San Diego Estate Planning Lawyer Blog
California estate planning must take into account the state’s community property laws. California is one of nine states that recognize community property, which is a legal system that governs property held by married couples. In general, each spouse enters the marriage with their separate property. Property subsequently acquired during the marriage is community property, with each spouse retaining a one-half interest. Upon a spouse’s death, his or her estate plan may only dispose of that one-half interest.
In making a will or trust, it is therefore essential to distinguish separate and community property. If you intend to make provisions for one or the either, you should do so explicitly. Ambiguity may lead to litigation between your heirs, as one recent decision from the California Court of Appeals illustrates. This case is cited only for illustrative purposes and is not meant to be taken as a statement of the law.
Pakula v. Klein
Rina Klein and her husband executed their wills in 2007. Klein’s will named her husband as executor and provided for the creation of a family trust. The following year, Klein made a separate revocable living trust. The first article of the trust instrument said Klein conveyed all of her property “whether separate or community” to the trust. But the very next article clarified, “This trust contains only separate property.” The trust named Klein’s mother, Julie Pakula, as successor trustee and instructed her to distribute the trust property to Klein’s children after her death.
Klein died under mysterious circumstances in 2009. She died at a Los Angeles hospital after suffering multiple seizures. An autopsy failed to conclusively determine a cause of death, however. Pakula and other members of Rina Klein’s family believed her husband, Gary Klein, murdered her. Beverly Hills police investigated the case for at least four years without arresting or charging Klein.
Pakula and Klein continued to fight in probate court over Rina Klein’s estimated $2.8 million estate. The court determined that Klein’s will and trust were both valid. The will, which named Gary Klein executor, took possession of Rina Klein’s community property, while her separate property belonged to the trust administered by Pakula as successor trustee.
Pakula appealed this decision. She argued the trust should include both the community and separate property. But the Court of Appeals found no error in the probate court’s judgment. Based on the available evidence, it was clear Rina Klein only intended to transfer her separate property to her trust. Although there was an apparent conflict between the two articles in the trust instrument on this point, the court examined emails from Klein to her estate planning attorney that confirmed she only wanted to provide for her separate property in the trust. While Pakula did present contradictory evidence, the probate court’s weighing of such evidence will not be questioned by an appeals court absent some clear error.
Always Make Your Intentions Clear
It does not take a murder investigation to inflame family rivalry over a valuable estate. That is why, if you have any significant assets, it’s essential you work with a California estate planning attorney who can advise you on the best way to minimize potential conflicts over your separate and community property. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.