San Diego Estate Planning Lawyer Blog

Published on: October 7, 2015

What Happens When Children Fight Over a Parent’s Estate?

You may think estate planning is unnecessary because California intestacy law automatically provides for the distribution of assets to your heirs, but intestacy law does not eliminate the need for an estate. Someone must still take responsibility for administering those assets and ensuring your heirs receive their fair share. Even when dealing with family members, this can fail to happen, leading to years of costly and unnecessary litigation.

Brothers Attempt to Exclude Sister from Father’s Estate

Here is a recent example from here in California. This case involves a man who died nearly 24 years ago without a will. Under California intestacy law, his three surviving children-two sons and a daughter-were entitled to equal shares of his estate. The estate itself included over 760 acres of timber property.

In the absence of a will nominating an executor, the probate court appointed one of the sons as administrator of the estate. Rather than sell the land and distribute the proceeds to his siblings, he decided instead to continue managing the property through the estate. According to court records, during this time he “did not communicate with his sister [], failed to file an accounting, failed to cooperate with or contact his attorney, and evaded service of citations to appear in court.” Seven years after his father’s death, the probate court suspended the son as administrator.

Published on: September 17, 2015

Why Is It Important to Make Your Estate Plan As Soon as Possible?

by Scott C. Soady

It is never advisable to wait until you are on your deathbed to finish (or start) your estate planning. This is especially true if there are potential complications with your estate, such as a pending bankruptcy, divorce or other issues that might affect the distribution of your property. By waiting until the last minute, your estate plan may lead to confusion-and litigation-among your heirs.

Bankruptcy, Last Minute Estate Planning Leads to Litigation

Here is a recent example from here in California. This case involves a man who suffered a stroke in July 2011 and died in the hospital a few weeks later. While hospitalized, the deceased signed a will and revocable trust, as well as a quitclaim deed purporting to transfer 22.5 acres of land to the trust, with his sister serving as trustee. The will, meanwhile, named the deceased’s daughter as executor. Complicating matters somewhat was the decedent’s Chapter 13 bankruptcy petition, which was still pending at the time of his death but later discharged at the daughter’s request.

Following the bankruptcy discharge, the decedent’s son recorded the quitclaim deed transferring the land to the trust. The daughter, acting as executor of the probate estate, asked the probate court to determine whether the deed was valid; if it was not, the land would pass to the estate and not the trust. She further argued the quitclaim deed did not accurately reflect her father’s wishes and conflicted with the terms of his bankruptcy discharge.

Published on: September 16, 2015

How Multiple Trusts May Complicate an Estate Plan

by Scott C. Soady

Although living trusts are a common estate planning tool, they can be quite complex. In fact, many estate plans include several trusts. Some of these trusts help with tax planning. Others keep a married couple’s individual and community property separate. It is therefore important when creating multiple trusts to understand what each one involves and the appropriate use of any assets contained therein.

Judge Cites Spouse for Mismanaging Community Property Trust

Here is a recent California case that illustrates the difficulties which can arise when administering multiple trusts as part of a single estate plan. The case revolves around a man who passed away in 2014. While married to his first wife, they executed an estate plan which included no fewer than five separate trusts. Things became more complicated after the wife died in 1999 and the husband remarried. This added two more trusts to the estate plan-one for the second wife’s separate property and another including the new couple’s community property.

By 2005, the husband was diagnosed with Alzheimer’s disease. The following year, the second wife told a California probate court her husband could no longer take care of himself or make financial decisions. At some point in 2007, the second wife took over as sole trustee of the couple’s community property trust. Wells Fargo assumed control of the husband’s other trusts.

Published on: August 19, 2015

Is an Adopted Adult Child a Person’s Legal “Issue”?

by Scott C. Soady

Words matter when making a will or trust. Any ambiguity in the meaning of your estate planning documents may lead to protracted litigation among your family members or other designated beneficiaries. And even in cases where you think you are being clear, different courts may look at the meaning of certain words differently. This is especially true when your estate plan is enforced in more than one state.

For example, a California appeals court recently had to determine the meaning of the phrase “adopted children” in a trust. On the surface this does not sound too difficult, yet probate courts in California and Texas disagreed as to how to define this term.

The case centered around a 1975 will executed by a woman then residing in California. She had one daughter with her then-husband. Upon the woman’s death, which occurred in 1976, most of her property went into a testamentary trust. The trust’s income goes to the daughter during her lifetime. Upon the daughter’s death, the trust would terminate and its remaining assets distributed among her “then living issue.” The trustee may also make payments out of the trust’s principal during the daughter’s life for the benefit of her or “any issue.”

Published on: August 17, 2015

Confusion Over Mother’s Estate Plan Leads to Siblings’ Court Battle

by Scott C. Soady

A mother of six adult children owned a home in San Luis Obispo County. She lived in the house with one of her sons and his wife. The couple, together with two of the other children, gave their mother money each month to help pay her mortgage.

In 2007, the mother signed a form will in the presence of an attorney. The will left the house to the son and daughter-in-law who lived with her. She simultaneously signed a deed transferring the house to the son while reserving a “life estate” for herself. This is a common estate planning device, but not usually favored given the problems that arise in this case. Basically, the mother became a “life tenant” of the house, and upon her death, the son would assume sole ownership.

Two years later, the relationship between the mother and her daughter-in-law deteriorated. The daughter-in-law told the mother she no longer owned the house and could be kicked out. At this point, three of the mother’s daughters arranged for her to meet with a new estate planning attorney. The daughters were aware of the 2007 will leaving the house to their brother, but not the deed conveying the property to him with a life estate for their mother. The mother told the new attorney she now wished to leave the house to one of her daughters. Accordingly, she signed a new will, together with a document giving her daughter power of attorney.

Published on: August 14, 2015

Late Actor’s Estate Prompts Litigation Between Sister, Biological Daughter

by Scott C. Soady

Many people avoid making a will because they assume they will die without leaving a probate estate. And while estate planning can help keep many assets out of probate, you should always prepare for unexpected claims that may arise after your death. For example, if your death is the result of medical malpractice or a defective product, a probate estate may be necessary to pursue civil litigation against the responsible parties. Recently a California appeals court addressed such a case involving the estate of a one-time Hollywood star whose death prompted an extended legal fight between his sister and a biological child he later acknowledged as his own.

In re Estate of Johnson

Troy Donahue was a well-known Hollywood actor during the 1950s and 1960s best remembered for co-starring in the 1959 film A Summer Place with Sandra Dee. Although married four times, Donahue died unmarried in 2001. In 1987, Donahue met a woman who claimed to be his biological daughter. She was adopted at birth in 1964. Donahue nevertheless accepted the daughter as his own and maintained a relationship with her and her children until his death.

Donahue, whose real name was Merle Johnson, died without a will. Donahue’s obituary reported the cause of death was a heart attack. But the daughter later received information suggesting the use of the prescription drug Vioxx caused her father’s death. In 2005, the daughter hired a lawyer to join a class action against Vioxx’s manufacturer. But this required opening a probate estate for her father in California.

Published on: August 13, 2015

What Happens If a Spouse Gives Away Community Property Without the Other Spouse’s Consent?

by Scott C. Soady

California is a community property state. This means that unless a married couple specifies otherwise, property acquired during their marriage belongs to both spouses. (There are some exceptions, such as property inherited by one spouse from someone else.) Accordingly, when one spouse dies, his or her estate owns one-half of any community property belonging to the couple, while the surviving spouse retains ownership of the other half.

Married couples should discuss how to dispose of their community property as part of the estate planning process. It is important for one spouse not to unilaterally dispose of such property, especially when both spouses are still alive. In fact, California law expressly prohibits a spouse from giving away community property “for less than fair and reasonable value” without the written consent of the other spouse.

Failure to follow this rule can lead to complicated litigation after a spouse’s death. Here is a recent example which is discussed for informational purposes only and should not be considered an accurate statement of the law. This case arises from the aftermath of a tragic 2009 incident. A woman murdered her daughter and grandchildren before killing herself. The daughter was estranged from her husband at the time of her death. We previously discussed a California court decision from last August dealing with the daughter’s estate.

Published on: August 7, 2015

What Happens to My Business When I Die?

by Scott C. Soady

People often look at their estate plan in terms of purely personal assets-their house, bank accounts, etc. But your estate also includes any businesses you own or co-own. So what happens to these assets after you die? The answer to this question largely depends on how you choose to organize your business.

Sole Proprietorship

If you run a one-person business out of your house, it is likely a sole proprietorship. This means the business has no legal existence separate and apart from you. If you have a will, this means your sole proprietorship becomes the responsibility of your personal representative (executor), who may keep the business going for up to six months under California law. A probate judge may subsequently order the personal representative to continue the business for a longer period of time or wind it down.

Published on: August 6, 2015

Is There Any Difference Between the Executor and Administrator of an Estate?

by Scott C. Soady

A key function of an estate plan is to designate a person to act in your name after you’re gone. This person must be responsible for gathering your assets, paying off any valid debts and costs of administering your estate, and distributing the remaining property to your chosen beneficiaries. If you fail to designate such a person, California law will determine who fulfills this critical role.

Generally, the person who oversees your estate is known as your “personal representative.” California law also refers to a personal representative as an “executor” or “administrator.” All three terms describe the same function, although there is a legal distinction between their method of appointment.

Executors

Published on: August 5, 2015

What Happens When Your Spouse Undermines Your Estate Plan?

by Scott C. Soady

Even the best laid estate plan does not execute itself. It is essential that your chosen fiduciaries carry out your wishes. If they depart from your plan, even inadvertently, it can have repercussions that last years, and in some cases decades.

Failing to Follow the Will as Written

Here is a recent example. Actually, “recent” is misleading given the decedent in this case died over 25 years ago. The decedent was a married man with three children. He signed his first will shortly after his marriage in 1942. Forty years later, in 1982, he signed a new will, which he amended once in 1987.