Articles Posted in NEWS AND COMMENTARY

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Sibling rivalry is a natural part of childhood and growing up. When sibling rivalry continues into adulthood, it can have negative consequences for a parent’s estate planning. In some cases an adult child may even attempt to manipulate a parent’s will or trust to place his or herself at an advantage over a sibling.

Toxic Sibling Rivalry Leads to Court-Appointed Conservator

Such behavior may constitute elder abuse and require a court to step in. For example, an appeals court in Los Angeles recently upheld a probate judge’s decision to appoint a neutral third-party conservator for a woman in her 80s. The conservatorship was necessary, according to the court, due to her son and daughter’s jockeying for “position to control, manage, and ultimately inherit their mother’s assets.”

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California is a community-property state. This means that assets acquired during the course of a marriage are considered the equal property of both spouses. For estate planning purposes, one spouse may only dispose of his or her 50% share of community property by will or trust; the other 50% remains with the surviving spouse. Of course, one spouse may always leave his or her share of community property to the other.

Drafting Mistake Leads to Dispute Over Status of Marital Home

It is important when making your estate plan to clearly delineate between community and separate property. This is not always a simple matter, especially if one or both spouses have remarried and retain separate property from prior relationships. While California law allows couples to freely decide whether to convert property’s status from separate to community and vice-versa, a process known as “transmutation,”it is important that a will or trust is consistent on this point.

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Joint tenancy is a common estate planning tool used to avoid probate. The basic idea is that two (or more) people hold property as “joint tenants.” This means they own the entire property together, and when one co-owner dies the survivor automatically owns 100% of the property outright without having to go through the deceased co-owner’s estate.

Court Rules DMV Title Insufficient to Create Joint Tenancy

Although joint tenancy is most often associated with real property, it can be applied to personal property as well, such as motor vehicles. For instance, spouses may choose to register their car as joint tenants. It is important to register a joint tenancy because a probate court will not assume that was your intention. By default, the law assumes two or more people hold property as “tenants in common,” meaning they each own a separate interest.

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Dealing with real estate is often the most complicated part of estate planning, particularly if you want to provide for multiple family members. Unlike cash or stocks, it can be logistically difficult to divide a house or a rental property among multiple children. In many cases it makes sense to direct the executor of your estate (or the trustee of your trust) to sell the property upon your death and divide the cash proceeds among your designated beneficiaries.

Leaving it Up to Your Trustee

Then again, there are cases in which you might want to afford one member of your family the chance to keep the property. For example, your will might give one person the right to purchase your house upon your death. Such provisions must be carefully drafted by a qualified attorney to avoid any misunderstanding or confusion.

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Charitable giving is a common feature of many estate plans. In many cases this takes the form of a simple gift in a person’s last will and testament, but charitable giving can also involve complex trust arrangements designed to benefit both the charity and the donor or their family.

Trustee, Charities Spar Over Terms of 1967 Trust

Of course, the more complicated the gift, the more chances there are for a dispute to arise. For example, upon the death of a California man in 1967, his will established a trust for the benefit of his grandson. A corporate trustee was named to oversee the trust with instructions to pay the grandson $100 per month for the rest of his life. The trustee was also permitted to make additional payments to the grandson if he was “without sufficient funds to defray expenses incurred by illness, accident, or other dire need.” After the grandson’s death, the trustee is supposed to divide the remaining trust assets between a number of specified charities.

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The legal requirements for making a valid will in California are straightforward. A will should be in writing and signed by the testator (the person making the will) in the presence of at least two witnesses. Ideally the will is typewritten and signed on the last page. Many estate planning lawyers will also have their clients and the witnesses initial each page of the will, just to make sure there is no doubt as to the authenticity of the entire document.

Alaska Follows California’s Lead on Signature of Handwritten Wills

Most modern wills are typewritten, usually by the office of an experienced estate planning attorney who specializes in preparing such documents. Still, some people decide to write their own wills. Such documents often do not conform with the witnessing requirements of California law. Does that mean these wills are invalid?

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If you have a family member who is unable to care for him or herself, it may be necessary to seek a conservatorship for that person. A conservator is someone appointed by a probate court to manage the personal or financial affairs of another person (the conservatee). In California there are several different types of conservatorships. For example, a conservator of the estate exercises control over the conservatee’s assets and finances, while a conservator of the person makes decisions regarding the conervatee’s health care, living arrangements, and other basic needs.

Court Appoints Conservator Due to Spouse’s Irresponsibility

While California conservatorships are often associated with elderly relatives with dementia or physical disabilities, in truth a conservatee can be someone of any age and condition. For example, in a recent California case, a probate court created a conservatorship for a woman in her early 30s due, among other things, her ongoing substance abuse problems. Although the woman is married, the court named her aunt as conservator.

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The federal estate tax has long been a source of political controversy. The tax applies to the transfer of assets upon a person’s death, but there are a number of exemptions that effectively exclude all but a handful of estates from paying. No estate with a gross value of $5.45 million ($5.49 million as of January 1, 2017) is liable for the tax. Additionally, one spouse can leave an unlimited amount of property to the surviving spouse without owing any tax. While some states still impose their own estate tax, California does not.

Trump Expected to Undo Obama Rules Changes

In August, the U.S. Treasury Department proposed new regulations that it claimed would close “loopholes” in the estate tax. According to the White House, these regulations would make it more difficult for estates to restrict the use of certain assets in order to “discount” their value for tax purposes. Many business owners, in California and elsewhere, have spoken out against the proposed rules, arguing that they will raise their projected estate tax liability and force them to sell their businesses instead of leaving them to their children.

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It is not uncommon for a person entering a second marriage to keep certain assets as separate property for the benefit of any children from the first marriage. If you are in this situation, it is important to make sure that your estate planning reflects your intentions so as to avoid any potential misunderstanding with your current spouse. You have every right to leave separate property to your children without interference from your spouse.

Court Rejects Wife’s Estate’s Effort to Claim Husband’s Estate

Unfortunately, there are some cases where a person may still and try and challenge a deceased spouse’s estate plan. A California appeals court recently issued a series of three decisions in a long-running Orange County probate dispute involving the children of now-deceased spouses.

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If you co-own real property with others, it is important to clearly establish each party’s interest. Among other reasons, this can have a significant impact on your estate planning because your will or trust can only dispose of your own interest in real estate. Your estate plan will not affect the rights of the other co-owners in most situations.

Brothers Fight Over Share of Mother’s Property

Here is an illustration from a recent California case. In 1978, a mother and her three children–two sons and a daughter–acquired a piece of real estate in Los Angeles. There were a number of title changes made to the property over the years. According to a 1986 deed, ownership was divided as follows: a one-third interest belonged to a revocable trust established by the mother, a one-third interest belonged to the daughter, and the final one-third interest belonged to one of the sons (who is the defendant in the lawsuit discussed below). In 2002, the daughter effectively transferred her one-third interest to her mother’s trust.

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