Inheritance Disputes

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Senior woman and caregiverAs our population ages, more of our seniors are moving into assisted living facilities.  The number of such facilities has nearly tripled over the past two decades, with construction of memory care units the fastest-growing segment of senior care.  Half of assisted living residents are age 85 and older, and over 40 percent have some form of dementia.

In “How Not to Grow Old in America,” an article by Geeta Anand in the New York Times last year, the author discusses caring for her parents, notes the above trends, and argues that if assisted living “is to be a long-term solution for seniors who need substantial care, then it needs serious reform, including requirements for higher staffing levels and substantial training.”  She cites examples of deaths and injuries that have befallen seniors at assisted living facilities in California and elsewhere.

While Ms. Anand’s focus is on the physical care of seniors in assisted living, the transition from a home environment to an assisted living environment also can lead to serious financial elder abuse.

Right of Survivorship in Joint AccountOften an aging parent will add an adult child to the parent’s account as a joint holder to assist with asset management or bill payment.  However, this may lead to an unintended result in California when the parent dies.  The child, as surviving account holder, may get all of the account proceeds even if the parent wanted them shared among a group of beneficiaries.

Provisions of the California Probate Code set ground rules for the treatment of joint accounts, but the statutory language is not crystal clear.  In Placencia v. Strazicich (2019) 42 Cal.App.5th 730, the Court of Appeal clarified that the intent of the person who established the account is paramount such that the surviving account holder’s presumed right of survivorship can be overcome by just about any sort of admissible evidence, as long as it is clear and convincing.  The survivor just may have to share the piggy bank. 

(Editor’s Note: The Court of Appeal granted rehearing on December 2, 2019 and later depublished the portion of its opinion discussed below such that it is no longer citable authority in California courts.)

It is widely understood in California that inherited assets, unlike assets earned from labor, are the separate property of the receiving spouse.  But what if the assets do not come directly from a parent and instead pass from one sibling to another?

Inheritance for separate property purposes generally means direct inheritance, says the California Court of Appeal.  That’s the lesson of In re Marriage of Deluca (2019) 41 Cal.App.5th 598.

A key feature of a California revocable trust is that it can be amended.  Revising a trust can, however, seem like an irksome chore so it’s common for creators of trusts (i.e., “settlors” or “trustors”) to shrug off an amendment until it becomes clear they have limited time to settle their affairs.

Such procrastination invites mistakes, including failure to comply with a trust’s built-in procedure for amendments.  Indeed, while many trust instruments do not specifically prescribe how they may be amended, others do – often requiring “delivery” of the amendment to the trustees or settlors, that the amendment be signed, or both.

What happens when a settlor does not fully comply with the trust instrument’s modification procedure, even though it’s achingly obvious that he intended to amend his trust?  Should a court rigidly bind him to the modification procedure or should it follow what seem to be his dying wishes?  The California Court of Appeal faced this conundrum recently in Pena v. Dey (2019) 39 Cal.App.5th 546.  The court required strict compliance with the trust’s modification procedure, rejecting a Post-it® note as satisfying a signature requirement. 

Many California financial elder abuse cases we see involve caregivers. While the vast majority are honest, a caregiver who spends many hours alone with a vulnerable client has a unique opportunity to exploit the situation. A crafty and crooked caregiver may go so far as to marry his or her client as part of a scheme.

The California Legislature has closed loopholes in the Probate Code that allow abusive caregivers to marry their way into a dependent adult’s wealth. Assembly Bill 328, signed by Governor Newsom on June 26, 2019 and effective on January 1, 2020, creates a presumption of undue influence that applies in two scenarios. The Trusts and Estates Section of the California Lawyers Association sponsored the bill and the California Judges Association supported it.

In the absence of a trust that allows assets to pass without opening probate, the California probate process lasts for at least six months and can run much longer depending on the size of the estate and the nature of assets. The role of the personal representative (i.e., the “executor” if nominated in the will) is to administer the estate efficiently, resolve creditor claims, and get the assets out to the rightful beneficiaries.

By no means, of course, is the probate process supposed to drag out for two decades. That’s exactly what happened, however, in a case in Riverside County Superior Court. In Estate of Sapp (2019) 36 Cal.App.5th 86, the California Court of Appeal affirmed the probate court’s removal of the personal representative, providing guidance as to when a representative may be removed. As the opinion indicates, probate is no time for napping by the personal representative or the beneficiary: the former has a fiduciary duty to get the job done and the latter may need to poke the dozing, inept and/or corrupt representative.

No contest clauses are included in wills and trusts to discourage dissatisfied beneficiaries from challenging the document’s validity. Because enforcement of these clauses results in disinheritance, the California Probate Code limits their applicability. But what happens when a beneficiary defends a trust amendment that is found to be invalid? Can the defense of an…

Many California will and trust disputes arise from ambiguity in the document with respect to who is entitled to an asset.  Maybe the document was hazy from the start or perhaps circumstances have changed such that the rightful recipient is no longer clear.

Two cases decided in the California Court of Appeal last year illustrate the conflicts that surface over interpreting wills and trusts.  In both cases, coincidentally involving 35 percent shares, the appellate courts overruled the trial courts, nicely illustrating the complexities of will and trust interpretation.  California Probate Code sections 21101-21118, though obscure, can be pivotal in the analysis.

Trust and estate litigation attorneys are “trusted advisors.”  Like estate planning attorneys and other professionals who help clients with wealth management, we are fixers who assist clients with navigating conflict relating to a trust or estate.  While we spar in the probate departments of the Superior Court of California, at the end of the day our main function is to advise clients so they can choose a resolution that fits their needs and is achievable in the situation at hand.

The role of litigator as trusted advisor came to mind last week as I sat at McGeorge School of Law listening to Todd Fithian’s upbeat and insightful presentation on the subject of “Amplifying Your Brand.”  Todd spoke at the Sacramento Estate Planning Council’s annual Estate Planning Forum event which offers outstanding continuing education and serves as a collaboration incubator for professionals in various fields.

When musician Prince Rogers Nelson died at the age of 57 on April 21, 2016, he had no estate plan in place, not even a will.  We blogged that “You Don’t Have to Be Rich to Need an Estate Plan.”

As the third anniversary of Prince’s death approaches, his probate estate continues to be administered in Carver County District Court in Minnesota.  Judge Kevin Eide issued orders naming Comerica Bank & Trust as Personal Representative (i.e., administrator) of the Estate and identifying Prince’s six siblings and half-siblings as the heirs.

Litigation involving the Estate spilled over into California in December 2018 when Paisley Park Enterprises, Inc. (Prince’s company) and Comerica as Personal Representative filed a motion to compel compliance with a subpoena by a Redding-area law firm, Sidebar Legal, PC.  See Paisley Park Enterprises, Inc. v. Boxill, U.S. District Court, Eastern District of California, Case No. 2:18-mc-00211-MCE-KJN.