ESTATE PLANNING

Published on: November 26, 2013

How a Joint Tenancy Can Affect Your Estate

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.

Published on: November 22, 2013

NFL Patriarch’s Death Highlights Importance of Estate Tax Planning

by Scott C. Soady

K.S. “Bud” Adams, Jr., built his fortune in the Texas oil business during the 1950s. In 1959, Adams tried twice to get a National Football League team for his hometown of Houston. When those efforts failed, Adams and fellow Texas oilman Lamar Hunt joined forces to create the American Football League. Adams ran the new Houston Oilers franchise. The AFL and NFL fiercely competed for players and fans during the 1960s, only to merge in 1970, with Hunt’s Oilers entering the new NFL.

By the 1990s, Adams had become dissatisfied with his team’s stadium, the Houston Astrodome. When Houston officials refused to fund a new venue, Adams moved the team to Nashville, Tennessee, where state and city leaders were all too happy to provide a state-of-the-art facility. Now known as the Tennessee Titans, Adams turned his original investment of $25,000 back in 1959 into a franchise valued at over $1 billion.

A Costly Move from Texas to Tennessee Adams died on October 21 at the age of 90. He was survived by two children and seven grandchildren. According to David Klimer of The Tennesseean, “Adams had the foresight – and wealth – to establish a succession plan that keeps the NFL team in the family.” Klimer said Adams set aside sufficient funds to pay what will likely be an enormous federal and Tennessee estate tax bill on the appraised value of the Titans franchise.

Published on: November 16, 2013

Omitting a Residuary Clause From Your Will Makes No Sense

by Scott C. Soady

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.

Published on: November 15, 2013

Providing for a Disabled Child Through a Special Needs Trust

by Scott C. Soady

Special needs trusts are an estate planning device that allows a person to leave part of his or her estate to a disabled beneficiary without affecting that beneficiary’s government benefits. For example, let’s say you have an adult child who is permanently disabled and receives Social Security and California Medicaid (Medi-Cal) benefits. Leaving that child a large inheritance might disqualify them from continuing to receive those benefits. And if the child’s disability renders them unable to handle their own finances, any inheritance you leave them may simply be squandered.

A special needs trust addresses this situation by distributing assets from your probate estate (or existing living trust) to a trustee, who could then make payments for the benefit of the disabled child-but not to the child directly, as that would constitute income for Social Security and Medi-Cal purposes. The special needs trust would continue for the duration of the child’s lifetime. Like most trusts created as part of an estate plan, the special needs trust would become irrevocable upon your death, meaning your child or the successor trustee could not unilaterally modify or revoke it.

A special needs trust is usually the best way to provide for a disabled child in your estate plan. If you think a more informal arrangement might suffice, consider a recent decision from the California Court of Appeals. In this case, which is described here for informational purposes only, a father decided to leave his entire estate to one daughter with only an oral promise she would provide for her disabled sister after his death.

Published on: November 9, 2013

Joint Accounts Can Help Avoid Probate, If Registered Correctly

by Scott C. Soady

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.

Published on: November 8, 2013

Making a Federal Case Out of Your Estate

by Scott C. Soady

Estate planning is intended to prevent disputes from arising after your death. Of course, good intentions aren’t always enough. Even the most carefully planned estate may be subject to fighting among aggrieved relatives or other would-be heirs. In some cases, these fights can tie up the courts (and your estate) for many years.

For the most part, when lawsuits do arise over a trust or estate, things are handled at the state level. In California, the superior courts act as probate courts to resolve matters like will contests or petitions to remove a trustee. The decisions from these courts may then be appealed to the California Court of Appeals, and, in rare instances, to the California Supreme Court.

Federal courts generally stay away from probate matters. As far back as 1789, when Congress created the federal courts, the probate of estates was considered a purely state affair. But this probate exception to federal jurisdiction is not without limits. In 2006, the U.S. Supreme Court said federal courts could hear cases that touched upon probate matters if the underlying dispute involved a subject (such as tort law) that was normally subject to federal jurisdiction.

Published on: October 23, 2013

When Does an Advance Directive for Healthcare Take Effect?

by Scott C. Soady

An advance directive provides your physician and other healthcare providers with instructions regarding your care in the event you are no longer able to make your wishes known. An advance directive also enables you to appoint an agent to make healthcare decisions on your behalf. It’s important you provide clear instructions to your agent so that he or she does not act in a manner contrary to your wishes.

Even healthcare providers can misunderstand the scope of an advance directive. A recent California Court of Appeals decision addressed such a case. Please note, this case is discussed here for informational purposes only.

Goldman v. Sunbridge Healthcare, LLC

Published on: October 16, 2013

Think Carefully Before Naming Multiple Trustees (Or Executors)

by Scott C. Soady

The purpose of California estate planning is to prevent your children or other family members from fighting over your assets after you’re gone. But even the best intended plan can go awry. A recent California case demonstrates the problems that may arise when one child is charged with overseeing the distribution of an estate to another child.

This case is discussed here for informational purposes only and should not be construed as an authoritative statement of California law. The subject of the case is the estate of Lydia Wezel, who died in 2006. In 1991, Wizel established a trust as part of her estate plan. She intended her two children, Jill Wizel and Robert Brown, to benefit from the trust after her death. Lydia Wezel transferred her home into the trust and instructed her successor trustees to distribute the property to Jill Wizel. The balance of the trust estate, less a few gifts specified by Lydia Wizel, would be divided between Jill Wizel and Brown.

Upon Lydia Wizel’s death, the trust named Jill Wizel and Edward Ezor as co-successor trustees. Within a few months, questions arose regarding Jill Wizel’s competency to serve as trustee. According to court records, she was hospitalized for psychosis and had a history of drug, alcohol and gambling addiction. Ezor knew about Wizel’s problems but did not act to remove her as co-trustee. Instead, he took advantage of the situation, paid himself a $10,000 fee for his “services” as trustee without actually carrying out the trust’s instructions. Notably, he failed to properly divide and distribute the balance of the trust assets to Wizel and Brown.

Published on: October 11, 2013

California Appeals Court Clarifies Burden of Proof In Will Contest

by Scott C. Soady

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.

Published on: September 27, 2013

Unsolved Murder Prompts Litigation Over Life Insurance Proceeds

by Scott C. Soady

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.