WILLS

Published on: June 13, 2015

Can My Creditors Control My Estate?

Estate planning includes not just how to dispose of your assets, but also how to deal with any creditors you may still owe money to after your death. This includes lawsuits which may be pending or occur as a result of your death. In some cases, even if you leave no assets as part of your probate estate, an estate must still be opened in order to address such litigation.

Estate of DeMotto

Here is a recent example which is discussed only as an illustration and should not be taken as a correct statement of the law. A man died in 2013. The man was living with a woman-not his wife-at the time of his death. Their relationship began in 2001. Although the woman claimed he intended to provide for her in his estate planning, he did not name her as a beneficiary of his will or trust.

Published on: March 20, 2015

Addressing “Joint” and “Community” Property in Your Estate Plan

by Scott C. Soady

California is a “community property” state. This means any property acquired during a marriage belongs to the spouses equally. In the event of divorce, any community property must be divided between the spouses. Of course, a divorced couple can still own property together, but they would do so as joint tenants or tenants in common; there is no “community property” once the marriage is dissolved.

If you are recently divorced (or contemplating divorce), you should be aware of the estate planning implications. It is important to revise your will or living trust to reflect the end of your marriage. In the event your divorce settlement leaves any unresolved questions over the ownership of former community property, your estate plan should address these issues.

Schmidt v. Turner

Published on: March 13, 2015

What is the Rule Against Perpetuities?

by Scott C. Soady

When you create a trust as part of your estate plan, you can effectively control the disposition of your property for years, even decades, into the future. This can prove useful if you want to limit the distribution of an inheritance until your chosen beneficiaries reach a certain age. But there is a limit to such control, as expressed through what is known in the law as the “rule against perpetuities.”

At common law, the rule against perpetuities dictates that a gift can last only until 21 years after the death of the last potential beneficiary alive at the time of the trust’s creation. A number of states, including California, have amended the rule of perpetuities. Under the California rule, a trust must terminate after 90 years. This does not replace the common law rule entirely, but rather complements it. The common law rule declares a trust gift valid if it vests within 21 years after the last surviving beneficiary’s death. This is still the case under the California rule, but it also declares the gift valid if it is completed within 90 years of the trust’s creation.

What About Your Great-Great-Great Grandchildren?

Published on: December 14, 2014

Dealing With Real Property During Probate

by Scott C. Soady

It is common practice in estate planning for an individual to make specific gifts of property. Perhaps you wish to leave your house to your children or a particular family heirloom to a sibling. But what happens if the property described in your will is no longer part of your estate at the time of your death? In such cases, the gift is moot; your executor cannot distribute property that is not there.

A more complicated question may arise if your will specifies a distribution of property that conflicts with actions taken during your lifetime. A Connecticut court recently addressed such a situation. A woman left a piece of real estate in her will to a local church. However, shortly before her death, she entered into a contract to sell the property to another person. The woman’s executor wished to proceed with the sale. The church sued to enforce the gift made in the will.

A Connecticut appeals court ultimately ruled for the church. Although the woman signed a contract to sell the house, the terms of the agreement were not fulfilled by the time of her death. Specifically, the putative buyer failed to secure mortgage financing. This meant the woman still owned the property on the day of her death, and Connecticut law required it be distributed in accordance with the terms of her will. The executor could only sell the property with the consent of the church, which was the designated beneficiary.

Published on: November 3, 2014

How Does a “Survivorship Clause” in a Will or Trust Work?

by Scott C. Soady

In making a will or trust, you should consider the possibility your chosen beneficiaries will not outlive you. It is therefore common practice to include a survivorship clause, specifying that a gift will lapse unless the recipient survives you. Some survivorship clauses require the recipient survive you by a specific period of time, say 30 or 60 days, in order to inherit.

A common survivorship clause scenario involves a married couple that dies simultaneously, for example in a car accident. The spouses may structure their wills or trusts to dictate which spouse is deemed to have survived the other. Absent such provisions, California law will presume each spouse predeceased the other. This means any estate will be distributed assuming there was no surviving spouse.

Marble v. Fibiger

Published on: November 1, 2014

What Happens When an Equal Distribution of Property Is Not So Equal?

by Scott C. Soady

If you have multiple children, you may wish to structure your estate plan so that each child receives an equal share of your property. Sometimes this is easier said than done-or written. If your will or trust contains conflicting or ambiguous language regarding the division of property, a probate court may have to attempt to determine what your actual intent was. This adds time and money to the cost of administering your estate, which ultimately reduces the amount of any gift left to your children.

Estate of Ellis

Here is a recent example from Iowa. In 2012, a longtime married couple passed away within a couple weeks of one another. They left three surviving adult children. According to each of their wills, upon both of their deaths, the couple left several parcels of real estate to their children. The will contained specific descriptions and estimated acreage for each gift.

Published on: October 12, 2014

Is a Will Necessary When There Is No Probate Estate?

by Scott C. Soady

A last will and testament is a document that applies only to your “probate estate.” A probate estate may not include all of your assets. In some cases, you might not even own any assets subject to probate.

Probate Assets

Generally, any asset titled solely in your name is a probate asset. For example, this would include your bank account or a house owned by you alone. After your death, these assets become part of your probate estate and may be disposed of according to the terms of your will. If you leave no will, your probate estate is subject to California’s intestacy law, which distributes property to your closest surviving relatives.

Published on: September 19, 2014

Making Your Intentions Clear in a Will

by Scott C. Soady

A successful estate plan makes the final distribution of a person’s property plain and clear. Ambiguity in a will or trust may lead to costly litigation over conflicting interpretations of a person’s intent. But even the best executed estate plan may still leave some unhappy heirs, as one recent California Court of Appeals decision illustrates.

The Case of the Lanfermans

The deceased in this case was Paul Lanferman, who died in 2011. Lanferman and his wife, Susan Lanferman, executed an estate plan nearly two decades earlier. The Lanfermans had a total of six children, all from prior marriages. The Lanfermans executed identical wills. As applicable here, Paul Lanferman’s will said upon his death that his one-half interest in any community property would go to his wife. The will attached no conditions to the gift, aside from an instruction to the executor, which stated that the couple’s home could not be sold during Susan Lanferman’s lifetime without her consent.

Published on: August 29, 2014

The Importance of Safekeeping Your Will

by Scott C. Soady

A last will and testament does little good if nobody can find the document after you pass away. It is important to safeguard your signed, original will as it must be filed with a probate court in order to formally open an estate. As a general rule, California courts will not accept photocopies of wills.

Any delay in locating a will may produce significant complications for your estate. As an illustration, consider a recent California appeals court decision which is discussed here for informational purposes only. The case arose from a horrific 2009 murder-suicide that resulted in the death of Elizabeth Fontaine, her mother and Fontaine’s two small children. Fontaine left a will naming her cousin, Jennifer Hoult, as executor.

At the time of her death, Fontaine worked as an attorney at a prominent Los Angeles-area law firm. Hoult made several attempts to locate Fontaine’s will, which she believed the firm held for safekeeping. But it was not until 2013-four years after Fontaine’s death-that the will was found. (The law firm entered bankruptcy in 2011, and the trustee assigned to distribute the firm’s assets ultimately found the will.)

Published on: August 22, 2014

What Is a “Pour-Over” Will?

by Scott C. Soady

In estate planning, a “pour-over will” is a document signed in conjunction with the creation of a living trust. A pour-over will is like any other last will and testament, except that it distributes-or “pours over”-any probate assets to the related living trust. In this sense, the pour-over will is a backup that ensures no assets remain outside of the trust.

The Difference Between a Will and a Trust

Many people simply dispose of their estate through a will. This means the person leaves an estate subject to probate before the California courts. When the person dies, his or her will must be filed with the court, an executor is named (usually by the will) and assets are distributed according to the terms of the will.