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.