How Does Amended California Emergency Rule 9 Affect Probate Proceedings?

California causes of action are subject to various statutes of limitation.  Unless a plaintiff or petitioner files a complaint or other document asserting a cause of action within the applicable limitations period, the filing will be deemed time barred and subject to dismissal.  Under some circumstances, however, statutes of limitation may be tolled or suspended so as to extend the filing period.

When the COVID-19 pandemic caused court closures, the California Judicial Council responded with Emergency Rule 9, which tolled the statutes of limitation for civil actions from March 6, 2020 until 90 days after the Governor lifts the state of emergency, which will not occur until an unknown future date.

The initial emergency rule, issued April 6, has now been revised and partially clarified.  As California courts began to reopen in May, the Judicial Council chose to put a clearer endpoint on the tolling of limitations periods.  A memorandum from the Judicial Council provides background on the amended rule. Continue Reading

California Powers of Appointment: Follow Instructions When Exercising

In California, a trustor (person who creates a trust) can confer a “power of appointment” on trust beneficiaries, empowering them to designate to whom they want to give their shares of the trust.  The trustor can require trust beneficiaries to specifically exercise and refer to the power of appointment in any will they create to designate who should get their shares of the trust.

What happens if a trust beneficiary creates a will that gives away his or her trust shares without specifically referring to the power of appointment as required by the trust?  Can a California probate court fix the defect by amending or reforming the will to include a specific reference to the power?

The California Court of Appeal answered this question in the negative in Estate of Eimers (2020) ___ Cal.App.5th ___.   The court held that, although reforming a will is permissible if extrinsic evidence establishes a testator’s intent, a will cannot be reformed if it would achieve a work-around of the power of appointment requirements in the Probate Code.  In short, a court cannot reform a will when the testator fails to follow the directions for exercising a power of appointment. Continue Reading

What California Trust and Estate Litigation Will Arise from the Economic Downturn?

The COVID-19 pandemic has idled workers and the coming weeks will bring more news of business closures and bankruptcies.  After a decade of sustained growth, we are facing a recession of uncertain depth and duration.  The New York Times recently reported that some Americans are turning (or perhaps returning) to “financial therapy” for support.

In the trust and estate world, how dark are the approaching storm clouds?  More specifically, how might the economic downturn cause California trust and estate litigation?  From this blogger’s perspective, claims are likely to increase as a result of declining asset values, growing demands for trust distributions, and anxiety associated with economic insecurity.  As always, however, allegations are easier to make than to prove. Continue Reading

Helping Families and Solving Problems – A Conversation with Trust Officer Alysia Corell from Exchange Bank

Bank trust departments, also referred to as corporate trustees, provide professional management to the administration of California trusts.  People may choose to name a bank to act as successor trustee when they can no longer manage their own assets, either because they don’t have family members they can count on to handle assets or because they don’t want to burden family members with the role. Sometimes family members or a court may appoint a bank to take the place of an acting trustee as a means to resolve disharmony amongst the parties.

Alysia Corell joins us here to share her experiences as a trust officer.  Alysia grew up in the Mt. Shasta area of Northern California and traveled south to attend San Diego State University where she majored in communications.  She began to work in a bank trust department in 2003 and became a Certified Trust and Financial Advisor in 2008.  She is a past president and current member of the Sacramento Estate Planning Council and a member of the South Placer Estate Planning Council.  In 2018 Alysia joined the trust department of Exchange Bank. Continue Reading

California Court May Award Attorney’s Fees to Financial Elder Abuse Plaintiff Who Does Not Prove Damages

A new case from the Court of Appeal once again illustrates the robust nature of claims under California’s Elder Abuse and Dependent Adult Civil Protection Act, also known as the Elder Abuse Act.

In Arace v. Medico Investments, LLC (2020) ___ Cal.App.5th ___, a San Bernardino County jury found the owner of a residential care facility for the elderly liable for the financial elder abuse of a resident, but did not award any damages on that claim.  Nonetheless, the court properly awarded legal expenses to the plaintiff as the prevailing party.  This broad view of a plaintiff’s entitlement to legal expenses shows the bite of the Elder Abuse Act and will encourage elders and their advocates to pursue financial elder abuse claims. Continue Reading

Trustees May Not Need Lawyers to Seek Instructions from California Courts, But the Do-It-Yourself Approach Remains Hazardous

While California trustees hope for smooth sailing, they must navigate waters that can be choppy depending on the assets, trust instruments and personalities involved.  As fiduciaries, trustees must honor the trustors’ intent as expressed in the trust instruments.  Sometimes the language is unclear and the trustee needs instruction from a court as to how to proceed.

If they are not already working with an attorney, most trustees will (and should) seek guidance from counsel when uncertain about what to do.  An attorney, generally at the expense of the trust, can help the trustee decide whether to file a petition for instructions, draft the necessary paperwork, serve it on parties entitled to notice, and then appear in the probate department of the court on behalf of the trustee.  Some DIY-minded trustees, however, may be inclined to proceed without paying an attorney.  Business & Professions Code section 6125 provides that a person can’t practice law unless he/she is an active member of the State Bar of California.  When can a trustee represent himself or herself in court without engaging in unauthorized practice of law?

Earlier this month, the Court of Appeal held in Donkin v. Donkin, Jr. (2020) ___ Cal.App.5th ___ that individuals acting as trustees may represent themselves when seeking instructions from a California court.  Yet, like an inexperienced sailor who attempts a solo ocean journey, a trustee who proceeds without counsel risks serious missteps such that self-representation may end up being far more costly in the long run. Continue Reading

New California Statutes Change Spousal Undue Influence Presumptions

California trust and estate disputes often involve allegations that a surviving spouse took advantage of a deceased spouse so as to get more of the latter’s assets.  Often the “spousal financial abuse” charges are leveled by the deceased spouse’s biological children against their step-parent, as discussed in a prior post.  Sometimes care custodians who are hired to care for vulnerable elders marry them to achieve financial gain, much to the surprise and consternation of surviving family members.

Assembly Bill 327 and Assembly Bill 328, passed by the California Legislature last year and effective on January 1, 2020, adjust the statutory presumptions of undue influence that apply to spouses with respect to estate planning.  The legislation was sponsored by the Trusts and Estates Section of the California Lawyers Association.  On March 24, 2020, attorney Ellen McKissock explained AB 327 and 328 in a webinar entitled “Care Custodians and Spouses: New Legislation Affecting Their Rights.”  Ms. McKissock is Vice Chair of the Executive Committee of the Trusts and Estates Section. Continue Reading

Another Shiner – Court Confirms Hefty Fee Award to California Attorney General in Breach of Charitable Trust Action

In California, the Attorney General oversees charitable trusts.  This responsibility includes bringing legal actions against trustees who breach their fiduciary duties.  Government Code section 12598 provides that the Attorney General is entitled to recover from a defendant all reasonable attorney’s fees and actual costs incurred in an action to enforce a charitable trust.  But what happens when the Attorney General is only partially successful in its case against the defending trustee of a charitable trust?

People ex rel. Becerra v. Shine (2020) ____ Cal.App.5th ____ provides the answer.  The Government Code does not require a stringent analysis of whether the Attorney General has achieved all of its litigation goals or has been completely successful on every claim.  Further, the Attorney General is entitled to attorney’s fees when it has generally accomplished what it set out to do, which in People v. Shine was to prove that Shine had breached his fiduciary duties and to recover funds for the trust. Continue Reading

California Estate Planning Disrupted by COVID-19 Virus and “Social Distancing”

Scientist in a laboratoryWhat a difference a few weeks make!  A month ago, the COVID-19 virus was a distant threat.  Over the last few weeks, California courts and law offices have closed, leaving families at home and uncertainty as to when “normal” will return.

Colleagues share that COVID-19 has led to a flurry of calls from clients who want to push forward to complete estate plans that they had left unfinished.  Folks who never had estate plans also are seeking to get them done.

California’s estate planning formalities, however, create challenges in our pandemic situation. Continue Reading

Mind Your Notice in California – Even Remote Contingent Beneficiaries May Need to Be Served

It’s unremarkable that California courts require that notice be given to affected beneficiaries in trust and probate proceedings.  After all, the Fourteenth Amendment guarantees that no person will be deprived of life, liberty, or property without due process.  While contingent beneficiaries may not have received an inheritance yet, they may someday and so should know if someone’s trying to tamper with their potential payday.  But how far do notice requirements really go?  Must notice be given to beneficiaries who likely won’t ever get a nickel?

The California Court of Appeal wrestled with this issue in Roth v. Jelley (2020) 45 Cal.App.5th 655, and held that beneficiaries who will only receive an inheritance upon the happening of an event (i.e., contingent beneficiaries) have a property interest in an inheritance and are therefore entitled to notice under constitutional due process requirements. Continue Reading

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