When it comes to California estate planning, it’s important to understand that you’re dealing with a legal process. The administration of estates (and trusts) is strictly governed by California and federal law. It is not a casual or informal procedure. Personal representatives and trustees should always work with an experienced estate planning attorney to guide them through this legal process.
It’s especially inadvisable to represent yourself in connection with a trust or estate matter that’s already in court. Consider this recent case from a federal court in San Francisco. In 2006, Helen Evans took out an adjustable rate home equity conversion mortgage-popularly known as a “reverse mortgage”–on her residence in the amount of $544,185. With a reverse mortgage, the borrower need not make any payments until he or she no longer resides in the property secured by the loan.
When Evans died years later, the mortgage holder, Wells Fargo, demanded full repayment of the outstanding balance, which was nearly $250,000. Wells Fargo foreclosed on the residence and moved to sell it at auction. Evans’ son, Leonard Evans, objected and decided to take matters into his own (legal) hands. Acting without an attorney, Evans sued Wells Fargo in Contra Costa County Superior Court, alleging various defects in Wells Fargo’s actions.
Since Wells Fargo is not a California-based company, it asserted its right to transfer the case from state to federal court, in this case the U.S. District Court for the Northern District of California. A magistrate judge reviewed Evans’ complaint and, at Wells Fargo’s request, dismissed it on August 8 of this year. The problem was that Leonard Evans had no authority, as far as the court could tell, to act on behalf of his late mother’s interests.
Having a Leg to Stand On
No court will hear a case if it lacks legal authority-jurisdiction-to do so. Jurisdiction requires the party bringing a lawsuit has standing to do so. Leonard Evans did not have standing. Evans told the court that he was “responsible for handling” his mother’s affairs and suggested Helen Evans had made a last will and testament naming him as executor. Unfortunately, Leonard Evans never presented the magistrate judge with any evidence of his appointment as executor. He merely assumed he could act on behalf of her estate.
Under California law, an estate is not a legal entity like a corporation. An estate is simply a collection of assets that belonged to a now-deceased person. An executor or personal representative must be appointed by a probate court to take possession of these assets. The executor may then sue or be sued in his official capacity. But a person cannot claim an interest in those assets merely because of a relationship or informal agreement with the deceased.
Helen Evans took out the reverse mortgage on her residence, not her son. If and when he’s named executor of the Estate of Helen Evans, Leonard Evans may then pursue a lawsuit against Wells Fargo. But not before.
Leonard Evans appears to have misunderstood the legal complexities involved in administering his mother’s affairs. Let this be a lesson. If you’re in a similar position-or if you’re looking to plan your own estate-contact the Law Office of Scott C. Soady today.