Sunday, August 25, 2013
Time to talk about the property given under your Will. First, “property” is used as an overall term to include anything that you may own, which may be disposed of under your Will. PC §62. We go on to define property in all sorts of classifications, including “Real Property” which is any kind of land, “Personal Property” which is any other type of thing you have that is not land. There are all kinds of other sub-definitions, but I don’t want to take your time here to recite a legal dictionary. Also, while we are usually talking about things of value, we may also have to deal with things of negative value or debts. Not the fun stuff, but of major concern in your Estate Plan.
Second, we need to determine if the things you want to deal with in your Will are in fact things that you can direct or give away. This is the question of whether something is “Subject to Will”. I know, you are going to say, how would anyone try to give away something they don’t have the power to give away? The answer is, they do try, because they don’t realize they can’t. Simplest example is when you and your spouse own property Jointly with rights of survivorship. Upon your death, this property likely passes directly to your spouse, by their express right of ownership, and not your Will. Another good example, not with your spouse, would be certain forms of title in holding land or other things. It is not uncommon in California for people to hold title to land as “Joint Tenants”. When land is held that way, upon the death of one person, any other person or persons jointly owning that land automatically takes title possession of that land. There may be a fractional change in ownership, but it has nothing to do with your Will. There need be no Will, Trust or Probate of that particular land, yet sometimes people include that land expressly in their Will. Another good example of this would be Joint bank or investment accounts. A final example for our discussion is that if some property is placed in a Trust, but in an abundance of caution, the property owner also tries to pass the same property through their Will, that gift in their Will is ineffective as the property is already in the Trust, and the administration of the Trust will govern what happens upon death. For reasons like these, and others not discussed here, it is very important for you to work with your Estate Planning Attorney, and the rest of your “A Team” to clearly identify everything you have so you can determine the correct way to pass or dispose of your stuff and avoid complications if possible.
Third, we need to talk about property that can be disposed of or passed by your Will. Conveniently, this would include all property you own at death, even if acquired after the Will was made, that is not otherwise disposed of as discussed above, by virtue of some other title or ownership presumption. There are still many considerations, which is why you need to consult with a professional and your “A Team”, but lets discuss some of the more frequently seen issues. Obviously, anything you own outright, with no shared interest in, you have the undisputed right to gift it any way you want. We mentioned how Joint Tenant property automatically goes to the surviving joint tenants. However, in California, we also hold property as “Tenants in Common”. Unlike Joint Tenants, when title is held as “Tenants in Common” you CAN Will away your share of the property. Frequently you plan on gifting your share in the Tenants in Common property to the other Tenants in Common, for example, if a family owns a family farm, or some other investment property, you give your share back to your family. However, just a common, you may pass your share in the family property to your children. All you have is your fractional share, so that is all you pass, but you can pass it on nonetheless. Another right is that you may own a “Power of Appointment”. This is a particular right or “Power” that someone has given to you, likely under your sole control, wherein you have the right give to “Appoint” a certain thing. The Power could be general, special or testamentary, and we won’t concern ourselves about those distinctions here today. Essentially, someone has given you're the right to give away their stuff. For instance, your parents gave you the right to use their land and the right to appoint that use, as you deem best. They did not give you the land, just the right to use it, but also said, you could direct it as you want at some later point in time. I will dedicate a whole blog to Powers of Appointment, but take my word for the fact that this could happen.
Finally, you need to be aware that there are some property or assets that are subject to nonprobate transfers, or transfers outside the Estate Plan process. You may recall, several weeks ago I already discussed “Money Outside Your Estate Plan”. See my blog of 5/20/13. For being complete, a short list of significant assets possible under this idea and NOT included in your Estate Plan would include things like Insurance Policies, Retirement Assets, Pensions, Profit Sharing Plans, IRAs 401Ks, Employment Contracts and similar items that commonly permit for the benefits to pass to designated Beneficiaries upon your death. Probate Code §5000 et.seq. (sorry, et.seq. is fancy lawyer talk for “the following sections”) lists many assets that are expressly allowed and directed to pass outside probate or your Estate Plan. Just because they pass outside your Will does not mean we simply ignore them. There may be certain tax consequences to your spouse, the Estate and/or the recipient, so we still need to know and share this info with your “A Team”.
Last comment. This blog is directed at Estate Planning for the Recently Divorced. Thus, I assume you do not have a current spouse. However, I want everyone to know about Estate Planning. I believe almost everyone could benefit from some sort of Estate Plan, ranging from simple to complex according to their needs. My next blog will specifically address some of these issues relative to surviving spouses, in California, as we are a community property state. Just be warned.
By the way, in last week’s blog, “Come ‘N’ Get It”, I ended with a question, “What do you think Jane’s heirs would receive by “representation” under PC §246.” Here’s the question and answer:
Grandma Jane had 3 children, George, Helen and Mike. George died before his mother, leaving two children, Greg and Grace. Helen also died before her mother, leaving one child, Hal. Mike is alive and well. Who is around to take from Jane’s will? The last son, Mike, and 3 grand children, Greg, Grace and Hal. By representation or §246, the will is divided in thirds for each child, since Mike was alive. Mike gets 1/3. Hal gets Helen’s 1/3. Greg and Grace each get 1/2 of George’s 1/3 or 1/6 each.
I hope you will review your Estate Plan with you're “A” Team, or at least begin to seek out an Estate Planning Attorney to start this process. Stay tuned for future blogs. However, if you have any questions, feel free to respond below, or if you are interested in learning more about an Estate Plan, Wills, Trusts, Advanced Healthcare Directives, or Divorce, Custody, Visitation, Child Support, Spousal Support, Property Division, Modifications, Remarriage, or Pre-Nuptial Agreements, please contact me at please contact me at firstname.lastname@example.org, or through my other websites, www.fcbegun.com, or www.linkedin.com for Fred Begun.
Saturday, August 17, 2013
Let’s get to some brass tacks about who gets your stuff under your Will. We need to start with some basics from the California Probate Code.
PC §7000 states that “Title to a decedent’s property passes on the decedent’s death to the person to whom it is devised in the decedent’s last will or, in the absence of such a devise, the decedent’s heirs as prescribed in the laws governing intestate succession.”
PC §32 defines a “Devise” as either a disposition of real or personal property by will or the act of disposing of real or personal property by will. Depending on whether it is a noun or a verb. One of those weird words from grammar class . . . do they still teach grammar? Thus, under PC §34, the “Devisee” is the designated recipient of the devise.
Like with the making of the Will itself, there may be issues of capacity to take under the Will, but while it seems more difficult to make a Will, the list of people or entities that can receive under a Will is pretty broad. That said, there are a few common exceptions, such as you cannot kill someone and benefit from their killing by inheriting their possessions. Witnesses of the Will are not automatically eliminated, but there can be some problems, so it is best to avoid the presumption of undue influence.
As important as it is to include proper persons to receive under the Will, complications can arise for people that are skipped or omitted from the Will. If someone makes a Will and later marries, but never modifies the Will, their spouse may be deemed omitted. As such, the omitted spouse will have other statutory rights, including ½ of the community property, ½ of the quasi-community property and even a share of the decedent’s separate property if the decedent passed without a Will, but in no event more than ½ of the value of the separate property. Probate Code §100 and §101. Similar rules apply for omitted children, in that they too would presumptively be entitled to a share as if the decedent passed without a Will. The issue here is that there might be intentional exclusion of a child. Nothing says that in a written Will you have to treat everyone equally or fairly. Granted, every rule seems to have exceptions, but we will not go into this detailed area here.
Another area with possible odd developments is simultaneous death. Who gets what when a family dies in an accident? We have a variety of laws, rules and presumptions to address this and other oddities. We could probably fill a book on such weird cases and the history of heirs fighting over the money and courts trying to do what’s “fair”, but we have boiled this down over many years of such fights and have rules for guidance. Suffice it to say, if you are aware of any unusual fact related to someone’s death, ALWAYS consult a lawyer.
The last general area I want to discuss about who gets your stuff, is to be aware of class gifts. That is, giving to a group of people. The most common class gift is, “to my children”. Assuming we don’t omit a spouse or a child born after the Will is made, and assuming we don’t make specific gifts to specific children, this is the easiest way to give equally to your offspring. Bu what happens if you have several children, who have children, so now you have several generations living? Next let’s assume that one of your children die before you, but leave grand children. How do you intend to give. Never fear, the law is here! If you do not specifically name each child, grandchild or other offspring, but simply leave everything to your “children”, your “heirs”, your “issue” your “descendants”, you have created a class gift. While there are all sorts of weird rules, like pregnant but not born, at the time of your death, or half-siblings, step-children, adopted children, and even bastard children, no not that, bastard simply means born out of wedlock, and the like, we will keep it simple for now. The Probate Code provides 3 basic ways for class gifts to pass:
- Distribution for cases of intestacy (without a Will) or where the Will does not specify (as per PC §245) follow under PC §240
- Distribution “per stirpes” or “by representation” under PC §246 or
- Distribution “per capita” at each generation under PC §247
Break out your calculators, here we go!
PC §240 states that property be divided into as many equal shares as there are living members of the nearest generation still living, and deceased members of that generation who have issue living. Each living member of the closest generation gets one share, and the share of each deceased member that leaves living issue, is passed to the next generation and divided in a similar manner to that next generation. Example time. Grampa Jo dies, leaving two children, Tom and Sally. Tom has two children, Tony and Ted. Sally has one child, Seth. Tom died before Grampa Jo. Who gets what? Tom and Sally would each get 1/2. However, since Tom has passed, Tony and Ted share Tom’s 1/2, so they each get 1/4. Seth gets nothing, because Sally is alive and she takes priority. If Sally had also died before Grampa Jo, Tony, Ted and Seth would each get 1/3.
PC §246 states that where a will calls for property to be taken under §246 or by representation, the property shall be divided in as many equal shares as there are living children of the designated ancestor, if any, and deceased children who leave issue then living. Each living child of the designated ancestor is allocated one share, and the share of each deceased child who leaves issue then living is divided in the same manner. So what about Grampa Jo’s family? Under §246, Tom and Sally would each still get 1/2. However, since Tom has passed, Tony and Ted share Tom’s 1/2, so they each get 1/4. Seth gets nothing, because Sally is alive and she takes priority. However, is Sally died, under §246, Tony and Ted each get 1/4 and now Seth gets 1/2.
PC §247 states that where a will calls for property to be taken under §247 or per capita, the property shall be divided into as many equal shares as there are living members of the nearest generation of issue then living and deceased members of that generation who leave issue then living. Each member of the nearest generation of issue then living is allocated one share, and the remaining shares, if any, are combined and then divided and allocated in the same manner among the remaining issue as if the issue already allocated a share and their descendants were then deceased. This needs a slight more complex family to see this weirdness. Grandma Jane had 3 children, George, Helen and Mike. George died before his mother, leaving two children, Greg and Grace. Helen also died before her mother, leaving one child, Hal. Mike is alive and well. Who is around to take from Jane’s will? The last son, Mike, and 3 grand children, Greg, Grace and Hal. Pure per capita divides equally among all survivors, so everyone gets 1/4. There is no benefit to different generations, or representation taking of different percentage.
I bet you thought you were over the word problems in school! What do you think Jane’s heirs would receive by “representation” under PC §246. Post your answers if you dare. I’ll give you're the correct answer next blog!
I hope you find this as interesting as I do. How would you want to treat your heirs? I hope you will review your Estate Plan with you're “A” Team, or at least begin to seek out an Estate Planning Attorney to start this process. Stay tuned for future blogs. However, if you have any questions, feel free to respond below, or if you are interested in learning more about an Estate Plan, Wills, Trusts, Advanced Healthcare Directives, or Divorce, Custody, Visitation, Child Support, Spousal Support, Property Division, Modifications, Remarriage, or Pre-Nuptial Agreements, please contact me at please contact me at email@example.com, or through my other websites, www.fcbegun.com, or www.linkedin.com for Fred Begun.
Sunday, August 11, 2013
Most every legal document is too long to comprehend in the whole. As such, over time we have devised a process of breaking these sensitive documents into sections of some kind in order to try to organize thoughts, intents and actions in some manageable chunks. Most Wills will have many of the following clauses, articles, divisions, provisions, parts or chunks:
Most Wills should start with some form of Declaration Clause. This clause makes the affirmative statement of who you are, that this document is intended to be your Will as of a certain date and that it revokes any prior Wills.
Some Wills have Introductory Provisions in addition to the Declaration. Again, we state your identity, but maybe with more detail, such as your place of residence, age, and capacity. We next flesh out the personal information to include marital status, including former marriages, spouses past and present, children, family, or the absence of any family. We might also begin to identify friends and other beneficiaries.
After identification and bookkeeping language, we start getting into more substance. We start by identifying all Property to be disposed of by the Will, and include particular gifts to particular beneficiaries. After that, we typically have Residuary provisions, saying that anything not specifically given to a beneficiary goes to some one, some charity or maybe the Trust that you created with your Will.
Next we usually have Executor Provisions. Who will be your representative after you die? Who is charged with the job of executing the terms of your Will and making things go as you intend? This is your Executor. These sections lay out the rights, rules, powers and obligations of this person or group of persons.
Since we’ve dealt with stuff, if you have children, we will also have Guardian Provisions. Who will be in charge of your minor children, (under the age of 18). Obviously, your spouse or ex-spouse, but stranger things have happened, and we have seen where both parents die.
We can also send your assets through your Will to a Trust, and so Trust Provisions could come next. In some instances we can create a Trust here, or send items to a Trust that already exists.
If you create a Trust, then you may also have Trustee Provisions. While the Executor handles the disposition of the Will, the Trustee handles the disposition of the Trust. Frequently this is the same person. Sometimes it may be a commercial entity. These sections lay out the rights, rules, powers and obligations of this person or group of persons.
Almost done, we begin to wrap up with the Concluding Provisions. These include a lot of the weird clauses that have proven necessary over time in order to create a valid death time document that a court can enforce.
Finally, we wrap up and sign off with Signatures and Attestations. You as the maker of the Will and of course Witnesses, who we discussed in prior blogs.
Not every Will will have all of these provisions. For example, if you have no children, you need not bother with the Guardianship sections. More complex estates, with extensive assets and more complex families may have even more descriptive sections. Point is, this is generally how Wills are structured.
The last few Blogs were about some basic Will aspects, trying to catch your interest and get you thinking about Estate Planning. Hopefully you will review your Estate Plan with you're “A” Team, or at least begin to seek out an Estate Planning Attorney to start this process. Stay tuned for future blogs. However, if you have any questions, feel free to respond below, or if you are interested in learning more about an Estate Plan, Wills, Trusts, Advanced Healthcare Directives, or Divorce, Custody, Visitation, Child Support, Spousal Support, Property Division, Modifications, Remarriage, or Pre-Nuptial Agreements, please contact me at please contact me at firstname.lastname@example.org, or through my other websites, www.fcbegun.com, or www.linkedin.com for Fred Begun.
Sunday, August 4, 2013
Time to start getting into some of the meat and taters of Estate Planning. The single most common item in an Estate Plan is your Will. There are several types of Wills and various treatments.
As we discussed last blog, there used to be Oral or Spoken Wills, but in California, that is no longer viable. While Oral Wills are the oldest format, the next oldest and by far most common is the Holographic Will, no, not the 3-D video, which would be cool, but simply a hand written Will. Prior to 1983, the law used to be that a holographic Will is simply a written Will, not witnessed, but written entirely in the hand of the Testator, the person making the Will, also signed and dated by the Testator. This has evolved over time, due to various cases, like the 1982 case, “Estate of Black”, that allowed use of writing on a printed form, and was then made into new laws regulating these modern details.
PC §6111(a) provides for a Holographic Will to be valid if, “the signature and the material provisions are in the handwriting of the Testator.” As with most laws, there are specific exceptions and concerns stated in the Probate Code, but we will not go into that here. However, be advised, if you want to have a Holographic Will or a loved one has passed leaving a Holographic Will, ALWAYS consult with an attorney to determine validity and other legal concerns. Please remember, while paralegals and notaries are valued service provides, some of whom help in the preparation or sign offs on printed or form Wills, they are neither licensed nor qualified to give legal advice.
A few oddities about Holographic Wills. While we have established that they can be printed forms, but must be signed and with handwritten specifics, when signing, the Testator need not use a legal or formal name. Nicknames or family affectionate names have been accepted by the courts. The signature doesn’t have to be at the end of the document. Seems weird, in that we see a signature at the end as being the wrap up of the document, but the point here is that the signature is evidence of intent, in this case that this document is the Will and the signature is evidence that the Testator adopts this document as the Will.
Another change as of 1983 is that the Holographic Will no longer has to be dated. Be Warned, while this may not be required, you really should date and sign. And here’s why. First, a fundamental question is whether the Testator had the mental capacity to make a will. If there has been health or aging issues, know that a Will was made years ago when someone was healthy, means that it is more likely to be valid. Second, what about someone who changes his or her mind over the years and has several Wills. The last in time will be presumed to be the most recent statement of what the Testator wanted done. Most Wills will state that all other Wills are revoked and replaced by this Will. We need to know which came first and which came last.
The last type of Will that I want to tell you about is the California Statutory Will. This is a printed form Will provided by the State Bar of California for anyone to use, and can be done without an attorney! As per PC §6220, any individual over 18, of sound mind, can use the Statutory Will. You get the forms, fill them out and sign. You must have witnesses, who actually see you sign the Will (PC §6221). There are various other considerations of the Statutory Will, but it is handled like any other Will and given the same respect and scrutiny. The one thing to be aware of here is that the Statutory Will accomplishes the basic goal of a Will, that being to not die with a Will and to direct the disposition of your stuff to your people. It is not useful if you have a slightly more complex story or if you are trying to do any kind of tax planning in your Estate Plan. No to be dismissive, but it is better than nothing.
Let’s be honest. Not everyone has a Will, and when they die, their stuff is dealt with by rules of law and the Probate Code. If you don’t have a Will, you are deemed “Intestate” or without a Testament, you know, the “Last Will and Testament” stuff we hear on TV and in movies. In many instances, this will be fine. If you do not have much by way of money or assets or if you don’t have much by way of family. The law of Intestate Succession will give your stuff, to your family, and do so equally, by degree of connection. For example, your spouse, then your children, then your parents, then your siblings, and so on. But if you want at least some control, then you should consider a Will. The last point I want to make here is that if you do not have a Will, and you have some stuff, your stuff will have to go through Probate. This means courts and court costs, attorneys and their fees. In addition to this money, matters could take time to process in the court system. Having a Will does not guarantee that you don’t have these fees and costs and time drains, but it can help remove the likelihood and can save some time and money.
These last few Blogs were about some basic Will aspects, trying to catch your interest and get you thinking about Estate Planning. Hopefully you will review your Estate Plan with you're a Team, or at least begin to seek out an Estate Planning Attorney to start this process. Stay tuned for future blogs. However, if you have any questions, feel free to respond below, or if you are interested in learning more about an Estate Plan, Wills, Trusts, Advanced Healthcare Directives, or Divorce, Custody, Visitation, Child Support, Spousal Support, Property Division, Modifications, Remarriage, or Pre-Nuptial Agreements, please contact me at http://www.fcbegun.com/, email@example.com or at http://www.linkedin.com for Fred Begun.