California Trust, Estate & Probate Litigation

We spend a great deal of our time as Trust and Will lawyers pleading with people to create a Will or a Trust as part of their estate plan.  But we rarely discuss how to get rid of those documents if the need ever arises.  The process, called “revocation,” can be a bit more difficult than you might think.

Revoking a California Will

Will revocation is an area of the law unto itself.  In California, there are two options to revoke a Will: (1) create a new Will that specifically revokes the old one, or (2) destroy the original Will by a physical act.  The options for revoking a Will can be found at California Probate Code Section 6120. 

Revocation by a New Will

The first option is the easier and most used of the two.  Whenever you create a Will you typically will find language at the beginning of the documents that says something to the effect of “I hereby revoke all prior Wills.”  This simple sentence is enough to revoke a prior Will; PROVIDED THAT, the new Will is signed with all the proper formalities required of a valid California Will.  In other words, a new, valid Will can revoke a prior Will.

This is true even if the above sentence is not included in the new Will, if the new Will makes provisions that are different and conflicting with the first Will.  So if you give your diamond ring to your daughter in Will one, but then create a new Will leaving the same ring to your son, then the new Will controls and effectively revokes the gifts in the prior Will.  Of course, you never want to rely on an inconsistency—it’s far better to clearly state what you want to have happen to the first Will.

Revocation by Physical Act

A writing is not the only way to revoke a California Will.  You can also do so by a physical act, such as burning, tearing, canceling, obliterating or destroying the Will.  The catch is (1) the physical act must be done by the Testator (that’s the person who created the Will), or at least in the Testator’s presence and at his or her direction.  Once the physical act takes place, the Will is revoked.

Revoking a California Trust

Revocation of a Trust is a bit different from a Will.  And Trust revocation always starts with the Trust document itself because most Trust documents state the method of revocation.

For example, a very common provision in a Trust allows revocation using the following language: “I reserve the right to amend this Trust by a signed writing delivered to the Trustee.”  That sentence, simple as it is, provides the basis for an amendment.  If the Trust is silent as to amendment, then the probate code provides the method to revoke at Section 15401(a)(2), which is a writing (other than a Will) signed by the settlor and delivered to the trustee—a very simple requirement.  Notice that the writing does not have to be notarized or witnessed, it just has to be a writing, signed by the Settlor and delivered to the Trustee.

Of course, a Trust can also be revoked as to a particular piece of property by the Settlor’s act of taking the property out of the Trust.  For example, if I create a Trust and transfer my house into the Trust name, I can revoke the Trust as to that asset by filing a new deed transferring my house out of the Trust.  The Trust then ceases to act over that asset.  That doesn’t necessarily mean that it won’t get put back into the Trust at some point, but once transferred out of the Trust, the Trust no longer controls that assets.

The bottom line: revoking a California Will or Trust is not difficult, but there are a few hoops to jump through if your going to do a proper revocation.

California Trust and Will litigation is like building a puzzle.  There are a lot of moving parts in most cases and trying to figure out how and when to put the parts together can be confusing.

The Fourth District Court of Appeals recently set Trust litigators straight on how and when a Trustee can be sued by Trust beneficiaries, in a case titled “Estate of William A. Giraldin” (2011, No. G041811).  Associate Justice William W. Bedsworth authored the opinion that holds beneficiaries have no standing to sue a Trustee for alleged breaches of fiduciary duty that occurred while the Settlor (which is the Trust creator) is still alive and had the power to revoke the Trust.  My first reaction: What???

In Estate of Giraldin, the decedent, William Giraldin had created a revocable, living trust.  Although he was the “Settlor”, because he created the Trust, he appointed one of his five sons, Tim, as the successor Trustee.  The Trust was revocable by William Giraldin during his lifetime and, therefore, under Probate Code Section 15800, the Trustee, while acting as Trustee during William’s lifetime, only owed duties to William—not the named Trust beneficiaries (Williams’ other four sons)..  In other words, the Probate Code specifically states that the Trustee does not owe any fiduciary duties to the children of William (who are “contingent” beneficiaries so long as William is alive) until after William’s death.

The problem in Estate of Giraldin revolved around a large investment William made, over $4 million, into a start-up company owned, in part, by his son Tim.  After William created the Trust, and made his investment in Tim’s company, William stepped down as Trustee and allowed Tim to act as Trustee of his Trust.  But Tim was acting at William’s direction.

As might be expected, the start-up company William invested $4 million in did not survive, and William’s wealth plummeted as a result.  After William’s death, the other siblings were not happy that William invested so much of his money into Tim’s company only to have it disappear (I would imagine that had Tim’s company been successful, the other siblings would have been quite happy).  So Tim’s siblings sued Tim for breach of Trust claiming, among other things, that Tim never should have allowed William to invest in the company and lose his $4 million.

The Trial court agreed with Tim’s siblings and awarded a surcharge against Tim in excess of $4 million (yikes!).  Tim naturally chose to appeal that ruling and Justice Bedsworth gives us new law with a ground-breaking result for Trust litigation issues—he reversed the surcharge.  Tim owes nothing!

Before Estate of Giraldin, it was generally assumed that while beneficiaries could not sue a Trustee while the Settlor was alive, they could do so after the Settlor’s death.  The beneficiary could receive both an accounting of actions that took place before the Settlor’s death and even ask for a surcharge for any breach of Trust that occurred during that time.  This was based on Evangelho vs. Presoto (1998) 67 Cal. Appl. 4^th 615.  Not so fast, says Justice Bedsworth.  He overrules the concepts set down in Evangelho.

Instead, the Court states that when a Trust is revocable by a Settlor, the only duty a Trustee owes is to that Settlor.  Therefore, there is no basis, and even no standing(!), for beneficiaries to seek an accounting of Trust actions or assert a breach of Trust for actions taken during that time.  What about breaches that the Trustee incurs, but the Settlor could not assert due to the ill-health or lack of capacity of the Settlor?  The Court says that can be taken up by the Settlor’ successor’s-in-interest, which usually means his Executor or surviving heirs.  But that type of action must assert wrongs against the Settlor, which did not occur in this case.

In fact, in the Estate of Giraldin matter, the only wrongs asserted by the beneficiaries is that they should have had an extra $4 million to split among themselves.  Everyone agreed that the Settlor wanted to invest in Tim’s company and had the capacity to do so.  They merely asserted that Tim should have stopped William from investing how he liked.  The Court disagreed, saying that during the Settlor’s lifetime, since the Settlor has the power to revoke the trust, the Trustee must do as the Settlor directs.  This is true even if the investing decisions are foolish. 

Had the beneficiaries been asserting wrongs committed as against William, then it may have been a different story.  Or if the investing had occurred after William died, when the Trustee owned a duty to his siblings as vested trust beneficiaries, there would have been a different outcome.  But under these facts, the Trustee gets a free-pass because he based his actions on the directions of the Settlor.

Giraldin is a well-reasoned and well-written opinion and makes sense on the facts of that case.  But the downside of a case like this is that the new argument for every Trustee acting while the Settlor is alive is going to be “the Settlor made me do it”—no matter whether that is true or not.  It will then be up to the beneficiaries to show whether that is true. 

Keith A. Davidson describes in this video the basic requirements for creating a California Will and Trust. He refers to the basic creation elements as "formalities" and "intentionalities", terms he uses in teaching California Will and Trust creation at Chapman Law School (which he borrowed from his own Trust and Will professor, Father O'brien (thank you Father O'Brien!), who taught at Loyola Law School in Los Angeles).  For those viewing this blog by email subscription, you can click on the title for a link to the video. 

California Wills and Trusts are not created equal.  In this video, we describe the basic differences between the mental capacity required for California Will creation and the mental capacity required for California Trust creation.  For those viewing this blog by email subscription, you can click on the title for a link to the video.

Conservatorship is the Court process for taking control of an adult's finances and personal care in California when there is no other planning in place—such as a Trust or Will.  (Some states refer to it as "guardianship," but in California guardianship only applies to minors--conservatorship is for adults).

Conservatorships are supposed to “conserve” a person’s estate (as in “to keep in a safe or sound state…especially to avoid wasteful or destructive use of…” as defined by Merriam Webster).  Yet, even a routine conservatorship proceeding (one that is not contested by family members) is expensive to initiate, time-consuming to create, and burdensome to maintain. It hurts less to simply hit yourself in the head with a hammer than to go through a conservatorship proceeding.

But when a conservatorship proceeding is contested by dueling family members wanting to be conservator, now the pain really begins.  And the costs (both financially and emotionally) are downright excessive.

Conservatorship proceedings start with a petition filed by a family member reciting why the proposed “conservatee” (the person in need of help) can no longer manage his or her personal and financial decisions.  Then there are loads of other documents that go with the initial petition.

If other family members disagree with the conservatorship filing, or want a different person appointed as conservator, then they must make an objection to the original conservatorship petition and then file their own petition for conservatorship (referred to as a "competing" petition).  The Court appoints an attorney to represent the proposed conservatee, and the matter is ultimately set for trial and tried before the court to determine whose petition will win.

Sounds easy enough right?  But what this little overview fails to convey is the amount of time, money, and emotional toll that goes into a lawsuit of this nature.  Conservatorship cases are difficult to begin with because there is usually an elder adult caught in the middle; as opposed to Trust and Will contests, where the dispute revolves around a pile of assets.  The effort to conserve a person’s estate often results in the excessive waste of that estate instead. 

Of course, the Court acts as a safeguard to the estate and will refuse to reimburse the parties for their litigation fees and costs if they do not directly benefit the conservatorship estate (or even if they do benefit the estate, the reimbursement will be refused if the estate cannot afford it). 

The end result is that no good deed goes unpunished.  The parties bear the costs, the estate bears some too, and the family feels bruised, wounded and far worse from the wear of conservatorship litigation.  The alternative is to have some plans in place (such as a California Trust and related powers of attorney) so that conservatorship can be avoided.  All too often good planning is neglected and the penalty of such neglect is facing the excesses of conservatorship in California.

If your goal is to help keep lawyers employed (and that’s an excellent thing to do in my opinion), then do not change your beneficiary forms on your retirement accounts when you do your estate planning.

By retirement accounts, I mean things like 401(k), 403(b), Pension, and IRA type accounts to name a few. These types of accounts are not able to be held in a Revocable Trust, instead they pass by beneficiary designation.  But all too often, people will go through the work and expense of preparing an estate plan using a Revocable Trust, but then neglect to check the beneficiary forms on their retirement accounts.

The beneficiary designation on a retirement account governs regardless of anything stated in a Trust or Will.  Your Trust or Will could leave everything to your children equally, but if your beneficiary designation names only one child, then that one child takes the entire retirement account.

If that is your intent, to leave a particular account to a single child, then fine.  But neglecting to plan how retirement assets will pass, means full employment for lawyers.  Fine with us lawyers...not so great for the children left behind to litigate the mess.

Worse yet, if your retirement account has no beneficiary named, or the named beneficiary dies before you do, then oftentimes the retirement assets will pass to your Probate Estate, which means they must pass through the Court process of probate before being distributed to your heirs. 

The bottom line is that failing to plan for the distribution of your retirement accounts often means you are planning on litigation in your estate.

I’ve blogged before about using the concept of undue influence to overturn a California Will or Trust.  But knowing the definition of undue influence is only the first step.  To make the concept of undue influence useful, you have to know how to prove the existence of undue influence in a Court of law.  That can be trickier than it sounds.  Let’s walk though the primary options for proving undue influence in California: 

Under California law, undue influence consists of:

• John taking unfair advantage over Jane, who relies on John for her daily living needs; or
• John taking unfair advantage over Jane’s weakness of mind where Jane has Dementia, Alzheimer’s disease or some other type of mental deficit; or
• John taking unfair advantage of Jane’s distressful situation, whatever that may be. 

An Example of Undue Influence: 

It is usually easy to spot undue influence. For example, Jane has three children, namely, John, Jerry, and Jack. Jane is living with John at the end of her life, and relies on John for her daily living needs. John does not like his brothers Jerry and Jack. Six weeks before Jane dies, John drives his mother to an attorney to change her California Will or Trust, which disinherits Jerry and Jack. Now John goes from getting one-third of his mother’s Will or Trust to getting 100 percent. The question: Did John exercise undue influence over Jane? Most likely, yes. But how do you prove undue influence under California law? 

How to Prove Undue Influence under California Law: 

There are two primary ways to prove undue influence under California law—by either (i) shifting the burden of proof to John, in the example above, so he then has to prove an absence of undue influence, or (ii) by Jerry or Jack proving directly that John exercised undue influence over their mother. If at all possible, it is best to shift the burden to John to prove he did not exercise undue influence over Jane because it can be very difficult to prove the absence of something. If you don’t have facts that shift the burden of proof to John, then Jerry and Jack will have the burden of proving the existence of undue influence directly.

 How to Shift the Burden of Proof in an Undue Influence Case:

How do you shift the burden of proof to John so that he carries the burden to prove he did not exercise undue influence over Jane? Under California law there is a presumption of undue influence that arises if you can establish three facts:

• Confidential Relationship: Jerry and Jack must prove that John had a “confidential relationship” with Jane, which can consist of John being Jane’s trustee, or agent under a power of attorney, or conservator, or perhaps, simply being Jane’s son.
• Active Participation: John must have “actively participated” in the preparation or execution of the Will or Trust.
• Undue Benefit: John must receive an “undue benefit” by way of the new Will or Trust.  

You can prove each of these facts where John (i) is the Executor or Trustee of Jane’s Will or Trust, (ii) arranged to have an attorney draft the new Will or Trust for Jane to sign, and (iii) where John’s interest in the Jane’s Will or Trust increases from one-third to a higher amount. 

Once these facts are proven, there is a presumption that John exercised undue influence over Jane causing her to create the new Will or Trust; and the burden of proof shifts to John to prove the absence of undue influence, which is not easy for John to do under this fact scenario. Essentially John has to prove a negative—i.e. that undue influence did not occur. 

 How to Prove Undue Influence Directly:

If you can’t prove facts shifting the burden of proof to John, you must prove undue influence directly. Circumstantial evidence is enough to prove undue influence. Here are the most likely facts you need to prove undue influence directly:

 Disinheriting a child: Provisions that are unnatural, cutting off from any substantial bequests the natural objections of the decedent’s bounty. When Jane disinherits Jerry and Jack, that is disinheriting her children, an unnatural act, which can indicate undue influence.

 Contradicting decedent’s former estate plan: Dispositions at variance with the decedent’s intentions, expressed before the document’s execution. If Jane had a previous Will or Trust that treated her children equally, but a new Will or Trust (or Amendment) contradicts the former Will or Trust (or Amendment), this can add to the conclusion that Jane was unduly influenced.

 Opportunity to control decedent: Relations existing between the chief beneficiaries and the decedent that afforded the former an opportunity to control the testamentary act. If Jane relied on John for her daily living needs, this can add to the conclusion that Jane was unduly influenced.

 Poor mental and physical condition: A testator whose mental and physical conditions are such as to permit a subversion of her freedom of will; and if there is evidence the testator had a weakened state of mind it is easier to demonstrate the pressure from another overcame the testator’s free will.

 Sudden negative shift in attitude: Under California law, courts may infer that Jane’s sudden negative shift in attitude toward Jerry and Jack was caused by John’s poisoning Jane’s mind because the court can find no other rational explanation.

 Decedent’s advanced age: A Will or Trust creator of advanced age at the time a document is signed adds to the conclusion the testator was unduly influenced.

 History of mental deficits: A Will or Trust creator with a history of mental deficits adds to the conclusion the testator was unduly influenced. California Probate code section 811 outlines the likely areas of mental deficits.

 History of Dementia or Alzheimer’s disease: A Will or Trust creator with a history of Dementia or Alzheimer’s Disease adds to the conclusion the testator was unduly influenced.

Testator under conservatorship: A Will or Trust creator that is under a court ordered conservatorship adds to the conclusion the testator was unduly influenced. 

The more of these facts you can establish, the easier it is to prove undue influence directly.

There you have it—a big picture view of how to prove undue influence cases under California law. In future blog posts, I will treat in further detail (i) the burden shift for undue influence cases, and (ii) proving undue influence directly.

When you practice in the area of Trusts and Wills, you are often called upon to resolve other legal problems that pertain to clients' assets such as business law, real property law, family law, etc.  So here is a post discussing a few business issues I have dealt with recently.  This same post was published in our local Corona Business Monthly: 

Do you have insurance?  Nearly every business buys some type of insurance because it’s better to pay an insurance premium than it is to pay for a huge loss if something unexpected occurs.  Taking unnecessary risks is not a smart business move.

 Yet businesses regularly take unwarranted legal risks when entering into agreements without properly documenting them in writing.  The “in writing” part every business owner seems to know—an agreement should be in writing.  The problem arises, however, with what is put down in writing.  All too often the terms of the agreement are not reflected in the written word on the agreement.  I meet with business owners all too often who first show me a so-called written agreement and then quickly explain how several meaningful provisions were either left out of the document or were written down incorrectly. 

Why the confusion between what we mean and what we say?  Part of the problem is that language is subject to interpretation.  I have litigated many business disputes that turn on the meaning of language in a document—even lawyers and judges struggle with drafting, understanding, and interpreting “clear” language.

But the bigger problem affecting business owners is lack of attention.  Businesses just don’t have time (or at least they think they don’t) to sit down and craft a carefully worded agreement.  In the rush to seal a deal, parties often forget to record the finer points, and sometimes even the most important points and provisions, of their agreement.  And agreement terms are fluid during negotiation, so a contract drafted yesterday may not reflect the agreement today.  Yet, sometimes, it is yesterday’s draft agreement that is signed without adding in the new or changed provisions. 

The best advice for anyone entering into a new business arrangement is to take the time (all the time) needed to draft a proper agreement.  The agreement should reflect all the major terms of the transaction and as many of the minor terms as you can address.  And the language should be clear and to the point.

For example, if the parties envision one side paying the other every other week then the agreement should say “payment shall be made every other week,” not “payment to be made regularly.”  And the term of the agreement should be clearly spelled out: “this agreement shall take effect on January 1, 2011 and shall expire on June 1, 2011.”  In fact, the best agreements are easy, simple, and straight forward. 

Unfortunately, it takes time to make language simple and it takes time to make a written agreement reflect the intent of the parties entering into it.  But the penalty for not taking the proper amount of time to draft an agreement can be a huge loss of business and litigation costs, including lawyers’ fees.  Poorly drafted agreements, and especially oral agreements, result in full employment for lawyers.  It’s somewhat ironic that some businesses are reluctant to pay a relatively small amount to have a lawyer prepare an agreement, yet subject themselves to  much higher fees, and for a much longer period of time, if a business is caught in a lawsuit due to a poorly drafted (or never drafted) agreement.  That is the risk every business runs in entering into a business transaction without the proper written agreement in place.

Taking the proper time and seeking the proper advice in preparing a written agreement is a businesses’ “insurance policy” to avoid the huge costs of litigation. 

Children are a big part of Trust planning, and a big part of Trust litigation (lawsuits) when the planning falls apart (or is not done properly to begin with).  There are many factors that affect planning for children, including age, marital status, health, legal or creditor issues, and level of responsibility (or rather perceived level of responsibility by the parent).

Age Issues:

Age is easy to plan for in that a child’s trust can be created to hold assets until a certain age.  Choosing the “certain age” is a highly personal question to answer.  As a starting point, a child must be a legal adult to receive assets, which is at age 18 in California.  And most people agree that ages 19, 20, and even 21 are too young for a child to receive anything substantial.  In fact, research has shown that the Prefrontal Cortex-the part of the brain that controls reasoning and impulses-does not fully mature until age 25.  So a scientific argument can be made that age 25 is a good minimum age to work with, but does it apply to every case?  Sure, why not.  If nothing else, age 25 is a good starting point.  What about an age other than 25, like 30, 35, or 40?  That’s where personal preference comes into the mix.  Of course, it’s not an all or nothing proposition because a Trust could allow a portion of the assets to be distributed at age 25 (say ½ or 1/3), and then use other ages for the remaining distributions.  You can be as creative as you like in setting the “certain age” for distributions.

Marital and Creditor Protection Issues:

Age is only one part of the equation because keeping assets in trust for a child also impacts marital property issues and creditor protection.  By placing a child’s assets in trust it can (i) protect those assets from creditors, and (ii) help the assets retain their character as the child’s separate property (this applies in California, which is a community property state, but inherited assets are, by definition, separate property).  So as long as the assets are in trust, they have some protection in case of creditors or divorce.  This may be helpful if the child is in a high-risk profession, such as a doctor, lawyer, stuntman, dare devil, motor cross, etc.  But the protection only lasts for as long as the Trust is in existence.  If the trust provides for distribution at a certain age, such as 25, then the creditor protection ends at age 25.  The trust could continue for the child’s entire lifetime if this is a concern.  But you have to balance the inconveniences of the trust with the protection being provided. 

Health Issues:

Children with health issues can face substantial costs for medical care in the future.  A child’s trust can be created so that the child will qualify for government assistance, but have trust assets available for extraordinary expenses that add to the child’s comfort.  Known as “protective”, “Medicaid”, or “Special Needs” trusts, these devices can be helpful for children in need.  In this case, the trust would remain in existence for the child’s lifetime, so the age question is no longer a concern.

Level of responsibility:

This is the real issue parents grapple with in determining a proper age for distribution.  How responsible are your children?  Perhaps the more important question is: how do you perceive your child’s level of responsibility? 

Before I had children I had a hard time understanding why continuing trusts for children were such a big deal—let the children have their cake, I thought.  Not anymore.  As the father of two boys I now understand just how perplexing the question of responsibility can be.  I also know that every child is different and my perception of each of my children may vary from their actual level of responsibility.  And it is my perception of responsibility that matters because that is what will drive my decisions in planning for my children.

So take a good look at your individual situation and ask yourself, what do you think is best for your family?  There are many variables and options to choose from to help your children.  But your opinion is the only one that counts when creating your own trust. 

The manner in which assets are titled govern how those assets pass at death.  And this can override a disposition contained in a Will or Trust. All the effort people take to prepare a Will or Trust can be wasted if assets are not titled properly.  This is what I call the asset puzzle.

The first part of the puzzle is knowing the possible pieces (i.e., the way in which assets can transfer at death).  There are differing ways in which assets pass at death and it can be downright confusing.

For exapmle, life insurance passes by beneficiary designation. Whoever is named as the beneficiary on the form in the files of the life insurance company takes at death. It does not matter what the decedent's Will or Trust state, the beneficiary designation controls. Therefore, even though a Will may be created that leaves assets equally to the decedent's children, if only one child is listed as a beneficiary of a life insurance policy, then that one child takes the life insurance proceeds and the other children get none.

Same applies to assets titled in joint tenancy. Bank accounts, brokerage accounts, real property and cars all have the ability to be held jointly with another person or persons. When one joint owner dies, the other joint owners receive the property automatically without the need for probate. But this also means that the assets pass without regard to a Will or Trust. All too often I see children unintentionally excluded because they are not included as a joint tenants on the assets.

For some reason people think that if they have a joint tenancy over their assets one of two things will occur. Either (1) the child who takes that asset will share with the other children (even though there is no legal obligation to do so), or (2) the Will or Trust will override the joint tenancy or beneficiary designation (which is false, the beneficiary or joint tenancy overrides the Will or Trust).

This is where planning comes into the picture. Planning is NOT the act of simply having a Will or Trust.  A Will or Trust is a required part of planning, but that is just the beginning. The most crucial part of planning is looking at all the assets in the estate and changing title to those assets to conform to the plan.  This means filing a new deed so the house is in the Trust, for example.  Changing the title on bank or brokerage accounts, ensuring any beneficiary designations go to either the Trust or the proper individuals.  In other words, looking at the entire, big picture and taking all necessary action.  That’s truly the definition of planning.

By the way, it's lack of planning that keeps lawyers fully employed because that is when litigation and probate ensue. And we lawyers make far more money on probate and litigation then we do on planning. So while people look at me skeptically when I plead with them to have an estate plan, I really should be pleading NOT to create a plan. So support your local lawyers, neglect your planning!

Several weeks ago we announced we were offering to draft California Wills for free to members of our community. We were worried that we would be inundated with requests for the free Wills. But we were wrong. We only received one e-mail accepting our offer to draft a free California Will.

So, we’ve decided to try this again. Albertson & Davidson is pleased to announce it will draft California Wills for free (at no cost) to the first 20 individuals who email us the following information:

1. E-mail Requirement: Send an e-mail to stewart@aldavlaw.com and keith@aldavlaw.com.
2. Subject Line Requirement: The subject line of the e-mail should state “Free Will”.
3. First Come, First Serve to 20: The first 20 e-mails received will get one of the free 20 California Wills. All individuals who e-mail us will be notified whether or not they made it into the top 20 e-mails.
4. Contents of Your E-mail: Your e-mail should contain the following information:
   1. Your full name.
   2. Your spouse’s full name (if married).
   3. Your children’s full names (if you have children).
   4. Your date of birth.
   5. Your spouse’s date of birth (if married).
   6. Your children’s date of birth (if you have children).
   7. Your mailing address.
   8. Your e-mail address.
   9. Your website (if you have a website).
   10. Your occupation.
   11. Your spouse’s occupation (if married).
5. What You Get: We will draft a stand-alone California Will for you and your spouse (if married). We will also draft Durable Powers of Attorney for Health and Assets for you and your spouse (if married). Finally, we will draft a Guardianship Nomination for you and your spouse (if married) designating who you wish to take care of your minor children should something happen to you. We will also advise you on whether you should implement a revocable living trust as part of your plan (the trust is not part of the free services, but our consultation with you on a trust is free). All these services are at no cost to you.
6. Reservation of Rights: We reserve the right to decline to draft any documents for any individuals for any reason at any time. For example, if there is a potential or actual conflict of interest that precludes us from representing you, we will decline to draft any documents on your behalf. Of course, there may be other reasons as well why we cannot draft a California Will for you and/or your spouse that will be discussed and disclosed to you on a case by case basis. We also reserve the right to discontinue these free services at any time. This offer is open only to California residents.

Sincerely,

Stewart R. Albertson and Keith A. Davidson, attorneys in Riverside, California

You work hard to create your Trust and your estate plan and you want the terms of your Trust carried out the way they were drafted.  But how can you be sure your named Trustee will perform as instructed after your death or upon incapacity?  Sure you may have chosen a trusted person to act as Trustee, but how will they actually perform?  And how will their performance be viewed by the Trust beneficiaries (i.e., usually your children and other family members)?

There are times when a Successor Trustee either violates their duties (whether it be intentional or unintentional--by not taking the proper actions), or the beneficiaries have the belief that a Trustee is not acting fairly (especially if the Trustee is also a beneficiary as when a single sibling acts as Trustee for his brothers and sisters). It does not much matter whether a breach of trust is actual or perceived because litigation (lawsuits) can result from either situation.

In comes the Trust Protector. A Trust protector is simply a special Trustee.  Someone appointed in the Trust document for a very limited and specific purpose. For example, the Protector could have the final say in when to make distributions from the Trust and how much should be distributed. This provides the appearance (and actuality) of a neutral third party making an important decision rather than a self-interested Trustee.

But the Trust Protector can be used for more than that. The Trust Protector can:

1. Make or consult on investment decisions,
2. Have veto power over certain (or all) decisions of the Trustee,
3. Have veto power over distributions to the Trustee,
4. Be a tie-breaker vote between two Co-Trustees,
5. Set compensation levels and advise on hiring professionals, and
6. Manage certain Trust assets.

In other words, the Trust Protector can be used however you like, the sky is the limit. In fact, each time I incorporate a Trust Protector into a Trust I am amazed at how versatile the concept is and how many different ways it can be used. It is a very personal device that can provide peace of mind, along with actual peace between the beneficiaries, when the time arrives.

So get creative and find ways to help protect your Trust for the benefit of your family and beneficiaries.

Listen to Keith A. Davidson summarize his blog post on the difference in contesting a California Trust and a California Will.

Which is better—A Trust or Will if a fight takes place for your assets after your death?   One of the primary reasons people create Living Trusts (also called Revocable Trusts and Revocable Living Trusts) is to avoid probate. And Trusts can also help in reducing or, in some cases, eliminating estate taxes. But can a Trust also help discourage a contest over an individual’s intended disposition of his or her assets at death?  The answer is a resounding “maybe.”  Let me explain.

Some people believe Trusts better protect against a contest because Trusts are not administered with court supervision. Once the person who created the Trust (referred to as the Settlor) dies, the Successor Trustee begins administering the assets, gathering them up and preparing these assets for distribution to the Trust’s beneficiaries (usually family members), without any need for court supervision. On the other hand, a California Will can only be administered in probate, which requires court supervision. In fact, an Executor is not even appointed to act under a Will until a Petition for Probate is filed with the court and the court appoints the person as executor. Once in court, anyone who wishes to challenge the Will has a ready forum in which to do so. In other words, a contestant normally does not need to open the court process pertaining to a Will—they merely need to show up and file an objection in the probate court.

In contrast, contesting (or challenging) the terms of a Trust is not quite so easy. Trusts can be challenged in court and trustees' actions can be challenged in court, but the person wishing to contest a trust, or its trustee, must take the initiative and bring the matter to court by filing an appropriate petition.  Thus, it is the contestant who has to take the initiative to start the court process when it comes to trusts—they can't just show up and object as in the probate of a California Will.

So back to the “which is better” question—is is a Trust better than a Will in warding off attacks by angry beneficiaries? It depends.  If an heir or beneficiary is set on contesting the document and if the heir has means to hire an attorney, then a Trust is just as vulnerable to attack as a Will—the fact that the heir or beneficiary must start the process will usually not prevent an attack. If, however, an heir or beneficiary does not have the means to hire an attorney and does not know how to bring a trust contest to the Court’s attention, then the trust may be better at preventing attack. A California Will, after all, is already filed in court, which allows a beneficiary to object to it much easier, sometimes without the help of a lawyer.

Therefore, a Trust may have some benefit over a California Will in preventing a contest by an angry heir or beneficiary, but the benefit is relatively small if the heir is ready, willing and able to take action to bring the matter to court.

Fifty years ago, most assets passed from an individual who died to his or her family by way of Probate (by Will or Intestacy both of which require Probate). Probate is a strict, expensive and time-consuming Court process that must be completed before assets can ultimately being transferred to family members.

But today, we own assets differently than we did fifty years ago. Most of us have bank accounts, retirement accounts, life insurance, and perhaps Living Trusts. These four types of assets (or financial vehicles) constitute the core of the so-called “Nonprobate Transfers” or “Will Substitutes”, meaning each of these assets pass outside Probate if properly designated.

California law expressly allows these Nonprobate Transfer assets to pass outside the probate process, even though these assets do not comply with the formal requirements for execution of a Will (read more about the Formalities and Intentionalities of Will creation.) Accordingly, individuals can rely on beneficiary designation forms that identify who gets his or her bank accounts, life insurance, and retirement accounts at his or her death without regard to what a Will states. As a result, with proper planning, an individual’s entire estate can pass at death to his or her family members outside of the Probate system. In fact, this is one of the primary reasons why estate planners created Revocable Trust—to avoid Probate altogether.

Let’s take an example, Stewart owns the following assets:

• a home worth $400,000;
• a rental property worth $350,000;
• two bank accounts totaling $60,000;
• a retirement account totaling $500,000; and
• life insurance with a death benefit of $1 million.

Stewart’s total estate is worth $2,310,000. If Stewart’s estate passes by a Will or Intestacy, it must go through the Probate system. The attorney’s fees on this size of an estate would result in fees of approximately $40,000 (read more on how Probate fees are calculated.)

On the other hand, Stewart’s entire estate could pass by way of Nonprobate Transfers (also known as Will Substitutes), as follows:

• Stewart’s (i) home and (ii) rental property are owned by his Living Trust, which designates the beneficiaries of his home and rental property.
• Stewart’s (i) bank accounts, (ii) retirement account, and (iii) life insurance have “beneficiary designation” cards filled out designating who gets these assets on Stewart’s death.

Now Stewart’s entire estate passes outside of the Probate Court process.

Ultimately, these types of Nonprobate Transfers (or Will Substitutes) function as a private system of transferring assets at death—usually requiring less time, fewer rules, and a lower cost than Probate requires.