedent’s will to administer the decedent’s estate

Intestate - refers to the fact that the decedent died without a will so that his or her heirs will receive the assets of the estate according to the laws of intestate succession

Look for later blogs about other aspects of probate. If we can assist you by answering your questions about probate or handling your probate matter, feel free to contact us.

Probate in San Diego

July 2, 2009

According to a survey by Martindale-Hubbell at lawyers.com, more than half of the people in America do not have a will or a trust. If you do not prepare a will before you die, your estate will have to go through probate. In fact, if you do prepare a will rather than a trust, your estate will have to go through probate.

Probate in San Diego is the legal process of administering a decedent’s estate so that legal title to property can be transferred from the decedent’s estate to his or her beneficiaries. If the decedent has died in San Diego, the estate will be probated in the San Diego courts. In San Diego County, a petition for probate can be filed in the downtown San Diego Probate Court or the North County Probate Court located in Vista.

For most people, becoming an executor of an estate with a will, or becoming an administrator of an estate without a will, is something that requires the assistance of a lawyer. Sometimes people think they can handle a probate without legal counsel, get involved in the process, and then decide that they are in over their head and need legal assistance. Many clients find the process time consuming and confusing. There are many nuances to filing the correct documents with the Probate Court in a timely fashion. If property is owned out of California such as a timeshare, second home, etc., ancillary probate proceedings have to be set up in those states, which complicates the settling of the estate. Sometimes court appearances have to be made which makes some lay people uncomfortable.

The experienced estate planning lawyers at Law Office of Scott C. Soady, A Professional Corporation help many people through the probate process. It doesn’t matter which lawyer you choose to assist you, the statutory fees are the same, however, what we offer is years of expertise in helping clients through the process; no charge for copies, postage, parking, or mileage; convenient location off the Interstate 15, and helpful friendly support staff that will always return your calls, keep you informed of the status of your case, and answer your questions. Give us a call to set up your complimentary consultation about your probate matter. We also handle will contests, preparation of wills & trusts, and litigation.

Is there a Reading of the Last Will & Testament?

June 19, 2009

You have no doubt watched movies or TV shows where everyone gathers in the lawyer's office, solemn and perhaps anxious about the "reading of the will". The will is then read aloud by the lawyer to all interested parties. It is unknown where this idea came from but it never happens in real life. There is no legal requirement that a will or a trust be read out loud to family members. As a practical matter, family members usually know where their loved one's will or trust is located and it may be several weeks until they even consult with a lawyer about what should be done. At that point, the lawyer may even provide copies to the beneficiaries.

With a will, the will is filed with the Probate Court to start the probate process and once that happens, the will is a matter of public record, open to anyone who wants to view it. That is how the public knows so much about celebrities and their wills.

If you have a trust, the trust which becomes irrevocable at your death, your beneficiaries and heirs are entitled to a copy of the trust but your trust does not become public. Privacy is one of the advantages of a trust over a will.

If you need assistance with determining what needs to be done after the death of a loved one, contact the estate planning attorneys at Law Office of Scott C. Soady, A Professional Corporation. We can help with probate or trust administration. Feel free to call us with any question you have about probate, trust administration or any other estate planning question.

What Assets Do Not Go Through Probate?

June 11, 2009

If you have a will and not a trust, when you die your estate will have to go through probate. In general this means that all the property that the deceased owned at the time of death such as real property, personal property, bank accounts, investment accounts, etc. will be part of the probate estate. However there are some exceptions. You may have in your estate some assets that do not go through probate in California. These are some of them:

1. Property held in joint tenancy. An example might be a home you own with your spouse with a “right of survivorship.” Sometimes people own their cars in joint tenancy with other people or a bank account in joint tenancy. When a joint tenant dies, the other joint tenant(s) inherit the property without the probate process. Although assets held in joint tenancy avoid probate, holding title in joint tenancy can cause other problems such as the potential loss of a full step-up in basis which can result in capital gains. Another problem which can result when you own something in joint tenancy is that creditors of the other joint tenant may be able to enforce a judgment against the property.

2. Payable on Death Accounts (or POD accounts). This is a type of account where you choose a beneficiary who will receive the account upon your death. These accounts pass to the beneficiary without probate.

3. IRAs and Retirement Accounts. Benefits payable to beneficiaries under these accounts automatically pass to the named beneficiaries and avoid probate.

4. Life Insurance Proceeds. Just as with pension and retirement plans, life insurance proceeds bypass probate and are paid directly to the named beneficiaries.

Another way you can avoid probate is to transfer your assets into a revocable living trust. Assets which have been transferred into the name of the trust are non-probate assets. Contact the experienced estate planning lawyers at Law Office of Scott C. Soady, A Professional Corporation if you would like more information about a trust or putting your assets into some other form which will avoid probate.

Who Will Be Appointed Executor or Administrator in Probate

May 28, 2009

In our last blog, we talked about the timeline for probate in San Diego. Another question we are asked frequently is who is going to be appointed the executor or administrator of the estate? If there is a will created by the decedent, the will usually names the "executor." If that individual is unable or unwilling to serve and there are no successor executors named in the will, then the court may be asked to appoint an administrator with will annexed also known as an administrator CTA. If a person dies without a will, the person who handles the estate is called the "administrator." All administrators and executors have the same function which is to oversee the decedent's estate, including evaluating assets, paying bills, and distributing the estate to the beneficiaries.

Any interested party can petition the court to become the administrator. An interested party could be a family member or even a friend. There is however an order or priority which is set forth in the Probate Code. The following list shows the persons who have priority if they choose to be appointed:

1. Surviving spouse or domestic partner
2. Children
3. Grandchildren
4. Other issue ("Issue" means one's descendants)
5. Parents
6. Brothers and sisters
7. Issue of brothers and sisters (nieces and nephews of the decedent)
8. Grandparents
9. Issue of grandparents
10. Children of a predeceased spouse or domestic partner
11. Other issue of a predeceased spouse or domestic partner
12. Other next of kin.

Last in the priority list are other interested persons which could be friends of the deceased or even a creditor.

If you have any questions about probate or the appointment of administrators and executors, or want to petition the court to become one, contact us. at Law Office of Scott C. Soady, A Professional Corporation. Your initial appointment with us is always free of charge.

Time Line for San Diego Probate

May 23, 2009

If your loved one who resided in San Diego has passed away with a will or no estate plan, there will have to be a probate proceeding in the Superior Court. Probate can be a lengthy and complicated process with deadlines that have to be followed. Most people want to know “how long is this going to take?” Every probate is different. There are no simple answers to that question. The time depends on what assets are in the estate, how easily they can be liquidated, whether you own property in other states, and other issues.

The following guideline gives you a basic idea as to what has to be done and when it is usually accomplished, assuming you contact us at Law Office of Scott C. Soady, A Professional Corporation or another experienced probate lawyer soon after the death.

Filing the will with the Superior Court - Within 30 days of death

File a Petition for Probate; Publication of Notice in local newspaper - Within 1 - 2 months

Hearing on Petition; Appointment of Executor or Administrator; Bond issued if necessary - 2 - 3 months

Notice to Creditors - Within 2 - 4 months

Inventory of Assets; Appraisal of all assets; Obtain a tax ID number, Pay bills - Within 4 - 8 months, depending on number and type of assets

Filing of an Estate Tax Return if required - Within 9 months of death

Filing of Federal/State Tax Returns - Within 6 - 12 months

Filing of an Accounting if necessary; File Petition for Final Distribution and Distribute Assets - Within 8 - 18 months

The above timeline is a general one. These are most of the steps which will occur but there may be other steps in your situation. Your probate may be longer or shorter depending on your loved one's estate and the court’s calendar. Litigation could also cause delays. If we can help with probate in your situation, contact us to schedule a complimentary appointment.

Unusual Will Contest before Death of Testator

April 4, 2009

In the category of “stranger than fiction,” a lawsuit has been filed in Arizona by a man who was cut out of his mother’s will. The problem is that she is not dead yet. Here in the San Dieigo Probate Court, will contests are filed but after the death of the testator (the individual who made a will before their death.)

The lawsuit filed by Robert Jaeger seeks $1 million in punitive and compensatory damages from his brothers and sisters on the basis that they interfered with an expected inheritance by persuading his mother to cut him out of her will. Jaeger claims that he took care of his mother for seven years and in return she promised to leave him her house when she died. His mother changed her will to leave her estate to her other children instead. The mother, Patricia English, says that her son was unemployed, spent her money, failed to find work, and became more and more demanding. In any case, she says, she had the right to decide who should inherit her house when she died. The siblings are fighting over English’s house which has $130,000 equity. She has no other assets.

In Arizona as in California, there is no cause of action for interfering with an expected inheritance. Only Maine and Florida have such causes of action while the person who executed the will is still alive. The court in Arizona has ruled however that the suit can proceed.

Mary Jo Quinn, director of the San Francisco Probate Department has said she has never heard of siblings squabbling in the probate court while the parent is still alive and capable. “Anybody can sue anybody,”she said, “but the trick is they have to prove it.”

Stay tuned.

Procrastination Has Its Problems

March 29, 2009

We know that many Americans procrastinate about getting a will or a trust done. Especially in this economy where people have a lot of challenges, an estate plan, even if desired, sometimes doesn’t work itself up to the top of one’s To Do List. What happens if you procrastinate about getting an estate plan?

Probate - Without a trust or a will, your estate will wind up in the probate court. Statutory fees will have to be paid to the probate attorney and the administrator of your estate. Probate is not private - anyone can view probate records - and the distributions to your heirs can be delayed for as much as a year and in some cases, longer.

Without a will or a trust, your surviving spouse may not inherit your entire estate. Your spouse will inherit all the community property but will only get 1/2 to 1/3 of your separate property. The remaining property will go to the children.

Minor children will not have guardians appointed. Without a designation of guardians for your minor children, the Court will have to appoint a guardian without any guidance from you as to your preference for the guardian or guidelines for raising the children.

Children may receive money outright and not be equipped to handle it. Without a trust setting forth increments for the distribution at various ages, children who are 18 will receive their money outright, all at once, which may not be a good idea for some young beneficiaries.

Special Needs Beneficiaries may lose their public assistance. If you have a child or other beneficiary who is on public assistance, inheriting money outright rather than into a special needs trust, may cause them to be disqualified from receiving those benefits.

Higher Estate Taxes - For those high net worth individuals, not having a trust can result in your heirs having to pay more estate taxes than necessary. Estate planning strategies like an A/B or A/B/C trust, irrevocable life insurance trusts, or other advanced techniques can avoid or reduce estate taxes.

Don't procrastinate any longer. Contact us at Law Office of Scott C. Soady, A Professional Corporation for a complimentary consultation to discuss your will or trust.

Can Killers Inherit from Their Victims?

March 22, 2009

Have you ever wondered whether someone who murders another person can inherit from their estate? In years past, there have been several California cases where children have murdered their parents, sometimes for money, as was alleged in the famous Menendez case in Los Angeles. Two brothers, Eric and Lyle Menendez, were tried and convicted of murdering their parents in 1989 to inherit what they thought was a $14 million estate. As it turned out, after taxes, loans, and costs of defense, they each would have inherited only about $ 2 million each. They were prevented from inheriting their parents' estate.

The California Probate Code Section 250 has a section that provides that a person who “feloniously and intentionally kills the decedent” is not entitled to “any property, interest, or benefit under a will of the decedent or a trust...” This would also include life insurance proceeds or assets left to the killer as a designated beneficiary. You may remember Scott Peterson who was convicted of killing his wife. He was prevented from receiving benefits from his wife’s insurance policy.

All states in this country have similar laws to prevent someone who kills another from inheriting from the victim of their crime. In addition many states have adopted laws to make it difficult for convicted killers to sell their story and keep the money for themselves. These so-called “Son of Sam” laws came from the case where serial killer David Berkowitz, nicknamed the Son of Sam, was planning to profit from the sale of his story. California passed a “Son of Sam” law in 1986 prohibiting felons from profiting from their crimes. This law was struck down in 2002 as being unconstitutional. Today “Son of Sam” laws are sometimes put into plea bargains to provide that any profits from book deal or movies will go to the U. S. Treasury. Another remedy for victims is that they can sue their perpetrators in civil court, as in the O.J.Simpson case, and obtain a judgment which would be satisfied by book and movie profits.

Families Need to Greive Before Tackling Estate Issues

March 17, 2009

Sometimes we get calls within a day or two of a loved one’s passing away by family members who wonder what they should do. The first thing that should be done is to handle the bereavement process. Spend time with family and friends and begin the grieving process before anything else.

There are many resources on line and in San Diego for information on the grieving process.
The National Hospice and Palliative Care Organization is the largest nonprofit organization representing hospice and palliative care programs. In San Diego we have the Elizabeth Hospice, San Diego Hospice, and Hospice by the Sea to name just a few. For people dealing with the death of a child there is the Empty Cradle and the Jenna Druck Foundation.

Coping with the loss of a loved one is a process. In addition to the grief and bereavement resources listed here, there are many grief support groups at local churches or through professional counselors. Most support groups also can recommend books and articles on the subject.

We always tell our clients and potential clients that the first thing to do is to begin the healing process. In most cases, contacting us in several weeks will be fine to determine what needs to be done as far as estate and trust issues are concerned. Sometimes there are immediate issues that have to be addressed and the experienced estate planning attorneys at Law Office of Scott C. Soady, A Professional Corporation would be happy to assist with those if necessary. Feel free to contact us by phone or email if you have questions.

Extension for Filing and Paying Tax Returns

March 12, 2009

Some people need extra time to file a personal tax return or an estate tax return. On your personal income taxes, you can apply for an automatic extension to file but it doesn't extend the time to pay. You will have to pay a .5% per month penalty for late payment.

With the payment of estate taxes, you can also apply to receive a 6 month extension. The extension provided for in IRS Form 4768 is automatic. You will automatically receive an extension to file for 6 months however be aware that an extension of time to file is not an extension of time to pay the taxes. An extension of time to pay is discretionary.

One executor and trustee of an estate found this out the hard way. In a court case entitled Baccei v. United States, a trustee of a revocable living trust hired an accountant to prepare the Federal estate tax return. The accountant filed Form 4768 requesting a 6 month extension of time to file the return. Part of the form contains a section for an explanation as to why the estate needs more time to pay the tax and the number of months requested, up to 12 months. The accountant did not fill out that part of the form. Within 6 months, the accountant filed the return and paid the estate tax. The IRS then assessed a late penalty on the estate tax paid which had been approximately $1 ½ million. The Trustee appealed.

The Court which heard the matter held that the estate had not requested an extension to pay, only to file, and therefore the late penalty was proper. The two extensions found in Form 4768 are separate extensions and have to be separately requested.

Filing and paying tax returns for an estate is one of the jobs of the executor of a will or the trustee of a trust. If you are the executor of an estate or the trustee of a trust, these are part of your fiduciary duties. Our office handles numerous probates and trust administrations in which we assist executors or trustees with these types of duties. If we can be of assistance, please contact us.

Transferring a Vehicle without Probate

February 27, 2009

In California, the transfer of a car or other vehicle can be done without probate through the DMV. If you are an heir of someone who has died, you can transfer title even though there will be a probate or trust administration. You do have to wait at least 40 days from the date of death before you can transfer ownership.

The DMV form called "Affidavit for Transfer Without Probate" must be completed for all motor vehicles licensed in California. In additional to this form you will also need the Certificate of Title, an Odometer Disclosure Statement, a Statement of Facts, and pay the transfer fee.

DMV offices are located all over San Diego County, in the cities of Oceanside, El Cajon, Chula Vista, Poway, Escondido, Claremont and downtown.

Our experienced probate lawyers at Law Office of Scott C. Soady, A Professional Corporation can assist you with any other issues you have relating to probate in San Diego County.

Valuable Information to Protect Your Deceased Loved One From Identity Theft

December 26, 2008

Earlier this month we posted a blog about identity theft during the hollidays. Malls in North County, South Bay, Carlsbad, and Mission Valley are targets for pick pockets and thieves who look to steal purses. But did you know that even deceased persons can be victims of identity theft? The deceased are easy targets because sometimes it takes weeks or months and in some cases years for financial institutions to find out about a death. The identity of a deceased person can be stolen in a variety of ways. Some identity thieves watch the obituaries, look up death certificates, or obtain private information from health care providers, unknowing relatives, or internet genealogy web sites.

Back in 2006 in Kentucky a financial planner used the confidential data of 160 deceased persons to acquire 700 credit cards from financial institutions and scammed nearly $2 million over a three year period

Although the deceased person doesn’t have to be concerned with his or her credit rating, identity theft can cause emotional distress for the family. Identity Theft Resource Center has valuable information about how to protect yourself and your deceased loved one from identity theft. They also have an information sheet with steps to take to decrease the risk of identity theft such as notifying the credit bureaus to put a “deceased” notation in their file, obtaining a copy of the decedent’s credit report, and a list of agencies and companies to notify of the death. Sample letters can be found at the California Office of Privacy Protection.

You can also stop the junk mail by contacting the Direct Marketing Assn. There you can register to take the deceased’s name off mailing lists with their Deceased Do Not Contact List.

If your loved one had a will which needs to be probated or a trust which needs to be administered after death, Law Office of Scott C. Soady, A Professional Corporation handles many of the above steps as part of their representation. Contact us if we can help with trust administration or probate.

Help is a Click Away!

November 13, 2008

If you live in San Diego, there is a lot of free information available to you on a variety of legal issues. Here are some “clicks’ that may answer many questions you have:

1. Our website at Law Office of Scott C. Soady, A Professional Corporation has many articles in the area of estate planning and divorce. Our estate planning blog has current postings as well as archived postings going back to 2002.

2. The San Diego County Clerk/Recorder's office has information on its website about recording documents and you can also download samples of commonly used forms such as affidavits of death, grant deeds, quitclaim deeds, property tax exemption forms, and preliminary change of ownership forms. You can access information about your property tax bill or download an application to lower your propery taxes. You can also check the Grantor/Grantee index online for deeds and other recorded documents and order copies on line or pick them up at one of the offices in Kearney Mesa, San Marcos, downtown, Chula Vista, or El Cajon.

3. The California Courts Self-Help Center has information about how to find lawyer referral services, where all the courts are located and their calendars, and frequently asked questions about a variety of topics. There is information about small claims court, conservatorships, elder abuse, landlord/tenant issues, divorce, and traffic tickets. You can even download the Judicial Council legal forms and get information on how to fill them out.

4. At the California State Bar website you can find a lawyer, look up a specific lawyer’s disciplinary record, and get basic information about a number of legal topics. Consumer pamphlets are available on all sorts of topics such as estate planning, probate, small claims court, getting arrested, minors and the law, seniors and the law, and divorce and child custody.

If you need information on estate planning issues, remember Law Office of Scott C. Soady, A Professional Corporation offers a free in-house consultation. E mail us or call us with a question or to set an appointment.

Timeshares and Estate Planning

August 21, 2008

Many San Diegans have timeshare properties out of state in Hawaii, Colorado, and Florida as well as right here in San Diego in the beachfront communities of Coronado, La Jolla, Mission Beach, Carlsbad, and Oceanside. If you plan to leave your timeshare properties to your heirs you need to understand several things.

There are two types of timeshare properties - deeded and non deeded. With the non deeded form of ownership you usually are buying a license to use the property or a lease or membership interest that allows use of the property for a number of years. You may or may not be able to pass this on to your heirs. With a deeded timeshare you actually have an ownership interest in the property and have a deed showing that interest.

If you have a revocable living trust, a timeshare, like any other piece of property, has to be transferred into your trust. If it is a deeded timeshare, this will be done with a trust transfer deed. Many trust administrations or trust distributions are delayed because individuals forget to transfer their timeshare properties into their trust.

With a will as your estate plan, your entire estate will have to go through the probate procedure with its accompanying time and expense. If the timeshare property is out of state, a second probate called an “ancillary probate” will have to be established, resulting in additional probate fees. Ownership of out of state property is a good reason to have a trust rather than a will.

With either a will or a trust, if you think your children will be fighting over the use of the timeshare, consider leaving it to only one beneficiary so that the timeshare does not have to be sold to distribute it.

If you have questions about your vacation properties and whether they are properly transferred into your revocable living trust, we can assist you at Law Office of Scott C. Soady, A Professional Corporation You can also call us or e mail about any other estate planning issue.

10 Things You Can't Do Without a Will or Trust

August 4, 2008

If you die in San Diego without a will or a trust, you are deemed to have died “intestate”. To die “intestate” means to die without a “testament” (a will) or a trust and your estate will have to go through the probate process where the Probate Court will determine where your estate will go. This can result in unintended results for some people and not what they would have wanted.

As an example, most people believe that if they are married and they die without a will or a trust, all their property will go to their surviving spouse. That is not the case in California. If you are married with children, your community property(essentially property acquired during the marriage) will go to your spouse, but only one-half of the separate property (property acquired before marriage or inherited during the marriage) will go to your spouse if there is one child of the marriage. If you have 2 or more children, your spouse will only receive one-third of the separate property. This can be an unintended result if the estate is small and the surviving spouse needs all the assets in the estate to live on. Furthermore, California inheritance laws only recognize relatives of the intestate decedent, so the Probate Court can never distribute any of the estate to charities or non relatives.

Here are 10 example of things you cannot do if you die intestate:

1. Leave any part of your estate to a friend.
2. Provide for a disabled child or other disabled beneficiary so as not to impact their public assistance.
3. Designate a guardian for your minor children.
4. Prevent a minor beneficiary from receiving all of his or her inheritance at age 18.
5. Leave any gifts to charity.
6. Disinherit someone who is your heir.
7. Designate who will receive your personal property such as jewelry, artwork, coins, etc.
8. Provide a life estate so that someone can live in your home after your death.
9. Leave any part of your estate to a non-adopted step-child or foster child.
10. Designate the ages and the terms under which your children or grandchildren will receive their inheritance.

To avoid unintended results upon your death and provide for your loved ones in any of the ways listed above, it is important to have a will or a trust. A will allows you to accomplish these objectives but a will has to go through the probate process which can be costly and time consuming. A living trust is a better way to specify who you want to inherit your estate without the time and expense of probate. The experienced estate planning lawyers at Law Office of Scott C. Soady, A Professional Corporation can assist you with implementing your wishes in the appropriate estate planning documents. Call us or e mail us for a complimentary in-house consultation.

North San Diego County - Will and Trust Litigation

July 30, 2008

Even when a person dies with a will or a trust, there can be disputes that result in a will contest or trust litigation. An individual may feel he or she should have been a beneficiary under a will or a trust. Sometimes a will has been changed and beneficiaries under the original will feel there has some impropriety surrounding the execution of the subsequent will. Sometimes beneficiaries may be dissatisfied with the accounting of the assets in the estate. When these types of issues occur, it may become necessary to seek the assistance of the court to resolve these issues. Common grounds for contesting a will are such things as claims of undue influence, lack of mental capacity, fraud, or an invalid codicil (amendment).

With a trust, individuals who are beneficiaries or think they should be a beneficiary may dispute the trust. Issues can arise such as the validity of the trust or amendments, the administration of the trust, or conduct of the trustee. Sometimes trustees have to be removed for misconduct or impropriety or it may be the case that beneficiaries have to initiate litigation to receive a fair distribution.

Handling a will or trust litigation matter requires special experience. If you have concerns about a will or a trust or believe you should have inherited from one, the experienced estate planning lawyers at Law Office of Scott C. Soady, A Professional Corporation can assist you. Call or e mail us for a complimentary, confidential in-house consultation.

Probate: Same Sex Spouses

June 20, 2008

In San Diego, many opposite sex and same sex couples have been married since the week of June 16, 2008. The California Supreme Court has issued a Writ of Mandamus to the California State Officials to not deny the issuance of marriage license based upon the sex of the betrothed. As such, there are now same sex spouses in California and these marriage are legal as of today and, as all know, there is a proposal for an initiative on the November, 2008 Ballot for same sex marriages to be unconstitutional. Whether the marriages are ultimately held valid or void, it is possible that a same sex spouse married in June of 2008 who passes away before the November elections, would have their estate treated the same as opposite sex spouses which would involve probate if there was not a revocable living trust.

In San Diego, there are two court houses for probate cases: San Diego and Vista. Our law office of Law Office of Scott C. Soady, A Professional Corporation, LLP would be pleased to offer a complimentary and confidential consultation to both same sex and opposite sex spouses for representation in probate or for the preparation of a revocable living trust. Please feel free to e mail or call us to set up an appointment.

San Diego: Probate Bonds

June 5, 2008

In San Diego, there are two Probate Courts. One court is in San Diego and the other court is in Vista. The Judges follow the Probate Code and this requires, in some instances, a bond be placed with the Court. This is not an unusual procedure in Court however we find many of our client's are unfamiliar with the bonding process and are insulted by this requirement. The probate process, in and of itself, can be confusing enough.

The bond can be posted in cash with the Court. Most parties to a probate action, however, post the bond through a bonding agency. Bond Services of California is one bonding company and there are others. We do not endorse or recommend this company and list this for informational purposes only. Please make sure to check with the Better Business Bureau of San Diego for any companies in San Diego [including bonding companies] or in the city in which you need the services. Our firm of Law Office of Scott C. Soady, A Professional Corporation, LLP can assist with the liaison of a bond as needed. There are strict requirements for being bonded as well and this can be a complicated and confusing area.

Please feel free to e mail our firm or call for a complimentary and confidential consultation if you are seeking a probate attorney or have a question regarding the need for a bond in a probate case.

San Diego Revocable Living Trusts: Avoid Advances on Probate Inheritance which is Costly

May 29, 2008

In San Diego, as in many of our previous postings, our law firm of Law Office of Scott C. Soady, A Professional Corporation, LLP has helped thousands of clients avoid probate fees and costs. The death of a loved one [and often a financial provider] can leave families financially devastated during this time. The probate fees in San Diego are 4% of the first $100,000, 3% of the second $100,000 and 2% of each next $100,000 in increments. In addition, probate can take more than one year for distribution and there is no privacy.

In fact, there are business' which advertise to beneficiaries [heirs] in probate cases and offer to advance them money pending the distribution by the Court. One company's website is included in this posting and our firm has no connection with this entity and does not endorse them nor their product. This is posted for the sole purpose of our firm using our education, training and experience to try and protect our client's rights and try and obtain their legal goals and to avoid having our client's in the financial position where they have no option but to pay for an advance on their own inheritance. Of course, once a probate is open, many persons have no choice given the financial position post death of a spouse or other financial provider such as a parent.

In our firm, our revocable living trust can avoid probate fees, costs and time thereby eliminating the need for advances which cost money to the beneficiaries. Please e mail us if you need a probate attorney would like to avoid probate with an estate plan prepared for you or for a complimentary and confidential consultation on any estate planning matter.

Before paying any company or hiring them, make sure to check whether they are members of the Better Business Bureau and what their record is with that company. The BBB is a legitimate method of ascertaining the credibility and reliability of any company and our firm has been members of the San Diego Better Business Bureau for many years and is proud of this and our record with them. On our website, we also display their logo and this is a link directly to our record with the BBB for any potential client to view.

San Diego: Probate Appeal Case re: Divorce

May 27, 2008

San Diego has many divorced spouses. A recent case in the Court of Appeal published March 27, 2008 and modified on April 16, 2008, illustrates the need for an estate plan post divorce. The attorney fees were ordered to be paid by each party so both sides spent thousands of dollars in litigation when a proper estate plan would have avoided this costly and time consuming litigation. Do not let this happen to you or your beneficiaries. The investment in the cost of a revocable living trust alone would have saved thousands of dollars in legal fees and costs.

The case of Estate of McDonald involved a divorced man and woman. The parties had a legal judgment and this included that there was a termination of all marital property rights. The man died without an estate plan and the case went to Probate Court. The woman alleged that she was the rightful heir under the laws and the parents of the man alleged that they were the rightful heirs under the law. The Trial Court found that the woman was not the "surviving spouse" under the terms of the Probate Code. The Court of Appeals agreed.

At our firm of Law Office of Scott C. Soady, A Professional Corporation, LLP, we do not want your family to incur thousands in legal fees and costs when this is not necessary. Please e mail us if you have any questions or call for a complimentary and confidential consultation.

San Diego Probate: Heath Ledger

May 17, 2008

In San Diego, there are many probate cases. These are heard in the probate court houses located at the Madge Bradley Court House in San Diego and the North County Court House in Vista. Our law firm of Law Office of Scott C. Soady, A Professional Corporation, LLP can assist you with any probate matter in San Diego. You can feel free to e mail our firm or call.

An illustration of a famous probate case, which is not in San Diego, is that of Heath Ledger. An article in the Herald Sun explains that his fortune will go to his infant daughter as opined by two legal experts. This is a much more complicated case since Heath Ledger has substantial assets in Australia as well as the United States.

Please feel free to call us to represent you in your pending probate matter in San Diego, California.

San Diego Probate Court: Vista Branch change of Judge

February 12, 2008

San Diego, California has two probate courts. The first is located at the Madge Bradley Court House located on Fourth Avenue in San Diego. The second is located at the North County Court House located on Melrose Avenue in Vista. Judge Klein has the current assignment and, at the San Diego County Bar Association meeting in January of 2008, it was announced that there would be a change to Judge Brown.

It is very important to retain a law firm which has experience practicing before the Judge who will hear the case. This is important since the attorney needs to know the local rules of San Diego as well as the court room practice before each Judge. While all Judges follow the same laws, the procedures in the court rooms may be different. For example, some Judges allow attorneys into the "well" which is the area between counsel table and the "bench" where the Judge sits and some do not. Our law firm of Law Office of Scott C. Soady, A Professional Corporation, LLP can use our experience before the Probate Judges to assist with your legal matter. Please feel free to e mail us with any questions. Please feel free to visit our probate page on our website.

San Diego Probate Website: Steve Fossett

January 22, 2008

In Illinois, a Probate Judge is expected to hear testimony about the disappearance of Steve Fossett. As all recall, his body was never found. This also happens in San Diego as well and the procedure is to have the case probated. In the Fossett case, the wife of Steve Fossett is expected to testify that she has good reason to believe that her husband died when he was never found after flying in the Nevada desert. Many of the residents of San Diego habitually fly over the desert in Nevada and also go to Las Vegas. The issue of what happens when a body cannot be found is complex and complicated.

There is a legal rule in California that a person who has been missing for less than seven years is presumed to be alive unless evidence shows otherwise. There is a need in this case for a ruling of the husband being deceased for legal purposes of the wife and the estate. You can view the full article on Law Office of Scott C. Soady, A Professional Corporation, LLP website which has a daily newsletter for estate planning or go to the website for the Chicago Tribune which had details of the full article as our newsletter changes daily for the most up to the date news on estate planning. Always feel free to e mail us as well.

San Diego Probate Court: Important Information for Court Locations and Publication

January 4, 2008

In San Diego, California, there are two probate courts which are located in downtown San Diego at the Madge Bradley Court House and in Vista at the North County Regional Center. The Business Office is open from 8:30am to 4:30pm at these two locations however you must check your local branch first as all are closed on court holidays and these may not be holidays on your schedule. It is important to understand that the probate process includes the Probate Examiner who reviews all documents for legal requirements and content before the relief is granted by the Court. You can make an appointment to meet with the probate examiner and this information can be obtained at the court house. It is important to consult with an experienced attorney first since this process can be very confusing and frustrating to the novice and, sometimes, even to the experienced.

The technicalities can become very important and, at times, there is a need for publication. This is an important aspect of the probate process since the publications must by by a list of the approved newspapers by the San Diego Superior Court. This list was last revised on October 10, 2007 and there are over 30 to choose from. As the costs for filing, service and other mandatory fees can be very expensive, it is important to make sure that the newspaper is approved for publication or you will have to republish and this will cost twice. This list is frequently revised so it needs to be checked prior to making any arrangements for publication. In addition, it is important to have the least expensive newspaper to save money since all are equally qualified. The most current list can be obtained free of charge by e mailing our law firm of Law Office of Scott C. Soady, A Professional Corporation, LLP at lawyer@help411.com.

San Diego Probate Guardianships: Requirements

December 20, 2007

In San Diego, California, there are exact rules for becoming a guardian which is an appointment by the Court. There are different standards depending on the legal relationship between the minor and the guardian. For example, if you are a relative of the minor then the investigation is completed by Family Court Services. Family Court Services is the mandatory mediation process used in San Diego, California and the mediators are licensed clinical social workers hired by the Court to assist in the agreements and/or recommendations regarding custody and placement of minors. Guardianships are only for minors and this is the age of 18 in California. If you are not the relative of the minor, then a contact with the San Diego Department of Health and Human Services will need to be contacted. Their phone number is 858-616-5907 however numbers often change. If you call and this is not the correct number, please feel free to call the office and we can assist in getting the correct number.

If the guardianship is for the estate only, you will need to contact the Probate Investigators in the Vista Court House at 760-806-6150 or the Probate Investigators downtown at 619-687-2000. This is a very complicated area of the law and the guardianship can be for the person, estate or the person and estate. An analysis really needs to be made at the beginning of the case for the best chance of success. Please visit our website at Law Office of Scott C. Soady, A Professional Corporation, LLP or e mail us for any questions you may have at lawyer@help411.com.