There are many legal events that may affect your estate planning. For example, if you get divorced, the terms of your property settlement may require you to alter the terms of your will or trust. It is therefore important to resolve any potential legal question about your estate plan prior to your death, as any ambiguity may lead to costly and unnecessary probate litigation afterwards.
Children, Stepmother Spend Years Fighting Over Retirement Account
A long-running probate case from here in San Diego offers a helpful example. This case involves the estate of a man who died in 1998. The decedent’s prior marriage ended in divorce in 1977. The divorce included a property settlement, approved by an Illinois court, that required the decedent to make provisions in his estate planning such that the couple’s two children would receive one-half of his “net estate” upon his death.
The decedent eventually remarried. He named his new wife the sole beneficiary of his “substantial” retirement account. After his death, his children from his prior marriage argued they were entitled to one-half of this account under the terms of their parents’ divorce settlement.
Nine years of litigation ensued. A probate court initially dismissed the childrens’ petition, but the California Fourth District Court of Appeal in San Diego ruled their case could proceed. The trial court then rejected the petition a second time, holding the children should have filed a “creditor’s claim” against their father’s estate, and their failure to do so meant their petition was “procedurally flawed.”
Again, the children appealed, and again, the Fourth District reversed the trial court. Noting this case has now been pending before the California courts for nine years without resolution, the Fourth District said the children were not “creditors” in the context of this dispute. The original divorce settlement said the children were entitled to half of the decedent’s “net estate.” The “net estate” generally refers to the value of an estate after paying any debts and expenses, which includes creditor claims. “If, in fact, [the children’s] claim was a true creditor’s claim, as the [trial] court found,” the Fourth District said, “then it necessarily would have been excluded from the definition of ‘net estate.’”
The appeals court further expressed its frustration with the probate court for allowing the children’s case to languish for nearly a decade. Among other problems, this case was apparently assigned to “four different judges” in the probate court. The probate court also failed to reach the merits of the case after the Fourth District’s first decision. Had the lower court not ignored the appeals court’s instructions, the Fourth District said, “then clearly there would have been no reason” for this second appeal (which, it should be noted, still has not reached the merits of the children’s claim).
Need Advice From a California Estate Planning Attorney?
It is unlikely that any parent would deliberately construct an estate plan that forces their children to spend years in court fighting over their inheritance. That is why it is important to resolve any potential legal conflicts and obligations affecting your estate plan while you are still alive. If you need help from an experienced San Diego estate planning lawyer, contact the Law Office of Scott C. Soady today.