Martindale-Hubbell Peer Review Ratings recently came out with it's rating of me. The Ratings are an objective indicator of a lawyer's high ethical standards and professional ability. Attorneys receive a Peer Review Ratings based on evaluations by other members of the bar and the judiciary in the United States. I have been honored with an "AV Preeminent" rating which is a significant rating accomplishment- a testament to the fact that a lawyer's peers rank him or her at the highest level of professional excellence. My piers gave me a rating of 5 out of 5 in all possible areas analyzed: Legal Knowledge, Analytical Capabilities, Judgment, Communication Ability, Legal Experience. I'm pleased and honored.
On November 9, 2012 the Joint Committee on Taxation released a report which, among other issues, examines the potential impact to the Treasury from potential changes to the estate tax, including the Obama administration’s proposals. Importantly, if the 2012 estate tax regime is extended into 2013, the Joint Committee estimates that there will be 3,600 taxable estates. Under the Obama administration’s proposed 45-percent estate tax and $3.5-million exemption, the number of taxable estates in 2013 is estimated to be 7,200. If the estate tax regime in 2013 reverts back to the 2002 regime (as it is currently scheduled to do), the number of taxable estates is estimated to be 55,200.
2012 provides a unique opportunity for making gifts using the federal estate, gift and generation skipping transfer (“GST”) tax exemption of $5,120,000 (reduced by any prior use of such exemption).
Unless Congress takes action, the exemption decreases to $1 Million on January 1, 2013 and there is a possibility that those who miss the opportunity will have lost the ability to make significant tax free gifts.
· Based upon the existing estate and gift tax rate of 35%, the additional taxes from not taking advantage of the gift exemption of $5.12 Million that could expire on January 1, 2013 as compared to the $1 Million gift tax exemption that is scheduled to be effective on January 1, 2013 could be over $1.4 Million.
· If estate, gift and GST tax rates are increased to 45%, additional taxes from not taking advantage of the $5.12 million tax exemption could be over $1.8 Million.
· For couples who each retain their $5.12 million of remaining gift tax exemption (total of $10.24 million), the potential gift tax savings by making use of the 2012 exemption could be as much as $3.7 million (assuming the gift tax exemption is reduced to $1 million and gift tax rates increased to 45%).
These computations disregard the additional tax benefits of removing future appreciation on assets gifted from future estate, gift and GST taxes.
If you believe you can afford to make gifts in 2012, you must carefully select assets to gift and understand the consequences if such gifts are determined to be undervalued in the event of an IRS audit.
For legal assistance, call a qualified tax attorney. Call Mitchell A. Port at (310) 559-5259.
A conservatorship in California is a court case where a judge appoints a responsible person or organization (called the “conservator”) to care for another adult (called the “conservatee”) who cannot care for himself or herself or manage his or her own finances.
Types of Conservatorships
There are various types of conservatorships depending on the needs of the conservatee:
1. Probate Conservatorships
These conservatorships are based on the laws in the California Probate Code. They are the most common type of conservatorship. Probate conservatorships can be:
General Conservatorships — conservatorships of adults who cannot take care of themselves or their finances. These conservatees are often elderly people, but can also be younger people who have been seriously impaired, like in a car accident, for example.
Limited Conservatorships — conservatorships of adults with developmental disabilities who cannot fully care for themselves or their finances. Conservatees in limited conservatorships do not need the higher level of care or help that conservatees in general conservatorships need.
When a conservatorship is needed right away, the court may appoint a temporary conservator until a general conservator can be appointed. The request must be filed as part of a general conservatorship case, and can be filed either at the same time or soon after the general conservatorship case is opened with the court. The main duties of a temporary conservator are arranging for the temporary care, protection, and support of the conservatee, and protecting the conservatee’s finances and property.
2. Lanterman-Petris-Short (LPS) Conservatorships
LPS conservatorships are used to care for adults with serious mental health illnesses who need special care. These conservatorships are used for people who usually need very restrictive living arrangements (like living in locked facilities) and require extensive mental health treatment (like very powerful drugs to control behavior). Conservatees in LPS conservatorships cannot or will not agree to the special living arrangements or treatment on their own. LPS conservatorships must be started by a local government agency. If you believe that this is the type of help the adult needs, contact your local county Public Guardian or Public Conservator. The information on this Online Self-Help Center does not apply to LPS conservatorships.
Types of Probate Conservators
The probate court can appoint a conservator of the person, a conservator of the estate, or both, depending on the needs of the conservatee.
A conservator of the person cares for and protects a person when the judge decides that the person cannot do it. The conservator is responsible for making sure that the conservatee has proper food, clothing, shelter, and health care. Depending on the conservatee’s ability to understand and make decisions, the conservator may need to make important medical choices for him or her.
A conservator of the estate handles the conservatee’s financial matters — like paying bills and collecting a person’s income — if the judge decides the conservatee cannot do it.
Being appointed conservator of the person does NOT automatically make that person the conservator of the estate. If someone wants to be conservator of both, the person and the estate, he or she must petition to be appointed as both. If someone is a conservator of the person and later decides that he or she needs to be appointed as conservator of the estate, he or she can file a new petition for conservatorship and, this time, request to be appointed as conservator of the estate.
Duties of a Conservator
The duties of a conservator of the person are to:
Arrange for the conservatee’s care and protection. Decide where the conservatee will live. Make arrangements for the conservatee’s: Meals, Health care, Clothing, Personal care, Housekeeping, Transportation, Shelter, Recreation, and Well-being. Get approval from the court for certain decisions about the conservatee’s health care or living arrangements. Report to the court on the conservatee’s current status.
The duties of a conservator of the estate are to:
Manage the conservatee’s finances. Locate and take control of all assets. Collect the conservatee’s income. Make a budget to show what the conservatee can afford. Pay the conservatee’s bills. Responsibly invest the conservatee’s money. Protect the conservatee’s assets. Account to the court and to the conservatee for the management of the conservatee’s assets.
Read the Handbook for Conservators to learn more about conservatorships.
Who Can File for Conservatorship
There are a number of people who can file for a conservatorship:
The spouse or domestic partner of the proposed conservatee; A relative of the proposed conservatee; Any interested state or local entity or agency; Any other interested person or friend of the proposed conservatee; and The proposed conservatee, himself or herself.
In appointing a conservator, the court is guided by the best interests of the conservatee. If the proposed conservatee has nominated someone (and the proposed conservatee has the mental and physical ability to express his or her preference), the court will appoint that person as conservator unless it is NOT in the proposed conservatee’s best interests.
If the proposed conservatee has not or cannot nominate anyone, the law provides a list of preferences that the court generally follows when the court determines whether all these persons are qualified to serve as a conservator.
The order of preference is:
Spouse or domestic partner Adult child Parent Sibling Any other person the law says is okay Public Guardian If the person closest to the top of the list does not want to be conservator, he or she can nominate someone else.
In the end, regardless of this order of preference, the selection of the conservator is up to the judge, and the judge makes this decision by considering the best interests of the proposed conservatee.
If you know someone who needs help and probably needs a conservator, but there is no suitable family friend or relative that can be the conservator, do some research to find a private professional fiduciary to act as conservator. Professional fiduciaries charge fees, but the court must approve in advance all fees paid by the person to be helped. If the person who needs help cannot pay these fees, contact your county’s Public Guardian or Public Conservator by searching online for "public guardian" and your county's name or looking in the government pages of your telephone book. There may be fees charged, but they are usually less than the fees requested by a professional fiduciary. They have experienced personal conservators and property administrators who can serve as conservator. If you are not eligible to use the Public Guardian’s services, contact your county’s Department of Aging .
You can also call the:
Adult Protective Services hotline : 1-800-414-2002, or
Senior Legal Hotline : 1-800-222-1753.
Alternatives to a Conservatorship
You must be sure that establishing a conservatorship is the only way to meet the person’s needs. If there is another way, an alternative to the conservatorship, the court may not grant your petition.
You may not need a conservatorship if the person who needs help:
Can cooperate with a plan to meet his or her basic needs. Has the capacity and willingness to sign a power of attorney naming someone to help with his or her finances or health-care decisions. Has only social security or welfare income every month and the Social Security Administration can appoint you Representative Payee. The Representative Payee is the person the beneficiary allows to receive social security checks in his or her name on behalf of the beneficiary. Is married or is in a domestic partnership and the spouse or partner can handle financial transactions. The property must be community property or in joint accounts.
Some alternatives to a conservatorship
For Medical and Personal Care Decisions:
Advance health care directive Court authorization for medical treatment Informal personal care arrangements Restraining orders to protect against harassment
For Financial Decisions:
Power of attorney A substitute payee for public benefits (like veterans’ benefits or social security benefits) Informal arrangements Joint title on bank accounts or other property Living trusts (also called “inter vivos” trusts)The Conservatorship Court Process
Setting up a conservatorship is a long and complex process. Before asking the court to appoint a conservator, the person asking for the conservatorship should be sure this is an appropriate arrangement for the proposed conservatee.
Starting the conservatorship.
The process may be started by: the proposed conservator; the proposed conservatee; the spouse, domestic partner, a relative, or a friend of the proposed conservatee; another interested person; or an interested state or local agency, employee of the agency, or public officer. The process starts once all the necessary paperwork is filed with the court.
Completing the petition. The petition must include information about the proposed conservator and conservatee, relatives, and the petitioner (the person filing the case in court), and the reasons why a conservatorship is necessary. It must also explain why the possible alternatives to a conservatorship are not available in this case.
Filing of the petition.
The petitioner files the petition with the court clerk. He or she must pay the filing fee, plus a court investigator fee. A court date will be scheduled by the clerk. If the petitioner is low income, he or she may be able to ask the court for a fee waiver.
Informing the proposed conservatee.
The petitioner must have someone else personally deliver a citation and a copy of the petition to the proposed conservatee.
Informing the proposed conservatee’s relatives.
The petitioner must have someone else mail a written notice about the court hearing on the conservatorship petition, together with a copy of the petition, to the conservatee’s spouse or domestic partner and close relatives.
Investigation by a court investigator.
A court investigator will talk to the proposed conservatee and others who may be familiar with the conservatee’s condition. The court will assess the conservatee’s estate for the cost of this investigation unless the court decides that the assessment would be a hardship for the conservatee.
The proposed conservatee must go to the hearing unless he or she is excused because of illness. At the hearing, a judge will determine if everyone has been properly notified and if a lawyer needs to be appointed to represent the proposed conservatee. Once the judge is ready to make a decision, he or she may grant or deny the conservatorship. If the judge grants the petition, an order appointing the conservator will be filed and Letters of Conservatorship will be issued. If there is an estate, a surety bond must be filed unless the court orders the conservatee’s bank accounts to be frozen.
If a judge grants the conservatorship
The conservator must purchase a copy of the Handbook for Conservators from the court or download it at the link provided.
He or she can then assume the powers authorized under the law. Also, the conservator of the person, conservator of the estate, and limited conservator of the estate must attend the training for conservators offered by the court. Each conservator will have the ongoing duty to report to the court for regular reviews and to meet with the court investigator.
The Role of the Court Investigator
The court investigator gives neutral information about the case to the judge.
The investigator will call the proposed conservator and set up a visit with him or her and the proposed conservatee. Sometimes, he or she will meet with both more than once. The investigator must also interview relatives of the proposed conservatee.
The court wants the investigator to:
Have a private interview with the proposed conservatee. Explain how the conservatorship will change his or her life. Explain what will happen at the hearing. Explain about the proposed conservatee’s right to object to or oppose the conservatorship, to have a lawyer, to have a different conservator, and to have a trial by jury if he or she wants a jury to decide if a conservator is needed. If the proposed conservatee does not have the ability to understand or to give an opinion, the investigator will decide if a lawyer should be appointed to represent him or her. Review the petitioner’s Confidential Supplemental Information (Form GC-312) and get more information if needed. Find out if the proposed conservatee is willing and able to come to the hearing. The investigator is allowed to look at the proposed conservatee’s confidential medical records. See if the proposed conservatee is able to fill out an affidavit of voter registration. Talk to the relatives about the proposed conservatorship and why it is necessary (or not). Write a confidential report for the court and send a copy to the conservator, the conservator’s lawyer, the proposed conservatee and his or her lawyer, the conservatee’s spouse or domestic partner, and the conservatee’s parents and children. Make recommendations to the judge about the case.
Once a conservator is appointed, the court investigator stays involved. Six months after the appointment, the investigator will review the case to make sure the conservator is fulfilling his or her responsibilities as conservator and that the conservatee’s rights are being upheld. The investigator will review the case again in another 6 months and at the end of each 12-month period after that.
If the investigator thinks the conservator is acting in the best interests of the conservatee and the court agrees, the court can reduce the scope of the reports the investigator must write and file in later reviews, but the investigator must make a personal visit and interview the conservatee and must prepare and file at least a short status report every year after the first year. The court may order additional reviews as necessary or helpful to protect the conservatee.
If the investigator thinks there may be a problem after one of these reviews, he or she may ask the judge to appoint a lawyer for the conservatee. This may start the legal process to sanction or remove the conservator and either appoint someone else as successor conservator or end the conservatorship.
The investigator will also visit the conservatee and make a report if:
A petition for appointment of a temporary conservator is filed. The temporary conservator wants to move the proposed conservatee out of his or her residence. The conservator asks for exclusive authority to make medical decisions for the conservatee, especially if he or she is asking for special powers to take care of the needs of a conservatee with dementia. The conservator wants to sell the conservatee’s home (or former home). A petition for appointment of a successor conservator is filed and the conservatee cannot attend the hearing or refuses to attend the hearing on the petition.
The court investigator will explain these situations to the conservatee. He or she will then make recommendations to the court in a written report that will also be mailed to the conservator, the conservatee’s attorney, and his or her spouse or domestic partner and other close relatives.
A judge may appoint a temporary conservator to take care of a conservatee’s more immediate needs that cannot wait until a general conservator is appointed. A temporary conservator may also be appointed by the court to fill in temporarily in between permanent conservatorships, for example, if one conservator is removed and a new one has not yet been appointed.
Temporary conservatorships have a specific end date. A temporary conservator is usually appointed for a fixed time period, usually 30 to 60 days. These conservatorships can be of the person, of the estate, or both. The main role of the temporary conservator is to ensure the temporary care, protection, and support of the conservatee. And the temporary conservator of the estate protects the conservatee’s finances and property from any loss or damage until a general conservator can take over the management of the estate.
A temporary conservator cannot, without the judge’s prior approval:
Move the conservatee from his or her home (unless it is an emergency) ; Sell the conservatee’s home, or, if the conservatee is a renter, give up the lease; or Sell or give away an estate asset. To ask for the appointment of a temporary conservator, the request must be made as part of a general conservatorship court case.
Ending a Conservatorship
A conservatorship is usually a permanent arrangement. But, in certain cases, a conservatorship may be ended or the conservator may be changed.
The conservatee becomes able to handle his or her own affairs.
Someone may have a conservator while he or she recovers from a physical or mental condition that is temporarily disabling. For example, the conservatee may have been in a serious car accident and be unable to handle his or her personal affairs or finances. After rehabilitation, the conservatee may recover and be able to take care of things again.
In these cases, the conservatee, the conservator, a relative or friend of the conservatee, or some other interested person can ask the court to end the conservatorship. The court may ask the court investigator to evaluate the case and the conservatee’s condition to see if the conservatorship should be ended. If the judge ends the conservatorship, the conservator will be released from his or her duties.
The conservatee doesn’t have any more assets.
Sometimes all of the conservatees assets will be spent for his or her care. Without assets there may no longer be a need for a conservatorship of the estate. The conservatorship of the person continues if necessary.
The conservatee dies.
The conservatorship ends when the conservatee dies. But the court will not automatically release the conservator from his or her duties and close the conservatorship until the conservator takes certain actions to finish the case.
The court removes the conservator.
The court may remove a conservator who is not doing the job or is not able to do it, and then appoint a new conservator. The conservatee or any of his or her relatives or friends may ask the court to remove and replace the conservator. If the conservatee makes the request and does not have his or her own lawyer, the judge will generally appoint one to file the petition for the conservatee.
The conservator dies
If the conservator dies, a relative, friend, or the conservator’s executor (the personal representative of his or her estate) should let the court know. If there is an estate conservatorship, the conservator’s executor or attorney may be required to file a final account of the conservatee’s financial affairs, or another conservator may be required for this purpose.
The conservator resigns
If the conservator becomes ill or cannot continue serving as a conservator for some other reason, the conservator can file a petition asking the court to accept his or her resignation. Until (and unless) the court accepts the resignation, the conservator is still fully responsible as conservator.
If the court accepts the resignation, the judge may ask the former conservator to help find someone else to replace him or her. If there is no one suitable, the Public Guardian or a professional fiduciary may be appointed.
When a conservator is removed or resigns, or the conservatorship ends, the conservator will be released from his or her duties, but only after he or she wraps things up and provides the court the needed information or documents to either transfer the case to a new conservator or end the conservatorship. For conservatorships of the estate, the conservator will have to turn in a final accounting.
In California, people with developmental disabilities have a right to services they need to live independent, productive, normal lives. The state must provide services for each person with a developmental disability at each stage of his or her life, regardless of age or the degree of the disability. These state services are provided through the regional centers, which are nonprofit corporations that have contracts with the California Department of Developmental Services to serve people with developmental disabilities.
The services provided through Regional Centers are available to persons with developmentally disabilities whether they are under a general conservatorship, a limited conservatorship, or no conservatorship at all.
Find a directory of regional centers in California .
Get more information on regional centers and the California Department of Developmental Services .
A limited conservatorship is a court case where a judge gives a responsible person (called a “limited conservator”) certain rights to care for another adult who has a developmental disability (called a “limited conservatee”).
Limited conservatorships are for adults with developmental disabilities. Developmental disability refers to a severe and chronic disability due to a mental or physical impairment that started before age 18. Limited conservatorships are set up to assist developmentally disabled adults who are unable to provide for all their personal or financial needs.
As with general conservatorships, there are two kinds of limited conservatorships:
A limited conservatorship of the person is a court arrangement where a conservator cares for and protects a developmentally disabled adult and provides for the conservatee’s needs associated with daily life.
A limited conservatorship of the estate is a court arrangement where a conservator handles the conservatee’s financial matters — like paying bills and collecting the conservatee’s income if the conservatee has an estate.
You do not need a conservatorship of the estate if:
The developmentally disabled adult you care for gets public assistance, like Supplemental Security Income (SSI) or Social Security (SSA) but has no other assets, or
The developmentally disabled adult earns a wage.
But you need a conservatorship of the estate if the developmentally disabled adult has other assets, such as an inheritance or a settlement from a lawsuit that is not in a special needs trust.
If a developmentally disabled minor will soon be 18, it is often a good idea to start the process of requesting a limited conservatorship a few months before the developmentally disabled person’s 18th birthday. But, keep in mind that a limited conservatorship can be established at any time after the person with the developmentally disability has reached age 18.
The Superior Court Probate Department will supervise the limited conservator. Someone from the court investigator’s office will review the case 1 year after the conservatorship is granted, then every 2 years after that. The investigator will call the conservator to update the court’s file. The investigator will also visit the conservatee.
Limited Conservator’s Duties
When someone is appointed as a limited conservator of a person who is developmentally disabled, the court can give the conservator limited responsibility for the person and their estate.
The limited conservator’s Letters of Conservatorship and the court’s order of appointment list the exact areas (powers) in which the limited conservator is authorized to act. The limited conservatee keeps all other legal and civil rights.
Because developmentally disabled people can usually do many things on their own, the judge will only give the limited conservator power to do things the conservatee cannot do without help.
The conservator may ask the court for the powers to:
Decide where the limited conservatee will live (NOT in a locked facility). Look at the limited conservatee’s confidential records and papers. Sign a contract for the limited conservatee. Give or withhold consent for most medical treatment for the limited conservatee (NOT sterilization and certain other procedures). Make decisions about the limited conservatee’s education and vocational training. Give or withhold consent to the limited conservatee’s marriage or domestic partnership. Control the limited conservatee’s social and sexual contacts and relationships. Manage the limited conservatee’s financial affairs (for a limited conservator of the estate).
Duty to help develop the limited conservatee’s self-reliance
Overall, a limited conservator’s responsibility is to help the limited conservatee develop maximum self-reliance and independence. A limited conservator must get treatment, services, and opportunities to help the limited conservatee become as independent as possible. This can be:
Training or education, Medical and psychological services, Social opportunities, Vocational opportunities, and Other appropriate help.
To learn more about limited conservatorships, read the Handbook for Conservators.
Mental Health (LPS) Conservatorships
A mental health (LPS) conservatorship makes one adult (called the “conservator”) responsible for a mentally ill adult (called the “conservatee”). LPS conservatorships MUST be started by a local government agency, usually a county’s Public Guardian or Public Conservator.
LPS conservatorships last for only 1 year. If they are needed longer than that, they must be restarted and the conservator must be reappointed by the court. The government agency may recommend that a family member of the conservatee be appointed as LPS conservator, but this happens usually only after the first year.
These conservatorships are only for adults who are gravely disabled as a result of a mental illness listed in the Diagnostic and Statistical Manual of Mental Disorders (DSM). The most common mental illnesses are serious, biological brain disorders, like:
Schizophrenia, Bipolar disorder (manic depression), Schizo-affective disorder, Clinical depression, and Obsessive-compulsive disorder.
LPS conservatorships are not for people with organic brain disorders, brain trauma, developmental disability, alcohol or drug addiction, or dementia, unless they also have one of the serious mental illnesses listed in the DSM.
Duties and Responsibilities of an LPS Conservator
An LPS conservatorship gives legal authority to the conservator to make certain decisions for a conservatee who is unable to take care of himself or herself. If asked, the court can give an LPS conservator the duty to take care of and protect the conservatee (conservator of the person) and also the power to handle the financial matters of the conservatee (conservator of the estate).
The conservator can consent to mental health treatment even if the conservatee objects. The conservator can agree to the use of psychotropic (mind-altering) drugs. However, the conservatee may refuse to take them if he or she is determined to have enough mental ability to make this decision knowingly and with enough understanding of the consequences.
The conservator can agree to place the mentally ill person in a locked facility if a psychiatrist says it is needed and the hospital agrees to take the person, whether or not the conservatee agrees. The conservator can decide where the mentally ill person will live when he or she is not in a locked psychiatric facility.
The LPS conservator can also make financial decisions for the conservatee, like paying the bills and collecting his or her assets and income.
An LPS conservator must have enough medical and social information before making decisions for the conservatee. And the conservator must only take actions that are in the best interest of the conservatee.
Are you married?
Estates of married individuals dying after 2010 must file an estate tax return to pass along their unused estate & gift tax exclusion amount to their surviving spouse.
Available for the first time this year, the new portability election allows estates of married taxpayers to pass along the unused part of their exclusion amount, normally $5 million in 2011, to their surviving spouse. Enacted in December, 2010, this provision eliminates the need for spouses to retitle property and create trusts solely to take full advantage of each spouse’s exclusion amount.
A married couple might want to take into consideration a very important aspect of the 2010 estate tax law. Under the law, each partner's individual estate tax exemption of $5.12 million becomes "portable," or it allows the first partner who passes away to transfer his or her individual estate tax exemption to his or her surviving spouse.
The IRS expects that most estates of people who are married will want to make the portability election, including people who are not required to file an estate tax return for some other reason. The only way to make the election is by properly and timely filing an estate tax return on Form 706. There are no special boxes to check or statements needed to make the election.
The purpose of this provision is to ensure that the surviving spouse does not incur an estate tax on property that would normally be covered by the estate tax exemption. This provision operates with the martial estate tax exemption, which allows the first spouse to pass away to transfer his or her assets to the surviving spouse without incurring an estate tax. Because of this provision, the first spouse to pass away does not need to use the $5.12 million exemption.
However, if a couple wants to take advantage of the portability provision, the executor of the estate must file an estate tax return on the first spouse to pass away to preserve the exemption. Even if the estate is worth less than $5.12 million exemption, the executor might still want to file an estate tax return preserving the exemption just to be cautious. The surviving spouse might gain a windfall and, notwithstanding other facts, use the preserved exemption to pass that windfall to the heirs of the surviving spouse.
Speak with an estate planning attorney for help. Call Mitchell A. Port at (310) 559-5259.
Last month I blogged about "Intentional Interference With Expected Inheritance".
A new article written by two Harvard Law School professors is about to come out entitled "Torts and Estates: Remedying Wrongful Interference with Inheritance" which takes the opposite view.
Here is the abstract of their paper which is forthcoming in the Stanford Law Review:
"This paper examines the nature, origin, and policy soundness of the tort of interference with inheritance. We conclude that the tort should be repudiated because it is conceptually and practically unsound. Endorsed by the Restatement (Second) of Torts and recognized by the U.S. Supreme Court in a recent decision, the tort has been adopted by the courts of nearly half the states. But the tort is deeply problematic from the perspectives of both inheritance law and tort law. It undermines the core principle of freedom of disposition that undergirds all of American inheritance law. It invites circumvention of principled policies encoded in the specialized rules of procedure applicable in inheritance disputes. In many cases, it has displaced venerable and better fitting causes of action for equitable relief. It has a derivative structure that violates the settled principle that torts identify and vindicate rights personal to the plaintiff. We conclude that the emergence of the interference-with-inheritance tort is symptomatic of two related and unhealthy tendencies in modern legal thought: the forgetting of restitution and equitable remedies, and the treatment of tort as a shapeless perversion of equity to provide compensation for, or deterrence of, harmful antisocial conduct."
A study conducted by Consumer Reports magazine concluded that consulting a lawyer is important, especially in more complex situations, when it comes to choosing between wills prepared by on-line services or documents drafted by lay persons. "Unless your needs are simple--say you want to leave your entire estate to your spouse--none of the will-writing products is likely to entirely meet your needs."
Consumer Reports evaluated three services commonly used to prepare legal documents including estate plans consisting of living trusts, wills, durable powers of attorney and advance health care directives. Those three services were LegalZoom, Nolo, and Rocket Lawyer.
The outcome of the study found that in some cases, documents programmed by the software of these three companies aren’t specific enough or contain language that could lead to an unintended result.
If all you need is software which makes a good simple will, these products may help. But consult a lawyer for more complex situations.
The bottom line from Consumer Report's review of the three online providers is that the sites offer basic legal advice that might help save you money spent on a lawyer. If you use them for document prep, at minimum get all needed signatures to preserve your rights and prevent disputes. But many consumers are better off consulting a lawyer. The websites let you search for one and provide such information as education, background and licenses.
For estate planning help, call attorney Mitchell A. Port at (310) 559-5259.
Probate in California just got more expensive. Beginning July 10, 2012, there is a new probate fee schedule.
On April 17th, 2012, the following headline and article was posted by the Los Angeles Superior Court:
LOS ANGELES SUPERIOR COURT’S PRESIDING JUDGE ANNOUNCES COURTROOM CLOSURES
The Los Angeles Superior Court today announces plans for the most significant reduction of services in its history. By June 30, 2012, the Court will reduce its staff by nearly 350 workers, close 56 courtrooms, reduce its use of court reporters and eliminate the Informal Juvenile Traffic Courts.
According to Presiding Judge Lee Smalley Edmon, “Staffing reductions due to budget cuts over the past 10 years have forced our court to reduce staffing by 24%, while case filings continue to increase. This has created incredible pressures on our court to keep up with our work. We cannot endure these pressures for much longer.”
In the current year, additional staffing reductions are required to deal with the fact that the state’s budget crisis has resulted in a reduction to the California judicial branch of $652 million. The Court has managed its share of these cuts by spending down year-end fund balances, freezing wages, furloughing court staff, and eliminating staff positions, achieving $70 million in ongoing savings as of last fiscal year.
“This year, the state cuts are forcing us to reduce our spending by an additional $30 million – on top of the $70 million in reductions we have already made,” notes Edmon. “There will be as many as 350 dedicated, skilled court workers who will no longer be serving the residents of Los Angeles County. When we lose those people, we will no longer be able to shield the core work of the court – the courtroom – from the budget crisis.”
The $30 million reduction plan, which will take effect by June 30, 2012, has four components:
First, the Court is closing 56 courtrooms, a move made necessary by the depth and breadth of the reductions.
The courtrooms being impacted include 24 civil, 24 criminal, 3 family, 1 probate, and 4 juvenile delinquency courts. The caseloads of those courtrooms are being distributed among the remaining courtrooms. Judicial officers whose courtrooms are impacted will be reassigned to fill vacancies, to share staff or to handle settlement conferences to resolve cases without trials.
Second, on May 15, 2012, the Los Angeles Superior Court will no longer provide court reporters for civil trials. In addition, after June 18, 2012, court reporters will be available for civil law-and-motion matters on a limited basis. (No changes are being made to the provision of court reporters in criminal, family, probate, delinquency or dependency matters.)
Third, the Court is again making significant reductions to its non-courtroom staff. Having made 329 layoffs and lost another 229 court staff through attrition over the past two years, the Court anticipates making more than 100 additional non-courtroom staff reductions by June 30, 2012. “Our judges and staff have shown incredible dedication and commitment in keeping the court running during these past two years. But these new reductions will not allow it to be business as usual. There will be longer lines at clerk’s windows across the county and slower responses to the public’s needs across the court,” said Edmon.
Fourth, the Court will eliminate its Informal Juvenile Traffic Court program (IJTC). IJTC is an innovative program in which minors who commit low-level offenses are held to account for their actions by the court and by their parents – but outside of the traditional delinquency system. “These courts have allowed us to address tens of thousands of offenses in a more appropriate forum than delinquency court,” said Assistant Presiding Judge David Wesley. “We are losing a crucial element of the juvenile justice system to lack of funding.”
“It saddens me to have to make these layoffs,” notes Presiding Judge Edmon. “These actions are affecting people who have made a commitment to public service, to justice. We have had incredible cooperation of all our staff and our labor representatives through the past few years of these trying economic times. We should be in a position to reward them, not to have to inflict further pain.”
“These extraordinary actions,” says Presiding Judge Edmon, “cut into the core work of the courts. With risks of more reductions on the horizon, we are already rationing justice. The Judicial Council must find fiscal relief for the trial courts – from any and all sources. The public cannot tolerate any further major service reductions.”
Notices to litigants and to attorneys regarding these changes are proceeding. Pursuant to statute and rule of court, relevant notices to attorneys and the public regarding the moving of case types, and changes to filing locations, can be found through the court’s website: go to www.lasuperiorcourt.org, click on “News and Media”, then click on “Notices to Attorneys.” For relevant judicial orders, click on “Court Rules” and look under the “Special Notices” tab.
No cases are being dismissed because of these actions.
Just two months later, the following headline and article was posted by the Los Angeles Superior Court:
LOS ANGELES SUPERIOR COURT ANNOUNCES BUDGET CUTS AFFECTING 431 EMPLOYEES
Los Angeles Superior Court Presiding Judge Lee Smalley Edmon announces that “Tomorrow 431 court employees will be adversely affected as reductions in state financial support for the California judicial branch force us to cut our budget by $30 million.”
These actions will affect nearly 1 of every 10 employees of LASC, the largest trial court in the nation.
“This is the unfortunate human impact of the need to reduce our spending by $30 million,” said Presiding Judge Lee Smalley Edmon. “We are laying off people who are committed to serving the public. It is a terrible loss both to these dedicated employees and to the public.”
The latest cuts are part of an ongoing series of reductions that began in April of 2010 and that will continue. The reductions made to date already saved $70 million. The current actions will save another $30 million. Despite these cuts, the Court faces future additional shortfalls as more reductions in state support for the trial courts are proposed for the Fiscal Year 2012-13 budget.
As of this writing, the state budget is not yet finished, but the Governor’s May Revision proposes to reduce judicial branch funding by another $544 million, and to eliminate the ability of the courts to use or maintain reserves as bridge funding to delay the impacts of cuts. LASC will likely face additional mandatory reductions of more than $40 million during the next fiscal year.
“Because the California trial courts are state funded, our Court has become a casualty of the state budget crisis,” noted Edmon. “We have blunted the impacts of the cuts through the use of locally held reserves,” said Edmon. “But we cannot do that indefinitely – especially if those reserves are swept, as is being considered in the current budget talks. Our Court is in the midst of a series of painful and wrenching reductions that must ultimately bring services in line with significant reductions in state funding.”
According to Assistant Presiding Judge David Wesley, “There will be more cuts next year, and their impacts will be severe. The current cuts already affect the core work of court – the judge in the courtroom – while significant budget shortfalls remain. Given the significance of our responsibilities to protect public safety and children, the next round of reductions will further limit our ability to hear civil cases.”
Across-the-board cuts will eliminate 341 (corrected) positions in four areas, totaling $30 million in ongoing savings:
• Eliminating courtroom staffing in 56 courtrooms will save $6.8 million, a change that affects courtrooms in civil (24 courtrooms affected), criminal (24), family law (3), probate (1) and juvenile (4). The changes to the affected courtrooms have been underway for the past several weeks; they are already being felt across the county.
• Eliminating the Court’s innovative Informal Juvenile Traffic courts will save $4.8 million and will result in the closure of 11 additional courtrooms.
• Reducing court reporter services will save $10.3 million. These changes began affecting civil courtrooms on May 15, when court-employed reporters were no longer available for civil trials.
• Eliminating 110 management, clerical and administrative positions outside of the courtrooms will save $8.2 million. These impacts will be felt across the Court, from clerk’s windows across the county, to central administrative functions.
Altogether, these cuts will impact 431 court staff:
• 157 people are being laid off,
• 108 people will lose 40% of their salaries when they are moved to a three-day-per-week schedule,
• 86 people will lose between 5% and 40% of their salary when they are reclassified to lower-level positions,
• 80 people are being transferred to new jobs, and typically new locations, because their old jobs have been eliminated.
Notices to affected employees are being hand-delivered tomorrow. Those laid off will be given two weeks’ paid administrative leave, during which time they may attend Court-provided workshops on post-employment benefit issues.
By tomorrow, the LASC will have reduced the number of budgeted positions by 23% since 2002.
“We are in the midst of a fundamental restructuring of the California courts,” notes John A. Clarke, the Executive Officer and Clerk of Court. “But the final outcome is difficult to manage, and impossible to predict, due to the speed and severity of the budget cuts being forced upon us.
“Legislators and the Governor are restructuring how California addresses corrections, public education, and welfare and health services. Our court is swept up in these catastrophic changes,” said Clarke. “The commitment of our judicial officers and staff to preserve access to justice is unwavering, but our ability to follow through on that commitment may soon be exhausted,” he said.
A new tort in California law.
Forbes online reports California joins majority of states in recognizing tort -- Intentional Interference With Expected Inheritance. Here's what the article says:
In Beckwith v. Dahl (May 3, 2012), the California Court of Appeal, Fourth Appellate District, joined the majority of states in recognizing the tort of intentional interference with expected inheritance (IIEI).
“[I]t is time to officially recognize this tort claim,” writes Justice Kathleen O’Leary in the Court’s option.
The Court of Appeals adopted IIEI based on policy, on the fact that IIEI is consistent with California law, and on the fact that a majority of the states have adopted it. Twenty-five of the forty-two states that have considered IIEI have adopted it, and the United States Supreme Court called IIEI a “widely recognized” tort.
Marc Christian MacGinnis was in a committed relationship with Brent Beckwith for almost 10 years. MacGinnis’ only living family was his sister, Susan Dahl; he had no children and his parents were deceased. But MacGinnis’ relationship with his sister was estranged.
MacGinnis had a will on his computer that divided his estate equally between Beckwith and Dahl. At some point, MacGinnis showed this will to Beckwith, but MacGinnis never printed or signed the will.
MacGinnis wanted to print and sign this will, but he was not able to. MacGinnis got ill in May 2009 and needed surgery to repair holes in his lungs. He asked Beckwith to find and print the will. But Beckwith could not find it.
MacGinnis asked Beckwith to draft a new will. Beckwith downloaded a will from the internet, and e-mailed the draft to Dahl and called her to discuss it. Like the first will that MacGinnis had on his computer, the will that Beckwith drafted also divided MacGinnis’ estate between Beckwith and Dahl. But, again, MacGinnis did not sign the new will.
The problem this time was that Dahl raised objections. Dahl told Beckwith that the should not show the new will to MacGinnis because a trust-based plan has advantages over a plan that is controlled by a will. Dahl said that she has “very good friends [who] are attorneys” and that one of these friends would prepare the trust documents for MacGinnis to sign “in the next couple [of] days.”
MacGinnis never got an opportunity to sign the new will or a trust-based plan. Two days after Beckwith’s conversation with Dahl, MacGinnis had surgery. Doctors told Dahl that MacGinnis might not survive the surgery, but they did not tell Beckwith “because he was not a family member under the law.” Dahl did not share this information with Beckwith.
After his surgery, MacGinnis was placed on a ventilator, his condition worsened, and he died a few days after. MacGinnis had an estate worth over $1 million but no estate plan that would provide for Beckwith. Because he left no will and no trust, MacGinnis could not provide for his committed partner of almost ten years. MacGinnis had good intentions, but he did not give them legal effect. As a result, MacGinnis’ estate is controlled by the default descent rules in California. His wishes are in direct conflict with these rules, which give nothing to Beckwith because they do not consider him family.
Dahl eventually informed Beckwith of the fact that he has been disinherited: “Because [MacGinnis] died without a will, and the estate went into probate, I was made executor of his estate. The court then declared that his assets would go to his only surviving family member which is me.”
Beckwith opposed the distribution of the estate to Dahl. But the probate judge found that Beckwith had no standing because Beckwith is not a creditor and is not someone with “intestate rights.”
Beckwith then started a civil action, alleging (1) IIEI, (2) deceit by false promise, and (3) negligence. The trial court dismissed Beckwith’s complaint. Regarding the first allegation, the trial court stated that it was up to the appellate court to recognize a new tort for IIEI.
The Court of Appeals recognized the claim of IIEI, but the Court of Appeals made the tort action available only when a probate remedy is not available.
The Court of Appeals identified the “five distinct elements” that a plaintiff must allege to state a claim for IIEI:
1. Expectation of inheritance. The plaintiff must plead that he or she had an expectancy of receiving an inheritance.
2. Causation. “[T]here must be proof amounting to a reasonable degree of certainty that he bequest or devise would have been in effect at the time of the death . . . if there had been no such interference.”
3. Intent. “[T]he defendant had knowledge of the plaintiff’s expectancy of inheritance and took deliberate action to interfere with it.”
4. Tortious interference. “[T]he interference was conducted by independently tortious means, i.e., the underlying conduct must be wrong for some reason other than the fact of the interference.”
5. Damage. “[T]he plaintiff must plead that he was damaged by the defendant’s interference.”
The Court of Appeals added another element:
• Harm to someone other than plaintiff. ”[D]efendnat must direct the independently tortious conduct at someone other than the plaintiff.” The “fraud, duress, undue influence, or other independent tortious conduct” should be “directed at the testator.” “[T]he defendant’s tortious conduct must have induced or caused the testator to take some action that deprives the plaintiff of his expected inheritance.” Cases might permit interference that was not directed at the testator, but the tortious interference cannot be directed solely at the plaintiff.
The Court of Appeals held that Beckwith’s complaint did not allege sufficient facts to support this claim. Specifically, he did not allege facts to support the sixth element: “Beckwith did not allege Dahl directed any independently tortious conduct at MacGinnis. The only wrongful conduct alleged in Beckwith’s complaint was Dahl’s false promise to him.” The Court gave Beckwith an opportunity to amend the complaint. (It also found that Beckwith’s complaint satisfied the elements of promissory fraud, the second allegation.)
“For each of the elements of an IIEI claim, future courts will flesh out what specific conduct does or does not satisfy it,” writes Randy Spiro, a super lawyer in California with dual specialization in estate planning and taxation. Beckwith’s case might provide such an opportunity.
Estate Planning Lesson
The takeaway that Ryan Cunningham, an Associate in Hopkins & Carley’s Trust & Estate Litigation department, noted is salient: “There is a new, but narrow, cause of action in California, the IIEI.”
But there is also a broader estate planning lesson that is worth emphasizing. MacGinnis unintentionally disinherited his partner of almost ten years, Beckwith. He could have avoided this with proper estate planning. Statistics show that, like MacGinnis, most people do not have estate plans that reflect their intent and that are up-to-date. You should learn from the mistakes of others: Create a plan for your estate and create this plan as soon as possible. The purpose of an estate plan is to ensure your loved ones are taken care of according to your intent. Be proactive and take action while you can.
In November, 2010, a court action was filed in the U.S. District Court, Southern District of New York, seeking a refund of the estate tax levied on a married same-sex couple, which would not have applied to a married straight couple and which arguably violated the United States Constitution. The plaintiff in that action, Edith Schlain Windsor (“Edie”) challenged the constitutionality of section 3 of the Defense of Marriage Act (“DOMA”) which required Edie to pay federal estate tax on her same-sex spouse’s estate.
Edie met her late spouse, Thea Clara Spyer ("Thea"), nearly a half-century ago at a restaurant in New York City. Edie and Thea went on to spend the rest of Thea's life living together in a loving and committed relationship in New York.
After more than forty years, Thea and Edie were finally legally married in Toronto, Canada in 2007. Having spent virtually their entire lives caring for each other in sickness—including Thea's long battle with multiple sclerosis—and in health, Thea and Edie were able to spend the last two years of Thea's life together as married.
New York State legally recognizes Edie and Thea's marriage and provided them with the same status, responsibilities, and protections as other married people. However, Edie and Thea were not considered "married" under federal law because of the operation of the statute known as DOMA, and, as a result, Edie was forced to pay more than $350,000 in federal estate tax that she would otherwise not have had to pay if Edie and Thea's marriage were recognized under federal law.
This month, the District Court upheld Windsor’s constitutional challenge to section 3 holding that it violates the Equal Protection Clause of the United States Constitution thereby allowing for the marital deduction.
This is a rapidly evolving area of the law. If you are an executor in a similar situation, you should move quickly to file protective claims.
For tax help from an experienced attorney, call Mitchell A. Port at (310) 559-5259.
Reasons for removal of a personal representative include statutory grounds of wrongdoing, neglect, or incapacity, as well as removal in favor of a person with higher priority. California Probate Code Section 8500-8505 cover this topic.
What happens if the personal representative fails to perform his or her duty?
The court may lower or deny compensation and can replace the personal representative with someone else. The personal representative may even have to pay for any damages he or she caused.
A personal representative may be held liable for:
distributing property to beneficiaries before all creditors have been paid, etc.
failing to collect claims and money due the estate,
selling an asset without the authority to do so, or at an inappropriate price,
not filing tax returns on time,
distributing property to the wrong beneficiaries, or
improperly managing the assets of the estate,
California Probate Code Section 8505 lists these reasons to remove a personal representative:
(a) The personal representative has wasted, embezzled, mismanaged, or committed a fraud on the estate, or is about to do so.
(b) The personal representative is incapable of properly executing the duties of the office or is otherwise not qualified for appointment as personal representative.
(c) The personal representative has wrongfully neglected the estate, or has long neglected to perform any act as personal representative.
(d) Removal is otherwise necessary for protection of the estate or interested persons.
(e) Any other cause provided by statute.
Any interested person may petition for removal of the personal representative from office. A petition for removal may be combined with a petition for appointment of a successor personal representative.
What does the Personal Representative do?
The Personal Representative must:
• decide if there are any probate assets;
• value or appraise the estate's assets;
• pay funeral bills, outstanding debts, and valid claims;
• use estate funds to pay continuing expenses -- for example, mortgage payments, utility bills and homeowner's insurance premiums;
• locate the decedent's assets and manage them during the probate process. This could take up to a year or longer and may involve deciding whether to sell real estate or securities owned by the decedent;
• receive payments due to the estate, including interest, dividends, and other income (e.g., unpaid salary, vacation pay, and other company benefits)
• set up an estate checking account to hold money that is owed to the decedent -- for example, paychecks or stock dividends;
• file tax returns and pay income and estate taxes – including a final state and federal income tax return covering the period from the beginning of the tax year to the date of death;
• investigate the validity of all claims against the estate;
• figure out who is going to get what and how much under the Will. If there is no Will, the administrator will have to look at state law (Probate code Sections 6400 – 6414, called "intestate succession" statutes) to find out who the decedent's heirs are and determine each heir's share of the estate;
• give official legal notice to creditors and potential creditors of the probate proceeding and the deadlines for creditors to file claims, according to state law;
• handle day-to-day details, such as disconnecting utilities, ending leases and credit cards, and notifying banks and government agencies -- such as Social Security, the post office;
• after getting the court's permission, distribute the decedent's property to the people or organizations named in the Will, or to the decedent's heirs if there is no Will; and
• file receipts for distribution and wrap up any closing details for the estate.
Don't try this on your own. Hire a probate lawyer (in Los Angeles) to handle this type of matter in court for you. Call Mitchell A. Port at (310) 559-5259.
Currently, on account of the enactment of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the “2010 Tax Act”), the Federal estate tax exemption is $5.12 million, or twice that for a married couple.
It was and is common practice for a married person to provide if his or her surviving spouse survives to have his or her estate to be divided into two broad portions. One part is made equal to the estate tax exemption. That part is exempted from estate tax when that spouse dies on account of the so-called unified or applicable estate tax credit (which may be translated into a dollar exemption of $5.12 million). That part may be placed into a trust of which the surviving spouse is a beneficiary but need not be included in the gross estate of the survivor. Typically, that trust is called the “credit shelter trust” (because it is protected from type by reason of the unified credit), “estate tax exemption trust” or a “bypass trust” (because it “passes by” the estate of the surviving spouse for estate tax purposes).
The second part of the estate of the surviving spouse usually passes to or in a marital deduction trust for the surviving spouse and avoids estate tax when the first spouse dies by reason of the estate tax marital deduction. The property that passes to or in trust for the surviving spouse under the protection of the estate tax marital deduction is included in the gross estate of the survivor (unless consumed, given away or dissipated before the survivor dies). (In some cases, this second part of the estate is also divided by directing an amount equal to the otherwise unused generation skipping transfer tax (GST) exemption of the first spouse to die to pass into a separate qualified terminable interest property (QTIP) trust described in Section 2056(b)(7) of the Internal Revenue Code (Code). A QTIP trust qualifies for the estate tax marital deduction only by affirmative election.
As mentioned, the 2010 Tax Act increased the Federal estate tax exemption to $5.12 million for this year. That Tax Act also made other changes to the Code including adopting a “portability” system under which the surviving spouse may “inherit” any unused estate tax exemption of the first spouse to die, by an affirmative election on the United States estate tax return of the spouse dying first, and use it to protect the survivor’s later gifts from gift tax or his or her estate at death from Federal estate tax.
But under the 2010 Tax Act, the Federal estate tax exemption is scheduled to decline to and remain at $1 million at the end of this year. Moreover, under that act, portability will disappear. However, many think that Federal legislation will be enacted that will increase the Federal exemption to at least $3.5 million and make portability permanent.
Under Revenue Procedure 2001-38, 2001-1 CB 1335, the IRS ruled that the estate of the surviving spouse is permitted to “undue” or “reverse” any QTIP election made in the estate of the first spouse to die which was unnecessary to reduce the Federal estate tax marital deduction. In other words, if the spouse dying first directed the amount by which his or her Federal estate tax exemption exceeded the amount needed to eliminate Federal estate taxes back into the marital deduction trust, then over-funding the QTIP trust can be undone so that no part of the over-funded amount will be included in the survivor’s gross estate.
If both portability and Rev. Proc. 2001-38 are available, two additional considerations need to be taken into account. The first is that all appreciation with respect to the assets excluded from the estate of the surviving spouse, by reason of enacting the revenue procedure, occurring after the death of the first spouse to die up to the death of the survivor on those assets, would be excluded from the gross estate of the survivor. In contrast, in the case of portability, all appreciation on the assets passing to the surviving spouse with respect to the ported amount of Federal estate tax exemption would be included in the survivor’s gross estate. The second is that, in the case of portability, the property inherited by the surviving spouse will receive automatic change in income tax basis pursuant to Section 1014 of the Code. On the other hand, if revenue procedure is invoked, the basis of that property will not be adjusted at the survivor’s death.