San Diego Estate Planning Lawyer Blog

Published on: December 7, 2014

Delaware Sparks National Debate Over New Probate Laws for “Digital Assets”

“Digital assets” remain an unsettled area of estate planning law. While it is long-established that a person may leave physical assets, such as books or photo albums, to someone else via a will or trust, that is not necessarily the case for digital copies of the same items stored in an email or social media account. In fact, many popular online services, like Facebook and Apple’s iTunes, expressly restrict a person’s ability to transfer their account to another person.

At least one state has taken a step towards liberalizing the rules governing digital assets after death. On August 12, Delaware Gov. Jack Markell signed the nation’s first law governing “fiduciary access to digital assets and digital accounts.” The new law requires an estate executor or trustee to “have the same access as the account holder” to online accounts owned by the deceased. The fiduciary may then order the service provider to copy, deliver or even delete the account in question.

The Delaware law is based on the Uniform Fiduciary Access to Digital Rights Act, a proposal adopted by the Uniform Law Commission (ULC), a nonprofit organization of legal professionals who draft and lobby for model state legislation. Delaware is thus far the only state to consider or adopt this particular uniform act.

Published on: December 5, 2014

Failure to Leave a Will Can Lead to More Than Just “Sibling Rivalry”

by Scott C. Soady

It is important to make a last will and testament before your declining health renders you incapable of doing so. In a deteriorating physical or mental state, you may be subject to the undue influence of others who may wish to take control of your property for their own benefit. And while the law in California and other states will not recognize a will signed as the result of undue influence, settling this may require long and often costly litigation which can deplete your estate and deprive your chosen beneficiaries of the fruits of your labors.

Green v. McClintock

Here is a recent example from another state. This involved the estate of Kenneth Green, who died of cancer in 2010. Green and his brother, Albert, had fought for years over the disposition of their mother’s estate. She died in 1995 without leaving a will. She did, however, leave a substantial farm in Allegany County, Maryland, and other cash assets. Neither brother bothered to open an estate for their mother until 2002, when Kenneth Green decided to take action.

Published on: November 5, 2014

Can a Creditor Challenge a Trustee’s Mismanagement?

by Scott C. Soady

When you create a living trust, you transfer personal assets to a trustee, who then manages those assets on your behalf. In most cases, this won’t be a problem, since you can name yourself as trustee during your lifetime. But when someone else serves as trustee, he or she owes a duty, not only to you as the person creating the trust, but to any persons you name as beneficiaries of your trust. Under California law, a trustee may not misuse (or co-mingle) trust assets for his or her personal benefit to the detriment of any beneficiaries.

Recently, a California appeals court addressed a question that apparently had not been considered before: Does a trustee owe a creditor a duty to avoid self-dealing? The appeals court answered no, reversing a lower court’s decision to the contrary.

Vance v. Bizek

Published on: November 3, 2014

How Does a “Survivorship Clause” in a Will or Trust Work?

by Scott C. Soady

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

Published on: November 1, 2014

What Happens When an Equal Distribution of Property Is Not So Equal?

by Scott C. Soady

If you have multiple children, you may wish to structure your estate plan so that each child receives an equal share of your property. Sometimes this is easier said than done-or written. If your will or trust contains conflicting or ambiguous language regarding the division of property, a probate court may have to attempt to determine what your actual intent was. This adds time and money to the cost of administering your estate, which ultimately reduces the amount of any gift left to your children.

Estate of Ellis

Here is a recent example from Iowa. In 2012, a longtime married couple passed away within a couple weeks of one another. They left three surviving adult children. According to each of their wills, upon both of their deaths, the couple left several parcels of real estate to their children. The will contained specific descriptions and estimated acreage for each gift.

Published on: October 31, 2014

When Does a “Revocable” Living Trust Become Irrevocable?

by Scott C. Soady

A revocable living trust is a flexible estate planning device that allows you to transfer your property to a trustee–usually yourself–thereby reducing those assets subject to a court-supervised probate after your death. Your trust document names a successor trustee to assume responsibility for the trust assets after your death. And as the name implies, a revocable living trust may be modified or revoked at any point during your lifetime.

But what about after your lifetime? Does a successor trustee have the right to modify the terms of your trust? That was the question before a California appeals court recently, which had to decide whether the spouse of a deceased trust grantor could alter the distribution of assets he specified.

Wright v. Tufft

Published on: October 12, 2014

Is a Will Necessary When There Is No Probate Estate?

by Scott C. Soady

A last will and testament is a document that applies only to your “probate estate.” A probate estate may not include all of your assets. In some cases, you might not even own any assets subject to probate.

Probate Assets

Generally, any asset titled solely in your name is a probate asset. For example, this would include your bank account or a house owned by you alone. After your death, these assets become part of your probate estate and may be disposed of according to the terms of your will. If you leave no will, your probate estate is subject to California’s intestacy law, which distributes property to your closest surviving relatives.

Published on: October 10, 2014

The Dangers of Using a Pre-Printed Power of Attorney

by Scott C. Soady

A power of attorney is a legal document whereby a person, known as the “principal,” grants to another person, known as the “attorney-in-fact,” the authority to act on his or her behalf in certain financial matters. The attorney-in-fact is an agent and therefore owes a fiduciary duty to the principal. California law requires an attorney-in-fact to keep his or her personal property separate from any owned by the principal and managed by the attorney-in-fact. This is to prevent self-dealing, where an attorney-in-fact may attempt to enrich him- or herself at the expense of the principal.

As it is a binding legal document, it is always best to retain a qualified California estate planning lawyer to prepare a power of attorney. Although pre-printed power of attorney forms are widely available, they may offer insufficient protection for principals, especially when such documents are subjected to the laws of another state. A recent decision by an appeals court in the State of Washington, called upon to interpret a pre-printed power of attorney signed in California, illustrates the problems that may arise.

Boyd v. Pandera

Published on: September 26, 2014

Collecting Payments After Your Death

by Scott C. Soady

Although you might think of an estate plan simply as a way to dispose of your existing assets, in fact your future estate might also be responsible for collecting additional income generated after your death. If you work in the entertainment industry, for example, your estate may still collect residual payments for years-even decades-after you’re gone. According to a recent report by the entertainment website Deadline Hollywood, the Screen Actors Guild (SAG-AFTRA) currently holds more than $40 million in unpaid residuals that belong to living and deceased members. In these cases, the union simply cannot locate the person or his or her estate to make the payments.

What Is a “Residual”?

A residual is any payment made to a performer in a television show or movie for the rebroadcast of that work. For actors, residuals are governed by a series of labor agreements between the studios and SAG-AFTRA. Since the 1970s, residuals have been unrestricted, meaning the performer must receive a payment for each rebroadcast without limit. This means residual payments may continue well after the performer’s death.

Published on: September 25, 2014

Establishing Paternity for Probate Purposes

by Scott C. Soady

When the law speaks of “heirs,” it refers to those individuals entitled to inherit a person’s estate in the absence of a valid last will and testament. For example, if you live in California and die without a will or a spouse, but you do have children, those children are your heirs and inherit your estate. “Children” includes your biological offspring, as well as any children you legally adopted during your lifetime.

But what about children whose paternity is unsettled? California law states, for purposes of inheriting an estate, paternity must be “established by clear and convincing evidence that the father has openly held out the child as his own.” A court may also enter an order during the father’s lifetime establishing paternity, whether or not he acknowledges a child as his own. If for some reason the father was unable to acknowledge paternity, it may be established after his death, also by the “clear and convincing evidence” standard.

Different States Have Different Rules