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
fbegun@gmail.com, or through my other websites, www.fcbegun.com, or www.linkedin.com for Fred Begun.