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8 Steps To Avoid Estate Litigation

Posted on | November 30, 2009 | No Comments

An article by the US News and World Report gives “8 Tips to Avoid Nasty Estate Surprises.”  I agree with most of the points, and add my critique after each tip below:

1. Get a good lawyer. I would add that your lawyer should concentrate exclusively in this area.
2. Pick the right executor and trustees. The right trustee will be solid and will react neutrally to avoid disputes over the estate’s property.
3. Talk about it now. This seems obvious, but most people will not let their intentions be known ahead of time. Unfair surprise is one surefire way to start a contest.
4. Know state laws. In California, as the Tax Professor adds, probate can be avoided entirely through the use of a trust.
5. Make your intentions known early and often. Making repeated modifications to the will or trust will make it harder to invalidate later.
6. Make sure title to your assets is clear. Circumventing the estate distribution by retitling assets later in life is another way to encourage litigation.
7. Consider including a “no contest” clause. Then give the beneficiary an amount that they would rather not sacrifice if they lost the contest.
8. Don’t try to manage your estate from the grave. Although I am not sure that I entirely agree with this one, in theory giving discretion to your beneficiaries may stop them from fighting over items to which they are personally attached. I agree that not every item need be listed in the instrument, but sometimes a person who writes a will or trust can avoid disputes ahead of time by simply making the right decision.

Category: Probate Litigation
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Legal Fights Over Wills - No Contest Clauses Hit the Public Spotlight

Posted on | October 31, 2009 | No Comments

With the death of Michael Jackson and other celebrities, no contest clauses have come to the fore of the public’s attention. No contest clauses are an attempt to keep brothers and sisters, aunts and uncles, and everyone else from suing in probate court every time someone writes an unfair will. There are quite a few benefits to discouraging litigation – as well as some detriment where there is a legitimate cause for concern. In fact, the California law on the subject is complex and will change in 2010. As it stands now, there are multiple statutory exceptions to no-contest clauses that everyone must follow. It is even possible to set aside a no-contest clause if the contest is brought with “reasonable” cause on the grounds of forgery, revocation, or an action to establish the invalidity of any transfer. So at least for now, would-be litigants can take heart that there may be a remedy when a relative makes a move to steal through influence or lack of capacity, as long as there is a solid reason to pursue it.

Category: Estate Planning - Generally
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10 Odd Bequests; Or How to Disinherit With Style

Posted on | July 31, 2009 | No Comments

The law regarding wills and trusts has changed greatly over the years. New law makes it difficult to precondition a devise by will or trust on an act that would violate public policy. For instance, California Probate Code § 710 prohibits imposing a condition or restraint on marriages under certain circumstances. In other words, you can’t place a restriction that discourages your son or daughter from marrying a certain person or encouraging their divorce. Likewise, “[i]f a condition precedent requires the performance of an act wrong of itself, the instrument containing it is so far void, and the right cannot exist. If it requires the performance of an act not wrong of itself, but otherwise unlawful, the instrument takes effect and the condition is void.” California Probate Code § 709. In other words, be careful what you wish for in a will or trust.

The link at the end of this paragraph gives ten examples of odd bequests that may or may not be enforceable in a court of law – but are entertaining nonetheless. Consider the man who preconditioned his wife’s receipt of £330,000 by devising that she could only receive it if she smoked 5 cigars a day (she refused to allow him to smoke). Or the woman who gave her husband $2.00 provided he spend half the money on rope to hang himself. Check out the full list here.

Category: Wills and Trusts
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Michael Jackson “Disinherited” Father in Last Will and Trust

Posted on | June 30, 2009 | No Comments

In a case that will surely be publicized to no end, the first of possibly multiple wills (see “What Will Happen if I Die Without a Will?“) executed by Michael Jackson have been submitted to the Los Angeles Probate Court. The will apparently refers to a trust (see “What is a Revocable Trust?“) in which Jackson titled all of his assets. It appears initially that Michael disinherited his father, Joe Jackson, leaving everything to his mother. The court granted temporary custody of Jackson’s children to Katherine Jackson via a guardianship proceeding (see “What is a Guardianship?“). If this probate is anything like Jackson’s life, there will be plenty of drama in the coming weeks.

Category: Current Events
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California Probate Guardianships - No Contest Clauses in a Will or Trust May Not Apply to Minors

Posted on | October 9, 2008 | No Comments

A minor who nominated his mother as guardian ad litem (See What is a California Guardianship?) does not voluntarily participate in a probate proceeding triggering a no contest clause provision in a will or trust. Safai v. Safai, 164 Cal.App.4th 233 (2008).

“The Trust (What is a Revocable Living Trust?) and the will both included ‘no contest’ clauses, with the Trust’s clause stating, as follows: ‘Any beneficiary who directly or indirectly voluntarily participates in any proceeding or action in which such person seeks to void, nullify, or set aside (1) any provision of this instrument; (2) any provision of the Settlor’s will; or (3) any amendment of this instrument or codicil of the Settlor’s will shall be considered to have predeceased the execution of this instrument without surviving descendants[.] The provisions of this paragraph shall not apply to any disclaimer by any person of any benefit under this instrument. The Trustee is authorized to defend any contest or other attack of any nature on this instrument or any of its provisions.’”

The court reasoned that the settlor did not intend “to disinherit his only son in the event that [the son] contested the Trust while still a minor,” even though a “guardian or guardian ad litem is not a party to the action; instead, he or she is a representative of record of a party who lacks capacity to sue.” Thanks to Professor Beyer for bringing this case to my attention.

Category: Probate, Probate Litigation, Trusts, Will Contests, Wills, Wills and Trusts
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Heath Ledger’s Daughter Will Inherit His Entire Estate

Posted on | October 2, 2008 | No Comments

Heath Ledger’s daughter Matilda will apparently inherit his entire $16.3 million estate. The actor executed a will (What Are the Advantages of a Will?) that left nothing to his daughter, but left everything to his parents and three sisters. Those family members have allegedly gifted those distributions to Matilda.

Category: Current Events, Estate Planning of the Rich and Famous, Probate, Probate Litigation
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How Much Does Probate Cost In California?

Posted on | September 23, 2008 | No Comments

Probate is an expensive proposition in California. The cost will vary depending upon the size of the estate, but one thing is guaranteed – your estate will pay much more than the cost of a living trust. San Diego probate fees include the cost of filing, notice of publication in the San Diego Union Tribune, real property appraisal by the probate referee, a probate bond, attorney’s fees, and executor’s fees. The TLD legal blog estimates that the probate of a $500,000 estate will generate $28,035 in costs and fees.

Category: Uncategorized
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Jury Finds San Diego Probate Agent Murdered By Beneficiary of Will

Posted on | September 11, 2008 | No Comments

Michael Ray Jennison was found guilty of second degree murder of a real estate agent hired by a local San Diego probate lawyer. [See the first report here and the second report here.] Jennison inherited part of a condominium from his grandmother (see “What Will Happen If I Die Without A Will?“). Probate agent James Magot was hired to handle the sale of the property, but placed a competing bid against Jennison for its purchase (the forced sale was truly one “Disadvantage of Probate“). The agent and Jennison were involved in an altercation witnessed by a neighbor, after which Jennison shot the probate agent twice in the head. Jennison faces a life sentence.

Category: Current Events
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California Personal Representative – Duties and Liabilities

Posted on | September 2, 2008 | No Comments

“What happens if I die without a will or trust?” The answer is that a California Personal Representative will be appointed by the court to administer your estate. A “’Personal representative’ means executor, administrator, administrator with the will annexed, special administrator, or successor personal representative.” California Probate Code §58. The order of preference, by priority (not all inclusive) is: the surviving spouse or domestic partner, children, grandchildren, other issue, parents, and brothers and sisters. California Probate Code §8461.

Even if you have a will that names the personal representative for your estate, the probate court must still approve of your selection. If you do not have an instrument in place, the probate court may require that the personal representative post a bond in order to serve in the position, which could cost thousands of dollars. The bond requirements include a credit check of the personal representative’s net worth.

Duties and Liabilities of a California Personal Representative

The personal representative is required to sign an acknowledgment of receipt of the “Duties and Liabilities of Personal Represenatitive.” California Probate Code §8404. The personal representative is an officer of the court, and the acknowledgment (drafted by the state Judicial Council) advises repeatedly that “[a]n attorney is best qualified to advise you about these matters.”

Managing The Estate’s Assets: The duties include managing the estate’s assets and investments prudently (the “prudent investor rule”), that is with the care of a prudent person dealing with someone else’s property. Another rule familiar to estate planning attorneys is the prohibition of commingling estate funds. Money in the estate must earn interest and be kept in insured accounts, and an estate planning lawyer should be consulted before making investments. Additionally, “[y]ou should not spend any of the estate’s money unless you have received permission from the court or have been advised to do so by an attorney.”

Estate Property: A California personal representative must locate and take possession of all the estate’s property, determine its value (likely by court-appointed referee), and file an inventory and appraisal within four months of all the assets in the estate. At the time of the inventory and appraisal, the personal representative must file a change of ownership statement with the country recorder or assessor where estate property is located.

Notice to Creditors: The personal representative must mail a notice of administration to each known creditor within four months of appointment.

Insurance: In California, the personal representative is required to obtain and maintain adequate insurance covering the assets and risks of the estate for the entire period of the administration of the estate.

Record Keeping: You must keep complete and accurate records of each financial transaction affecting the estate, including money and property received, spent, and the dates of the transactions. These records will reviewed by the court.

Consulting an Attorney: The Judicial Council’s form expressly states that “if you have an attorney, you should cooperate with the attorney at all times. . . When in doubt, contact your attorney.”

Finally, the form warns that your actions as a personal representative are “governed by the law itself and not by this summary.”

Category: Estate Administration, Probate
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San Diego Man Who Inherited a Condo Allegedly Kills Probate Agent

Posted on | August 26, 2008 | No Comments

A San Diego probate dispute turned deadly when a local man who inherited a condominium allegedly killed a court appointed probate agent. Michael Ray Jennison inherited the condo from his grandmother, and the victim, James Magot, was hired through the court to handle the sale. But Magot made a competing bid against Jennison’s friend on the condominium, and when the three met, a dispute arose and Jennison and Magot got into a brief fight. Jennison then pulled a gun and shot Magot in the head, killing him instantly. The trial is expected to last for a couple more weeks.

Category: Probate
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