Under California law, no-cotest clauses in California Trust and Wills have been substantially limited in their applicability. In most cases they simply will not apply. But even when a no-contest clause does apply, it may still be possible to escape its affects. In this video, Stewart Albertson discusses when you can escape the harsh affects of a no-contest clause.
If you are the beneficiary of a California Will, there’s a few things you need to know in order to understand and protect your rights. Here’s the Top 10 things you must know as a Will Beneficiary:
1. The Last Will Controls
Sometimes people create more than one Will. Under California law, the last Will made usually wins. But that depends on whether the decedent had the capacity to create a Will and was not subject to undue influence. The key is to find the last Will created. And it must be an original.
2. Executor’s Attorney is not Your Attorney
This may sound strange if you are not used to this process, but even though the executor’s attorney is paid from the estate (essentially paid from your assets) that attorney is NOT your attorney. The executor (or administrator if its an intestate estate) has the right to hire an attorney and that attorney advises the executor ONLY. Want your own legal advice? That’s fine, but you will have to hire and pay for your own independent lawyer. Welcome to probate!
3. The Empty Will Syndrome
You are named as a beneficiary under a Will, so what? A Will only controls assets that pass through the probate process. In todays complicated world, there’s precious little that passes through probate. Joint tenancy accounts or real property, life insurance, retirement account, trust interests, paid-on-death or transfer-on-death accounts all pass outside of probate. That means the Will does NOT control those assets. If there are no assets that pass through probate, then you (as a Will beneficiary) are a beneficiary of nothing. Congratulations, don’t spend it all in one place!
4. A Will is not a Will until a Court will call it a Will
So you think you have a Will? The court will be the judge of that. In California (and most places throughout the U.S.) Wills must be “admitted” to probate. Probate comes from a Latin word meaning to prove. The beginning of the probate process is meant to prove the Will is, in fact, a valid and enforceable Will. In admitting a Will to probate, the Court is essentially finding the Will to be a valid documents—in other words, the Will was proven to be a true Will.
5. Know your Bonds
The default rule in probate is that every executor or administrator is required to obtain a surety bond. A bond is not insurance, not exactly. A bond provides a source of funds that is paid out to the probate estate in the event the executor or administrator breaches a fiduciary duty. But a bond does not automatically pay out once an executor breaches a duty—quite the contrary. Most bond companies will enter the matter and fight in favor of the executor’s actions if a breach of duty is raised. If a Will beneficiary prevails, then the Court can order payment to the estate by the bonding company, and the bond company then has the right to sue the executor to recover payment.
Bonds are good and important to protect the interests of a beneficiary. But most Wills have a provision that waives bond, which the Court will do if the Will allows it. Also, the beneficiaries as a group can waive bond, assuming all beneficiaries agree to do so. The bond does cost the estate in the form of a bond premium. But it usually is a small price to pay for the protection a bond provides.
6. Inventory and Appraisals
All probate estate assets MUST be inventoried and appraised by a probate appraiser (sometimes called the probate referee) assigned to your probate case. The only thing that is not appraised by the probate referee is cash. It does not matter that you have your own appraisal or you have an appraiser you want to use. The probate referee is the only one who can appraise your estate assets.
However, there are times when a probate referee will use an independent appraiser’s information to assemble an appraisal. This typically happens with unique items that are outside the probate referee’s area of expertise, such as appraisal of race horses. But most estate don’t have race horses, so be prepared to work with the probate referee assigned to your case by the court.
7. Creditors Claims
The primary purpose of the probate process is to protect creditors. There is a mandatory waiting period of 120 days after the estate is opened (and Letters are issued) during which creditors are allowed to make claims against the estate assets. And creditor’s claims take precedence over any rights of the beneficiaries. In fact, every executor is required to notify all known creditors and provide them with a copy of the claim form (to make it as easy as possible for the creditor’s to submit a claim to probate).
8. Reports and Accounting
If you have a probate estate that does not require an estate tax return to be filed (which means your estate is worth less than $5 million—most are), then your executor must either close the estate or file a report within 12 months of the estate being opened. If an estate tax return is due, then the deadline is 18 months. Reports allow the probate court to review what is occurring in the estate and ensure nothing is amiss while the estate waits to close. As a beneficiary, you have the right to object to the report if it contains anything to which you disagree.
9. Court Order required for distribution
You cannot receive any assets from the estate until a court order is issued. It does not matter than you are a beneficiary and entitled to the assets, the property does not legally belong to you yet. It belongs to the estate and it remains an asset of the estate (and in the executor’s possession) until a court orders the property to be distributed. Frustrating, I know, but that’s the rule.
10. Executor Fees, Attorneys Fees and Costs
We all love fees (being paid them, not having to pay them). Fees are a necessary part of the probate process. In probate, there are two categories of fees you need to know about, statutory fees and extraordinary fees.
If you are an Executor in California, there are a few things you must know if you hope to do your job the right way. Here’s our top ten list for every California Executor:
1. You have no powers or duties until the court appoints you as Executor
You may be named as an Executor under a Will, but you really are just a suggested Executor until the court appoints you as Executor. That means you have to file a Petition for Probate with the court, receive a court order appointing you, and then have Letters Testamentary issued. The Letters Testamentary are what actually give you the legal authority to act as Executor. Once you have Letters, you can start collecting the assets and accounts of the decedent.
2. You Must Inventory and Appraise the Estate
You may know exactly what the assets of the estate are worth, but you have a legal duty to have the court-appointed probate appraiser give you an appraisal for all assets (other than cash). Even puclicly traded stocks must be appraised by the probate appraiser. There is a judicial council form created for this purpose that must be used, and you only have 120 days in which to file the completed appraisal with the court–the sooner you get started, the better.
3. Probate is all about the Creditors
You may be surprised to learn that the number one reason we have probate is to protect creditors and make sure creditors are paid. That’s why you have a duty to serve notice of the probate on all known creditors and you MUST send them a copy of the creditor claim form that they can use to submit their claim to probate. In other words, not only must you notify creditors, but you have to make it as easy as possible for them to file a claim against an estate.
4. No Distributions Without Court Order
You cannot, under any circumstances, distribute probate assets to a beneficiary without first obtaining a court order authorizing you to do so. It does not matter if a beneficiary is suffering a hardship, or if they are the only beneficiary of the estate and will receive the assets eventually, a court order is required.
5. No Fees without Court Order
The same is true for your fees and the fees for the estate’s attorney. No fees whatsoever can be paid without first obtaining court approval for payment.
6. Full Powers Are a Must
Technically, in California all actions you take as an Executor require Court approval, especially selling real estate. However, when you first petition the court to act as Executor, you can ask for full powers under the Independent Administration of Estates Act. Full powers allow you to do things like sell real property without first obtaining court approval. So try to obtain full powers whenever possible, especially if you have real property as part of your estate.
7. Know Your Way Around a Bond
Many estates require you to be bonded as an Executor. A bond ensures that there are assets to pay to beneficiaries if you screw up as Executor. However, a bond is not insurance. If you do something wrong that costs the estate money, then the bond will pay the estate, but then the bonding company will turn around and sue you to recover its money. That means you should fully understand what you are getting yourself into when becoming an executor and agreeing to be bonded.
8. Reports and Accoutning
If you are able to wrap the estate up in 12 months, then you can file your final report and accounting all at once and obtain a final order to distribute the estate assets and pay your fees. If, however, the estate remains open for longer than 12 months, then you are required to file a report with the court. A probate report is simply an update on what is happening with the estate. As part of the report you can even ask for a preliminary distribution or a partial payment of fees. But the report, as with just about every court filing, comes with a hefty filing fee, so it is usually best to get the entire estate wrapped up at one time.
9. Final Discharge
Once the court approves your final report and accounting, you are not off the hook yet. You have to make the distributions out to beneficiaries and have them sign receipts for the assets, which must then be filed with the court. You also have to file an ex-parte application for discharge. Once the court approves your discharge as Executor, then the process is complete. But if you fail to file the receipt and ask for discharge, then you are still on the hook with the court for the estate assets. Don’t forget to obtain your discharge before its too late.
10. Learn Your Duties
Executors have a ton of duties and obligations they must fulfill. Do yourself a favor and learn as much as you can about your duties and obligations because whether you know them or not, you will be on the hook for any breach of duty you undertake.
Your parent dies and after grieving you wonder, where is his or her Will? Didn’t mom say she had a Will, and she mentioned something about it going equally to all the kids, but what happened to that Will?
So you call your siblings and ask about the Will. You are told that your sister has it, but she will not show it to you because you are disinherited so you are not entitled to a copy. Disinherited? How can that be, mom never mentioned anything about disinheriting you. Plus, you and mom got along so well, how could this happen? Are you even being told the truth?
You persist and demand a copy of the Will in writing. You believe you should at least see the Will before you give up and go away. Something just does not feel right. You knew you and your sister were not close, but you never imagined she would do something like this, but what has she done and how are you going to find out?
Your sister never responds or she sends you a threatening message and tells you that you will never see a cent of your mother’s assets because mom hated you. Oh really? That is the first you ever heard of mom not liking you.
Now comes a call to a lawyer. The lawyer tells you that under the California Probate Code you are entitled to a copy of your mother’s Will because you are an “heir-at-law” of your mother. Even if the Will did disinherit you, you are still entitled to a copy. Great, now how do you get that copy? That’s not as easy as it should be.
Bottom line: you must file a Petition to compel your sister to hand over the Will. In other words, there is no way for you to force your sister to hand over the Will without going to court and seeking a court order. The good news: that a relatively straightforward petition and the court will grant your request (most likely). The bad news: it costs money to hire an attorney, draft up the petition, and pay the court filing fee. But will your sister have to pay that cost? No. As ridiculous as that sounds, it is highly unlikely that your sister will have to reimburse you for your attorneys’ fees and court costs because under our system each party pays their own fees and costs.
Once you have a copy of the Will, however, then you will know for certain what your rights are and how to take the next step to assert your rights. Hang in there, it can be a frustrating process, but when you mom’s legacy is at stake, it’s worth the struggle. Or maybe it’s not worth the struggle, that’s a question only you can decide.
If you think you have been wrongly disinherited from an estate, please do me a favor and act quickly. I cannot tell you how many people I have talked to who have great claims, or rather HAD great claims, only to find out that they waited too long to bring a lawsuit to enforce their rights in Court. The statute of limitations (that pesky set of laws that sets time limits to bringing lawsuits) can have harsh results.
The problem in Trust and Will matters if that there are a number of different (often conflicting) statutes of limitations at play. For example, let’s say you have an agreement with a decedent to leave you property in a Will, but the Will was never created. That is a contract right, but it must be brought within a year of the decedent’s death. If you were disinherited from a Trust, you may have a very long time before you have to bring a lawsuit, UNLESS you are served with Trustee’s notice, in which case your statute of limitations is limited to 120 days.
Have a problem with a Trustee? You might have an unlimited amount of time to bring a claim, or you might have three years, it all depends on whether you were provided enough information to know (or where you should have known) you had a claim against the Trustee. On the other hand, if a Trustee files for Court approval of a Trust accounting, and you do not object to the accounting, then you are forever barred from contesting the Trustee’s actions as reported in the accounting.
Not only does the statute of limitations bar your claim, there’s also the equitable doctrines of Laches, which is a legal doctrine that allows a court to stop a lawsuit where a party waited too long to file it. Laches is based on fairness and where a party waits beyond what is a “reasonable” amount of time, then the lawsuit can be thrown out.
Confused yet? You should be, it is a very confusing area to deal with.
The bottom line: act swiftly. If you think you have been given a raw deal, then take action now. My favorite potential client call of all time: “Hi, my mom died in 1975 and I want to contest the distribution of her estate”…What!!?? 1975 was a while ago, why wait so long?
If you do not take action, then be forewarned, you may be giving up your rights whether you like it or not.
Ontario, California 91764
How does the promise to make a will or trust arise? Generally, a parent orally promises a child, a friend, or a caretaker some or all of their assets once they die, if the child, friend, or caretaker agrees to do something for the parent. The “something” can be anything of value, but usually takes the form of the child, friend, or caretaker taking care of the parent until the parent’s death.
But what if the parent didn’t get around to writing a will or trust that states the child, friend, or caretaker gets some or all of the parent’s assets after they die? Or what if the parent never intended to write a will or trust reflecting the promise to the child, friend, or caretaker? Can the child, friend, or caretaker enforce the now deceased parent’s oral promise to give them assets? The answer is ‘yes’.
California Probate Code section 21700, entitled “Contract to make will” has a provision that allows a person to establish an oral promise by establishing that there was an agreement between the parent and the child, friend, or caretaker that the parent would leave some or all of their assets to the child, friend, or caretaker after they died.
But this is where it gets a bit tricky. The procedural hoops one must jump through to make a an initial claim to enforce an oral promise to make a trust or will under California requires the following:
- First, one has to pay attention to the applicable statute of limitations. The statute of limitations simply tells us how long we have to file a lawsuit to enforce an oral promise. The applicable statute of limitations for filing a lawsuit to enforce an oral promise to make a will or trust is one year from the date of death of the parent. So if the parent dies on January 1, 2014, then the child, friend, or caregiver would have one year (to December 31, 2014) to file an actual lawsuit to enforce the claim.
- Second, it gets even trickier. Before one can file a lawsuit based on a broken promise to make a will or trust, one must file a “creditor’s claim” in the estate of the deceased parent. The creditor’s claim is not difficult to complete and file, but if one fails to complete this step, and one year passes from the date of death of the parent, one is very likely barred forever from filing an actual lawsuit to enforce the parent’s promise.
- Third, it’s still tricky. What if nobody has opened the deceased parent’s estate with the probate court? Can one simply wait until an estate is opened, whether that’s one or two years from now, and then file their creditor’s claim? The answer is very likely ‘no’. The applicable statute of limitations states that to enforce an oral promise to make a will or trust, a lawsuit must be filed within one year of the date of death of the parent. So if the probate estate is not opened, then one needs to file a petition for probate to open the parent’s estate with the probate court, file a creditor’s claim, and then file a lawsuit—all before the one year passes from the parent’s date of death.
Each of these steps must be completed before one can have their day in court to prove a claim based on an oral promise to make a California will or trust. If the one-year statute of limitations (calculated from the deceased parent’s date of death) is blown for any reason, the claim to enforce the oral promise is barred forever from being heard. Thus, it’s very important for one to understand and meet the procedural loopholes required to make a claim to enforce an oral promise.
The confusing world of Trust and Will lawsuits, it can be quite a quagmire. Especially if you are looking on the internet for information because every state does things differently when it comes to the trust and will arena. Even the term “Probate Court” can mean vastly different things in different states.
Let me see if I can demystify some of the confusion I hear about as it relates to California Trust and Will lawsuits.
1. Can a Court other then where the Trust matter is filed remove a Trustee? No. In California, Trust matters are filed in the Probate division of the Superior Court. There is no other Court that can take a Trust action and remove a Trustee. Oftentimes I hear people ask if they can bring a “civil suit” after something is filed in Probate, or a small-claims action, none of that is possible (generally speaking) if you are dealing with a Trust or Will matter because the proper venue for anything that takes place under the Probate Code is the Probate division.
I have heard that some states (like New York) provide a choice of venue between Probate and civil, but that does not apply to California.
2. Is Probate Court the same as Civil Court in California? Yes. Actually the term “Probate Court” is a misnomer because both Probate and civil departments are part of the Superior Court (as is family law “court”). That means the “Probate Court” has all the same powers and abilities to decide and rule on lawsuits as the civil department of the Superior Court.
3. Can a Trust beneficiary file a legal action in the state where the beneficiary resides instead of in the state where the Trustee resides? No. Under California law, any action against a Trustee, whether it be a Trust contest, and accounting, or some other breach of trust action, must be filed where the “place of administration” is located. If the Trustee has not specified a place of administration, then the proper venue is where the Trustee resides or his/her place of business. In any event, jurisdiction and venue usually depend on the location of the Trustee, which is where the action is filed, NOT the location of the beneficiary.
4. Is Probate Court only for filing Wills (or estates that have no Will)? No. the Probate division of the California Superior Court is also the forum for Trust lawsuits, conservatorships, power of attorney disputes, and oftentimes guardianships (dealing with minors—although the venue for guardianships can vary from county to county in California).
5. If a person dies with a Will, does it still require Probate? Yes. Wills do not avoid probate. Probate simply being a process where people can prove the validity of the Will and then ask the Court to start the estate administration process following the terms of the Will. If a person dies without a Will, probate is also required. What’s the difference then between having a Will and not having a Will? While probate is required in both cases, if you have a Will then your estate will pass pursuant to the Will provisions. And your named executor will act to manage your estate during the probate process. If you don’t have a Will, then your assets pass per the intestate statutes, which generally follows bloodlines to children first, and then to more distant relatives if there are no children.
So there is a brief recap of five of the most confusing myths and misconceptions about probate. Do you have a misconception or question you need answers on California probate or trust actions? Feel free to send me an email at firstname.lastname@example.org and I will include it in a future blog post on the myths of probate.
News outlets reported over the weekend that Mickey Rooney’s widow is contesting his Will in Court. According to this news story by Alan Duke on CNN.com; Mr. Rooney’s estate has an estimated value of $18,000, and his Will leaving his entire estate to his step-son (and excluding is ex-spouse and natural-born children) is being contested.
As intriguing as this sounds, what are the true facts of this case? It can be hard to tell because only a fraction of the estate information has been made public up to this point. If you do not know about estate law, however, you may think that the late actor’s estate truly was worthless. If that were the case, why is his widow contesting his Will? There must be more than meets the eye.
First of all, many famous people have Wills that are filed with the Court after they die. The Will’s are meant to satisfy people’s urge to gain access to the inside information of a celebrity’s estate. But many times, the Will is meaningless because most people of celebrity status create Trusts during their liftetimes (revocable, living Trusts), and transfer their wealth to the Trust to be held and distributed by the Trustee outside the Court system (and outside the public microscope of the media). So just because a celebrity’s Will is filed in Court does NOT mean that a Trust is non-existent. In most cases, the Will is just a red herring meant to satiate the public.
Secondly, the estimated estate value listed on a petition for probate is just that—a rough estimate. Nothing has been officially appraised yet. Only after the estate is open is a proper inventory and appraisal compiled by the Exeuctor (using a probate referee to appraise the assets) and filed with the Court. Until the official appraisal is filed, the numbers listed on the petition for probate are mere speculation.
Furthermore, only assets that are governed by the estate are listed and appraised. Anything held in a Trust would fall outside the estate and therefore not be appraised as part of the probate process—and thereby become public. So it is possible that the “probate” estate has very little in it, while the “Trust” estate could have far more value.
So why contest a Will for a valueless estate? I don’t know why the parties are doing so here, but I could speculate on a few possibilities. One possibility could be royalty rights to the actor’s estate. There could be a provision in the Will either directing future royalty rights or exercising a power of appointment, which is a mechanism that allows a decedent to change the distribution from his Trust using a term in the Will. Powers of appointment are not often exercised, but they can be a valuable tool to change the distribution provisions of a Trust without having to do a Trust amendment. And since Mr. Rooney was under a conservatorship at the time of his death, a Trust amendment would not have been possible (unless the Court ordered it). A Will on the other hand is still perfectly possible even when signed by a conservatee.
Whatever the reason, people don’t hire lawyers to contest estate’s worth $18,000 (usually) so there is something at stake in this mess…the question is what?
Have you ever had someone promise to leave you something at their death in return for you taking care of that person? You may have a contract to make a Will, which is enforceable in California. In this video, Stewart Albertson discusses the way in which you can enforce a contract to make a Will in California Will contest cases.
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You may be surprised to learn that your Will could be revoked without you even knowing it. Under Probate Code section 6124, if your original Will was in your possession at the time of death and if the original Will cannot be found, the law presumes that you destroyed the Will with the intent to revoke it.
Sometimes this may be true, someone may decide to destroy his Will for the purpose of revoking it. But the presumption applies even in cases where the original Will may just be lost or misplaced (or intentionally destroyed by someone else)—resulting in an unintended revocation of the Will.
This presumption of revoked Will sounds harsh, and often has an unintended result, but there is a bright side to this law. The presumption is not absolute. In fact, it is one of the easier presumptions to overcome because it only affects the “production of evidence” rather than a “presumption of proof.” What exactly does that mean? The Fourth Circuit Court of Appeal’s recent decision in Estate of Trikha helps explain this important difference and provides a roadmap for overcoming this harsh presumption of revocation.
Estate of Trikha presents a tragic set of facts between a man, his wife, and kids from a prior marriage. The wife (Suchitra Trikha) instituted a divorce action because she did not want her husband (Satish Trikha) to talk to his kids from a prior marriage. Suchitra, however, offered to reconcile if Satish would agree to disinherit his prior children and leave his entire estate only to his children from the current marriage.
Less than a month before Satish’s death he had a Will prepared where he left his estate equally among his four children. During the course of the divorce proceedings, matters became increasingly difficult and Satish eventually killed himself while staying at a Hotel. Suchitra and her two children were the first to retrieve Husband’s affects and the papers from his car, but she testified the original Will was not located. Of course, Suchitra had a strong motive to destroy the original Will as it went against her desires.
The trial court noted that the Will contestant, Suchitra in this case, usually has the burden of proving Will revocation. But a presumption of revocation arises under Probate Code Section 6124 where an original Will, last in possession of decedent, cannot be found. That places the burden on the Will proponent (Satish’s first son, Satish, Jr. in this case) to prove the Will has NOT been revoked.
At trial, Satish, Jr. introduced evidence to show that both Suchitra and her children were first to have access to Satish’s papers, they had the ability to destroy the original Will, and they had the motive to do so. Nevertheless, the trial court ruled in favor of Suchitra and held that the evidence presented was not enough to persuade the Court that Suchitra had in fact destroyed the original Will.
The Appellate Court disagreed. Section 6124 specifically states that the presumption contained in that section is “a presumption affecting the burden of producing evidence”—not a presumption affecting the burden of proof. What’s the difference?
The Appellate Court explains that a burden of proof presumption requires a party to prove by a preponderance of the evidence that the fact is not true. Whereas a burden of producing evidence is merely a preliminary assumption that goes away once evidence is produced to establish its nonexistence.
For example, in this case once evidence was produced showing it was possible the original Will was destroyed because the wife had ample opportunity and motive to destroy it, the assumption of revocation goes away. The Court then has to decide whether to admit the Will to probate or not based on the totality of the evidence without any presumption against the Will proponent.
In other words, the burden of producing evidence is a much lower presumption (better understood to be a preliminary assumption of a fact). The fact assumption goes away once any contrary evidence is introduced. So the presumption of revocation is not absolute. It can be overcome, and overcome rather easily so long as there is some contrary evidence to suggest the Will was NOT destroyed with the intent to revoke.