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Taxi Medallion Sale Highlights Importance of Making a Will

It is always a good idea to make a will. Although the law of intestacy provides for the distribution of your assets if you die without leaving a will, making a will (or trust) allows you to decide who should inherit from your estate. This can be especially important if you are married but have children from a prior marriage. In California, the law of community property can result in those children receiving little or nothing if you fail to leave a will.

Stewart-Williams v. Williams

Here is a recent example from a California Court of Appeal decision. This should not be construed as legal advice or a complete statement of California law on this subject. This is merely a case illustrating how the probate courts deal with community property of a deceased individual who does not have a will.

The deceased individual in this case, Roosevelt Williams, died in 2010. He was a San Francisco taxi driver for 32 years. The City of San Francisco requires all taxi drivers to have a “medallion,” or special permit, to operate. Prior to 1978, a taxi medallion was treated as the holder’s personal property and could be bought or sold. But in 1978, the law changed and medallions were thereafter treated as city property, which the holder could no longer transfer. The law changed again in 2010, when San Francisco officials approved a “pilot program” allowing taxi operators to surrender their medallions, which were then placed on a city waiting list and sold, with the proceeds going to the former holder.

Williams’ widow, who was also executor of his estate, sold his medallion for a net profit of about $200,000. This led to a dispute between the widow and Williams’ three children from his prior marriage. The children argued they were entitled to a share of the medallion sale proceeds. The widow argued the proceeds were hers alone.

The question for the courts was whether Williams’ medallion constituted separate or community property. If it was separate property, California intestacy law would divide two-thirds of the proceeds among the three children, with the other one-third going to the widow. However, if the medallion was community property, all of the proceeds would go to the widow.

Community property is defined as any property acquired during a marriage (with some exceptions). Property acquired before a marriage is generally separate property. Here, Williams acquired his medallion in 1978. He married his wife in 1992. That would seem to suggest the medallion was separate property. But as the Court of Appeal explained, the changes to San Francisco law over the years meant Williams did not actually acquire a “property interest” in the medallion until the most recent law took effect just before his death in 2010. That made the sale proceeds community property, to which his widow was sole beneficiary.

Providing for Your Children

If Williams had left a will, he could have specified a distribution for his one-half of the community property held his wife. This might have allowed his children to share in the sale proceeds. Unfortunately, by leaving it up to intestacy law, his children were left with nothing except the time and expense of litigation. Cases like this highlight the importance of working with an experienced California estate planning attorney to make a plan before it is too late. Contact the Law Office of Scott C. Soady today if you have any questions.

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