ESTATE PLANNING

Published on: November 1, 2014

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

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: October 10, 2014

The Dangers of Using a Pre-Printed Power of Attorney

by Scott C. Soady

A power of attorney is a legal document whereby a person, known as the “principal,” grants to another person, known as the “attorney-in-fact,” the authority to act on his or her behalf in certain financial matters. The attorney-in-fact is an agent and therefore owes a fiduciary duty to the principal. California law requires an attorney-in-fact to keep his or her personal property separate from any owned by the principal and managed by the attorney-in-fact. This is to prevent self-dealing, where an attorney-in-fact may attempt to enrich him- or herself at the expense of the principal.

As it is a binding legal document, it is always best to retain a qualified California estate planning lawyer to prepare a power of attorney. Although pre-printed power of attorney forms are widely available, they may offer insufficient protection for principals, especially when such documents are subjected to the laws of another state. A recent decision by an appeals court in the State of Washington, called upon to interpret a pre-printed power of attorney signed in California, illustrates the problems that may arise.

Boyd v. Pandera

Published on: September 25, 2014

Establishing Paternity for Probate Purposes

by Scott C. Soady

When the law speaks of “heirs,” it refers to those individuals entitled to inherit a person’s estate in the absence of a valid last will and testament. For example, if you live in California and die without a will or a spouse, but you do have children, those children are your heirs and inherit your estate. “Children” includes your biological offspring, as well as any children you legally adopted during your lifetime.

But what about children whose paternity is unsettled? California law states, for purposes of inheriting an estate, paternity must be “established by clear and convincing evidence that the father has openly held out the child as his own.” A court may also enter an order during the father’s lifetime establishing paternity, whether or not he acknowledges a child as his own. If for some reason the father was unable to acknowledge paternity, it may be established after his death, also by the “clear and convincing evidence” standard.

Different States Have Different Rules

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: September 18, 2014

Naming Backup Beneficiaries In Your Will or Trust

by Scott C. Soady

In creating a will or trust, a person may make specific bequests of property to a chosen beneficiary. But what happens if that beneficiary does not survive the person making the bequest? A well-drafted will or trust must anticipate such contingencies. Either the document should name an alternate beneficiary, or it should be made clear that the gift lapses and passes as part of the person’s residuary (leftover) estate.

A recent California Court of Appeals decision illustrates the confusion that may arise when the intended beneficiary of a gift dies before the giver. This case is only provided as an example and should not be viewed as a comprehensive statement of California law on this issue.

Dilworth v. Tiernan

Published on: September 4, 2014

Leaving a Legacy or Financial Abuse of the Elderly?

by Scott C. Soady

Many people use their estate plan to “leave a legacy.” A common example of this is making a gift to a charitable organization as part of a last will and testament. A person might, for instance, leave a gift to a university with instructions to establish a scholarship in his or her name. Some wealthier individuals might go so far as to establish a charitable foundation as part of their estate plan.

Then there are more unusual efforts at leaving a legacy that, unfortunately, often lead to expensive and unnecessary litigation. A recent case from Illinois presents one example. The case involved the estate of the late Virginia Rogers. In 2000, Rogers was a widow with no children or other immediate family. In a purported effort to continue her family name, Rogers signed a contract with her neighbor, George Dohrmann, whereby she would leave more than $5 million worth of property from her estate to him; in exchange, Dohrmann agreed to legally change the names of his two children to include the middle name “Rogers.”

Dohrmann apparently held up his end of the bargain. Rogers, however, did not amend her estate planning documents to reflect the terms of this supposed agreement. Instead, Rogers’ will left her estate to various friends, distant relatives and charities. In 2004, Rogers transferred ownership of her apartment-which Dohrmann claimed was part of the $5 million promised to him under the contract-to her living trust. By 2008 Rogers, who suffered from dementia, was judged legally incompetent to continue managing her own affairs.

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.

Published on: August 3, 2014

Making Charitable Bequests In Your Will or Trust

by Scott C. Soady

Many people wish to “leave a legacy” by making a charitable contribution through their estate plan. The Internal Revenue Service, which collects data from large estates required to file a federal estate tax return, reported more than $1.6 billion in charitable bequests from California residents alone in 2012. Charitable bequests are popular precisely because they are deductible from the value of an estate for federal estate tax purposes. (California does not impose an estate tax at the state level.)

What Is a “Charitable Organization”?

There are many ways to provide for a charity in your will or trust. First, you should understand what is meant by “charity.” The IRS is responsible for recognizing charitable organizations. Broadly defined, a charitable organization is one that operates not-for-profit-that is, there are no shareholders who receive dividends-and fulfills one or more “exempt purposes” as defined by law. These exempt purposes include: