Administration of Missing Person's Estate
It is a traumatic experience to have someone close to you go missing. Not only is the mental trauma of not being to locate the person strenuous, but the financial aspect also begins to take its toll. The requirement to fulfill the needs of the absentee’s family and creditors and also to manage and protect the property has led to the enactment of legislature in many states including California.
For the immediate needs of maintenance and protection of property, a trustee can be appointed for a person missing for at least 90 days who is a resident of the state. This is only applicable in cases where the missing person is still presumed to be alive.
But, what is the recourse when a person has been missing for a very long period of time? In California, a petition can be filed to declare a person “presumed dead” when that person has been missing continuously for five years or more. The absentee’s surviving spouse, registered domestic partner, some family members, or creditors can file this petition in the missing person’s last known county of residence. The “presumed dead” petition is governed by California Probate Code Sections 12400-12408.
Under Section 12404, the petition must include the person’s last known place of residence and the address, the time and the circumstances when the person was last seen or heard from along with the description of the search and enquiry that had followed. The Court shall determine at the hearing whether the person can be presumed dead or whether the court wants further investigation about the whereabouts of the missing person, as per section 12406. If the Court finds the missing person presumed dead as per section 12401, then under Section 12407, the Court will also determine the date of death and appoint a personal representative to administer the estate in the same manner as that of a deceased person’s estate.
The missing person if he reappears later has the option of recovering his property from the beneficiaries under Section 12408. He will have to do so within a period of five years since the distribution of the assets. His right of recovery will be affected by what seems fair under the circumstances and will also take into account the cost of legal fees and other costs of administering the estate.
Are verbal wills valid California?
The short answer is: no. A will is a legal document, which lists down how a person called a “testator” would like his assets to be distributed after his death. A will also mentions the name of the executor of the will. If a person dies without leaving behind a valid will or intestate then his estate and all his assets have to be probated.
Just having something scribbled on a piece of paper does not amount to a valid will. The state of California, through Probate Code sections 6110-6113 specifically requires that wills be in writing.
The following is a summary of the various types of Wills and their validity in California:
Holographic will: A holographic will is a will, which is written by hand and not printed or typed on a computer. In California, a holographic will is valid only if all those sections of the will that make the will valid are written entirely in the testator’s hand, it is dated, and the will is signed by the testator. It must, however, be noted that the person writing this will must seek some professional legal opinion to ensure that none of the important language or components are left out, thereby, defeating the purpose of drawing up a valid will.
Oral will: An oral will is a verbal will and is also called “nuncupative will.” It is not valid in California and only recognized in very few states, and only under exceptional circumstances like an impending death of a soldier in a foreign land. This kind of will expresses a dying person’s wishes of disposing of his assets in the presence of a few witnesses. This is done in extreme circumstances where there is no time to do the procedures related to a written will.
Video will: A video will is an effort to leave your testamentary wishes on a video tape or other digital recording device. Video recordings are not valid wills in the state of California. Like an oral will, this could be done in those cases where time is of essence like in the case of a dying person. It could be admitted in the court only as a supportive tool of a written will, and not individually and that too only in extraordinary circumstances.
A formal or traditional will: This kind of will is in writing and is signed by the testator and also signed by at least two witnesses. This will can be signed on behalf of the testator, but in his presence and as per his directions. The witnesses must be present at the time of the testator’s signing of the will or at the acknowledgement of the signing. This is the most traditional kind of will and is recognized by the state of California as valid.
A California statutory will: A California statutory will must be completed and signed by a testator, and at least two witnesses must be present while the testator signs the will. The witnesses must also sign in the presence of the testator.
A will executed under the Uniform International Wills Act. An international will is valid in California. It does not matter where it was made, or where the asseets are located, or the nationality, domicile or residence of the testator.
An international will must be in writing and can be written in any language. Under the UIWA, the testator must state, in the presence of two witnesses and a person authorized to act in connection with international wills, that the document is the testator's will and that the testator knows the contents of the will.
Thus we have seen that a legal and valid will is only recognized in certain formats. Be sure and prepare your will pursuant to these guidelines.
Do-it-yourself (DIY) estate planning - Is it worth saving the few dollars?
Through online legal document portals, consumers have access to a number of DIY legal documents available on the internet to create their own wills and power of attorney. This may save them money and time. But has the internet really empowered the public to handle their estate planning or does it create many avoidable problems?
Most lawyers agree that using online legal documents may result in errors. While filling up the online documents, one may miss a simple question; some terms may be difficult to understand and may confuse the user and she may fill it incorrectly; and some may not update their online wills when changes are needed. There are numerous examples of a consumer who created an online Will, but had not updated it after some of his beneficiaries died.
I was recently involved in a situation where a decedent, using will kit purchased from an office supply store, created his "Will" with the assistance of his friends. His one and only wish was that his child not be appointed fiduciary and not have any control over the finances. Either because he did not understand the form, or did not complete it, the wish was not upheld and the estate plan virtually worthless. Worse yet, the interested parties spent ten times the amount of an attorney prepared the estate plan fighting to enforce this wish.
An attorney can help in prevent errors and may also help in reviewing and updating the estate plan in case of changes in the family including those through divorce, pre-deceased beneficiaries or new births in the family. An experienced lawyer can show you methods of avoiding costly probate paperwork and court proceedings, and explain the intricacies of using trust funds and exemptions in your asset protection strategy.
If you own no real property or valuable personal property, have only one or two small bank accounts, and have no minor children, you can probably write your own Will, with the assistance of a reputable book, software package or online service. But even on following all the instructions, if the Will is not properly signed, it is presumptively invalid and your beneficiaries will spend large sums of money in legal fees rectifying the errors.
Common errors encountered when you do your own estate planning documents:
1. Failing to sign the Will;
2. Failing to execute the Will, in the presence of witnesses;
3. Invalid witnesses during execution of the Will;
4. Invalid amendments to a Will; and
5. The Will is outdated at the time of death.
Continue Reading...
What are the Crucial Estate planning documents?
I am often asked to name the essential documents for an estate plan. In California, an estate plan should include four or five basic estate planning documents. If your current family and financial situations do not warrant the need for a Revocable Living Trust, then your foundational estate plan based on a will-based estate planning will include the following three important legal documents:
1. Last Will and Testament;
2. Advance Medical Directive; and
3. Financial Power of Attorney.
Last Will
A will is simply a set of instructions on how to distribute your assets to loved ones and charities upon your death. But it does not cover any specific beneficiary you would have mentioned for any account or savings plan. If such details need to be altered, they need to be done with the said accounts and plans.
Advance Medical Directive
This is a document which gives the medical power of attorney to someone if the physician or court decides that you are incapacitated to make a decision. This allows the person to make health care decisions for you in case of any need. This document also describes your wishes regarding the use of life-sustaining measures in the event of terminal illness.
Financial Power of Attorney
This enables the concerned to manage assets that are titled in your individual name, including retirement plans, and assets titled in joint names as tenants in common. Choose carefully because, in general, this person can buy and sell your assets. In estate planning, the most commonly used versions of the financial power of attorney are:
1. A Durable Power of Attorney, which goes into effect as soon as you sign it; and
2. A Springing Durable Power of Attorney, which only goes into effect after you have been declared mentally incapacitated.
Revocable Living Trust
If you require a Revocable Living Trust, then this document will contains a detailed set of instructions covering three important periods of your life:
1. What happens while you are alive and well;
2. What happens if you become mentally incapacitated; and
3. What happens after your death.
In addition, assets held in the name of your Revocable Living Trust at the time of your death will avoid probate.
This is a brief overview of all the different documents which should be in order for good estate management. To determine which one fits your exact requirement, however, it is mandatory to consult an estate planning lawyer and create these documents as pursuant to the legal requirements of your state.
Probate is Going to Get Worse in These Tough Economic Times
One of the typical goals in estate planning is to avoid the probate administration of your estate. The principal reasons for avoiding probate administration are: (1) the cost; and (2) the delay associated with the process. In Los Angeles, the process of probate administration is controlled by the Los Angeles Superior Court system, nation's largest trial court system, with 600 courtrooms in 50 courthouses throughout the county.
These tough economic times have caused problems for all types of governmental agencies and private businesses. California, in particular, has suffered from massive budget operating deficits in recent years that have required severe cutbacks in most areas of governmental services. Over the past year or so, these budgetary problems have had a direct impact on the Los Angeles Superior Court system. Court fees, those charged for filing petitions and various pleadings with the Los Angeles Superior Court, have been slowly raised for most filings, including probate filings. Starting in July 2009, the Superior Court implemented a monthly furlough program, where the courts were closed the third Wednesday of every month. While the employee furlough program has been difficult, court personnel have made Herculean efforts to continuing the orderly processing of legal matters.
Unfortunately, the news of California budgetary problems is only growing worse and, earlier this week, there was a stunning announcement that will undoubtedly impact the speed of the probate administration process. On March 17, 2010, Presiding Judge Charles McCoy announced that the Los Angeles Superior Court will lay off 329 staff members and closing 17 courtrooms county-wide. The layoffs will most likely not be the last of the personnel cuts. Court officials predicted 500 more people could be laid off and 50 more courtrooms closed by September 2010. In announcing the cuts, Presiding Judge Charles "Tim" McCoy warned of delays and longer lines. "When you cut this deep into the workforce of this court, the system must ultimately wear down,"McCoy said.
Now, more than ever, it is important to create an estate plan that avoids the cost and delay associated with the probate administration process. A living trust is a private agreement that allows your chosen fiduciaries to administer your estate privately, outside of the Superior Court. A living trust, combined with powers of attorney, allow your loved ones to privately manage your affairs in the event of your sudden incapacity. These documents, working together, allow your loved ones avoid having to file a probate administration proceeding, or seek a conservatorship, through the Los Angeles Superior Court system. A well-crafted estate plan is usually significantly more economical than relying on the default probate systems administered by the Los Angeles Superior Court. If you have not done so, create an estate plan today—your loved ones will be grateful for your foresight.
Life's Stages Dictate Different Estate Plans
As you travel through the various seasons of life, you may not require the same estate plan. A plan you created in your 30’s could be vastly different from the one you need in your 60’s.
2. Newly Married. Once you are married, you will probably want to name your spouse as agent on your durable power of attorney for finances and advanced health care directive. You should also create a revocable living trust and name spouse as beneficiary of your 401(k), life insurance policies, pension or retirement plans.
3. Married With Children. Now is the time to amend your trust to provide instructions and designate guardians to raise your kids, should something happen unexpectedly to you and your spouse. Beneficiary designations on life insurance policies, pension plans, etc. should also be updated to cover a situation where both parents die simultaneously.
4. The Middle Years. During this time, your trust should be updated as changes occur such as divorce, additional children, changes in financial situation, inheritances or substantial increase in net worth, or death of a beneficiary or trustee.
Continue Reading...Which is Better: a Will or a Trust?
One of the most frequent questions I receive from clients goes to the very heart of estate planning—the difference between a will and a trust. When creating a trust, most individuals also create a will (usually a pour-over will), which further confuses the issue. When a client seeks guidance from me on whether it is better to create a will or a trust, the short answer usually is: it depends.
A will (sometimes called a last will and testament) is a foundational estate planning document and one that should be considered by every individual. The primary purpose of a will is to provide a set of instructions for the probate court to follow after your death. Basic issues that are addressed in a will are your choice of executors (the person who will be in charge of your estate) and your desired distribution of your property at your death. While a will is essential to any estate plan, by itself a will has two key drawbacks: it does not avoid probate; and it does not address the issue of your incompetency.
By contrast, a trust (sometimes called a living trust) is usually designed to accomplish everything addressed in a will (naming fiduciaries and designating where your assets go upon your death) but also usually provides the added benefits of avoiding probate and allowing the management of your incapacity. Most people want to avoid probate because an administration proceeding generally costs between four to eight percent of the gross value of the assets and take a minimum of nine months, if not several years, to administer. In local cities such as Manhattan Beach or Santa Monica, where home values average close to $1,000,000, probate fees and costs can easily exceed $40,000 or more. A trust also allows incapacity management because if you (as the trust creator or ‘settlor’) are deemed to be incapacitated (such as by a stroke), the trust agreement usually allows your named successor to assume control of your trust estate. Thus with a trust your assets can be managed for your benefit without having to file a court proceeding.
In addition to these foundational benefits, trusts can also be designed to create a host of other benefits for the settlor including some protection from estate taxes, delayed and managed distribution of your assets for dependents, and some protection from potential creditors. All of these benefits usually require that a person spend more money preparing the estate plan, but given the various benefits for most people, the investment is usually money well spent.
In summary, a will-based estate plan is frequently ideal for those with minimal non-real estate assets. For those individuals with real property holdings, dependents including minor children, or a reasonable asset base, a trust-based estate plan usually is the better choice.
Do You Have the Right Kind of Trust?
I have written extensively about the importance of creating a living trust (sometimes called an inter vivos trust) as a centerpiece of your estate plan. A living trust provides numerous benefits including allowing your loved ones to swiftly and privately manage your affairs, in the event of your incapacity or demise, without the assistance of the probate court.
Recently I was contacted by old friends who thought it might be time to review and update the trustee designations in their trust. Over the years, I had spoken many times to these friends about the importance of a having a living trust. These friends had repeatedly assured me that they had a living trust (created before they knew me) and had arranged everything many years earlier. I had even helped these friends when they functioned as trustees of another trust and so they were familiar with the operations of a trust and how it was administered. So imagine my surprise when I reviewed their plan and discovered that my friends’ trust was not a living trust, but rather a testamentary trust, or a trust created by a last will and testament.
The differences between a living trust and a testamentary trust are significant. Since it is created by a will, a testamentary trust only comes into existence through a probate proceeding. A testamentary trust thus requires that your executor apply to the probate court to create the testamentary trust. The probate (and trust) estate is then subject to the extensive costs of probate (generally 4% to 8% of the gross value) as well as the mandatory notice periods that require a probate proceeding to remain open for at least eight to twelve months. In many cases, a testamentary trust is the worst of both worlds because the creator will incur the additional expenses of creating a more complex document and force his or her beneficiaries to wade through the probate process. Moreover, the testamentary trust is only created upon your death and therefore does nothing to help manage your affairs if you become incompetent.
Time and time again I encounter clients who assumed that they had created a fully functional estate plan only to discover when it was too late that the plan was deficient. Frequently these mistakes are by “do it yourselfers” but sometimes the deficiencies arise from simply not reviewing an attorney-created plan for numerous years. When was the last time you reviewed your estate plan? Does it operate in the most efficient manner? Does it include sufficient contingency options to deal with the variety of problems we face in life? If you don’t know, now is a good time to review your plan with a professional.
Your Mother Always Said: Don't Leave a Mess!
I was contacted by a young woman in her early 30s after the passing of her beloved grandmother. She described herself as grandma’s favorite and the only member of her family that grandma would trust to administer her estate. Grandma had left a car, an apartment complex and a home full of possessions. And while grandma has no minor children, she is the sole means of financial support for two minor grandchildren who have lost their parents. The young woman searched high and low but cannot find grandma’s Will. The young woman believed that the Will may be in a safe deposit box, but until she is appointed administrator, the bank will not allow her access to the box.
We commenced a probate proceeding only to discover that the young woman’s cousin has filed a competing petition. The young woman confided in me that her cousin was ‘troubled’ and probably stole many of grandma’s possessions. But the cousin has filed a competing petition for probate and to the young woman’s surprise she was being wrongly accused of improper conduct. She returned to grandma’s residence only to discover that the locks have been changed and the car was gone. The tenants refused to pay rent because they didn’t know who was in charge, the support payments to the minor child stopped and chaos ensues.
After several hearings the court appointed a professional special administrator to open the safe-deposit box but unfortunately, it contained no estate planning documents. Without a Will, the two relatives had equal standing and the probate court was forced to sort through the competing allegations of misconduct. In the end, neither the young woman nor her cousin were allowed to serve and the court appoints a stranger—an independent attorney who served as a professional fiduciary. The battle between the relatives had resulted in months of delay, thousands of dollars in legal fees and probable financial losses associated with the disrupted tenants.
Much of these problems could have been avoided if grandma had simply taken the proper steps to protect her Will. As explained in a recent Wall Street Journal story, survivors can face numerous problems when a deceased family member fails to organize her affairs and leave them in a manner that can be readily accessed by the survivors. In addition to lost Wills, heirs can lose financial accounts if they are not located and timely claimed. I have seen thousands of dollars in stock certificates stuffed in drawers which could have easily been discarded but for the actions of an alert administrator.
The lesson learned from these tales is timeless: don’t leave a mess!
Parents Should Review Guardian Nominations Annually.
A fundamental principle in life is that things change; as our society becomes more interconnected and technologically advanced, the speed of change seems only to hasten. In response to this change, most of us regularly conduct annual reviews of important areas in our lives. For instance, most large employers review employees annually; many people schedule the traditional annual physical; and most financial advisors recommend annual portfolio reviews. But one area most people neglect a regular review is arguably the one most important: a review of guardianship nominations for their minor children.
The recent loss of musician Michael Jackson has focused attention on this most important issue. Upon his death, there were a number of individuals who could have had standing or a desire to serve as guardian to Mr. Jackson’s children, including Debbie Rowe, his ex-wife and mother to two of the children, his parents and his numerous siblings. Without instructions to the probate court, all of these parties could have petitioned to serve as the guardians. If more than one had petitioned the probate court for the appointment, the matter could have been highly contentious and resulted in an extended legal battle.
Fortunately, Mr. Jackson’s advanced planning prevented the stress and trauma associated with such court proceedings. In his Will, Mr. Jackson designated his mother as guardian for his children and named Diana Ross as a back-up guardian. Mr. Jackson’s decision to nominate these individuals appeared to facilitate the settlement, which was approved by the probate court on August 3, 2009. According to an article in the Los Angeles Times, “Neither side made any demands that were rejected, the source said, and the arrangement was agreed to without contentious negotiation.” In short, Mr. Jackson’s plan appeared to have worked as it should have and his children will be raised by Katherine Jackson, the guardian he designated in his Last Will and Testament.
In selecting guardians, most people designate those individuals they believe will best be capable of raising their children in their absence. But as time passes, circumstances change: couples divorce; parents age; and people relocate. When was the last time you reviewed the guardians for your minor children? Are you still close to the guardians? Do you still believe that they share your values? Are your nominees still healthy and capable of raising your minor children? If you cannot remember the last time you reviewed your guardian nominations, or who you nominated, it is time to review your estate plan.
