ESTATE PLANNING

Published on: May 2, 2014

The Importance of Separating “Separate” and “Community” Property

California estate planning must take into account the state’s community property laws. California is one of nine states that recognize community property, which is a legal system that governs property held by married couples. In general, each spouse enters the marriage with their separate property. Property subsequently acquired during the marriage is community property, with each spouse retaining a one-half interest. Upon a spouse’s death, his or her estate plan may only dispose of that one-half interest.

In making a will or trust, it is therefore essential to distinguish separate and community property. If you intend to make provisions for one or the either, you should do so explicitly. Ambiguity may lead to litigation between your heirs, as one recent decision from the California Court of Appeals illustrates. This case is cited only for illustrative purposes and is not meant to be taken as a statement of the law.

Pakula v. Klein

Published on: May 1, 2014

The Importance of Funding a Living Trust

by Scott C. Soady

A living trust is a useful estate planning tool that can help avoid extended probate proceedings after your death. Basically, a living trust is an entity you create and transfer property into through a declaration of trust. This declaration specifies how the property within the trust should be distributed after your death. Unlike a last will and testament, trust declarations are not submitted to a probate court. The declaration simply appoints a successor trustee to carry out your wishes.

During your lifetime, you can still control all of the property transferred into the living trust. In most cases, the trust is not even considered a separate legal entity for tax purposes, so your Social Security number remains tied to trust assets like bank accounts. You can revoke or amend a living trust at any point during your lifetime. After your death, however, the trust generally becomes irrevocable, meaning your successor trustee is bound by the declaration of trust.

Always Fund a Trust Properly

Published on: April 11, 2014

Never Wait Until the Last Minute to Make a Will

by Scott C. Soady

Ideally, estate planning is something you do long before it becomes necessary. It is never a good idea to wait until you are on your deathbed to make a will. You may run out of time before you can execute a will that meets with the legal requirements of California or another state where you reside.

Piper v. Dimmers

A recent Michigan case illustrates the perils of last-minute or incomplete estate planning. Grace Reid died in 2011 at the age of 69. Reid was unmarried and had no children. Absent a will, Michigan law would distribute her estate-which consisted primarily of some land-to her siblings. After she was diagnosed with heart disease, Reid met with an estate planning attorney to discuss her will. For some reason, she never followed up with the attorney prior to her death.

Published on: April 10, 2014

What You Need to Know about Estate Planning and “The Cloud”

by Scott C. Soady

In the Internet age, your estate no longer includes just physical property but digital assets like social media accounts, cloud storage and even computer-based currency. Taking stock of your digital assets is therefore an essential part of California estate planning. Here are a few issues to consider with respect to your “online estate.”

Online Devices and Cloud Storage

Recently the BBC reported on the story of Anthea Grant, a woman who passed away from cancer. Grant’s will directed her estate be divided equally among her five children. The children decided among themselves how to allocate individual pieces of property. Grant’s son Joshua received her iPad, manufactured by California-based Apple Inc.

Published on: April 9, 2014

Family Heirlooms Can Lead to Family Litigation

by Scott C. Soady

We often read stories about heirs fighting over a deceased relative’s multimillion-dollar fortune. But some estate disputes arise over seemingly trivial matters. The common thread in many of these disputes is insufficient direction from the deceased person’s estate plan.

A One Hundred Dollar Case

Recently, the Supreme Judicial Court of Maine had to settle an argument between relatives over the possession of a single item valued at just $100. The deceased was Ada Greenblatt, a Maine realtor with no children, but two surviving siblings and several dozen nieces and nephews. Upon Greenblatt’s death in 2008, her will made several specific gifts and left the remainder of her estate to her siblings in equal shares. If any sibling died before her, that share would be divided among his or her children.

Published on: March 27, 2014

$4.2 Million Judgment, Lack of Proper Probate Lead to Family Feud

by Scott C. Soady

Court judgments are an asset that must not be overlooked as part of your estate planning. For example, if you are receiving the proceeds of a personal injury lawsuit, that is an asset you must factor in to your will or trust. Similarly, if any litigation is pending at the time of your death, your executor becomes your legal successor in continuing the lawsuit. Therefore, it’s imperative you leave a will and name an executor, rather than leaving such decisions up to a probate court.

Unfortunately, large personal injury awards can breed further discord among relatives seeking a piece of the pie. This was evident in a recent California appeals court decision. The case, which is discussed here solely for informational purposes, nevertheless highlights the importance of estate planning as it relates to managing court judgments.

Kitchen v. Foxford

Published on: March 24, 2014

Actor Philip Seymour Hoffman’s Will Provides Insight Into Estate Planning Process

by Scott C. Soady

Academy Award-winning actor Philip Seymour Hoffman died on February 2, 2014. His last will and testament was recently filed in a New York City probate court. Curiously, the will directed Hoffman’s executor to distribute his estate according to the provisions of New York intestacy law, which normally applies to estates in which there is no will. In this case, that presumably means Hoffman’s entire estate will be equally divided among his three minor children. Hoffman had a longtime partner, Marianne O’Donnell, but they never married and, according to media reports, separated shortly before his death. O’Donnell, however, was still named executor of Hoffman’s estate.

Distinguishing Desires from Directions

A number of media outlets mentioned a particular clause in Hoffman’s will, in which he asked that his son-he and O’Donnell only had one child at the time he signed the will-be raised in New York City, or alternatively in either Chicago or San Francisco. In reality though, the will made no such demand, and O’Donnell will presumably retain full custody of all three children. Had she died before Hoffman, however, his will nominated a guardian-O’Donnell’s sister-to assume custody. In that event, the will asked the guardian to take into account Hoffman’s “strong desire, but not direction” that his son be raised in either New York, Chicago or San Francisco. Nothing in the will though restricts O’Donnell’s right to determine where her children should live.

Published on: March 21, 2014

Striking Oil Prompts Lawsuit Over Long-Dormant Estate

by Scott C. Soady

Many people do not bother to create a will because they don’t have much property. Why go to the trouble and expense when you own so little? But a will-and estate planning in general-isn’t just about what you own today, but what you might own in the future, and failing to leave a will can lead to legal complications, even years after your death. That’s especially true when your heirs discover property interests that were not obvious at the time of your death.

Estate of Huston v. Huston

A recent case from North Dakota illustrates the problems associated with not making a proper will. The case involved a Wyoming man, Virgil Huston, who died 14 years earlier. Huston’s heirs included his wife, Wilma Russell, and three adult children from a prior marriage. At the time of his death in 2000, the family believed Huston owned nothing except a car worth about $200. Not surprisingly, he left no will.

Published on: March 14, 2014

Using a Life Estate to Protect Your Spouse’s Right to Remain at Home

by Scott C. Soady

A life estate provides a means of transferring real property before death. In a life estate, Person A conveys the title to his house to Person B with the stipulation that Person A may continue to live in the house until his death, at which time Person B assumes sole ownership. It sounds simple enough, but life estates can produce unforeseen complications, as one recent California appeals court decision demonstrates. This case is discussed here for informational purposes only and should not be considered a complete statement of California law on the subject of life estates.

McCay v. Turnboo

The parties in this case are a stepfather and stepson. The stepfather, Warren Turnboo, married his wife Helen in 1960. She had a son, Brian McCay, from a prior marriage. Helen Turnboo brought to her second marriage the house she acquired following the dissolution of her first marriage. At the time of her second marriage, there was a mortgage of about $9,600 on the property. Helen Turnboo remained sole owner of the house, but she and her second husband lived there together and they use their funds to pay household expenses, including the mortgage. The mortgage was finally paid in 1978.

Published on: March 7, 2014

Bing Crosby Lawsuit Highlights Role of “Publicity Rights” in Estate Planning

by Scott C. Soady

Estate planning is about providing for the future. Sometimes, it’s about providing for a very distant future. For example, the famous actor and singer Bing Crosby died nearly 40 years ago, yet a California appeals court just recently issued a decision regarding property that still belongs to his estate. Even more remarkably, the other party to the case represents the estate of Crosby’s first wife, who died more than 60 years ago.

Crosby v. HLC Properties, Ltd.

Harry “Bing” Crosby, Jr., began singing professionally in the 1920s. His most famous recording, that of the Irving Berlin song “White Christmas,” reached No. 1 on the charts in 1942. Also during the 1940s, Crosby became well known as an actor, appearing with Bob Hope in a series of movies, and winning an Academy Award in 1944.