San Diego Estate Planning Lawyer Blog
In making a will or trust, you should consider the possibility your chosen beneficiaries will not outlive you. It is therefore common practice to include a survivorship clause, specifying that a gift will lapse unless the recipient survives you. Some survivorship clauses require the recipient survive you by a specific period of time, say 30 or 60 days, in order to inherit.
A common survivorship clause scenario involves a married couple that dies simultaneously, for example in a car accident. The spouses may structure their wills or trusts to dictate which spouse is deemed to have survived the other. Absent such provisions, California law will presume each spouse predeceased the other. This means any estate will be distributed assuming there was no surviving spouse.
Marble v. Fibiger
Another survivorship clause scenario was the subject of a recent California appeals court decision. This case is discussed here for informational purposes only and should not be construed as a general statement of California law on the subject. In this case, one daughter died with 60 days of her mother, and the surviving daughter argued her sister’s estate should not inherit from the mother’s estate due to a survivorship clause.
Kenneth and Doris Porter established a joint revocable trust in 1990. Kenneth Porter died in 2006. The trust was then divided into what is known as an A/B trust. Part of the trust remained under Doris Porter’s control. The other part, representing Kenneth Porter’s assets, went into a bypass trust, which became irrevocable upon his death. Doris Porter would receive the income from the bypass trust assets, and upon her death, the trust assets were to be divided among the couple’s two children, Cynthia Ayala and Lora Fibiger.
Doris Porter died in January 2009. Fifty-eight days later, Ayala died of cancer. The original trust contained a 60-day survivorship clause. Fibiger, the surviving daughter and now sole trustee of the trust, argued this meant her sister’s share of the bypass trust had elapsed. Furthermore, Ayala also signed a document just before her death releasing her share of the bypass trust to Fibiger in exchange for a one-time payment.
Ayala’s son and executor, Chris Marble, challenged both the application of the survivorship clause and the release his mother signed as a product of Fibiger’s undue influence. A probate court agreed with the Ayala estate on both issues. Fibiger, acting as trustee, appealed.
With respect to the survivorship clause issue, the Court of Appeals agreed with the Ayala estate and the probate court. The survivorship clause referred to Kenneth Porter’s death, not that of his wife. Ayala’s gift fell under the bypass trust, which only came into existence as a result of Mr. Porter’s death-and that trust simultaneously became irrevocable. Therefore, the court concluded, Ayala only had to survive her father-who died three years before her-by 60 days. The timing of her mother’s death was irrelevant. (The appeals court went on to overturn the probate court’s decision on the undue influence question, finding there was no evidence Fibiger abused her position or forced her sister to sign away her rights to most of the bypass trust assets.)
Draft Carefully
In a case like the one described above, the courts apply the written terms of the trust itself rather than a general principle of law. That is why it is essential any trust, will or other estate planning document be carefully drafted to avoid ambiguity or misunderstanding. Contact San Diego estate planning attorney Scott C. Soady today if you have any questions.