Category: Estate Planning

Tips of the Trade: North to Alaska for an Ante-Mortem Probate.

INTRODUCTION—THE ANTE-MORTEM PROBATE

Nine states have enacted legislation expressly authorizing ante-mortem proceedings to validate a will, a trust, or both.1 The goal of an ante-mortem probate—the Holy Grail—is to obtain an order precluding post-death contests of the validated document, granting it “total invincibility.”2 Although validation proceedings do not result in any disposition of a decedent’s property at the time of the validation, they have become known as “ante-mortem probate” proceedings.”3

An ante-mortem probate to validate a will, a trust, or both, differs from a traditional post-mortem proceeding principally because the person creating the instrument is alive and available to testify about their wishes and demonstrate their capacity. The presence of this key witness should, the
argument goes, eliminate the all-too-familiar situation in which heirs and beneficiaries take advantage of death to make unfounded claims as to the validity of an instrument, usually based on incapacity and undue influence.

An example of the unreliable evidence presented postmortem appeared recently in Levin v. Winston-Levin,4 in which the trial court, “was, to say the least, not impressed with either side.”5 Each claimant lacked credibility and each painted herself as the one loved by the deceased settlor of the trust at issue, “while depicting [the settlor] as distanced from, and distrusting of the other….”6 If the settlor had been willing to attempt to validate his documents in advance, and if the trial could have been held while the settlor was alive, the settlor’s testimony could have improved the evidence and enhanced the reliability of the court’s determinations, even if it may have also caused or exacerbated family discord.

The viability of ante-mortem probate is not free from debate. On one hand, a proponent of ante-mortem probate argues that the procedure is “[a] progressive technique with tremendous potential for improving the estate planner’s ability to assure that a testator’s desires will be carried out upon
death….”7 On the other hand, an opponent of ante-mortem probate argues that the proceeding does not just exacerbate family conflict but, moreover, “[a]ll proposed versions of ante-mortem probate have practical, constitutional, and policy issues that cannot be overcome.”8 One of the constitutional issues that is difficult, if not impossible, to overcome is the need to notify potential heirs and beneficiaries of the proceedings as required by due process.9

A. Ante-Mortem Probate as a Lawyer’s Tool

1. Is Ante-Mortem Probate in California
Possible?

California has not expressly authorized ante-mortem validation of a will, and the authors are not aware of any statute or case that could be the basis for seeking ante-mortem validation of a will in California.

California does not have a statute expressly authorizing ante-mortem validation of a revocable trust. However, California’s statutes and cases suggest that a revocable trust can be validated before the settlor’s death. An ante-mortem trust validation is similar to a declaratory relief action, and California’s probate courts have jurisdiction to grant declaratory relief.10 While the settlor is competent, Probate Code sections 15800 and 17200, together, authorize the settlor or the trustee to petition the court regarding the validity of a revocable trust and its provisions.11 If a trust is irrevocable, a trustee or beneficiary could file such a petition.12

In Conservatorship of Irvine, the Court of Appeal granted a trustee’s petition to determine the validity of a trust amendment during the settlor’s lifetime.13 In Irvine, the court held that a trial court’s general jurisdiction under Probate Code section 17200 to determine the existence of a trust or a trust amendment was not limited to irrevocable trusts.14 In Drake v. Pinkham, the California Court of Appeal held that a beneficiary with knowledge that a settlor’s trust amendment impacting the beneficiary’s interests was executed when the settlor was allegedly incapacitated has standing to challenge the amendment while the settlor is alive and, indeed, a failure to challenge the amendment during the settlor’s lifetime may
bar a post-mortem contest.15

Given these cases and statutes, a California practitioner may be able to cobble together a proceeding that would provide the practitioner’s client with a probate court order confirming a revocable trust that could not be challenged by disgruntled heirs or beneficiaries post-mortem. However, the California path is anything but straight and narrow, and since other states have statutes that expressly authorize the practitioner and the client to grasp the Holy Grail of incontestability for a trust and/or a will, it is worthwhile to pay some attention to those statutes.

2. Ante-Mortem Probate in Other States

As noted above, nine different states have expressly authorized ante-mortem proceedings to validate trusts, wills, or both. This article focuses on the Alaska statute, because, as explained below, it is more expansive than some others, and because Alaska is not that far from California.

3. The Purpose of This Tip of the Trade Article

This article is not designed to argue the merits of antemortem probate. It is designed, rather, to alert California practitioners to the idea that they might be able to validate their clients’ estate plans (and preclude post-mortem contests) under California law or the laws of another state. While California lawyers may not rush to pursue ante-mortem probates, the possibility of doing so in an appropriate case is a valuable tool in the California practitioner’s kit.

B. The Ravet Case—The Sort of Case That Calls for Ante-Mortem Probate

Wealthy San Diego residents Shirley and Emanuel Ravet had three daughters and a son, Gary.16 Gary was a lawyer who “was a party to over 100 lawsuits—some of them filed by him and some filed against him.”17 One infamous case involved a dispute with his health club, Personalized Workout of La Jolla (“Workout”), over membership fees. Gary lost his suit and, in 2003, Workout was awarded $867.

Workout then sued Gary for malicious prosecution, and Gary lost big. The jury awarded Workout $383,654.18 While the malicious prosecution case was pending, Gary engaged in a series of asset transfers that involved his parents and his girlfriend. After Gary lost the resulting fraudulent transfer case, Forbes summarized the result: “Gary Ravet was able to turn the $867 dispute with Workout over the membership fees into an $883,654 judgment against himself, a $383,654 judgment against his mother Shirley and his father Emanuel’s estate, and a $633,654 judgment against his ex-girlfriend….Well done, Gary, well done.”19

After the Workout case concluded, and Gary’s father had died, Gary’s mother restated her trust. As might be expected, the Restatement favored Gary’s sisters. Gary was to receive $250,000 and his sisters were to share the residue.20

Mrs. Ravet’s Restatement named a Delaware institution as Co-Trustee with her. The Co-Trustees promptly filed a petition in the Delaware Chancery Court to validate the Restatement. On February 23, 2012, just two weeks after the Restatement was created, the Co-Trustees provided Gary notice by mail that he had 120 days to contest the trust in Delaware—Gary apparently ignored that first notice and many others.21 Gary filed a contest of the Restatement on July 26, 2012 “while his mother was still alive, and well beyond the 120-day period to contest the trust….”22 Gary did not serve his petition until, December 5, 2012, a few days after his mother had died.23 The Chancery Court determined that Gary’s contest was timebarred.24 The Delaware Supreme Court affirmed February 12, 2015.25

Twelve days after the order, on February 24, 2015, Gary was found guilty of forgery of a deed of trust he recorded in his attempt to avoid the Workout judgment, and the judge let him know that he faced up to four years in prison.26 The next day, Gary committed suicide.27

Cases like Gary Ravet’s do not come along every day, but it is wise for California lawyers to be aware that Delaware and other states offer the possibility of an ante-mortem validation proceeding when it is needed. Unfortunately, Gary’s suicide did not clear up all the questions in the case, including the million-dollar question: “would the Delaware decision have
withstood all possible challenges?”

C. Potential Use of Foreign-State Ante-Mortem Probate Laws by California Attorneys

At the American College of Trust and Estate Counsel (ACTEC) 2020 Annual Meeting, a panel discussed the various state ante-mortem probate statutes, suggesting that the statutes could be available for use by attorneys whose states had not adopted such statutes, as had been done in the Ravet case.28 The underlying theory is that, if the court exercises valid jurisdiction, under the Full Faith and Credit Clause, a judgment valid in one state is valid in another,29 so a judgment barring a post-death contest of a will or trust issued by one state should be valid and enforceable in all other states. Several states have, in essence, declared themselves open for the business of conducting ante-mortem probates. The Delaware statute provides that an ante-mortem proceeding can be initiated by a trustee or co-trustee doing business in Delaware. The Alaska statute is even more expansive. Under the Alaska statute, only an in-state trustee or co-trustee or the settlor (if a trustee or co-trustee is in Alaska) can petition to validate a living trust,30 but any “interested party” can commence an ante-mortem validation proceeding of a will, with no requirement that any person involved in the case must, be domiciled in, or a resident of, Alaska.31

D. Ante-Mortem Will Validation in Alaska32

In Alaska, “[a] testator, a person who is nominated in a will to serve as a personal representative, or, with the testator’s consent, an interested party, may petition the court to determine that a living person’s will is valid, subject only to subsequent revocation or modification.”33 Standing to bring the petition is not limited to residents of Alaska. Thus, it appears that a California testator can bring an ante-mortem petition in Alaska seeking to validate a will executed in California. The statute contemplates such a petition and specifically provides that, if the testator is not a resident of Alaska, venue is “any judicial district of this state.”34

The required contents of an ante-mortem petition to validate a will in Alaska are not surprising.

The petitioner must allege that a copy of the will is on file with the court together with the facts establishing that the will was executed properly.35 The petition must also state the names and addresses of “the testator’s spouse, the testator’s children, the testator’s heirs, the personal representatives nominated in the will, and the devisees under the will.”36 Minor heirs and devisees must be identified.37 (Since the identities of a person’s heirs are determined at death, this notice provision is problematic.) Notice of the hearing on the petition is generally 14-days’ notice by mail.38 The petitioner bears the burden of “establishing prim facie proof of the execution of the will….”39 “A person who opposes the petition has the burden of establishing the lack of testamentary intent, lack of capacity, undue influence, fraud, duress, mistake, or revocation.”40

At the conclusion of the proceeding, the court can determine the will to be valid and “make other findings of fact and conclusions of law that are appropriate under the circumstances.”41 If the court determines the will to be valid, “the will has full legal effect as the instrument of the disposition of the testator’s intent and shall be admitted to probate upon request.”42 The determination is binding on “[a] person, whether the person is known, unknown, born, or not born at the time of [the] proceeding.”43 If a guardian ad litem was appointed to represent minors or unborn persons, the minors or unknown persons are bound “even if, by the time of the testator’s death, the representing person has died or would no longer be able to represent the person represented in the proceeding….”44

If a testator desires to modify his or her will after the court validates it, the testator can do so.45 However, the modification is not protected by the original determination.46 The possibility that a validated document could later be changed, resulting in further litigation (either ante-mortem or post-mortem) suggests that an ante-mortem probate is best employed when the possibility of a later change appears minimal.

E. Ante-Mortem Trust Validation in Alaska

The procedures for the ante-mortem validation of a living trust in Alaska are similar to those for the ante-mortem validation of a will. The key difference is that a trust validation procedure can be filed in Alaska only if one of the trustees is a resident of Alaska or is a trust company or bank that does business in Alaska.47

F. Observations Regarding Ante-Mortem Proceedings

Any attempt to obtain an ante-mortem validation of a will or a trust in California, Alaska, or another state deserves detailed consideration and analysis. Some preliminary questions and observations follow.

What notice is required? Beneficiaries with interests as remote as future contingent interests are entitled to notice.48 Heirs may be entitled to notice.49 How can those beneficiaries be identified and noticed while the settlor is alive? If at the settlor’s death there is a person who ends up being an heir or a beneficiary but was not noticed, is the court’s validation effective at all? Or, is it effective only as to those who did receive notice? Must a guardian ad litem always be appointed?

Would it be possible to validate a pour-over will in Alaska without revealing the contents of the trust or trusts into which it will distribute its assets? What would be the effect of such a proceeding?

Since a trust defines a trustee’s legal relationship to property,50 must the property in the trust be disclosed in an ante-mortem proceeding to validate the trust? Or, are the assets of the trust irrelevant to a proceeding to determine its validity? How can a determination of validity be made without consideration of who is getting what? If a trust is validated and
property is later added to it, must the later transfer to the trust be re-validated?

What discovery of the settlor’s capacity will the trial court permit?

What discovery of the trust property will the trial court permit?

What steps must be taken to ensure that any judgment obtained in a foreign state will be recognized in California? Will the notice provided under the statute of a foreign state comply with the due process requirements of Roth v. Jelley?51

It would be prudent to take as many steps as possible to validate jurisdiction in the foreign state. For example, it would be a good idea for the petitioner in an ante-mortem will validation proceeding in Alaska to move to Alaska during the pendency of the proceeding (or to at least rent an apartment or open a bank account there) to ensure minimum contacts with Alaska, justifying jurisdiction under the Due Process Clause of the Fourteenth Amendment to the United States Constitution.52 Similarly, any co-trustee named in a foreign state should be more than a figurehead.

G. Conclusion

Lawyers need as many tools as possible to help their clients. California lawyers do not have their own express ante-morte probate statute but, in proper cases, they might consider making use of California’s cases and statutes which, together, may authorize ante-mortem trust validation. California lawyers might also consider making use of antemortem probate statutes that have been enacted in Alaska and in other states. Obviously, as with any strategic decision on behalf of a client, expected costs and benefits should be weighed prior to proceeding.

*Hughes & Pizzuto, APC, San Diego, California

  1. These states are North Dakota, Ohio, Arkansas, Alaska, New Hampshire, Delaware, North Carolina, Nevada, and South Dakota.
    See Beyer, Just Because You Are Still Alive Doesn’t Mean You Cannot Probate Your Will: Ante-Mortem Probate as the Ultimate Will Contest Prevention Technique (a paper presented at ACTEC 2020 Annual Meeting, March 7, 2020, Boca Raton, Florida, Seminar F).
    See also Akers, ACTEC 2020 Meeting Musings, pp. 37-38 (summarizing materials presented at ACTEC 2020 Annual Meeting) [hereinafter Beyer].
    Much of this article is based on material presented by Professor Beyer, Michael M. Gordon, and Sally H. Mulhern at the ACTEC 2020 annual meeting.
  2. Id. at p. 17.
  3. Id. at p. 1.
  4. Levin v. Winston-Levin (2019) 39 Cal.App.5th 1025.
  5. Id. at p. 1033.
  6. Ibid.
  7. Beyer, supra, at p. 1.
  8. Bradley, Antemortem Probate Is a Bad Idea: Why Antemortem Probate Will Not Work and Should Not Work (Jan. 27, 2016) p. 3 https://ssrn.com/abstract=2723433.
  9. Mullane v. Central Hanover Tr. Co. (1950) 339 U.S. 306; Roth v. Jelley (2020) 45 Cal.App.5th 655.
  10. Stewart v. Towse (1988) 203 Cal.App.3d 425, 429-430.
  11. Probate Code section 17200(a) provides that “[e]xcept as provided in Section 15800, a trustee or beneficiary of a trust may petition the court … concerning the internal affairs of the trust.” Probate Code sections 17200(b)(1)-(3) includes the following as proceedings concerning the internal affairs of a trust: “Determining questions of construction of a trust instrument,” “[d]etermining the existence or nonexistence of any power, privilege, duty or right,” and “[d]etermining the validity of a trust provision.” Probate Code section 15800 provides that while a trust is revocable, only the settlor has the rights afforded to beneficiaries under trust law, meaning that only the settlor or trustee could file a petition concerning the internal affairs of a trust pursuant to Probate Code section 17200.
  12. If the trust instrument in question is irrevocable, a trustee or a beneficiary could bring a petition under Probate Code section 17200, but presumably not the settlor (unless the settlor were a beneficiary under the irrevocable trust). See Prob. Code, section 17200(a).
  13. Conservatorship of Irvine (1995) 40 Cal.App.4th 1334, 1341-1343.
  14. Ibid.
  15. Drake v. Pinkham (2013) 217 Cal.App.4th 400. Among the difficulties that arise from the Drake v. Pinkham approach is that the settlor can sign a new trust while the contest of the first trust is pending. If this occurs, the first contest becomes moot. The process can be repeated over and over again, frustrating any attempt at finality.
  16. Adkisson, The $867 Dispute Becomes an $883,654 Judgment in Ravet (Jan. 22, 2014) Forbes Magazine https://www.forbes.com/sites/jayadkisson/2014/01/22/the-867-dispute-becomes-an-883654-judgment-in-ravet/#e9e70b0542d5 [hereinafter Adkission].
  17. Beyer, supra, at p. 7.
  18. Adkisson, supra.
  19. Ibid.
  20. Ibid.
  21. Matter of Restatement of Declaration of Trust Creating the Survivor’s Trust Created Under the Ravet Family Trust Dated Feb. 9, 2012, C.A. No. 7743-VCG, 2014 WL 2538887 (Del. Ch. June 4, 2014).
  22. Beyer, supra, at p. 62.
  23. Ibid.
  24. Letter Opinion, supra, at p. 1.
  25. Ravet v. The Northern Trust Company of Delaware and Barry C. Fitzpatrick, in Their Capacity as Co-Trustees, (Del. 2015).
  26. Beyer, supra, at p. 63. See also Davis, Ex-lawyer Convicted of Forgery, Bad Checks (Aug. 24, 2016) San Diego Union-Tribune
  27. Beyer, supra, at p. 63
  28. Beyer, supra.
  29. Ibid.
  30. Alaska Statutes, section 13.12.535.
  31. Alaska Statutes, section 13.12.530.
  32. The authors thank Jo A. Kuchle and Danielle Gardner, attorneys in Alaska, for providing insights into the Alaska procedures.
  33. Alaska Statutes, section 13.12.530.
  34. Alaska Statutes, section 13.12.540, subd. (a)(2).
  35. Alaska Statutes, section 13.12.545.
  36. Alaska Statutes, section 13.12.545, subd. (10).
  37. Alaska Statutes, section 13.12.545, subd. (11).
  38. Alaska Statutes, sections 13.12.565, 13.06.110.
  39. Alaska Statutes, section 13.12.570.
  40. Id.
  41. Alaska Statutes, section 13.12.555.
  42. Id.
  43. Alaska Statutes, section 13.12.560.
  44. Id.
  45. Alaska Statutes, section 13.12.575.
  46. Ibid.
  47. Alaska Statutes, sections 13.12.535, 13.12.590(1), 13.36.390(3).
  48. Roth v. Jelley, supra, 45 Cal.App.5th 655.
  49. Alaska Statutes, section 13.12.545(11).
  50. Moeller v. Super. Ct. (1997) 16 Cal.4th 1124, fn. 3.
  51. See Roth v. Jelley, supra, 45 Cal.App.5th 655 (holding that a beneficiary with a contingent future remainder interest in a trust was entitled to notice of a proceeding to modify that trust when his identity was known and his address could be determined).
  52. See Internat. Shoe Co. v. Washington (1945) 326 U.S. 310.

Authors

,

IF CALIFORNIA IS GOING TO ADOPT AN ELECTRONIC WILLS STATUTE, HERE ARE SOME QUESTIONS TO CONSIDER IN ADVANCE

The calendar is turning to the new season for the California Legislature and – as night follows day – there will be new proposals for the adoption of a California statute governing electronic wills.  Before those proposals surface, it is appropriate to consider a few questions.

  1. What quantitative analysis has been done?
    1. If a proponent of an electronic wills statute claims that there is an existing demand for electronic wills in California, what evidence substantiates that claim?
    1. How many deaths actually result in a probate and what amount of money and property is transferred by will in California these days?  Given the plethora of non-probate transfer mechanisms, is it worth the Legislature’s time to consider a new statute dedicated to electronic wills?  
    1. If a proponent of an electronic wills statute claims that electronic wills will be cheaper or more efficient for consumers, what evidence substantiates those claims?  What is cheaper or more efficient than a California holograph will?  
  2. Will the statute be simple and easy to administer?  Previous proposals have contained complex solutions to common problems such as revocation and storage.  Does a complex new statute governing electronic wills substantially benefit the citizens of California?  Will it be likely to generate litigation over unanticipated technicalities?
  3. Will the statute be outdated as soon as it has been adopted?  Previous proposals have been limited to wills that are textual.  We are now living in an era in which more and more business is being conducted by video.  If the legislature is trying to modernize California law and validate assumed consumer expectations, does it make sense to stop with wills that are textual?  Shouldn’t audio and video wills, too, be validated?  
  4. Shouldn’t any electronic wills statute meet the following goals? California should deal with the reality that its citizens have a reasonable expectation that they should be able to use technology to express their final wishes.  But, wouldn’t it make sense to require that any legislation validating a digital expression of a person’s final wishes meet the following goals?
    1. The rules should be simple.
    1. The rules should not impose expense.
    1. The rules should be compatible with a citizen’s individual and inexpensive solitary action, and should accept varied actions, ranging from writing to audio recording and video recording. 
    1. The rules should recognize that we are in the infancy of dealing with electronic expressions of intent.  We should not freeze into place rules that may be outmoded quickly.
    1. The rules should not directly benefit any particular service provider(s).

Authors

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San Diego Trust Probate Administration Preview

California’s Statutory Will Needs An Update To Keep Up With Duke

Originally published in California Trusts and Estates Quarterly, Volume 26, Issue 2

I. SYNOPSIS

California’s Statutory Will1 needs to be updated. The current California Statutory Will form became law in 1991, when Pete Wilson was governor of California and Nirvana came out with “Smells Like Teen Spirit.” In those days, any potential reformation of a will in California was governed by Estate of Barnes.2 In Estate of Barnes, California’s Supreme Court affirmed the established rule that extrinsic evidence could not be used to reform a will that was unambiguous on its face.

Not surprisingly, the California Statutory Will formenacted in 1991 reflected the rigidity of Estate of Barnes. The form repeatedly instructs the user that failure to complete the form correctly result inexorably in intestate distribution, without room for interpretation or correction. An important example of the Statutory Will form’s rigidity can be found in its provision for distribution of the residue of the testator’s estate, often the largest part of the estate. Paragraph 5 of the Statutory Will form (a portion of Probate Code section 6240) provides that if a testator fails to sign a box next to the name of the person designated to receive the residuary gift, the gift passes by intestacy.


Paragraph 5 of the form, governing distribution of the residue, is set forth below. Assume that Sally Smith, who is not familiar with filling out the boxes in legal forms, were to complete her Statutory Will form as follows:

1. Balance of My Assets. Except for the specific gifts made in paragraphs 2, 3 and 4 above, I give the balance of my assets as follows:

(Select one choice only and sign in the box after your choice. If I sign in more than one box or if I do not sign in any box, the court will distribute my assets as if I did not make a Will.)

(Emphasis added; the form itself does not highlight this language.)

a. Choice One: All to my spouse or domestic partner, registered with the California Secretary of State, if my spouse or domestic partner, registered with the California Secretary of State, survives me; otherwise to my descendants (my children and the descendants of my children) who survive me.



b. Choice Two: Nothing to my spouse or domestic partner, registered with the California Secretary of State; all to my descendants (my children and the descendants of my children) who survive me.



c. Choice Three: All to the following person if he or she survives me (Insert the name of the person.):

___________________________________



d. Choice Four: Equally among the following persons who survive me (Insert the names of two or more persons.):

Juanita Chavez, Sam Smith, and Priscilla Jones




In this example, Sally filled in the names of the individuals who she wished to receive the residue of her estate, but did not sign her name in the box. Under the express terms of Probate Code section 6240 (the form is itself a statute), the residue of Sally’s estate must pass by intestacy and not to the persons Sally designated. There is no ambiguity, and no room for reformation. The law requires intestate distribution, and Sally’s intent is not relevant.

When Estate of Barnes was the rule in California, this rigidity perhaps made sense. However, the California Supreme Court has decided Estate of Duke,3 which overruled Estate of Barnes and held that extrinsic evidence can be used to reform even an unambiguous will.

Under Estate of Duke, if a lawyer drafts an unambiguous but mistaken will, the will can be reformed, “to conform to the testator’s intent if clear and convincing evidence establishes that the will contains a mistake in the testator’s expression of intent at the time the will was drafted, and also establishes the testator’s actual specific intent at the time the will was drafted.”4 However, if a layperson executes an unambiguous but mistaken Statutory Will, the will cannot be reformed, and the testator’s gift goes by intestacy.

This inconsistency which works to the disadvantage of the ordinary consumer who believes that use of the Statutory Will form provides legal support for his or her estate plan, should be remedied.

II. THE PROBLEM DISCUSSED IN THIS ARTICLE—MISTAKEN COMPLETION OF THE STATUTORY WILL FORM—IS REAL, AND IS NOT SMALL

A. The Problem is Real

Any lawyer who has struggled to fill in the boxes on a Judicial Council form knows that it is difficult to complete a box-laden form correctly. Inadvertent mistakes are common. It is not surprising then that consumers faced with the many boxes in the Statutory Will form would have difficulty completing the form correctly.

The authors possess copies of two different statutory wills that were probated in San Diego County within the last five years, both of which featured the same mistake Sally made in the example above in completing paragraph 5 of the form. In both cases, the testator wrote the names of intended beneficiaries on the lines governing distribution of the residue and failed to sign in the box. As might be expected, in both cases, intestate heirs argued that the statutory wills were not ambiguous, and the statute required intestate distribution, to the disappointment of the named intended beneficiaries.

This particular trouble with the Statutory Will form goes back years. In 1988, when the Legislature was beginning to consider changes to the laws governing statutory wills, the Estate Planning Trust & Probate News5 published the results of a phone survey of local courts. The survey revealed that courts in Sacramento, San Diego, and Los Angeles reported problems dealing with statutory wills. Significantly, the San Diego Probate Court reported that “approximately onehalf of the property disposition clauses were not properly completed.”6 The survey reported further that, when the property disposition clauses were not completed correctly, “the estate was distributed pursuant to [intestate succession] as if the testator had made no will.”7

If we assume that San Diego testators are not uniquely mystified by the Statutory Will form, it seems very likely that improperly completed forms are being presented for probate across California, and that designated beneficiaries are losing inheritances intended by testators in favor of undesignated heirs.

B. The Problem is not Small

In 1998, when the Estate Planning Trust & Probate News reported that courts were having difficulty with the Statutory Will form, the form was available through the California State Bar for $1.00 per copy, with discounts for large orders.8 At that time, the California State Bar had distributed 400,000 copies of the Statutory Will form, with 30,000 having been ordered
within a particular two-week period.9

Today, the Statutory Will form is readily available on the Internet. The number of forms circulating and in use is unknown, but one can assume it is quite large.

III. THE DIFFERENCE BETWEEN A TESTATOR’S INTENT AND LEGISLATIVE INTENT

A. Ascertaining and Enforcing the Testator’s Intent

In Estate of Duke, the court emphasized the importance of the testator’s intent, and the key role that extrinsic evidence can play in determining that intent. It remarked:

In cases in which clear and convincing evidence establishes both a mistake in the drafting of the will and the testator’s actual and specific intent at the time the will was drafted, it is plain that denying reformation would defeat the testator’s intent and result in unjust enrichment of unintended beneficiaries. Given that the paramount concern in construing a will is to determine the subjective intent of the testator . . . only significant countervailing considerations can justify a rule categorically denying reformation.10

The Duke court found no such “countervailing considerations,” and authorized use of extrinsic evidence to reform an otherwise unambiguous will.

In support of its reasoning, the Duke court noted the importance of evening the playing field to provide a method for correcting the mistakes of citizens who employ wills for their estate plans, especially those who write their own wills. The court stated:

Moreover, allowing reformation of trusts and other instruments, but never of wills, appears to favor those with the means to establish estate plans that avoid probate proceedings, and to deny a remedy with respect to the estates of individuals who effect their plans through traditional testamentary documents. Denying reformation in these circumstances seems particularly harsh with respect to individuals who write wills without the assistance of counsel, and are more likely to overlook flaws in the expression of their intent.11

The Duke court also pointed out that a preference for enforcement of the wishes of the testator over reliance on the laws of intestacy is consistent with Probate Code section 21120, which provides, “[p]reference is to be given to an interpretation of an instrument that will prevent intestacy or failure of a transfer rather than one that will result in an intestacy or failure of a transfer.”12

Estate of Duke can be seen to have relied on the following principles, all of which likewise support the notion that the Statutory Will form should be a document that can be reformed under proper circumstances:

Ascertainment and enforcement of the intent of a person who creates his or her own will;

Avoidance of unjust enrichment by preferring intestate heirs to beneficiaries whose status can be confirmed by evidence; and Preference to giving effect to an individual’s own wishes over the intestate rules of the Probate Code.

B. Ascertaining and Enforcing the Legislature’s Intent

Estate of Duke permits a court to modify and reform a will that a lawyer did not draft. However, Estate of Duke does not permit a court to overrule an unambiguous directive from the Legislature, and the Statutory Will includes more than one unambiguous legislative mandate in favor of intestacy. Interpretation of a person’s intent in a document evidencing a donative transfer is one thing; interpretation of the Legislature’s intent in enacting a statute is another.13

The Legislature’s instruction requiring intestate distribution when a testator fails to properly complete the box defining the distribution of the residue of his or her estate is deeply embedded in the Probate Code. Probate Code sections 6223, subdivision (b)(2)(B), 6224, 6240, and 6241, subdivision (a), all mandate intestate distribution if the Statutory Will form is not completed exactly as required on the form, regardless if the intent of the testator is clear. Section 6223, subdivision (b) (2)(B) provides: “If no property disposition clause is adopted, Section 6224 shall apply.” Section 6224 provides: “[If no property disposition clause is selected under paragraph 5] the residuary estate of a testator who signs a California statutory will shall be distributed to the testator’s heirs as if the testator did not make a will.” Section 6240 is the Statutory Will form itself, containing the intestate directive discussed above. Finally, section 6241, subdivision (a) provides: “If the testator has not made an effective disposition of the residuary estate, the executor shall distribute it to the testator’s heirs at law. . . .” Given the repetition and clarity of the legislative instruction that failure to properly complete paragraph 5 in the Statutory Will form requires intestate distribution of the residue, a trial court would be hard-pressed to ignore the legislative imperative—even in favor of the clearest evidence of a testator’s intent. Estate of Duke, itself, reveals that, faced with legislation directing intestate distribution, a trial court does not have the authority to consider extrinsic evidence of the individual testator’s intentions. The Duke court began its analysis of the court’s power in relation to the power of the Legislature, stating:

To evaluate whether there are circumstances in which this court should authorize admission of extrinsic evidence to correct a mistake in an unambiguous will, we first consider whether the Legislature’s actions in the field preclude this court from altering the rule. As explained below, a review of the development of the law in California reflects that the Legislature has codified judicial expressions of the admissibility of evidence with respect to a testator’s intent, but has not acted in a manner that restricts the authority of the court to develop the common law in this area.14

While the Probate Code sections governing the Statutory Will do not refer to the admission of evidence in interpreting a statutory will, the legislative mandate for intestate distribution is effectively the same. A court cannot admit evidence of an individual’s testamentary intent to override the Legislature’s plain requirement.

IV. CONCLUSION

A. The Present Situation

A key rationale in the court’s decision in Estate of Duke was to even the playing field so that the rules that permitted reformation of sophisticated trusts would be available to citizens who chose to use a simple will for their estate plan. The California Statutory Will is a simple will, but the statute precludes reformation of the disposition of the residue of the estate. The statute should be amended to permit reformation of the Statutory Will as permitted by Estate of Duke.

Under Estate of Duke “an unambiguous will may be reformed if clear and convincing evidence establishes that the will contains a mistake in the expression of the testator’s intent at the time the will was drafted and also establishes the testator’s actual specific intent at the time the will was drafted.”15 This test should be brought into the Probate Code provisions defining the terms of the Statutory Will.

B. A Proposed Statutory Fix

Any proposal to update the Probate Code provisions defining the Statutory Will faces at least the following problems: (i) the statutory preference for intestacy appears throughout the Probate Code sections governing the Statutory Will, (ii) the Statutory Will form itself is a statute, (iii) hundreds of thousands of statutory wills have been distributed, and likely executed, and (iv) it is conceivable that a clever testator or two actually intended an intestate distribution even after listing names of potential residuary distributees. Finally, the statutory solution must apply to the Statutory Will generally, and not just to the provisions in paragraph 5 of the form governing the distribution of the residue. Although this article focuses on problems with the distribution of the residue when the Statutory Will form is not completed correctly, the problems highlighted here are not limited to the residuary distribution.16

Given this backdrop, it appears that the best statutory solution is one that does not need to be incorporated into the form of the Statutory Will itself, that applies broadly to all provisions of the Statutory Will, and that applies equally to Statutory Will forms currently in circulation and to Statutory Will forms that will be circulated in the future. Finally, the statutory solution must be able to weed out the possible few wills in which the testator purposely failed to sign the box in paragraph 5, because he or she actually intended an intestate distribution. These goals could be reached by the adoption of a new Probate Code section 6244 stating:

Notwithstanding anything to the contrary in this Chapter 6 a California statutory will can be reformed if clear and convincing evidence establishes that the statutory will contains a mistake in the expression of the testator’s intent at the time the statutory will was drafted and also establishes the testator’s actual specific intent at the time the statutory will was drafted.

This statutory amendment is precise and could be adopted easily. It would apply to all statutory wills, would not require issuing a new Statutory Will form, and would incorporate the Duke test, permitting reformation under specific circumstances. The requirement of clear and convincing evidence is a test that would eliminate the small chance that a testator could have intended an intestate distribution by failing to sign the box in paragraph 5.

  1. Prob. Code, sections 6200-6243.
  2. Estate of Barnes (1965) 63 Cal.2d 580.
  3. Estate of Duke (2015) 61 Cal.4th 871.
  4. Id. at p. 898
  5. The Estate Planning Trust and Probate News was published by TEXCOM and is the predecessor to the Trusts and Estates Quarterly.
  6. Ross, Sterling, The Statutory Will Revisited (1989) 10 Estate Planning, Trust & Probate News, No. 1, p. 4. (A copy of this article can be found in the legislative history of Senate Bill 271 (Kopp—1991), the bill that included the then-new form Statutory Will.)
  7. Ibid.
  8. Ibid.
  9. Ibid.
  10. Estate of Duke, supra, 61 Cal.4th at p. 890 (citations omitted).
  11. Id. at p. 895.
  12. Id. at p. 892.
  13. Estate of Rossi (2006) 138 Cal.App.4th 1325, 1340.
  14. Estate of Duke, supra, 61 Cal.4th at 879.
  15. Id. at p. 876.
  16. See, e.g., Probate Code, section 6233, subd. (b)(2)(B).

Authors

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WHEN A PANDEMIC CATCHES YOU AND YOUR ESTATE PLAN OFF GUARD

When a Pandemic Catches You and Your Estate Plan Off Guard

Pandemics and Estate Planning: A Worthy Watch.  Please click on the link to read the article “When a Pandemic Catches You and Your Estate Plan Off Guard” by Paul Hynes of HearthStone Private Wealth Management.

https://www.hearthstoneinc.com/blog-01/when-pandemic-catches-you-and-your-estate-plan-guard

Author(s)

ACTEC Elects Ralph E. Hughes

Hughes & Pizzuto is pleased to announce that Ralph E. Hughes has been elected as a fellow to the American College of Trust and Estate Counsel (ACTEC).  ACTEC is a national organization of over 2,500 members throughout the U.S. and internationally.  Members are elected based on their outstanding reputation, exceptional skill, and substantial contributions to the field of trust and probate law.  In 2019, only 5 attorneys from California were elected as ACTEC fellows.

Hughes & Pizzuto congratulates Ralph on his election to ACTEC.  To learn more about Ralph, please click here.

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San Diego Estate Law Firm - King Lear

King Lear’s Tragedy Can Teach Us About Estate Planning

You Won’t Always Be Master of Your Kingdom

When Shakespeare’s King Lear opens, Lear is seated in his castle, resplendent in his power and glory. He is the master of a kingdom.  His will is law.  He wants to retire in peace, with the knowledge that he has implemented a thoughtful estate plan that divides his kingdom among his three devoted and loving daughters.

He has no worries about probate or estate taxes.  He proclaims:

Give me the map there.  Know that we have divided
In three our kingdom; and ‘tis our fast intent
To shake all cares and business from our age,
Conferring them on younger strengths while we
Unburdened crawl toward death.  Our son of Cornwall,
And you our no less loving son of Albany,
We have this hour a constant will to publish
Our daughters’ several dowers, that future strife
May be prevented now.

(, Act I, Sc. 1, Lines 35-43.)

What could be better or wiser?  Lear’s plan should have enhanced his retirement and avoided post-death disputes among his daughters.  The result, however, was betrayal, madness, war and death.

Absolute Power Can Disappear Overnight

Shakespeare’s greatest tragedy reminds us that absolute power can disappear overnight, that human beings can break seemingly-binding agreements, and that the new generation does not always follow the ways of the old.  We are fools on the heath if we believe that an estate plan that ignores the human beings involved will stand the test of time.  Lear’s plan lasted just a few months.

Since it is a tragedy, King Lear magnifies humanity’s many weaknesses.  Even though we know that most families are not like Lear’s family and that many estate plans work well, Shakespeare’s dark vision suggests:

Keep your eyes open.

The daughter who tells you “I love you more than worlds can leave the matter,” may not love you at all.  The daughter who confesses, “Sure, I shall never marry like my sisters, to love my father all,” may be the daughter who really loves you.

Be willing to listen to honest advice.

If someone you have listened to says, “I tell thee thou dost evil,” don’t abruptly exile him from your kingdom.

Above all, be aware of the role of power in human relationships.

Lear divided his kingdom and his crown.  Two of his daughters agreed that they would let him visit their castles periodically with his knights.  However, when his knights started partying in the castles, his daughters broke their agreements and threw Lear out.

He wandered on the heath accompanied by his fool.  He had no power and never regained it.  The members of the younger generation who took his kingdom over exiled him and began implementing their own agendas in the kingdom they had received just months earlier.

Few characters in King Lear portray redeeming human values.  All of life is not King Lear, and many of us have loving and trustworthy familiesHowever, Shakespeare’s undoubted ability to artistically illustrate the truths of human relationships clearly shows that retirement and estate planning are not limited to the technical issues of hoped-for easy living, avoiding disputes and avoiding taxes.

All retirement and estate plans need to be created with a clear vision of the human beings who are intended to be benefitted by them, and the human beings who will be charged with implementing them.

A bad trustee can ruin a good trust.  A good trustee can save a bad trust.

Consider King Lear. 

Can a trust designed to last more than 100 years really be a good idea?  Lear’s attempt to impose his patriarchal design on his daughters failed.  A perpetual trust may be “the ultimate manifestation of patriarchal control . . . .”  (“A Critical Research Agenda For Wills, Trusts, and Estates,” 49 Real Property, Trust and Estate Law Journal, No. 2, Fall 2014.)

King Lear tells us that, in the end, it is not clear that the patriarch has much control.

Author(s)


San Diego Estate Planning Law Preview

Three Reasons You Need an Estate Plan

Many people have the view that estate planning is mostly for high net worth individuals who require complicated estate tax planning.  However, there are many important reasons to do an estate plan other than tax planning, and these reasons apply to everyone, no matter the size of your estate.  Here are three reasons to consider doing an estate plan even if estate taxes are not your primary concern:

1. Planning for Incapacity

At some point in life, whether due to age, illness, injury, or other health conditions, many of us will become unable to independently manage our own finances.  If you become unable to manage your own finances, the agent you select in your estate plan can step in to make sure your bills continue to be paid and that your finances continue to be managed to provide for your financial needs.  Preparing an estate plan beforehand allows you to carefully choose people you trust to manage your property if you are no longer able to do so, and having the proper estate plan documents in place will give your agents the authority to act on your behalf quickly to provide for your needs without lengthy delays and in most cases without court involvement.

Planning for incapacity also involves planning for your health care in addition to your finances.  Preparing an estate plan gives you the opportunity to express your wishes relating to the treatment and care you would like to receive and allows you to choose people you trust to make important decisions relating to your health care, particularly difficult end of life decisions, if you are not able to do so yourself.

2. Nominate Guardians for Minor Children

If you have children under age 18, another important reason to do an estate plan is to nominate the legal guardians of your minor children.  For many parents, it is difficult to decide who will be responsible for raising and caring for their children after they are gone.  Nominating a guardian in your estate plan will give you assurance that the person you choose will be the person appointed as guardian of your children by the court.

3. Avoid Family Conflict

Dividing a bank account equally among several people is usually a matter of simple math, and there is not much reason to disagree as long as everyone gets the same amount.  However, it can be difficult for family members to agree when deciding who is to receive, for example, great-great-great-great-grandmother’s gold ring or the antique rocking chair that has been in the family for generations when there is only one of the item and several people interested in owning it.  Because of the high sentimental value these items sometimes have, deciding you will own it can become the source of deep family conflict.  The same principle applies to larger or more valuable items, such as the family home or other valuable real estate, where dividing it among several people might not be possible or practical.

Preparing an estate plan gives you the opportunity to specifically designate how you want your property distributed.  With a clear direction in your estate plan as to which family members should receive the property you specify, you can help avoid or reduce the possibility of a conflict over the distribution of your property among your family members after your death.

Depending on our circumstances and stage in life, some of the reasons discussed in this article will be more important or relevant to us than others.  These issues affect us and our families on a more personal level, and at some point most of us will be affected by one or more of the issues mentioned here no matter how much property we own or the value of your assets.  By preparing an estate plan before these issues arise, we can have confidence that that they will be managed effectively and efficiently.

Author(s)


Grandmother and Keyboard

Is Your Grandmother On Facebook?

Young people aren’t the only ones using social media.

People of all ages are using social media to share information, build and maintain relationships, and keep in touch with family and friends, primarily through sharing digital photos and videos.  Many people have also created music or book collections that are entirely digital.  These collections may contain thousands of dollars’ worth of books and music, but they can only be accessed digitally.

The exact means of access may be different depending on the specific type of media, but one thing they have in common is that access usually requires a login or password.

What is also common is that, depending on the media provider, getting access to these items after the death of the account owner can be difficult or impossible.

Family members are often anxious about receiving photos, home videos, journals, music and books of a deceased person, but find that the means for obtaining this information is difficult at best.  The laws affecting the rights to these digital assets are having difficulty keeping up with the advances in technology and the development of social media.

It is clear that digital assets and social media are ever evolving.

As estate planners, we can provide a valuable service to our clients by helping to guide them in arranging for the transfer of these important digital assets.  However, until the laws affecting these assets and the policies of the media providers becomes more stabilized and established, finding good resources to keep updated and informed as these issues develop is especially important to be able to properly advise clients.

The Digital Beyond is one helpful resource in this area. The “Legal” tab is chalk full of helpful articles and information for the “digital afterlife.” A good estate planner should be able to assist their clients with tangible assets, and navigate the waters of digital assets.

 

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