ESTATE PLANNING

Published on: October 22, 2016

What Happens When an Agent Abuses a Power of Attorney?

A power of attorney is a document where you give an agent the authority to act on your behalf with respect to property. An agent (also known as an “attorney-in-fact”) has a duty under California law to “observe the standard of care that would be observed by a prudent person dealing with the property of another.” This means that the agent may be legally liable if he or she mismanages or squanders your property.

Former Agent Ordered to Compensate Principal Over Uncollected Rent

A recent California appeals court decision illustrates how an agent may exceed the authority granted under a power of attorney. This case is only an example and should not be treated as a definitive statement of California law on this subject.

Published on: October 21, 2016

How One Word Can Affect Your Estate Plan

by Scott C. Soady

In estate planning a single word can make all the difference. Your will or trust is designed to express your wishes regarding your property. In the event of a legal dispute, a judge will attempt to strictly enforce the terms of your estate planning documents as written.

Court Rules “Trustee” Means Husband and Wife Acting Together

Here is a recent example of how one word can change the meaning of a trust. This is a case from Alameda County and is not considered binding precedent in the rest of California, but it still offers a useful illustration of how courts interpret an estate planning document.

Published on: October 17, 2016

Is My Will Invalid if I Leave Nothing to My Children?

by Scott C. Soady

Many parents do not get along with their children. It is an unfortunate reality, but in the context of estate planning, there is nothing that compels a parent to leave any of his or her property to an adult child. Nor is a poor parent-child relationship, in and of itself, evidence of a mental disability or a sign that the parent was not in his right mind when he excluded a child from his will.

Bad Relationship With Children is Not Evidence of “Delusion”

A recent California appeals court decision helps illustrate this point. This is an unpublished decision, so it is not considered binding precedent, but the case explains the law in this area. The case involves a 79-year-old man who died in 2011.

Published on: October 15, 2016

How an Estate Planning Attorney Can Help Protect Your Will or Trust

by Scott C. Soady

One reason to hire an experienced San Diego estate planning attorney is to help protect your will or trust from a challenge after your death. It is not uncommon for relatives who may feel entitled to a greater share of a decedent’s estate to claim there was fraud or undue influence behind an estate planning document. In some cases, an estate planning attorney’s testimony can to see that your will or trust truly reflects your wishes.

Court Rejects Nephew’s Challenge to Uncle’s Trust

Here is a recent example from a decision by the California Fourth District Court of Appeal, which has jurisdiction over San Diego and surrounding counties. This is an unpublished decision, so this case should only be viewed as an illustration of how courts examine probate cases and not a definitive statement of California law on the subject.

Published on: October 14, 2016

How Does My Estate Plan Affect Community Property?

by Scott C. Soady

Estate planning for married couples in California often involves making a clear distinction between community and separate property. Community property generally refers to any asset acquired by either spouse during the course of the marriage. Under California law, when one spouse dies, half of the community property automatically goes to the surviving spouse, while the other half is distributed according to the terms of the deceased spouse’s estate plan (or if there is no applicable plan, according to California’s intestate succession laws).

Wife’s Separate Property Not “Re-Transmuted” to Community Property

Any confusion or disagreement over whether a particular asset is community property should be resolved before one spouse dies. Otherwise there may be litigation over who actually owns the asset. Here is a recent example from Orange County.

Published on: September 11, 2016

How Does Probate Work in California?

by Scott C. Soady

When a person dies, some or all of their property is disposed of through a legal process known as probate. If the deceased left a valid last will and testament, that document appoints a person to oversee the probate estate—a personal representative—and names one or more beneficiaries to receive any property. In some cases there may be little or no property in the probate estate, particularly if the deceased created a separate revocable living trust, an entity that is not subject to probate.

The Basics of Opening and Administering a Probate Estate

In California, the person who has custody of a deceased individual’s will must either send the document to the named personal representative or bring it to the probate court clerk’s office in the county where the deceased lived at the time of his or her death. An interested party, such as the personal representative or one of the beneficiaries, must then file a petition for probate with the court. If the deceased failed to leave a will for some reason, a petition should still be filed, and the court will name an administrator to manage any probate estate.

Published on: September 10, 2016

How Does a “Transfer on Death” Work for Securities?

by Scott C. Soady

There are a number of estate planning methods to transfer assets outside of the normal probate process. For instance, the California Uniform TOD Security Registration Act allows the owner of securities, such as corporate stocks, to designate a beneficiary who assumes ownership upon his or her death. This transfer occurs automatically at the original owner’s death, so the securities do not pass under the terms of their last will and testament.

Courts Reject Son’s Efforts to “Transfer” Mother’s Mutual Funds to Him

In order for the TOD Securities Registration Act to take effect, it is essential to clearly designate the desired securities as “transfer on death,” “pay on death,” “TOD,” or “POD.” Failure to include such a designation may lead a court to determine the Act does not apply, in which case the security will pass under the decedent’s will, trust, or other estate planning device.

Published on: September 9, 2016

Can My Family’s Creditors Go After My Trust?

by Scott C. Soady

There are some estate planning situations in which you may want to protect a family member’s potential inheritance from his or her creditors. For example, many trusts contain what is known as a “spendthrift clause,” which restricts a beneficiary’s access to the trust principal. In other words, the trustee maintains control—subject to the terms of the trust—over how and when to make payments to the beneficiary. Since the beneficiary does not have direct access to the principal of the trust, it is not considered the beneficiary’s property and therefore is not subject to a court process in satisfaction of a judgment against the beneficiary. A spendthrift clause also typically prevents the beneficiary from assigning his or her interest in the trust to satisfy a creditor’s judgment.

“Shutdown” Clause Does Not Protect Beneficiary From Child Support Judgment

At least that is how a spendthrift clause works in theory. In practice, there are circumstances in which a court may still order a trust to pay a beneficiary’s creditors. A California appeals court recently addressed such a situation in a published opinion.

Published on: August 22, 2016

How California Probate Guardianships for Minors Work

by Scott C. Soady

If you have minor children, it is important to consider the estate planning implications of providing for them before they reach the age of 18. If you leave your children a substantial inheritance, it will be necessary to name a guardian for their estate until they reach the age of majority. A guardianship of the “estate” is separate from a guardianship of the “person.” The latter refers to the person who has physical custody of the child and oversees his or her daily care. A guardianship of the estate, in contrast, only deals with property owned by the minor child.

Family Member or Professional Fiduciary?

In many cases, a guardian of the person will also serve as guardian of the estate. But depending on the size and complexity of the inheritance that you plan to leave, it may make sense to name a separate guardian of the estate. For example, you might name a close relative to serve as guardian of the child’s person while designating a professional fiduciary to serve as guardian of the estate.

Published on: August 21, 2016

Can I Leave My Estate to Anyone I Want?

by Scott C. Soady

There are many stories about people who make unusual bequests in their last will and testament. Perhaps the strangest story involved a wealthy Portuguese aristocrat who passed away several years ago at the age of 42. The man was unmarried and had no children. But he did leave a will, which named 70 different people to share in the proceeds of his estate.

What made the will unique was that the 70 people were complete strangers. According to a 2007 BBC report, the man sat in the presence of two witnesses and selected the 70 beneficiaries “at random” from a local telephone directory. These individuals had no idea they were the man’s beneficiaries until they were contacted after his death.

American vs. European Rules Governing Heirship