San Diego Estate Planning Lawyer Blog

Published on: September 17, 2013

Court Considers Challenge to Reclusive Heiress’ Will

A New York City jury may soon determine the fate of an estate valued at over $300 million. The deceased, Huguette Clark, left a last will and testament, but her relatives have contested the document as fraudulent. At least 19 distant relatives-most of whom never even met Clark-could share in the estate if the New York County Surrogate’s Court determines her will is invalid. Recent news reports indicate the estate may settle with the would-be heirs to avoid a trial.

Clark died in May 2011 at the age of 104. Clark’s father, a former U.S. senator from Montana, left her an immense inheritance from his copper mining fortune. Huguette Clark’s estate included mansions in Santa Barbara and Connecticut as well as a 10,000 square-foot apartment in Manhattan. But Clark herself was rarely seen by anyone. A 2012 report by MSNBC documented Clark’s isolation and the mystery surrounding her final years.

Clark’s distant relatives long believed she was under the undue influence of her financial advisors, particularly her attorney. Clark’s last will and testament, dated 2009, left the bulk of her estate, including her California property, to a private foundation established under the will. Clark also left over $15 million to her longtime nurse, and made gifts to her attorney and other employees, but left nothing to any of her distant relatives. Before her death, Clark made gifts totaling more than $44 million to her nurse, attorney and others; the executor of Clark’s will now contends those gifts were coerced and has asked the court to order repayment of all funds back to the estate.

Published on: September 4, 2013

Understanding the Surviving Spouse’s Obligations Under an A/B Trust

by Scott C. Soady

Survivor’s and exemption trusts-often called “A/B trusts”–are a common estate planning device used by married couples to help reduce federal estate tax liability. The A (survivor’s) trust represents the property under the exclusive control of the surviving spouse after the first spouse dies. The surviving spouse may amend or revoke the A trust like any other living trust. The B (exemption) trust represent the deceased spouse’s share and becomes irrevocable upon his or her death. The surviving spouse may continue to enjoy and benefit from property in the B trust, but the legal title remains with the trust, restricting the survivor’s ability to modify the trust’s principal.

The B trust must comply with the stated wishes of the deceased spouse. That is why the trust becomes irrevocable upon death. Recently a California appeals court weighed in on a case where the surviving spouse attempted to use the principal of a B trust to circumvent her late husband’s wishes. The case is discussed here for illustrative purposes only.

Protecting the Principal

Published on: September 2, 2013

Appeals Court Upholds Award to Attorney’s Estate

by Scott C. Soady

Does a contract survive the death of one of the parties? A California appeals court recently looked into this issue and found that it did. The case, involving an attorney who performed contingency fee work in relation to another estate, serves as an important reminder that estate planning extends past your personal assets into your business. If you’re a self-employed professional it’s essential you make provisions for “winding up” your business as part of your estate plan.

In the recent Court of Appeals case-discussed here solely for informational purposes-the late Dale Sare had previously been hired by two sisters, Antonia Shad and Mary Tsouris, to deal with a number of legal matters related to the conservatorship (and later probate estate) of their half-brother, Dan Mathisen. In March 2006, Shad and Tsouris signed a contingency fee agreement with Shad, entitling him to one-third of any money that the sisters received “as conservators or beneficiaries” of Mathisen. Sare initially performed his work without signing this agreement; however, he signed a revised contingency fee contract about a month later. The revised agreement restated Sare would receive one-third of any funds the sisters recovered as conservators or beneficiaries of their brother.

Sare performed legal services related to Mathisen’s conservatorship until February 2007, when Mathisen died. At this point, Sare began to perform legal work related to Mathisen’s probate estate. The sisters sought to recover cash and various items of personal property from the estate. Eventually, the sisters received over $800,000 from Mathisen’s estate.

Published on: August 30, 2013

Prosecutors Allege Will Forgeries Led to Fraud Against Estates

by Scott C. Soady

Under the probate laws of California and every other state, if a person fails to make an estate plan or leave a last will and testament, his or her estate will automatically pass to the next-of-kin, as defined in law. That may lead you to think of estate planning as unnecessary. After all, why bother when I would just leave my estate to my next-of-kin anyways? Unfortunately, there are cases where unscrupulous individuals take it upon themselves to “plan” your estate without your knowledge or consent.

IRS, U.S. Attorney Pursue Ohio Properties Recently, prosecutors in Ohio and Pennsylvania uncovered evidence of forged wills and other estate planning documents used to steal the estates of wealthy decedents. The Ohio case involves the estate of the late Martin Fewlas, a Toledo real estate investor who died leaving more than $2.2 million in assets. Fewlas died in 2010 while residing in one half of a Toledo duplex that he owned. The other half was rented by Margaret McKnight; her boyfriend, Kurt Mallory; and his father, Gary Mallory.

In September 2010, McKnight filed Fewlas’s purported last will and testament, which named her as the executor and sole beneficiary of the estate. Both Mallorys were listed as witnesses. Although Fewlas was a widower at the time of his death, court records identified at least three living relatives who would have inherited the estate absent a valid will. Nevertheless, the Lucas County Probate Court admitted the will and declared the estate closed in 2012.

Published on: August 29, 2013

Court Rejects Late Challenge to Previously Admitted Will

by Scott C. Soady

Jose Marbaix died in March 2011. Marbaix, who was in her 80s, apparently had no living heirs, and her estate plan apparently consisted of a handwritten-or holographic-will found after her death by the Los Angeles County Public Administrator’s office. Every California county has a public administrator to oversee estates where the deceased has no known heirs and there is no executor named. Accordingly, the Los Angeles Public Administrator filed Marbaix’s holographic will and asked a probate judge to admit it to probate.

Marbaix’s will left a “significant” portion of her estate to a variety of charitable organizations, including the American Lung Association, the ASPCA, Paralyzed Veterans of America and the World Wildlife Fund. After the court admitted Marbaix’s will to probate on October 14, 2011, these organizations filed a petition for an official determination of the “persons entitled to distribution of the decedent’s estate.” When such a petition is filed, any “interested person” in the estate-which would include any heirs or beneficiaries named in the will-may file a statement in support of, or opposition to, the request for distribution.

In this case, a man named Vincent Bagby appeared with an unusual claim. In July 2012, he filed a statement with the court objecting to the proposed charitable distributions and the probate of Marbaix’s will. Bagby, whose relationship to Marbaix was not established in the court record, said that Marbaix had signed a will in 2009-the probated will was dated 2006-that left the bulk of her estate to him. Bagby produced this alleged superseding will and asked it be admitted to probate in place of the 2006 will.

Published on: August 28, 2013

California Appeals Court Addresses Forced Sterilization of Woman Under Conservatorship

by Scott C. Soady

Conservatorships are often thought of in the context of a person caring for an elderly parent who is no longer capable of making his or her own decisions. But conservatorships can also involve a parent caring for a physically or developmentally disabled adult child. These situations raise complex legal questions regarding the limits of personal liberty, as proven by a July 31 decision of the California 4th District Court of Appeal in Santa Ana.

The unnamed appellant in this case is a 25-year-old developmentally disabled woman. Upon reaching her 18th birthday, a probate judge appointed the woman’s mother as her “limited conservator,” authorizing the mother to direct her daughter’s medical care. For many years, the daughter has suffered from “severe and debilitating migraine headaches” related to an irregular menstrual cycle. After a number of treatments failed to treat the migraines, an obstetrician-gynecologist recommended the daughter undergo a total hysterectomy.

Although the daughter indicated she approved of the surgery, legally should could not give “informed consent,” so her mother, as conservator, had to petition the probate court for permission to proceed with the hysterectomy. The court appointed a public defender to represent the daughter’s legal interests.

Published on: August 16, 2013

Who Will Act as My Conservator?

by Scott C. Soady

When an elderly parent becomes unable to make his or her own decisions regarding finances and medical care, an adult child or other person must assume the role of conservator. Through proper estate planning, a person can nominate, in advance, a conservator to act should the need arise. In the absence of such planning, however, it often falls to a probate judge to determine which person will act in the conservatee’s best interests.

Under California law, if a person does not nominate his or her own conservator, the probate court has the “sole discretion” to appoint one. The court must give preference, in descending order, to the person’s (1) spouse or domestic partner, (2) adult child, (3) parent, (4) sibling, or (5) any other person who offers to serve as conservator. When two or more people seek to act as a conservator, the court will follow the preference order only if the judge determines each petitioner is “equally qualified.”

Sibling Disagreement Leads to Outside Intervention

Published on: August 15, 2013

Succession Planning for Your One-Person Business

by Scott C. Soady

Estate planning for your personal assets, such as your home, can be relatively straightforward. But estate planning for your business assets-sometimes called succession planning-presents unique challenges. The first step in succession planning is understanding the legal structure of your business and how it may interact with the probate system after your death.

Sole Proprietor

In a sole proprietorship, there is no legal or tax distinction between you and your business. In a sense, when you die, the business dies with you, and your estate may still be responsible for any business-related debts just as it would be for personal debts. Any business assets are disposed of in your will, or if you don’t make a will, according to California’s intestacy law.

Published on: August 12, 2013

A Warning to Those Who Commit Financial Abuse of the Elderly

by Scott C. Soady

Financial abuse of the elderly occurs when a person, often a relative, exercises undue influence over the affairs of another person who is unable to manage his or her own resources. Under California law, a person who commits elder financial abuse cannot benefit from the victim’s estate. In such cases, which usually involve the abuser forging or coercing the victim’s signature on new estate planning documents, the court will disinherit the abuser of his or her ill-gotten gains.

A recent California appeals court decision provides a cogent example of elder financial abuse. The case is discussed here purely for informational purposes and should not be construed as a binding statement of California law. As always, you should consult with an experienced California estate planning attorney who can advise you on the particulars of your own case.

Taking Advantage of a Mother’s Mental & Physical Decline

Published on: July 31, 2013

How Will Estate Planning Affect My Family Business?

by Scott C. Soady

A family business can impose unique estate planning challenges. Assets like cash and stocks can be easily divided among multiple heirs. But a business is an ongoing concern, and not all family members may be part of the company. Ultimately, a business owner’s estate planning must weigh the needs of the company against the interests of other family members.

Let’s say you and your spouse own a restaurant. Your respective estate plans state that in the event of one spouse’s death, the other spouse will continue to operate the business as sole owner. But what happens after you both die?

To further complicate things, let’s say you and your spouse have three children. One child currently works in the business, handling day-to-day operations. Another child helps out occasionally but is not a full-time employee. The third child lives out-of-state and has nothing to do with the business.