Openness and Transparency Help Avoid Trust Disputes – An Interview with Tracy Potts

Tracy PottsTracy M. Potts has nearly three decades of experience in California with estate planning, administration and litigation.  A Texas native, she earned her law degree from Southern Methodist University School of Law.  Her leadership experience includes chairing the Executive Committee of the State Bar of California, Trusts and Estates Section, as well as the Sacramento County Bar Association, Probate and Estate Planning Section.  She is a certified specialist in estate planning, trust, and probate by the State Bar of California, Board of Legal Specialization.  She also is a fellow of the The American College of Trust and Estate Counsel.

Tracy’s law firm, Legacy Law Group, operates from the Natomas area of Sacramento.  I sat down with Tracy at her office in February 2020 to discuss estate planning and dispute avoidance. Continue Reading

Judge Culhane Shares Thoughts on Sacramento County Probate Department

Judge Kevin R. Culhane rotated into Sacramento County Superior Court’s probate department in January 2020.  He shared his initial impressions with members of the probate bar on February 18, 2020, at the monthly lunch of the Sacramento County Bar Association’s Probate and Estate Planning Law Section.

Noting that probate filings are on the rise, he likened the business of the Court’s probate unit (Department 129) to trying to fit ten gallons of water into a five-gallon bucket. Continue Reading

I’m Still Standing – California Supreme Court Allows Trust Amendment Contests in Probate Court

Last week the California Supreme Court issued a unanimous opinion in Barefoot v. Jennings (2020) 8 Cal.5th 822, ruling that a trust beneficiary disinherited in an amendment may contest the amendment’s validity in the probate department of the Superior Court under California Probate Code section 17200.

The Court of Appeal had narrowly construed section 17200 to limit contests in the probate department to current trustees and beneficiaries.  Continue Reading

Put It on My Tab – When Is a Lifetime Gift in California an Advancement Against Inheritance?

Pint of Craft BeerA primary purpose of estate planning is to determine what a child will inherit (if anything) upon a parent’s death.  But what about a gift given during the parent’s life?  Is it an advance on the child’s inheritance, like putting it on the child’s tab until the trust is cashed out?  Or is the gift in addition to anything the child will get upon the parent’s death?  The answer in California depends on the parent’s intent when the gift was made – more specifically, whether the parent wanted it to be an advance.  The problem is determining the parent’s intent after death.

California Probate Code section 21135 describes the circumstances under which a lifetime gift will be considered an advancement against a beneficiary’s inheritance.  In Sachs v. Sachs (2020) 44 Cal.App.5th 59, the Court of Appeal examined Section 21135 and concluded that a parent’s written records of lifetime gifts established them as an advancement against a child’s inheritance.  This opinion provides guidance to parents who make gifts and to siblings in conflict over them. Continue Reading

Marvin Claims Between Unmarried Partners Will Abound in Post-Marriage California – A Conversation with Jeffrey Makoff

Jeffrey MakoffOn November 20, 2019, California attorney Jeffrey T. Makoff presented to the Sacramento Estate Planning Council on the topic: “Welcome to the Post-Marriage World: How to Plan for a Generation That Says ‘I Don’t.’”

Jeff started with evidence that marriage rates have declined sharply from the Silent Generation (those born from the mid-1920s to the mid-1940s) to the Millennials (those born from about 1981 to 1996).

California’s elaborate Family Code establishes property rights between married persons, resting on the concept of “community property.”  But what happens when unmarried folks start or run businesses together, or make other financial deals, during an intimate relationship?  Jeff explored the complexities associated with the legal relationship between partners who are neither married nor registered domestic partners. Continue Reading

California Assisted Living Residents Are Vulnerable to Financial Elder Abuse

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. Continue Reading

California Courts May Invalidate Right of Survivorship in Joint Accounts

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.  Continue Reading

Your Slice of the Pizza – Only Directly Inherited Asset Qualifies as Separate Property

(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. Continue Reading

Don’t Rely on a Post-It® Note to Amend Your California Trust

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.  Continue Reading

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