Wednesday, February 29, 2012

California Trust & Estate Lawyer has moved!

Gentle Readers, in order to bring a better blog experience to you, I have moved California Trust and Estate Lawyer to Wordpress. The new address is:

Please come by and check it out.  I've migrated all the posts from this site, so it is good to go!

See you there.

Monday, January 9, 2012

Estate Tax Exemption Increase for 2012

As part of the tax law changes passed in December 2010, Congress set the amount of an estate's assets that can pass free of estate tax at $5 million for 2011, indexed for inflation.  So, in 2012, the amount increases to $5.12 million.

Don't get too comfortable with this bounty, though.  The current law is set to expire at the end of this year, with the applicable exclusion amount, as it's known, decreasing to $1 million.  Congress will likely do something, at the last minute, again, to keep that from happening, but it is anyone's guess that that might be (perhaps an extension for another two years?).

I suppose that this is really only an issue for a fortunate, prosperous few.

Thursday, December 22, 2011

Judges bound to follow letter of the law, no matter the result

Often, judges will try to get the right result, even if it means doing legal gymnastics to get there.  But not always.  In Estate of Irving, 2011 Cal.App.Lexis 1515, Irving Duke made a will that provided for a gift of his entire estate to his wife.  He also provided that if he and his wife died simultaneously, then his estate would divided equally and distributed to two charitable beneficiaries.  There was no provision for what would happen to his estate if he outlived his wife.  Mr. Duke outlived his wife by five years, and died without issue (children, grandchildren, etc.).  Based on a strict reading of the will, there was no place for his property to go, meaning by outliving his wife, his will created an intestacy.

The charities filed a petition for probate of Mr. Duke's estate and asked the court to rule that Mr. Duke intended that his estate was to be distributed to them.  In support of this, they introduced evidence of Mr. Duke's intent including copies of annuity agreements favoring the charities, and testimony from witnesses of conversations where Mr. Duke confirmed his intent to give his estate to the charities.  Mr. Duke's  nephews, who would receive his estate if there was an intestacy, objected.

The court ruled that the language of will was unambiguous, even if it didn't make sense, and even if it appeared that Mr. Duke's intent was to give his estate to the Charities if he outlived his wife.  Becuause the language was clear, the court could not consider extrinsic evidence to determine Mr. Duke's testamentary intent. 

The court was not happy with its own ruling, as evidenced by this closing language:

Recognizing “that a will is to be construed according to the intention of the testator, and so as to avoid intestacy” (cites), perhaps the rule regarding the admission of extrinsic evidence should be more flexible when a testator's conduct after an event that would otherwise cause his will to be ineffective brings into question whether the written word comports with his intent. ... Perhaps it is time for our Supreme Court to consider whether there are cases where deeds speak louder than words when evaluating an individual's testamentary intent.

Wow.  They are practically begging the charities to appeal their decision, and for the California Supreme Court to reverse it.

For all you estate planners out there, let this be a lesson to you: draw a diagrm of your plan.  It will help you find holes like this one.  It is too expensive and time-consuming to rely on a ruling from the California Supreme Court to fix your error.  Assuming there is an appeal.  And the court Supreme Court agrees with the Court of Appeals' plea.

Thursday, October 27, 2011

CEB Drafting Revocable Trusts October 28

Just a reminder that I will be moderating an all-day panel discussion on Drafting Revocable Trusts, put on by Conitunuing Education of the Bar.  Check out CEB's web site for more details.  Registration starts at 9:00 a.m. and runs to about 5 p.m., and is located at the Bar Association of San Francisco's offices at 301 Battery Street, San Francisco.

I hope to see you there!

Friday, October 7, 2011

The Future

I'm a little sheepish about jumping on the Steve Jobs-in-memoriam bandwagon, but I feel compelled to express a few thoughts.  His impact on the world we live in today can scarcely be overstated.  You've heard or read it before, about how we now communicate, buy and listen to music, play video games and even watch video, has been irreversibly changed.  Good or bad, it will never be the same.

What does this have to do with estate planning? Or even the law?  Well, there is no question that the economy over the last few years has had an impact on the way we do things as well.  I believe that these changes are also irreversible.  For estate planning, as people have become more price-sensitive, they have become more likely to try to do this themselves.  Rather than paying an attorney a few thousand dollars for an estate plan, they are more likely to use web sites like LegalZoom and Rocket Lawyer, or storefront document preparers, or programs like WillMaker.  Good or bad, it will never be the same.

Steve Jobs had a relentless vision of a future that made everything better for everyone.  He wasn't constrained by the past.  The technological and economic transition we are now in is an opportunity for estate planning attorneys to look at the example of Steve Jobs and make the changes necessary to thrive in the future.

Good or bad, it will never be the same.

Monday, September 12, 2011

Automatic (for the most part) changes in 401k beneficiaries

Always with their finger on the pulse, the WSJ recently published this article on changes that occur to 401k beneficiaries when a participant spouse gets divorced, remarries or dies without changing the name of his or her former spouse as beneficiary.  The rules surrounding IRAs and 401k plans are incredibly complex, and for 401k plans, there is the additional complexity of ERISA laws, which preempts California community property laws in most cases.

Wall Street Journal on Disinheriting a Child

The WSJ published an excerpt from a new guide by Rachel Emma Silverman on how to effectively give one of your children less money than the rest.  I work strenuously to talk clients out of this because it will in most cases cause resentment between the child who gets less and any other children or beneficiaries.  Nevertheless, clients sometimes have good reasons for doing it.  Ms. Silverman does a good job of summarizing what to think about if you are considering an unequal distribution plan.