LIVING TRUSTS

Published on: March 5, 2014

When Is a Child Accidentally Omitted from a Parent’s Will?

It’s important to update your estate plan after a major life event, such as the birth of a child. An accidental omission may be correctable under California law, but it adds to the burden of your estate’s executor and the courts. A recent California Court of Appeals decision demonstrates how a not-so-accidental omission of a child can still lead to costly litigation.

Peltner v. Herterich

This case is discussed here for informational purposes only and should not be treated as a complete statement of California law on this subject. The deceased in this case is Hans Herbert Bartsch, who died in 2008. Bartsch signed a last will and testament in 2007, leaving his estate to various friends and family, most of whom resided in Germany. Bartsch’s will declared that he was unmarried and had no children.

Published on: February 19, 2014

“Undue Influence” Between Spouses Can Affect Estate Planning

by Scott C. Soady

Marriage may be sacred, but under California law, one spouse cannot take advantage of the other when it comes to estate planning. Spouses have a fiduciary duty to one another, and when one party exerts undue influence over the other, the courts may intervene. Recently, a California appeals court upheld a lower court’s decision to invalidate part of a deceased man’s trust after finding his wife exercised such undue influence.

Lintz v. Lintz

Robert Lintz was a real estate developer worth millions. He was married several times, including twice to his final spouse, Lois Lynne Lintz. Shortly after their second marriage in 2005, Robert Lintz amended one of his trusts-which held his northern California properties-to give his wife a one-half share upon his death. The trust was amended several more times between 2005 and Robert Lintz’s death in 2009, each time increasing Lois Lintz’s share and decreasing the amount left to Lintz’s children from his prior marriages.

Published on: February 10, 2014

Unmarried Couples May Face Unique Estate Planning Issues

by Scott C. Soady

Estate planning is an important subject for all married couples. It is also an issue though for unmarried couples in long-term relationships. If you are living with a non-spouse partner-and especially if you own property or enter into a business venture with that partner-your estate planning should provide for an orderly distribution of any assets acquired in the course of the partnership.

Married and unmarried couples are treated quite differently under the law. In California, married couples may own community property, or property acquired in the course of the marriage and jointly held by both spouses. Upon the death of one spouse, his or her estate plan may only dispose of up to 50 percent of any community property, with the remainder staying in the possession of the other spouse.

Unmarried couples cannot own community property, but they can hold property as joint owners. For example, they could co-own a home as joint tenants (or tenants in common) or open a joint bank account, but these assets are not community property. Typically, when one co-owner dies, the survivor automatically inherits the deceased partner’s interest. This can be a useful estate-planning tool, as such assets are generally not considered part of a probate estate. For example, if you and your unmarried partner open a joint checking account, you would automatically assume sole title upon your partner’s death without having to go through a formal estate.

Published on: January 30, 2014

California Supreme Court Rejects Application of “No-Contest” Clause in Trust

by Scott C. Soady

A “no-contest clause” is a common California estate planning device used in wills and trusts to discourage litigation over a person’s estate. The basic idea is simple: If a beneficiary named in a will or trust files a lawsuit challenging that document’s validity, that beneficiary is effectively disinherited. What’s not so simple, however, is California’s approach to no-contest clauses. Such clauses have long been recognized under the common law in California, but the state legislature has adopted numerous restrictions on their enforcement over the years.

The most recent law, which took effect in 2010, limits enforcement of no-contest clauses to three types of claims: (1) “A direct contest that is brought without probable cause”; (2) a creditor’s claim; and (3) a beneficiary’s claim to trust property (also known as a “forced election”). These latter two case types must be expressly mentioned in the no-contest clause in order to have effect.

Prior to 2010, California law allowed beneficiaries to file “safe harbor” proceedings, which allowed them access to the courts without invoking a no-contest clause. The 2010 law eliminated such proceedings. But what about safe harbor applications still pending as of 2010? Recently, the California Supreme Court considered just such a case.

Published on: January 16, 2014

Executor Recovers $1.25 Million from Caregiver Who Took Advantage of 100-Year-Old Woman

by Scott C. Soady

Proper estate planning is key to protecting your assets from those who might take advantage of you, both during and after your lifetime. One all-too-common situation faced by individuals is the presence of home caregivers who might take advantage of their elderly charges. In some cases, it may fall to the executor or trustee named in the person’s estate planning documents to recover money improperly obtained by such caregivers and their associates.

Lintz v. Ramirez

A recent California case dealt with just such a situation. This case is discussed here as an illustration only and should not be considered a definitive statement of California law. The deceased in this case was Ruth Moynes, who died in 2006 at the age of 100. Moynes did not appear to have any blood relatives, but she was close with the family of Lynn Lintz. In 1994, Moynes executed an estate plan that included a living trust and what’s known as a “pour-over” will. Upon her death, any assets remaining in Moynes’ probate estate would be automatically transferred to the trust. Lintz was named executor of the will and successor trustee and sole beneficiary of the trust.

Published on: December 28, 2013

“Resulting Trusts” May Result In Spousal Confusion

by Scott C. Soady

In estate planning, trusts are a common device used to transfer property from a settlor to a beneficiary. Not all trusts are explicit or in writing, however. California recognizes resulting trusts, which exist when a person takes title to property that is intended for the use or benefit of another. The person holding title has a duty, inferred from the parties’ intent, to transfer the property to the beneficiary.

If this sounds confusing, a recent California probate case may help explain. This case is discussed here for illustration only and should not be construed as legal advice or a binding statement of California law on the subject of resulting trusts.

Estate of Aniceto Reyes Alva

Published on: December 24, 2013

Can Your Estate Plan Pay for Your Great Grandchildren’s Education?

by Scott C. Soady

In establishing a trust as part of the estate planning process, you may intend to provide for future generations beyond your immediate heirs. Some trusts may last for decades in order to fulfill its creator’s purposes. If this is a path you intend to follow, it’s important to carefully consider the long-term logistics of administering such a trust.

Here’s a recent example taken from a California court of appeals case. The case involves a trust established nearly 50 years ago for the benefit of the trust settlor’s grandchildren and their descendants. Please note this is simply an illustration of one trust that should not be construed as a comprehensive statement regarding California law on the subject.

Wells Fargo Bank, N.A. v. Sprott

Published on: December 22, 2013

Taking Care When Revoking or Amending a Living Trust

by Scott C. Soady

A living trust provides a flexible estate planning tool that can shield many assets from the probate process. Most living trusts used in estate planning are revocable, meaning the person (or persons) making the trust can modify or revoke the trust at any point during his or her lifetime. The trust document itself should specify a procedure for amending or revoking the trust; in the absence of such provisions, California law may apply.

Frelo v. Opfer

It’s important to be clear in modifying or revoking a trust. A recent California appeals case provides one example of what can happen when there’s ambiguity. This case is merely an illustration of one trust and should not be construed as a general statement of California law on the subject.

Published on: December 20, 2013

The Risks of Naming an Heir as Personal Representative or Trustee

by Scott C. Soady

In an ideal world, estate planning would prevent disputes among your family members after your death. But even the best-laid estate plans can fall victim to squabbling heirs who use the court system to air their grievances over a period of months, if not years. In extreme situations, litigation can deplete the very estate you hope to leave to those same fighting heirs.

A recent California appeals court decision-actually, the third such decision arising from the same disagreement-provides a cautionary tale in estate planning gone wrong. This case is discussed here for informational purposes only and should not be construed as legal advice or a comprehensive statement of California law.

Trumble v. Schooler

Published on: November 22, 2013

NFL Patriarch’s Death Highlights Importance of Estate Tax Planning

by Scott C. Soady

K.S. “Bud” Adams, Jr., built his fortune in the Texas oil business during the 1950s. In 1959, Adams tried twice to get a National Football League team for his hometown of Houston. When those efforts failed, Adams and fellow Texas oilman Lamar Hunt joined forces to create the American Football League. Adams ran the new Houston Oilers franchise. The AFL and NFL fiercely competed for players and fans during the 1960s, only to merge in 1970, with Hunt’s Oilers entering the new NFL.

By the 1990s, Adams had become dissatisfied with his team’s stadium, the Houston Astrodome. When Houston officials refused to fund a new venue, Adams moved the team to Nashville, Tennessee, where state and city leaders were all too happy to provide a state-of-the-art facility. Now known as the Tennessee Titans, Adams turned his original investment of $25,000 back in 1959 into a franchise valued at over $1 billion.

A Costly Move from Texas to Tennessee Adams died on October 21 at the age of 90. He was survived by two children and seven grandchildren. According to David Klimer of The Tennesseean, “Adams had the foresight – and wealth – to establish a succession plan that keeps the NFL team in the family.” Klimer said Adams set aside sufficient funds to pay what will likely be an enormous federal and Tennessee estate tax bill on the appraised value of the Titans franchise.