San Diego Estate Planning Lawyer Blog

Published on: December 16, 2015

Should I Leave My Life Insurance Policy to My Estate?

Many people purchase life insurance to provide for their family’s long-term financial needs. Although life insurance is an important estate planning tool, it is generally not a good idea to name your estate as the beneficiary of any life insurance policy. For one thing, if the proceeds of your life insurance policy pass through your probate estate, your creditors can present claims against it, reducing the cash available to your family or other intended beneficiary. Even if you are not worried about creditors, allowing the policy to pass through probate can still impede your family’s access to immediate cash benefits.

Life Insurance Remains “Community Property” Despite Naming Estate as Beneficiary

Naming the estate as beneficiary may also create unnecessary confusion, which in turn can lead to litigation. Here is a recent example from here in California. This is only an illustration and not a complete statement of California law.

Published on: December 15, 2015

Should I Include Funeral and Burial Instructions in My Estate Plan?

by Scott C. Soady

One area of estate planning that many people overlook is their funeral and burial. It is a good idea to include instructions regarding your wishes to the executor of your will or the successor trustee of your revocable living trust. You might even consider using a funeral planning website or service to assist you. Such advanced planning can help your loved ones save time (and money) after your death and can minimize the potential for costly litigation over such issues.

Partner, Sibling Argue Over Headstone Inscription

A recent California court case illustrates what can happen when a person’s relatives fight over burial issues. The deceased in this case was a man with three siblings. The man had no children and never married, but he was in a 48-year relationship with a woman “whom he considered his wife in all but name.”

Published on: December 14, 2015

Simpsons Co-Creator’s Trust Faces $140,000 Bill for Dog Care

by Scott C. Soady

Many people are animal lovers, but few could match the dedication of the late Hollywood comedy writer Sam Simon. Simon, best known as one of the original developers of “The Simpsons,” died in March of 2015. His trust, reportedly worth “several hundred million dollars,” according to a recent story in The Hollywood Reporter, is expected to benefit a host of animal welfare causes, including Simon’s own eponymous foundation that helps rescue dogs.

The couple charged with caring for Simon’s own dog told the Hollywood Reporter that the trust has balked at continuing to pay for his care. Simon reportedly spent over $140,000 per year on the dog’s care. While that sounds like a staggering amount to most people, the Reporter noted the dog has a host of aggression and behavior problems requiring an extensive “medical and therapeutic care regimen.”

Simon’s will named a longtime friend who is also an experienced “canine-aggression trainer” as the dog’s caregiver. The trainer said that several years before his death Simon verbally promised he was “taking care of everything” with respect to the dog’s care. The trainer understood this to mean the Simon trust would continue footing the $140,000 per year bill for ongoing care. Simon’s trustee told the Reporter the trainer demanded a “ludicrous” lump-sum payment of $1.7 million but said she was still looking into the matter.

Published on: December 8, 2015

Can I Avoid Probate By Placing My House in a Joint Tenancy?

by Scott C. Soady

One way to avoid probate with respect to real property is to create a joint tenancy. While it may seem simple, this is typically not the best form of estate planning. There can be may unintended consequences for adding someone to the title such as the inherant issues with co-ownership and unintended tax consequences. Any form of estate planning, including adding someone to a deed, should only be done after consulting with an estate planning attorney.

Joint Tenancy basically means you co-own the property with another person and each of you have survivorship rights. So if you and your spouse co-own a house as joint tenants, upon your death your interest in the property automatically passes to your spouse (or vice versa). The property will not pass through probate under your will.

The other way to co-own property with other persons is as tenants in common. In this form, each person separately holds their interest in the real property and nobody has survivorship rights. Say, for example, you and your brother buy a piece of commercial real estate as tenants in common. You each own 50% of the property, and upon your death your 50% would pass according to the terms of your will. Your brother would have no survivorship rights.

Published on: December 7, 2015

Not Leaving a Will Can Leave Your Heirs Confused

by Scott C. Soady

It is never a good idea to avoid estate planning. While California law does provide for the distribution of estates without a will—that is, persons who die intestate—this often ends up costing your estate (and heirs) additional time and money. In addition, if you do not make a will, you forfeit any say over who will take responsibility for your assets as executor, which can lead to further delays in settling your affairs.

Lack of Will, Grandson’s Litigation Delays Distribution of Oakland Woman’s Estate

Intestate estate distributions can also be more complicated than you might think. Consider this recent California case, which is provided here merely as an illustration and not a complete statement of the law. The deceased in this case was an elderly woman who died without a will. She left one “significant asset,” her home in Oakland. One of the deceased’s granddaughters was named her personal representative of the estate. She apparently failed to perform her duties as personal representative, however, and four years later, the court named her attorney—who said he was “unable to reach his client”—as special administrator just to get a formal accounting of the estate filed.

Published on: November 24, 2015

What are Irrevocable Trusts?

by Scott C. Soady

When lawyers talk about trusts and estate planning, they generally mean revocable living trusts. These are flexible estate planning tools whereby a person (known as a settlor) transfers assets to a trustee. In living trusts, the settlor and trustee can be the same person. Basically, if you create a living trust and name yourself trustee, you continue to manage your assets during your lifetime, but upon your death those assets do not pass as part of your probate estate. These trusts are “revocable” because you retain the right to amend or revoke them at will during your lifetime.

There are also irrevocable trusts in estate planning. As the name implies, these trusts cannot be amended or revoked by the settlor once made. So why would anyone choose to make a trust irrevocable? The two main reasons are taxes and creditors. A revocable trust may keep assets out of your probate estate, but they remain subject to taxation and creditor claims. For example, if you place your assets in a living trust, someone who sues and obtains a monetary judgment against you individually can still enforce it against the trust assets. The trust is not a liability shield.

Similarly, any assets in a revocable trust remain part of your taxable estate. For most people this is not a big deal, as only wealthy estates are subject to federal estate tax (and California no longer imposes its own inheritance tax). Still, there are cases where an irrevocable trust can help minimize your tax burden and maximize the benefits to your designated heirs.

Published on: November 23, 2015

California Court Upholds L.A. Clippers Sale in Trust Dispute

by Scott C. Soady

Two years ago, the Los Angeles Clippers made national headlines not for their on-the-court performance but because of an audio recording of the team’s owner, Donald Sterling, making remarks deemed “deeply offensive” to minorities by the National Basketball Association. After the recording became public, NBA Commissioner Adam Silver suspended Sterling and threatened to cancel his franchise if he did not immediately sell the team. Subsequently, Sterling authorized his wife to negotiate a sale of the Clippers. In May 2014, Sterling’s wife accepted an offer from former Microsoft CEO Steve Ballmer to purchase the team for $2 billion.

But that was not the end of the matter. After initially agreeing to the Ballmer sale, Sterling changed his mind and refused to sign a binding term sheet committing him to the deal. The team itself was part of Sterling’s revocable living trust, where Sterling and his wife served as co-trustees, so his approval was necessary. Sterling’s wife responded by filing a lawsuit seeking to remove her husband as co-trustee, citing his lack of mental capacity.

The trust itself required “certification by two physicians who regularly determine capacity” before removing Sterling as trustee. A neurologist diagnosed Sterling with cognitive impairment secondary to primary dementia Alzheimer’s disease.” A second physician confirmed this diagnosis, adding Sterling was “at risk of making potentially serious errors of judgment, impulse control, and recall in the management of his finances and his trust.”

Published on: November 8, 2015

Joint Estate Planning Can Still Lead to Complications

by Scott C. Soady

Many spouses choose to execute a joint estate plan. For example, they may sign wills at the same time and promise to distribute property a certain way after the first spouse dies. Such agreements may be enforceable under California law, but it is important to follow certain procedures in the event the surviving spouse deviates from the plan. Things can get especially complicated when different family members in different states are involved.

Stepchildren Unsuccessfully Challenge Stepmother’s Trust

Here is a recent example. This case involves the application of California law to a complaint made before a federal court in New York. A husband and wife executed a joint estate plan in 1995. They agreed the surviving spouse would inherit all of the deceased spouse’s property, and upon the surviving spouse’s death, any remaining property would go to the husband’s two children from his first marriage. At the time of this agreement, the husband’s property included two apartments in New York City.

The husband died in 1998. The wife probated her husband’s will and, according to its terms, received all of his property, including the two apartments. Four years later, the wife created a revocable trust under New York law and transferred both apartments into it. She served as co-trustee together with her attorney. Unlike her will, which left her probate estate to her stepchildren, the trust provided a university located in New York would receive all of the trust assets upon her death.

Published on: November 6, 2015

California Laws Governing Assisted Suicide Remain in Limbo

by Scott C. Soady

A major part of estate planning is deciding how you wish to address quality-of-life issues if and when you suffer a terminal illness. Under current California law, a person has the “right to control the decisions relating to his or her own health care, including the decision to have life-sustaining treatment withheld or withdrawn.” The most common means of exercising this control is through a California Advance Health Care Directive.

While a doctor must honor your decision not to receive life-sustaining treatment, he or she may not assist you in ending your life, such as by providing prescriptions drugs designed to hasten death. Existing California law expressly disapproves of “mercy killing, assisted suicide, or euthanasia.” Indeed, a physician may be held criminally liable for assisting a patient’s death.

The End of Life Option Act

However, the law in this area is in flux. On October 5, California Gov. Jerry Brown signed the End of Life Option Act, a law permitting terminally ill patients to request a physician prescribe an “aid-in-dying drug” to enable them to die “in a humane and dignified manner.” The California legislature passed the Act during its ongoing special session to address healthcare issues. In a signing statement, Gov. Brown noted the ongoing political and ethical controversy over assisted suicide, but noted if he was dying and in extreme pain, “it would be a comfort to be able to consider the options afforded by this bill,” and he could deny the same right to other California residents.

Published on: October 19, 2015

Why Your Will Needs to Be Witnessed

by Scott C. Soady

Although you often hear stories about people contesting a will, it is not a simple process. Under California law, a person contesting a will has the burden of proving “lack of testamentary intent or capacity, undue influence, fraud, duress, mistake, or revocation.” In contrast, the person offering the will for probate only has the burden of proving “due execution,” that is, that the purported will meets the formal requirements of California law. So in most cases, proper estate planning can thwart a will contest.

Surviving Witness Proves Will 14 Years Later

Like most states, California law requires a will be signed by the person making it (the testator) and two witnesses. The witnesses need not read the will or understand its contents. Their role is simply to witness the testator declare the document in question is, in fact, his or her will. The witnesses must then sign the will in the presence of the testator and each other.

One reason wills must be witnessed by two people is that in the event of a contest, at least one of them will hopefully be available to testify in court as to the authenticity of the document. Here is an illustration from a recent case in San Diego which is discussed here for informational purposes only and should not be taken as an accurate statement of the law. This actually involved a contest to a will nearly 14 years after the testator’s death.