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Defective Language in a Will or Trust Can Lead to Probate Problems

A good estate plan should provide clear directions regarding the disposition of your property after your death. If your estate plan includes a trust, it is important to transfer title to any any assets you wish to place in the trust. Even if you have a trust, you still need a properly executed will to ensure there are no “loose ends” when it comes to administering your estate.

Sons Fight Over Ownership of Deceased Father’s Property

Here is an illustration from a recent California case of what can happen if an estate plan is not completely in order. In 2001, a man with three adult sons created a living trust as part of his estate plan. He simultaneously signed a deed transferring a parcel of real property in Long Beach into the trust. The subsequently signed an amended trust in 2006 together with a will.

The 2006 trust disinherited two of the three sons. The remaining son was named sole beneficiary and successor trustee. But after the father’s death in 2011, one of the disinherited sons challenged the trust’s ownership of the Long Beach property. As it turned out, the father’s will was invalid, as it had not been properly witnessed, and the disinherited son obtained appointment as executor of his father’s probate estate.

In short, the executor argued the 2001 deed purporting to transfer the Long Beach property “failed to name the trust to which the real property would be transferred.” This deficiency rendered the transfer ineffective under California law, the executor claimed. The successor trustee asked a judge to settle the matter of whether the estate or the trust owned the property.

In February 2015, a California probate judge held the property was part of the trust but it had “failed to transfer,” because while the 2006 trust named the successor trustee as sole beneficiary, the trust language did not expressly include “real property” in that gift. Nor did the trust contain a “residuary clause” to direct the distribution of any remaining assets. Based on this, the probate judge decided the Long Beach property should pass to the probate estate, where it would be divided equally among the sons under California’s intestacy law.

The California Court of Appeal said the probate judge jumped the gun. The trustee only asked the court if the property was part of the trust. Neither the trustee nor the executor actually requested a determination regarding distribution of the property. So the question of distribution remains unanswered for now.

Get Advice from an Estate Planning Attorney

Please note the case above does not provide complete statement of California law on any of the legal subjects mentioned. But it helps demonstrate how even small defects in estate planning documents can lead to confusion and ultimately litigation. The best way to help prevent such an outcome is to work with an experienced California estate planning attorney. Contact the Law Office of Scott C. Soady in San Diego if you would like to speak with an attorney today.

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