It is generally accepted that “personal property” refers to all property aside from real property. But in California, that isn’t always the case when it comes to making gifts of your property in a will or a trust.  California courts actually look to the language used in a document making a gift of “personal property” or “personal belongings,” and sometimes to other evidence, to interpret the scope of property intended when using such a term in an estate planning document.

Continue Reading This Time, It’s Personal: Beware The Misleading Use of “Personal Property” In Your Estate Planning Documents

Weintraub attorneys wrote the following case alert for the State Bar of California Trusts and Estates Section regarding FirstMerit Bank, N.A. v. Diana L. Reese. The case alert may also be found on the website for the State Bar of California under Trusts and Estates Section, New Case Alerts.

FirstMerit Bank, N.A. v. Diana L.

When it comes to setting up a revocable trust, most people are primarily concerned with avoiding the time and expense associated with the probate process. To avoid probate, it is crucial that legal title to any real property is transferred to the trustee of the trust. In discussing the importance of funding the trust with real property, many clients want to know whether or not the transfer to the trust will trigger an acceleration of the debt on the property under a “due-on-sale” clause. Although the question is fairly common, the answer is not as straightforward as you might expect.

 Transfers of a Personal Residence

Under federal law, due-on-sale provisions are regulated by the Garn-St. Germain Depository Institutions Act of 1982 (Garn Act). The Garn Act, as interpreted by the Code of Federal Regulations, prevents a lender from enforcing a due-on-sale clause when a home is transferred to a revocable trust in which the borrower is a beneficiary and the home is occupied (or will be occupied) by the borrower. As far as California law is concerned, a due-on-sale clause cannot be enforced if the property transferred into the revocable trust is “residential property” and the borrower is a beneficiary of the trust. Here, “residential property” is defined as “any real property which contains at least one but not more than four housing units.” Therefore, under both federal and California law, transferring your personal residence into your revocable living trust will not trigger a due-on-sale clause.


Continue Reading Avoiding Acceleration: How to Put the Brakes on Due-on-Sale Clauses when Funding Your Revocable Living Trust with Encumbered Real Property

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.


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