TRUST ADMINISTRATION

Published on: January 14, 2014

Dealing With Litigation After Your Death

After your death, the executor of your estate is responsible for paying any valid claims made by your creditors. California probate law governs how and when such claims must be presented to your executor. For instance, if a lawsuit is pending against you at the time of your death, the other party may only continue the case if he or she presents a claim against your estate, your executor rejects that claim, and the other party then moves to substitute the executor as a party in the lawsuit. If these conditions are not met, the lawsuit dies with you.

There are cases where the issue is not so cut-and-dry, however. One recent decision by the California Court of Appeals demonstrates how a judgment against a deceased individual may survive even when the aggrieved party failed to make a proper claim against the estate. This case is not considered binding precedent by the California courts and is only discussed here to illustrate the underlying legal principles.

Hammer v. Hammer

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: November 28, 2013

When Is a Surviving Spouse Responsible for a Deceased Spouse’s Debts?

by Scott C. Soady

When a person dies, his or her estate is liable for any valid debts incurred before death. But what if there is no estate as such? In California, an estate need not be opened-or administered-if the deceased person’s property passes to a spouse. Can the deceased person’s creditors then demand the spouse pay off the debt?

Yes, actually. California law treats such situations as if the deceased person never died. As with any other debt incurred by a married individual, the creditors may claim (1) the community property belonging to both spouses and (2) any separate property of the deceased spouse, even though such property has now passed to the surviving spouse.

The California Court of Appeals recently addressed a case involving this principle. The case is discussed here for informational purposes only and should not be treated as a binding statement of law. As with any question of probate law, you should speak with an experienced California estate planning attorney.

Published on: November 21, 2013

Understanding the Implications of Disclaiming an Inheritance

by Scott C. Soady

In preparing an estate plan, you need to consider not just the intended beneficiaries of your will or trust, but alternates in the event your first choices either die before you or reject their inheritance. Yes, there are many situations where a beneficiary might disclaim a gift made under a will or trust. Often this has to do with the tax implications of receiving an inheritance. But whatever the reason, it’s important to understand what happens if you leave part of your estate to a person who then turns around and says, “No thanks!”

Wait v. Wait

The California Court of Appeals recently considered a case dealing with this subject. The underlying dispute involved two brothers with different interpretations of their late mother’s trust. Please note, the case is discussed here for informational purposes only and should not be read as a complete statement regarding California law.

Published on: October 25, 2013

Understanding the Consequences of a “No-Contest” Clause In Your Will or Trust

by Scott C. Soady

The whole point of making a will or trust is to prevent disputes over the disposition of your estate after your death. One way to protect your estate plan is to include a no-contest provision in your trust or will. Basically, a no-contest provision states that if a person tries to challenge any part of your trust or will in court-and fails-he or she forfeits any inheritance from your estate. No-contest provisions have long been recognized by courts, and in 2010, the California legislature expressly recognized such provisions in the state’s Probate Code.

A recent California Court of Appeal decision demonstrates how this works in practice. In this case, the court upheld a no-contest clause. Please note this case is discussed for illustrative purposes only and should not be construed as a binding statement of California law.

A Son Tries to Change His Mother’s Trust (and Loses)

Published on: October 16, 2013

Think Carefully Before Naming Multiple Trustees (Or Executors)

by Scott C. Soady

The purpose of California estate planning is to prevent your children or other family members from fighting over your assets after you’re gone. But even the best intended plan can go awry. A recent California case demonstrates the problems that may arise when one child is charged with overseeing the distribution of an estate to another child.

This case is discussed here for informational purposes only and should not be construed as an authoritative statement of California law. The subject of the case is the estate of Lydia Wezel, who died in 2006. In 1991, Wizel established a trust as part of her estate plan. She intended her two children, Jill Wizel and Robert Brown, to benefit from the trust after her death. Lydia Wezel transferred her home into the trust and instructed her successor trustees to distribute the property to Jill Wizel. The balance of the trust estate, less a few gifts specified by Lydia Wizel, would be divided between Jill Wizel and Brown.

Upon Lydia Wizel’s death, the trust named Jill Wizel and Edward Ezor as co-successor trustees. Within a few months, questions arose regarding Jill Wizel’s competency to serve as trustee. According to court records, she was hospitalized for psychosis and had a history of drug, alcohol and gambling addiction. Ezor knew about Wizel’s problems but did not act to remove her as co-trustee. Instead, he took advantage of the situation, paid himself a $10,000 fee for his “services” as trustee without actually carrying out the trust’s instructions. Notably, he failed to properly divide and distribute the balance of the trust assets to Wizel and Brown.

Published on: September 30, 2013

California Appeals Court Upholds Ex-Partner’s Right to Property Under Trust

by Scott C. Soady

Estate planning for unmarried couples in a long-term relationship presents a unique set of legal challenges. California does not recognize “common law” marriages, but in 1976, the state’s Supreme Court held that unmarried couples could enter into binding legal contracts (either express or implied) allowing them to “pool their earnings and to hold all property acquired during the relationship in accord with the law governing community property.” These so-called Marvin agreements-named for actor Lee Marvin, the defendant in the 1976 case-allow courts to look at the overall nature of a non-marital relationship and grant equitable relief in certain cases.

Marvin agreements can also affect California estate planning. Recently, the California Court of Appeal opined for a second time in a dispute between a former unmarried couple over the fate of a living trust they established to hold their common home. The case is discussed here for illustrative purposes only and should not be construed as a binding statement of California law.

An Ex-Partner Still Owes a Fiduciary Duty

Published on: July 5, 2013

Dealing With Social Security and Final Benefits & Expenses

by Scott C. Soady

In May the Inspector General of the Social Security Administration reported that the government continued to pay benefits to over 182,000 people previously reported as deceased. It’s only a small percentage of the estimated 2.5 million deaths reported to the SSA each year, but it shows how even death can become lost in the bureaucracy. If you’re on the other end–as the executor or administrator of a deceased loved one’s estate–it’s equally important you understand the law as it relates to “last” benefits.

Social Security and Pension Benefits After Death

Let’s say your widowed, elderly mother recently died. She was receiving Social Security and her monthly check came in a few days after her death. Can you cash the check? No. Under the Social Security Act, the federal law governing benefits, a person must be alive for the entire month covered by the check. So if you’re mother normally received her check on the 15th of the month and she died on the 12th, you must return the check. Likewise, if Social Security direct deposited your mother’s benefit into her bank account, the government will instruct the bank to debit her account to reverse the transaction.