Articles Posted in Estate Planning

The California State Board of Equalization (BOE) recently wrote a letter summarizing how a real estate owner can rescind a recorded deed that gave rise to a reassessable change in ownership.  When real estate deeds are recorded, unless at least one of several exemptions from reassessment applies, the property is reassessed for tax purposes and the current owner’s taxes will be increased.  But what if a deed was recorded by mistake and you want to undo the mistake so as to avoid the assessor’s tax reassessment?  What can be done?  If you qualify, you simply rescind the deed.

When you record a grant, quitclaim deed or other written instrument that conveys or transfers title to real property, it is done on a voluntary basis.  A voluntary transfer of title to property is an executed contract which is subject to all the rules and laws dealing with contracts in general.  As a result, since deeds are considered executed contracts that are subject to the rules applicable to contracts, they are subject to the California Civil Code.  The Civil Code spells out the basis for which a contract can be rescinded.

California Civil Code Section 1688 provides that a contract is extinguished by its rescission. A contract may be rescinded either mutually if all the parties consent and if all parties are restored to their original position before the execution of the contract, or unilaterally under certain circumstances such as fraud, mistake or duress. Upon rescission, “the contract becomes a nullity; it and each of its terms and provisions cease to be subsisting or enforceable against the other party.”  Section 1691 explicitly requires the restoration of the parties to the status quo for unilateral rescission. Although the Civil Code contains no similar explicit requirement for mutual rescission, case law is supportive of a requirement to return the parties to the status quo for mutual rescission.  Also, since a mutual rescission has the effect of nullifying the contract, it follows that the parties to an executed contract should return each other to the position they were in prior to the execution of that contract.

One way to disinherit someone is to state in your California Will or living trust that if a beneficiary files a “pleading” in court, that person is penalized in some fashion, often by forfeiting their inheritance or distribution out of a trust.  This is often referred to as a no contest clause or an in terrorem clause.  The term “pleading” means a claim, petition, complaint, objection, cross-complaint, response or answer.  No contest clauses are valid in California and are favored by the public policies of discouraging litigation and giving effect to the settlor’s expressed purposes.  There are, however, other public policies that compete with that one and therefore no contest clauses are also disfavored by the policy against forfeitures and may not extend beyond what was clearly the trustor’s intent.  The California Probate Code contains an entire Part dedicated to no contest clauses in Sections 21310 through 21315.

California Probate Code Section 21311 defines what no contest clauses can be enforced and provides that a no contest clause may be enforced against a direct contest that is brought without probable cause. A “direct contest” is defined to mean a contest that alleges the invalidity of a protected instrument or one or more of its terms, based on one or more of the following grounds:

(1) Forgery.

The California Courts has a very informative website.  The section discussing probate, estates and wills is the most interesting and very comprehensive.

For example, the website begins the discussion on wills, estates and probate by stating in part:

“Losing a loved one is a sad and difficult time for family, relatives, and friends. In addition, those left behind must often figure out how to transfer or inherit property from the person who has died.

Your spouse may still inherit a part of your estate in California even if you are separated and not living together at the time you die.  The California Probate Code, beginning with Section 6400, addresses how your property passes when you die without a will.  Not having a will is called dying “intestate”.  If you are married when you die, certain rules apply to how much your surviving spouse inherits but if you are “legally separated” yet still married, those rules don’t apply and your spouse gets nothing.  There is a difference between simply being “separated” and being “legally separated”.

Being “separated” and dying without a will results in your spouse getting half of your community property which means that the surviving spouse ends up with about three-fourths of your community estate (the half already owned by the surviving spouse plus half of the dead spouse’s community property).  It also means that the deceased spouse’s separate property all goes to the surviving spouse who may have previously separated and moved away from the decedent if the deceased spouse does not leave kids, grandkids, parents, siblings, nieces or nephews.  If any of those types of “heirs” are alive when you die intestate, then your surviving spouse won’t inherit all of your property since it will be split with the other heirs according to the rules of intestacy.  Nonetheless, if you don’t want any of your property going to the person with whom you are still married when you die even if you’ve “told” others what your wishes are, put your wishes in writing.

Your marriage is not necessarily over simply because you may be living apart.  Some spouses spend huge amounts of time apart while they are attempting to reconcile.  Some spouses continue to maintain an intimate spousal relationship while living apart.  When there are kids, spouses may want to postpone a divorce until some later time related to the kids’ life so as to reduce the impact on them.  The time when an inference of being “legally separated” may be made is when one spouse unambiguously declares there is a complete breakup of the marriage; otherwise, no legal inference of being legally separate is made simply because spouses live apart from one another.

The State Bar of California has online pamphlets on a variety of topics such as estate planning, living trusts, when to get a will, finding the right attorney, kids and the law, seniors and the law, just to name a few.

On the topic of estate planning, the State Bar website asks the following useful questions if you’ve been thinking about whether or not to contact a qualified California attorney to discuss estate planning:

  1. What is estate planning?

In California, will contests and trust disputes are quite common.  When someone who believes they are entitled to share in an estate or a family member disagrees with how estate property is being distributed, the likely result is probate litigation.  Litigation begins with a petition and that means someone who has an interest in the estate brings their disagreement to the court to resolve. Litigation is sometimes difficult to avoid despite using even the best estate planning techniques.

There are essentially four legal grounds for challenging the validity of a will.  Each of these bases can be difficult to prove because medical records need to be obtained, witnesses’ declarations/testimony needs to be provided and experts may need to be hired for their input.  Contesting a will can also be a very expensive court process, yet that fact does not often dissuade everyone.  The legal bases to challenge a will include the following: (1) there is a question about testamentary capacity, (2) there is a suspicion of undue influence in preparing or executing the will, (3) it was not signed properly, and (4) the testator was fraudulently induced into creating the will or including certain provisions.

A lack of testamentary capacity can invalidate a will.  Under California law, an incapacitated person is defined as follows:

Vesting Title in Real Estate

For investment property, perhaps one of the better ways of owning real property is in a limited liability company (LLC) created either in California or in another state with great asset protection laws and regulations.  The LLC should in turn be owned by your living trust.

For non-investment property, using an LLC may also be appropriate depending on the circumstances.  For example, if you are divorced or single, keeping title in your own name may be too risky and using an LLC instead may be more risk-averse.

My client’s father died after being killed at a convenience store where he worked.  He didn’t leave a Will but my client was his only child so the Los Angeles Court appointed him as administrator of his father’s estate.  My client had heard his father tell him repeatedly that he owned over a million dollars of property (despite his relatively small salary).  Since the administrator was still a student at a local university and had practically no means of self-support, he needed to find that property and ask the Court to permit the distribution of it all to him.  The only problem in administering the estate was that access to the information leading to the discovery of the million dollars of property was locked in his father’s Google gmail account.  Google refused to allow my client access despite having a Court Order and Letters of Administration granting him full authority over his father’s property.  Instead, Google wanted the Court to sign this Order:

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF LOS ANGELES

 

[PROPOSED] ORDER TO PRODUCE CONTENTS OF DECEDENT’S GMAIL ACCOUNT

Dept.:

Judge:

 

Having considered all of the evidence and relevant legal authorities, the Court finds as follows:

  1. Google Inc. (“Google”) provides a free email service, called Gmail.
  2. ____________ (“Decedent”) is deceased.
  3. ____________ (“Administrator or Administratrix”), is the lawful administrator or administratrix of Decedent’s estate under California law.
  4. Decedent is the sole account holder of the Gmail account ___________ (“Account”).
  5. In his/her lawful capacity established under Paragraph 3, Administrator or Administratrix has a legal right to obtain the content of communications stored in Decedent’s Account.
  6. Under the circumstances of this case, and in light of this Order, no law, legal duty, or obligation, including, but not limited to, any provision of California law or the federal Stored Communications Act, 18 U.S.C. §§ 2701, et seq., prohibits Google from disclosing to Administratrix the communications stored in Decedent’s Account.

IT IS HEREBY ORDERED:

  1. Within ten (10) business days of the entry of this Order, Administrator or Administratrix shall cause an email message to be sent to Google at postmortemrequests@google.com. That email message shall attach an electronic copy of this Order as entered by the Court and shall state as follows:

I, _________, obtained the attached court order directing Google Inc. to produce to me the content of any reasonably accessible Gmail communications stored in the Gmail account [Insert Decedent’s Gmail Address] and dated between [date] and [date].

  1. The Consent Email shall further state that the Administrator or Administratrix consents to Google delivering the content to [Recipient’s name and Address]
  2. Within ten (10) business days of receiving the email message described in Paragraph 7, Google shall disclose to Administrator or Administratrix the communications specified in Paragraph 7. Google shall disclose those communications by sending them to Administrator or Administratrix, in an electronic format of Google’s choosing, at the email address that Administrator or Administratrix uses to send the email message described in Paragraph 7.
  3. Google shall have no obligations to disclose any communications under this Order until the Order is entered by this Court and until Google receives the email message described in Paragraph 7.
  4. This Order resolves any request, legal process, motions, or court orders currently directed to or against Google in this matter. Any such requests, legal process, motions, or court orders are hereby DENIED, QUASHED, OR VACATED as moot.

IT IS SO ORDERED.

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.