San Diego Estate Planning Lawyer Blog

Published on: December 12, 2013

Holographic Wills Are Inconsistent from State-to-State (or Country-to-Country)

An Australian judge recently issued what may be the first court decision of its kind anywhere in the world. Justice Peter Lyons of the Supreme Court of Queensland ruled in early November that a last will and testament found on a suicide victim’s iPhone was admissible to probate. The deceased individual apparently typed the will on the “notes” application of the phone. According to the Brisbane Courier-Mail, Justice Lyons said “although the will had not been witnessed, the young man had created it with the clear intention of it being legal and operative before he ended his life just moments later.” The judge added this was an unusual circumstances and people should not ordinarily prepare wills on their mobile phones.

“Holographic” wills are legal in many common law jurisdictions, including California, but they still must meet certain requirements. In California, a holographic will must be entirely in the maker’s handwriting and signed. Unlike typewritten wills, a holographic will need not be witnessed to be admissible under state law.

It’s important to understand, however, that holographic wills may not be treated the same in every state (or foreign country). That is why they are not recommended as estate planning documents. A recent case from the State of New Jersey helps explain the problems that can arise with holographic wills.

Published on: December 6, 2013

Same-Sex Spouses Now Treated Equally Under Federal Estate Tax Laws

by Scott C. Soady

The U.S. Supreme Court’s June 26 decisions in United States v. Windsor and Hollingsworth v. Perry significantly altered the legal and estate planning landscape with respect to same-sex couples. In Windsor, the justices invalidated the key provision of the Defense of Marriage Act, which previously barred federal agencies from recognizing any same-sex marriages, even those that were legal under state law. Perry ended litigation over Proposition 8, a California voter initiative that attempted to ban same-sex marriages in the state. California officials resumed issuing marriage licenses to same-sex couples shortly after the court’s decision.

The IRS Responds

In August, the Internal Revenue Service announced same-sex couples could henceforth be treated as “married” for purposes of federal tax law, provided the couple was legally married in a state or foreign country that recognized such unions. The key is that the marriage need only be legal in the state where it took place, not where the couple presently lives. So, for example, if a same-sex couple legally married in California later moved to Virginia-where such marriages remain illegal under the state constitution-the IRS would still treat the couple as married for purposes of determining any federal taxes.

Published on: December 5, 2013

First or Second Wife? How Divorce and Remarriage Can Affect Estate Planning

by Scott C. Soady

Divorce complicates estate planning, especially when one or both former spouses decide to re-marry. If questions over community property linger from the first marriage, they can spill over into probate court should either party die. A recent case from the California Court of Appeal, discussed here for informational purposes only, shows just how complicated remarriage can be with respect to probate and estate planning.

Burwell v. Burwell

Gary Burwell purchased a term life insurance policy in 1996 on his own life, naming his then-wife, Becky Burwell, as the beneficiary. In 2004, Becky Burwell sued her husband for divorce. In serving her husband, a number of restraining orders took effect, including one preventing Gary Burwell from changing his life insurance policy or disposing of any property via will or trust. These orders were meant to conserve the Burwells’ community property until their divorce became final.

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 26, 2013

How a Joint Tenancy Can Affect Your Estate

by Scott C. Soady

Joint tenancy is a form of property ownership that often factors into estate planning. If two people own a piece of real estate, for example, they can either be joint tenants or tenants in common. Under the latter, a tenancy in common, each person separately owns his or her share of the property. Thus, when one co-owner dies, his share passes through his estate like any other property. But under a joint tenancy, when a co-owner dies, his or her share simply ceases to exist; the surviving co-owner (or co-owners) acquire full title immediately upon the deceased co-owner’s death. Nothing passes through a will, trust or probate process.

A joint tenancy requires four conditions, known as the “four unities”: (1) the co-owners acquire the property at the same time; (2) the co-owners share identical same title to the property; (3) each co-owner has an identical share of the property; and (4) the co-owners have an equal right to possess the property. If any of these conditions are not met, or cease to exist, there is no longer a joint tenancy, but a tenancy in common.

Recently, the California Court of Appeals addressed a dispute over a joint tenancy that was dissolved shortly before one of the co-tenants died. The surviving co-tenant argued the joint tenancy remained in force. The probate court and the Court of Appeals disagreed. The case is discussed here for informational purposes only.

Published on: November 22, 2013

NFL Patriarch’s Death Highlights Importance of Estate Tax Planning

by Scott C. Soady

K.S. “Bud” Adams, Jr., built his fortune in the Texas oil business during the 1950s. In 1959, Adams tried twice to get a National Football League team for his hometown of Houston. When those efforts failed, Adams and fellow Texas oilman Lamar Hunt joined forces to create the American Football League. Adams ran the new Houston Oilers franchise. The AFL and NFL fiercely competed for players and fans during the 1960s, only to merge in 1970, with Hunt’s Oilers entering the new NFL.

By the 1990s, Adams had become dissatisfied with his team’s stadium, the Houston Astrodome. When Houston officials refused to fund a new venue, Adams moved the team to Nashville, Tennessee, where state and city leaders were all too happy to provide a state-of-the-art facility. Now known as the Tennessee Titans, Adams turned his original investment of $25,000 back in 1959 into a franchise valued at over $1 billion.

A Costly Move from Texas to Tennessee Adams died on October 21 at the age of 90. He was survived by two children and seven grandchildren. According to David Klimer of The Tennesseean, “Adams had the foresight – and wealth – to establish a succession plan that keeps the NFL team in the family.” Klimer said Adams set aside sufficient funds to pay what will likely be an enormous federal and Tennessee estate tax bill on the appraised value of the Titans franchise.

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: November 16, 2013

Omitting a Residuary Clause From Your Will Makes No Sense

by Scott C. Soady

A last will and testament is an important legal document that provides for the distribution of your property after your death. A will is not something to be prepared casually or haphazardly. You should always work with a qualified San Diego estate planning attorney before preparing or revising a will. Even if you think you understand the requirements of a will, an estate planning attorney can ensure there are no drafting mistakes that may lead to confusion-and litigation-down the line.

Banner v. Vandeford

Consider a recent decision by the Supreme Court of Georgia. Three adult siblings argued over the meaning of their father’s will. John Huscusson signed his will in 2012. The document was prepared by an attorney and executed in full compliance with Georgia law (which is similar to the law of California). There was no question the will was valid.

Published on: November 15, 2013

Providing for a Disabled Child Through a Special Needs Trust

by Scott C. Soady

Special needs trusts are an estate planning device that allows a person to leave part of his or her estate to a disabled beneficiary without affecting that beneficiary’s government benefits. For example, let’s say you have an adult child who is permanently disabled and receives Social Security and California Medicaid (Medi-Cal) benefits. Leaving that child a large inheritance might disqualify them from continuing to receive those benefits. And if the child’s disability renders them unable to handle their own finances, any inheritance you leave them may simply be squandered.

A special needs trust addresses this situation by distributing assets from your probate estate (or existing living trust) to a trustee, who could then make payments for the benefit of the disabled child-but not to the child directly, as that would constitute income for Social Security and Medi-Cal purposes. The special needs trust would continue for the duration of the child’s lifetime. Like most trusts created as part of an estate plan, the special needs trust would become irrevocable upon your death, meaning your child or the successor trustee could not unilaterally modify or revoke it.

A special needs trust is usually the best way to provide for a disabled child in your estate plan. If you think a more informal arrangement might suffice, consider a recent decision from the California Court of Appeals. In this case, which is described here for informational purposes only, a father decided to leave his entire estate to one daughter with only an oral promise she would provide for her disabled sister after his death.

Published on: November 9, 2013

Joint Accounts Can Help Avoid Probate, If Registered Correctly

by Scott C. Soady

One way to bypass the probate process is to title your assets jointly with another person. For example, you might register your bank account in the name of you and your son. When you die, your son would automatically assume sole ownership of the bank account without having to go through probate. The joint account would not be considered a probate asset passing under your estate.

It’s important to make sure, however, that any asset you intend to hold with another person is properly titled and registered. Informal agreements between family members are not sufficient to prove joint ownership in many cases. A recent decision from the California Court of Appeals, discussed here for informational purposes only, helps illustrate this point.

Mahmood v. Bank of America, N.A.