ESTATE PLANNING

Published on: May 26, 2016

Can a Probate Court Admit an Earlier Version of My Will?

Signing a last will and testament is often not a one-time affair. You may in fact execute several wills over the course of your lifetime. While a “last” will usually refers to the document signed most recently before your death, there are occasions when a California probate court may find good cause to admit an earlier will.

Judge Nullifies Will Favoring Stepdaughter Over Biological Children

For example, in a recent case from Los Angeles, a state appeals court upheld a probate judge’s decision to admit a decedent’s next-to-last will over his last will. The probate court found the last will was the product of undue influence but the previous will was not. The court therefore admitted that will to probate over the objections of the decedent’s children.

Published on: May 22, 2016

California Legislature May Approve “Digital Assets” Legislation

by Scott C. Soady

Estate planning is typically concerned with a person’s tangible possessions and assets. But in the modern age when more of our lives exist online, how does estate planning deal with so-called digital assets? The California legislature may attempt to answer that question in a bill now pending before the state Senate.

When you sign up for an online service like Google, Facebook, or Twitter, there are “terms of service” set by the provider that may explain what happens to your data in the event of your death. Facebook, for example, allows its users to provide instructions to “memorialize” or delete an account upon death. A memorialized account maintains the user’s data—photos, messages, et al.—but otherwise prevents anyone, including the personal representative of an estate, to access the actual account.

As the law in California presently stands, there is no uniform rule for how online service providers must deal with the post-death disposal of a user’s digital assets. California Assembly Bill 691 (AB 691) would change that. The bill, which was approved by the Assembly last year and recently cleared a Senate committee, would adopt a version of the Fiduciary Access to Digital Assets Act, a model law already adopted by about a dozen states.

Published on: May 21, 2016

Can My Stepchildren Inherit From My Estate?

by Scott C. Soady

Recently a California appeals court faced an unusual situation. A woman wanted to reopen her late husband’s estate nearly 25 years after his death. The widow claimed there was a “clerical error” in the original probate court order that led to the unintentional omission of her children from a prior marriage—that is, her husband’s stepchildren—from inheriting part of his estate.

Under the husband’s will certain property, notably three pieces of real estate, was placed with the wife in trust. As long as the wife remains alive, she receives all of the income from the trust property. Upon her death, according to the will, “the trust estate would be distributed in equal shares to each of decedent’s children then living and each group of issue of a deceased child.”

The wife served as personal representative of her husband’s estate. She apparently did not retain a probate lawyer to assist her. In 1992, she filed a petition to approve the distribution of estate property according to the terms of the will. The final order approved by the probate judge only included the husband’s children as “children” entitled to inherit under the will. But as it turned out, there was language in the will that included the wife’s children, the husband’s stepchildren, as intended beneficiaries of the trust.

Published on: May 19, 2016

What Happens to My Social Security Payments When I Die?

by Scott C. Soady

Nearly 60 million Americans receive Social Security benefits. Approximately two-thirds of these recipients are retired workers. According to Social Security, retirement benefits “represent about 39 percent of the income of the elderly.” But what happens to those benefits after the recipient dies? Can your estate continue to receive your Social Security payments?

Retirement Benefits After Death

With respect to retirement benefits, Social Security ends upon your death. Indeed, it is essential to notify Social Security of a recipient’s death as soon as possible. In many cases, a funeral director hired by the family will take care of this duty.

Published on: May 12, 2016

Prince Estate Raises Questions About Intestacy Laws

by Scott C. Soady

The recent death of Prince Rogers Nelson sparked a great deal of interest in estate planning circles when it became known that the famous musician, commonly known by just his first name of “Prince,” apparently did not leave a last will and testament. Nelson was also unmarried and had no surviving children at the time of his death. This has led to concerns that his siblings—and perhaps individuals claiming to be his siblings—will fight over the final disposal of Nelson’s sizable estate in a Minnesota probate court.

What Happens When You Die Without a Will?

In legal terms, a person who dies without a will is said to die intestate. When this happens, the probate law of the state where the estate is opened—generally the residence of the deceased—dictates the order of inheritance. For example, under California’s intestacy law, if a person dies without a spouse, child, or surviving parent, his entire estate would be equally divided among his siblings.

Published on: May 2, 2016

California Now Allows Transfer-on-Death Deeds

by Scott C. Soady

On September 21, 2015, California Gov. Jerry Brown signed legislation authorizing the use of “Revocable Transfer on Death Deeds” as an estate planning option for residential property owners. As of this year, owners may use these instruments to bypass the normal probate process when disposing of their homes after death. Several states already permit these types of deeds, although there are concerns about the potential for abuse.

What is a Transfer-on-Death Deed?

Under the new California law, a homeowner may file a deed naming a beneficiary who will automatically inherit the property upon the owner’s death. (The deed may also name multiple beneficiaries.) This means the property will not pass through the deceased owner’s probate estate. A transfer-on-death deed may only be used for residential properties, including condominiums, parcels with four or fewer dwellings, or farms containing 40 acres or less and a single-family home.

Published on: April 30, 2016

How Do I Transfer Property from One Trust to Another Trust?

by Scott C. Soady

Unlike a last will and testament, estate planning through a living trust involves the transfer of title to assets during your lifetime. For example, if you want your house to be part of a revocable living trust, you must execute and file a new deed transferring ownership from yourself to the trustee—which in most cases is also you. Failure to properly transfer an asset means a probate court may determine it is not part of the trust at all and should pass instead under your will.

San Diego Court Finds New Trust Sufficient to Transfer Real Estate

What about cases where you create a new trust and want to transfer assets into it from an earlier trust? A San Diego appeals court recently addressed this question. In this case a man, now deceased, created a revocable living trust in 1985, into which he transferred a parcel of real property located in San Diego. The man created a second, irrevocable trust in 2009, which listed the same property on the schedule of trust assets. The man did not, however, sign a deed transferring the property from the 1985 trust to the 2009 trust.

Published on: April 29, 2016

What is My Estate Actually Worth?

by Scott C. Soady

An “estate” does not necessarily include all of a person’s assets. In the context of estate planning, an estate refers to property subject to distribution under a person’s last will and testament—that is to say, their probate estate. This may exclude some or all of a person’s property depending on its type and ownership.

Assets That are Not in Your California Probate Estate

For example, any assets that you jointly own with someone else are not part of your probate estate. This would include a joint bank account or a house you co-own as a joint tenant. Upon your death, the surviving co-owner simply assumes full ownership of the asset. Your probate estate also excludes any life insurance policy or asset payable to someone else upon your death, such as a retirement account. And for purposes of determining your California probate estate, any real property that you own in another state—say a rental property in Arizona—is excluded.

Published on: April 25, 2016

How a California Power of Attorney Works

by Scott C. Soady

A power of attorney is a document authorizing someone to act on your behalf with respect to financial and contractual matters. Among other acts, a person holding your power of attorney may sell your house, write checks from your bank account, or access your safe deposit box. A power of attorney is “durable,” meaning it continues in effect until you revoke it. Your death would also terminate any outstanding power of attorney.

Daughter Improperly Delegates Father’s Power of Attorney

There are limits to what a person may do under a power of attorney. Here is one illustration from a recent California appeals court decision. This is only an example and should not be construed as a complete statement of California law on the subject of powers of attorney.

Published on: April 24, 2016

How the Estate Tax Works in 2016

by Scott C. Soady

The new year is a good opportunity to reconsider your estate planning needs. You should periodically review, and if necessary revise, your will, trust, and other estate planning documents such as a durable power of attorney, to keep your affairs current. Among other things, changes in the law may alter your estate planning needs.

What is the Estate Tax?

One of the most important laws affecting estate planning is the estate tax. This is a federal tax levied against the total value of a person’s assets upon their death. A handful of states also levy their own estate tax, although California does not. However, if you own property in a state where such a tax is still assessed, you will need to account for that in your estate planning.