NEWS AND COMMENTARY

Published on: September 10, 2016

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

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 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

Published on: August 19, 2016

Do I Really Need a Will if I am Under the Age of 30?

by Scott C. Soady

Many younger people think they do not need to concern themselves with making a last will and testament. A will is something that older people make when they are in poor health or even on their deathbed, right? Of course, that is ludicrous thinking. Every day we see reports of people cut down in the prime of their lives due to an accident, and in many cases those individuals died without taking the time to make a proper estate plan.

“Star Trek” Actor’s Sudden Death Highlights Legal Effects of Dying Without a Will

Anton Yelchin, a 27-year-old actor residing in Los Angeles, died this past June after he was accidentally crushed by his own car. Yelchin was best known for his appearances in the recent “Star Trek” feature films, the most recent of which premiered shortly after his death. Recently, Yelchin’s parents filed a petition to open a probate estate for their son, who they say died without leaving a will.

Published on: August 1, 2016

Estate Planning, Charitable Pledges, and Community Property

by Scott C. Soady

Many people pledge money to charity as part of their estate planning. In California, charitable pledges are generally not enforceable in court unless the donor receives some consideration, thereby creating a binding contract. For example, if a college offers to name a building after you in exchange for your gift, that would be consideration for your pledge. If you pledge money contingent on other people making similar donations, that would constitute mutual consideration among all of the donors.

If you do make a binding pledge as part of your estate plan, however, make sure you consider the wishes of your spouse. Under California law, any community property held by a married couple is owned one-half by each spouse. This means you may not make a gift of your spouse’s share of such property without his or her consent.

Ex-Husband Cannot Pay for Pledges With Ex-Wife’s Share of Community Property

Published on: July 31, 2016

Should My Estate Plan Be Digital?

by Scott C. Soady

For many of us the “paperless office” is a reality. Our personal and professional lives reside online through our laptops, smart phones, and cloud storage. But what does this mean for our estate planning?

An article on CNBC.com discussed the growing popularity of “digital document archives,” which offer specialized cloud storage for estate planning materials including wills, powers of attorney, and health care directives. The idea behind such services is to make it easier for family members or other fiduciaries to locate important estate planning documents. For example, if a person dies, his or her executor could go to a digital archive and promptly download a copy of the will.

Are “Digital Wills” Admissible in California?

Published on: July 22, 2016

Is a Creditor’s Judgment Enforceable Against My Estate?

by Scott C. Soady

Death does not automatically void any debts owed by the deceased. In the normal course of administering an estate, the personal representative named in the decedent’s last will and testament is responsible for paying any valid creditor claims presented. Indeed, once a person has died, a creditor may only enforce a debt through the probate courts. This includes debtors who obtain a civil court judgment against the decedent prior to death.

Claimant Waits Too Long to Challenge Illegal Creditor’s Lien

A recent case from Los Angeles illustrates the complications that can arise when creditors seek to enforce their judgments against a deceased debtor. In this case, a civil plaintiff obtained a $2 million judgment against the decedent in January 2012. The decedent passed away in August of that same year. Approximately two weeks after his death, the civil plaintiff filed a lien against a piece of real estate that the decedent owned in Malibu.

Published on: July 21, 2016

New California Budget Restricts Medi-Cal Claims Against Recipients’ Estates

by Scott C. Soady

In a recent post we discussed how Medi-Cal, California’s Medicaid system, can go after the assets of a deceased beneficiary recipient’s probate estate or revocable living trust for reimbursement of medical costs paid during the person’s lifetime. There is some good news for future Medi-Cal beneficiaries and their potential heirs. California’s recently adopted state budget includes important provisions designed to limit Medi-Cal “recovery” against estates. This is an important decision that will help many low-income California residents and their families by protecting their homes and savings from mandatory state seizure.

Legislature Adopts Important Protections for Medi-Cal Recipients and Families

There are actually two categories of reimbursements sought by Medi-Cal. The first is for “specified medical assistance, including nursing facility services, home and community-based services, and related hospital and prescription drug services” provided to California residents ages 55 and over. Federal law requires California to seek reimbursement from a recipient’s estate in these cases.

Published on: July 10, 2016

Taking Proper Inventory of a Probate Estate

by Scott C. Soady

An essential function of the personal representative of a probate estate is to identify and inventory the estate’s assets. Keep in mind, an estate’s assets at death may not be limited to property and funds in possession of the decedent at the time of death. If the decedent was a party (or potential party) to any civil lawsuit, any future proceeds from such a case may also be considered an estate asset.

Lawyer’s Statement Does Not Prove Intent to Disclaim Share of Judgment

A recent California case illustrates this point. This case is discussed here for informational purposes only and should not be treated as a complete statement of California law on this subject.

Published on: July 9, 2016

When Does My Trust Become Irrevocable?

by Scott C. Soady

Under California law, “Unless a trust is expressly made irrevocable by the trust instrument, the trust is revocable by the settlor.” This means that if you make a living trust as part of your estate plan, you are free to amend or revoke the trust at any time. You may, however, choose to make the trust (or part of a trust) irrevocable, in which case the trust should include clear language to that effect.

Court Upholds Husband’s Partial Revocation of Trust After Wife’s Death

Confusion over whether a trust is revocable can lead to litigation following the death of the settlor. Here is a recent example from here in California. This is only an illustration and not a binding statement of California law on the subject of revocable trusts.