Trusts & Estates Law Blog

When Applying the 120-Day Statute of Limitations Under Probate Code § 16061.8, When is a Trust Contest “Brought?”

Posted in Probate and Elder Abuse Litigation

When it comes to heading-off potential lawsuits, one of the most powerful weapons in a trustee’s arsenal is the “notification by the trustee.” By sending this notice to beneficiaries and heirs, the trustee can cut the timeframe for filing a trust contest down to a mere 120 days. Because of this, a solid understanding of the procedural issues involved with the notification is critical for both the trustee and potential contestants.

In handling a trust contest, it is important to recognize that procedural issues in probate cases are governed by both the Probate Code and the Code of Civil Procedure. This can lead to somewhat complicated—and not always obvious—consequences. What’s more, guidance from the courts regarding the overlap of these two codes is scant. Luckily, in the past few months the Courts of Appeal have issued two opinions specifically discussing procedural issues involving the 120-day statute of limitations triggered by a trustee’s notice.

From these cases, we learn that a trust contest is “brought” at the time it is filed (not when it is served) and that the 120-day window is not extended simply because the notice is sent by mail.

The Notification:

With a typical revocable trust, the trust becomes irrevocable when the settlor dies. The trustee then has sixty days to give notice to the beneficiaries and heirs that the trust is now irrevocable. The Probate Code also requires the trustee to include the following information: (1) the identity of the settlor and date the trust was signed; (2) the trustee’s contact information; (3) the “principal place of administration” of the trust (usually the trustee’s residential or business address); (4) that the recipient is entitled to a copy of the trust; and (5) any additional information the trust requires the trustee to include. Finally, since the trust is now irrevocable because of the settlor’s death, the notice must also include the following warning (in its own paragraph and in not less than 10-point boldface font):

“You may not bring an action to contest the trust more than 120 days from the date this notification by the trustee is served upon you or 60 days from the date on which a copy of the terms of the trust is mailed or personally delivered to you during that 120-day period, whichever is later.”

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Don’t Make the Grave Mistake of Killing Your Appeal from an Order of the Probate Court

Posted in Probate and Elder Abuse Litigation

BrendanBIn most California civil cases, a party generally must wait until a trial court issues a final judgment before he or she can get through the doors of the Court of Appeal.  While there are a few exceptions, this rule (sometimes called the one-final-judgment rule) prevents litigants from complaining to the appellate court about every ruling in a given case in piecemeal fashion.  Even when they receive an appealable judgment, parties to an appeal often find that getting a decision from the reviewing court takes endurance and patience; e.g., the time from the notice of appeal to the decision frequently takes over a year.

Things work a bit differently in probate court.  In that forum, parties can appeal from a multitude of rulings that a trial court may issue well before any final judgment.  And litigants who feel like they are growing old dealing with other types of appeals may find less waiting when it comes to probate appeals.  That is because probate appeals are subject to statutory preference (i.e., hurry-up-and-get-it-over-with rules) under section 44 of the California Code of Civil Procedure.  Still, it is a good idea to file an application for calendar preference (to remind the appellate court that yours is one of those cases) in order to speed things along.

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In Trust Disputes Where Competency of the Settlor is an Issue, Waiting Until After the Settlor’s Death to File A Trust Contest Can be Fatal

Posted in Probate and Elder Abuse Litigation

EdCTrust beneficiaries and litigators beware: the recent case of Drake V. Pinkham ((2013) 217 Cal.App.4th 400) highlights the dangers of waiting to file a trust contest until after the settlor’s death when questions regarding the settlor’s competency arise during the settlor’s lifetime.

Typically, revocable trusts are just that – revocable. A settlor can modify or terminate his or her revocable trust up until death, presuming that he or she retains the capacity to do so. Because a competent settlor has the legal right to change his or her revocable trust up until death, a beneficiary does not usually have the right to contest the revocable trust during the settlor’s lifetime.

The limitation on a beneficiary’s ability to contest a revocable trust during the settlor’s lifetime is contained in Probate Code section 15800. Section 15800 specifically provides that the person holding the power to revoke a trust (e.g. the settlor), and not the beneficiaries, holds the rights under the trust during the time the trust is revocable and the settlor is competent.

But if Probate Code section 15800 prevents a beneficiary from contesting a revocable trust when the settlor is competent, does that mean that a settlor must be formally deemed incompetent before a beneficiary can bring a contest during a settlor’s lifetime? And what happens if a beneficiary, believing a settlor to be incompetent, waits until after the settlor’s death to bring a contest – will that contest fail as untimely?

 

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Overcoming Proscrastination – Tips for Starting and Completing Your Estate Plan

Posted in Estate and Trust Planning

KayBAre you having trouble completing or updating your estate plan, although you are convinced you should?  Maybe you have a referral to an attorney recommended by a friend or other advisor, but you haven’t yet scheduled the first meeting?  Or you have attended the first meeting with your estate planning attorney, but you can’t quite seem to finish your action list for the next meeting?

Estate planning is not the top of anyone’s “to do” list.  As an estate planning attorney, part of my job is to help my clients complete their estate plans.  No one intends to delay the process, but many times the process stalls.

Here are some ideas that have helped my clients cross the finish line and enjoy the relief that a completed plan brings.  See if they work for you!

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You Need an Estate Plan (Even in Your 20s and 30s) (Part Three)

Posted in Estate and Trust Planning

In my two previous posts, I discussed the value of comprehensive estate planning even if you have a small estate or you want everything to go to your spouse.  In this last installment, I will address the most common reason I hear from clients who say they don’t need an estate plan, which is, “I don’t need an estate plan because I have everything in beneficiary designation accounts.”

People often try to create a “do-it-yourself” estate plan by creating beneficiary designations on all of their assets.  This is typically done by titling assets with another person “with right of survivorship,” holding assets jointly, or creating “payable on death” (POD) or “transfer on death” (TOD) accounts.  I caution against using this approach for several reasons.

In California, you can have $150,000 in total assets (subject to a few exclusions) outside of a trust or without beneficiary designations without triggering a probate.  Additionally, the threshold amount for transferring real property without a probate in California is $50,000.  With TOD/POD accounts, if the designated beneficiary is deceased at your death and if no successor is named, the account goes back to your estate and counts toward the $150,000.  The same is true if you are the surviving owner of property that had been owned “with right of survivorship,” which often happens with real property.  If enough beneficiary designations fail or were never created, it is possible that a probate will be required.

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Supreme Court Rules DOMA Section 3 Unconstitutional

Posted in Estate and Trust Planning

KayBToday the United States Supreme Court ruled that Section 3 of the federal Defense of Marriage Act (DOMA) is unconstitutional.  The case, United States v. Windsor, 570 U.S. ____ (2013), involved the portion of DOMA that stated that the federal government will only recognize marriages between opposite-sex spouses for purposes of federal law.  There are over 1,000 federal laws that address marital status, and DOMA’s Section 3 denied validly married same-sex couples myriad protections and responsibilities under federal law.  Because of the Windsor decision, same-sex spouses who are validly married under state law will now also be treated as married under federal law. 

Edith Windsor married Thea Spyer, her partner of 46 years, in Ontario, Canada, in 2007.  At the time, their state of residency, New York, did not allow same-sex marriage, but it did recognize the validity of their Canadian marriage.  When Ms. Spyer died in 2009, she left her entire estate to Ms. Windsor.  Ms. Windsor filed Ms. Spyer’s federal estate tax return and claimed that she was owed a refund of $363,053 as the surviving spouse.  Under federal tax law, property passing from a deceased spouse to a surviving spouse is not subject to estate tax.  However, DOMA prevented the IRS from recognizing Ms. Windsor and Ms. Spyer’s marriage, and the refund claim was denied.  The federal District Court and the Second Circuit Court of Appeals ruled in favor of Ms. Windsor, holding that the applicable provisions of DOMA were unconstitutional and ordering that the Treasury refund the estate tax paid to Ms. Windsor with interest.  The government appealed that decision to the U.S. Supreme Court.

In today’s U.S. Supreme Court decision, Justice Kennedy, writing for the majority, stated Section 3 of DOMA violates the due process and equal protection principles of the Fifth Amendment to the U.S. Constitution because it was principally designed to impose an unequal status on otherwise validly married same-sex couples.  Specifically, Section 3 tells these couples that “their otherwise valid marriages are unworthy of federal recognition . . . plac[ing] same-sex couples in an unstable position of being in a second-tier marriage.”  Slip op. at 23.  To the extent that a state has chosen to allow same-sex marriage, the U.S. Constitution prohibits the federal government from imposing “a disability on the class [of same-sex spouses] by refusing to acknowledge a status the State finds to be dignified and proper.”  Slip op. at 25.

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Marriage Equality Returns to California

Posted in Estate and Trust Planning

HilaryLThe United States Supreme Court issued its opinion in Hollingsworth v. Perry, 570 U.S. ___ (2013), this morning, regarding the validity of Proposition 8.  The outcome is that same-sex marriage is once again legal in California.  The Supreme Court did not rule on a specific right to same-sex marriage, but rather it stated that neither it nor the federal Court of Appeals for the Ninth Circuit (which includes California) had the power to hear the case.  Hollingsworth is largely a procedural case, and it requires some background to fully understand.

In 2008, the California Supreme Court held that the California Constitution’s equal protection clause prohibited limiting marriage to opposite-sex couples.  Shortly thereafter, California voters passed Proposition 8, which amended the state constitution to restrict marriage to opposite-sex couples.  The Respondents in Hollingsworth, two same-sex couples, filed suit against various California state and local officials in federal District Court asserting that Proposition 8 was invalid under the Fourteenth Amendment of the U.S. Constitution.  California state officials declined to defend Proposition 8, and the District Court allowed the Proponents (the parties who put Proposition 8 on the ballot) to defend it.  The District Court then declared Proposition 8 unconstitutional, and state officials declined to appeal.  The Proponents then appealed to the Ninth Circuit Court of Appeals.  The Ninth Circuit ultimately held that Proposition 8 was unconstitutional, and the Proponents appealed to the U.S. Supreme Court.  Even though the Ninth Circuit found Proposition 8 to be unconstitutional, it put a “stay” in place, meaning that same-sex marriages were put on hold while the appeal to the Supreme Court was pending.

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NEW U.S. SUPREME COURT CASE HIGHLIGHTS IMPORTANCE OF UPDATING BENEFICIARY DESIGNATIONS UPON DIVORCE

Posted in Estate and Trust Planning

HilaryLRetirement plans and life insurance and annuities often constitute a large portion of a client’s estate.   At death, these plans are distributed by beneficiary designation, not by the client’s Will or trust.

Many clients are aware that under California law (unless a Will specifically provides otherwise) bequests made to the former spouse in a Will that was made prior to the divorce are revoked at the time the dissolution becomes final.  In addition, some beneficiary designations naming the former spouse are automatically revoked upon divorce; but that is not always the case.  For example, there is no such automatic revocation of beneficiary designations for retirement plans that are covered by ERISA.  For an extended discussion of the effect of California law on the inheritance rights of a former spouse see the following Death and Divorce Blog.

 

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You Need an Estate Plan (Even in Your 20s and 30s) (Part Two)

Posted in Estate and Trust Planning

Last week, I blogged that a common refrain that we hear from people when we encourage them to consider estate planning is “But I don’t need an estate plan.”  This post addresses the second of three of the most common refrains that we hear.

I don’t need an estate plan because I want everything to go to my spouse.

Many married (or registered domestic partner) couples believe that they don’t need an estate plan because each spouse or partner wants everything to go to the other.  This is true for community property.  However, if either spouse owns any separate property, the separate property will be divided between the surviving spouse and other relatives.  Separate property generally includes anything owned prior to marriage and anything acquired during marriage by gift or inheritance, and titling a separate property asset jointly or commingling it with community property will not convert it to community property.  Many married couples will have at least some separate property, and if the surviving spouse and his or her in-laws do not get along, it could lead to disputes.  Additionally, if you have children, half to two-thirds of the separate property will go to your children, depending on the number of children.  If the children are minors, a court proceeding may be needed to distribute the assets to a guardian of the estate for the child or into a blocked account until the child turns 18 (even if the child has a surviving parent).   Even if a large sum of money is involved, there is no way to prevent the child from accessing the entire account at age 18.

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Mother Lacked Standing to Appeal Probate Court’s Order Relating to Her Son’s Rights

Posted in Probate and Elder Abuse Litigation

KellyDIn Conservatorship of Gregory D., (“Gregory D.”), the Court of Appeal considered whether the mother of a conservatee had standing to appeal an order that, among other things, set a visitation schedule for her son, an adult conservatee.  The Court of Appeal determined that the mother did not have standing to appeal, as she had not identified any of her own rights or interests that were injuriously affected by the order.

The Conservatorship:

Gregory D. (“Gregory”) is a developmentally disabled adult in his mid-twenties. Gregory reached the age of 18 in 2005; and, he moved into his own apartment in 2008, with supportive services that enable him to live independently.  In 2004, Gregory’s parents, Linda and Joseph, who were divorced, filed competing petitions to be named as Gregory’s limited conservator.  In 2005, Linda and Joseph settled the dispute and agreed that Linda would become Gregory’s limited conservator.  As limited conservator, Linda was granted various powers, including the ability to fix Gregory’s place of residence, access to Gregory’s confidential records and papers, and the power to enter into contracts on Gregory’s behalf.

A Series of Conservators:

While Linda was serving as limited conservator, further litigation ensued between Joseph and Linda pertaining to Linda’s administration of the conservatorship.  Joseph filed a petition to remove Linda as Gregory’s conservator, contending that Linda had improperly relocated Gregory from half-time residence in Joseph’s home and had prohibited contact between Joseph’s family and Gregory.  In August 2008, the court appointed a Probate Volunteer Panel attorney, Paul Gaulke (“Gaulke”), as attorney for Gregory.

In July of 2009, after Joseph and Linda entered into another settlement agreement, the court entered an order providing, among other things, that Linda would resign as limited conservator immediately upon the appointment of a successor limited conservator.  In September 2009, the court appointed Linda Cotterman (“Cotterman”) as the successor limited conservator for Gregory.

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