ESTATE PLANNING

Published on: July 1, 2013

How Far Can an Attorney-in-Fact Act On My Behalf?

A general durable power of attorney is an important estate planning document that grants your agent-the attorney-in-fact-the authority to act on your behalf in any contractual matter. Unless limited by your power of attorney or California law, your attorney-in-fact is you for all legal intents and purposes. Sometimes, however, even courts fail to properly understand the role of the attorney-in-fact.

A California appeals court panel in Los Angeles recently reminded a lower court of this role in a case that involved not just a power of attorney, but also the proper interpretation of a trust used for estate planning purposes. The case is discussed here for informational purposes only and should not be treated as a binding statement of California law.

Trustees Dispute the Attorney-in-Fact’s Authority

Published on: June 26, 2013

The Ramifications of Disinheriting a Child

by Scott C. Soady

Disinheriting a child sounds like a harsh act. The word conjures up images of an angry parent taking out a lifetime of disappointment with a child by denying him or her any inheritance. Yet there are many cases where disinheritance is simply based on the testator’s appraisal of his children’s relative financial positions.

An interesting historical example of disinheritance involved the former king of Great Britain, Edward VIII, who succeeded his father, King George V, in January 1936. The new king was surprised to learn he inherited nothing from the £3 million estate of his father. King George reasoned that since Edward would enjoy the income from properties held in trust for him as king, he would leave his private fortune to his other four children. (This later became an issue when Edward abdicated the throne in favor of his brother.)

While your own estate may not amount to a king’s ransom, it’s not uncommon to intentionally exclude a financially secure child from a will or trust in favor of providing for other children or family members. California law, however, requires clear manifestation of your intent to disinherit a child. If you make a will or trust and subsequently have additional children, California presumes you intended to provide for those children in your estate unless you amend your estate planning documents accordingly. Absent such explicit language, those children will automatically inherit the same share of your estate as if no will or trust existed at all.

Published on: June 25, 2013

California Court Rejects Improperly Witnessed Will of Man Found in Apartment Wall

by Scott C. Soady

Truth is often stranger than fiction when it comes to California probate cases. In May a state appeals court ruled on a particularly strange case involving a contested last will and testament. The case started with the 2004 disappearance of a Berkeley man who was found more than four years later stuffed into the wall of his own apartment building.

The man was Taruk Joseph Ben-Ali. Taruk’s father, Hassan Ben-Ali, was a real estate investor who owned and operated a number of properties. In 1993, Hassan transferred title to an apartment building on Ashby Avenue in Berkeley to his son (apparently due to Hassan’s failure of losing the property due to unpaid federal taxes). Hassan continued to manage the building even after transferring legal title to his son.

On August 3, 2002, Taruk married Wendelyn Wilburn over his father’s strenuous objections. In June 2004, Wilburn was in Las Vegas on business. She attempted to call her husband back in California but could not reach him. Subsequently, Hassan told Wilburn that Taruk had left her to “start a new life somewhere else,” according to court records. Taruk was never reported missing and Hassan continued to manage the Asbury Avenue building.

Published on: June 17, 2013

Should a Family Member Draft My Will?

by Scott C. Soady

When it comes to drafting your last will and testament or other California estate planning documents, it’s important you work with an attorney who is not only knowledgeable and experienced, but also someone who is impartial and not looking to benefit financially from your future estate. To that end, the California Probate Code specifically prohibits making a transfer by will, trust or similar instrument to the person who drafted that instrument or anyone related to that person. This means, for example, that a probate court will not honor a will leaving a person’s estate to the attorney who drafted that will–or the attorney’s wife, law partner, child, et cetera.

There is an exception, however, for attorneys who are already related by blood, marriage or civil partnership to the person making the will. If your son is an attorney and drafts a will for you where he’s a beneficiary, that would be valid under California law. Things can become more complicated when dealing with attorneys related by marriage, as a recent California Court of Appeals case demonstrates. This case is only discussed here for informational purposes and should not be construed as a statement of the law and is only for illustrative purposes.

Step-Children Can Complicate the Process

Published on: June 14, 2013

Making Sure Your Power of Attorney Is Valid

by Scott C. Soady

A power of attorney is an important estate planning tool that authorizes another person to make decisions for you should you become incapable of making them yourself. A health care power of attorney is a document that specifically applies to decisions regarding your personal care, treatment and maintenance. Health care powers of attorney are especially important for residents of a nursing home or other extended care facility. In these situations, the agent designated by the power of attorney must take care to safeguard the legal rights of the individual in the event something goes wrong.

Recently, a California appeals court thwarted a nursing home’s effort to enforce a clearly invalid health care power of attorney reportedly signed a by a resident who died under the facility’s care. The case, which is only discussed here for informational purposes and should not be construed as legal advice, demonstrates how failure to follow basic California legal requirements can lead to significant problems later.

No Witness, No Notary, No Power of Attorney

Published on: June 12, 2013

Avoiding Ambiguity in an Irrevocable Educational Trust

by Scott C. Soady

Trusts are a common estate planning device used to shield assets from the probate process. Trusts also enable an individual (or married couple) to provide for the maintenance, education and health of family members by utilizing specific assets for those purposes. When making a trust to provide for family after your death, however, it’s essential to be precise as to your intentions and instructions. Ambiguity may lead to confusion, and possibly litigation, between your trustee and the very family members you hope to support.

Paying for Your Grandchildren’s Law School

A recent California case illustrates the complications that can arise from a trust intended to provide for a deceased couple’s grandchildren. Please note this case is only discussed for informational purposes and should not be construed as legal advice or a binding statement of current California law.

Published on: June 11, 2013

The Problem of Dueling Conservators

by Scott C. Soady

When an adult can no longer manage his or her own affairs, a conservatorship may be necessary. If your California estate planning does not include a general durable power of attorney or advance healthcare directive naming agents to act in the event of your incapacity, a probate court may name an agent called a conservator to act for you. In some cases, a court may name two separate conservators–one for your person and another for your property or estate.

Conflicts can arise when multiple conservators disagree over what’s in the best interest of the conservatee. The California Court of Appeals recently had to settle one such dispute, which is discussed here purely for informational and illustrative purposes and should not be construed as a statement of the law. The argument arose over what to do with the property of an elderly man who was longer living at home.

Conservator of the Estate vs. Conservator of the Person

Published on: June 3, 2013

Distinguishing Between Inheritance, Gift & Estate Taxes

by Scott C. Soady

You may have heard the phrase inheritance tax in reference to estate planning. What is an inheritance tax? As the name suggests, it’s a tax assessed against the share of an estate inherited by an individual. An inheritance tax is separate from an estate tax, which is assessed against the whole value of a deceased individual’s property at the time of his or her death. The estate tax is paid by the estate. Inheritance taxes are generally paid by the recipient.

Estate taxes are more commonplace in the United States than inheritance taxes. There is a federal estate tax but no federal inheritance tax. Only nine U.S. states currently assess an inheritance tax. California is not one of them; it repealed its inheritance tax in 1982. Even the few states that do impose an inheritance tax provide broad exemptions for immediate family members of the deceased.

For example, in Maryland there is an 10% inheritance tax on all after-death transfers, except those to a spouse, child, parent, grandparent or sibling. Thus, if John Smith leaves $100,000 to his sister, there is no Maryland inheritance tax, but if he leaves that $100,000 instead to his sister’s son, that nephew would then owe $10,000 in taxes (unless Smith’s will directed his executor to pay the inheritance tax from the estate).

Published on: May 31, 2013

Dying Without a Will Can Leave Your Estate Vulnerable to Unscrupulous Relatives

by Scott C. Soady

If you die without leaving a last will and testament, your estate may be left at the mercy of unscrupulous relatives who will take advantage of the situation. While California law does provide for cases of intestacy–estates where the deceased left no will–relatives without legal knowledge may be unaware of their right to inherit part of your estate. That’s why it’s important to work with an experienced San Diego estate planning attorney who can help you and your relatives prepare a will that, hopefully, keeps everyone out of court after you pass on.

Taking Advantage of Intestacy

A recent case from the California Court of Appeals shows what may happen when relatives exploit the confusion that can arise from an intestate estate. (Please note this case is only discussed here for illustrative purposes and should not be taken as a definitive statement of current California law.) David Mack left an estate valued at approximately $700,000. He died without a wife, children or will, so California intestacy law required the division of his estate among his living siblings and the heirs of any previously deceased siblings.

Published on: May 24, 2013

LA Woman Faces Loss of Home

by Scott C. Soady

The Los Angeles Times recently reported on the plight of Marianne Blend, a 78-year-old woman facing the loss of her home due to what the Times called “probate confusion.”

Bland’s problems arise from the 2011 death of Fernando Neri, her longtime partner. Bland and Nerri lived together as husband and wife but never married. California does not recognize common-law marriages, however, and Bland does not have the same rights as a surviving spouse under probate law.

Nerri left a handwritten will leaving his Highland Park house to Bland, who was also named executor of the estate. For reasons not made clear in the Times article, the will was apparently never filed with the probate court, and the Los Angeles County Public Administrator took control of the estate. Public administrators are appointed in each California county to manage the estates of decedents and “at-risk individuals” who are deemed unable to make decisions for themselves. A public administrator may act if a person leaves no will or there is no person available to otherwise act as executor.