What pea is in which pod? California probate disputes often involve questions of property ownership. Petitions filed under Probate Code section 850 allow judges to determine whether and to what extent an estate is the true owner of specified property.
Yet how far can Section 850 petitions be stretched? In Parker v. Schwarcz (2022) ___
When a man dies in California, who gets the proceeds of his life insurance policy? The answer seems obvious: the named beneficiaries in the paperwork received and accepted by the life insurance company.
But what if the man gave the policy away during his lifetime? Can he cancel the gift and redirect the proceeds to others? No, said the California Court of Appeal in Dudek v. Dudek (2019) 34 Cal.App.5th 154. Even though the life insurance company may not have recognized the gift, its recipient can recover the policy proceeds from those who received them.
What do you do if someone steals money or property from a trust or estate? California Probate Code section 850 allows you to ask the Superior Court to order the thief to give the money or property back. To discourage such theft, Probate Code section 859 provides that the wrongdoer “shall be liable for twice the value of the property recovered,” and may be liable for legal expenses incurred to recover the property, if you can prove the wrongdoer took the asset in bad faith, through undue influence, or through the commission of financial elder abuse.
Like many California statutes, the “twice the value” language of Probate Code section 859 is not crystal clear. Thankfully, the Fourth District Court of Appeal in Conservatorship of Ribal (2019) 31 Cal.App.5th 519 recently provided guidance as to how to the calculation works.
A trust is a vehicle for managing and disposing of property. Just as you don’t want to leave your suitcase on the beach when you return from vacation, you should ensure that your assets are securely loaded into the trust you have created. If you don’t, your assets may end up held in the legal equivalent of a “lost and found” with the competing claims resolved only by adjudication in a California courthouse. Disputes over property ownership are all too common in California trust litigation.
A case published last week by the California Court of Appeal illustrates this point. In Carne v. Worthington, the court considered whether Kenneth Liebler had transferred certain real estate from a trust he created in 1985 to a trust he created in 2009. Liebler stated in the 2009 trust instrument “I transfer to my Trustee the property listed in Schedule A, attached to this agreement” and listed the real estate in the attached schedule. Liebler could have avoided litigation simply by signing and recording a deed transferring the property from himself as trustee of the 1985 trust to the trustees of the newly-created 2009 trust.
In addition to bark, the Probate Code can have bite too. Some Probate Code sections have provisions that are punitive in nature and are designed to keep fiduciaries and others dealing with trust property in line. These statutes have sharp teeth.
Take, for example, California Probate Code section 859, which concerns property taken from a trust, an estate, a minor, an elder, or other vulnerable persons through the use of undue influence, in bad faith, or through the commission of financial elder abuse. This statute might be triggered if Junior tricked Mom into leaving him the $1.2 million family home in Granite Bay to the exclusion of Sister. In such an instance, section 859 permits the assessment of damages against the offending person in an amount double the value of the property that was taken, and allows for the court’s discretionary award of attorneys’ fees. This means that Sister might be able to recover $2.4 million against Junior along with the attorneys’ fees she spends pursuing him.