In our monthly department meetings, the trusts and estates group at Weintraub keeps current by reviewing recent cases and discussing how they could affect our practice. See below for some highlights from the past few months:
Continue Reading Casebriefs – How Recent Decisions Could Impact You
It was recently revealed that the late Paul Walker left his entire estate—valued at approximately $25 million—to his 15-year-old daughter, Meadow.
As reported, Paul Walker named his father as the executor of his will and his mother, Cheryl, as the guardian of Meadow’s person and now-$25 million estate. Prior to his death, Meadow lived
Trust 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?
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)
Retirement 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.
