Trump's Proposal to Repeal Estate Tax Will Not Effect More Than 99% of Americans Who Are Extempted From Estate Tax. Estate Tax Elimination Does Not Eliminate Need for Trust and Estate Planning.

If president-elect Donald Trump follows through on his campaign promises, the estate tax will be eliminated.  Currently, the rules are straightforward: A married couple is exempt for the first $10.9 million in their estate, and they pay a 40 percent tax on the amount above that. Mr. Trump’s campaign proposal seems straightforward: Repeal the estate tax — the "death tax" in his words. There is a second part to his plan which involves keeping taxes on capital gains over $10 million when family assets are sold.

Back in 2012, most tax experts considered the estate tax resolved when the Republican-majority Congress and President Obama reached a so-called grand bargain on taxes. As part of that deal, the current estate tax exemption was set, with annual increases indexed to inflation. With that agreement, more than 99 percent of Americans were exempted from the estate tax. Last year, for example, the IRS processed just 4,918 federal estate tax returns.  Few families have more than $10.9 million in their estate.

But Mr. Trump’s proposal is not a simple repeal. His plan also said, “Capital gains held until death and valued over $10 million will be subject to tax to exempt small businesses and family farms.”  In other words, the tax on capital gains above $10 million would have to paid only when, or if, the assets were sold.

Estate Planning Meets Retirement Planning - NYT Article on How to Give an I.R.A. to Beneficiaries Without Giving Up Control

Kate Thornton/New York Times

An interesting New York Times article "How to Give an I.R.A. to Children Without Giving Up Control" (11/18/16). Some may have never heard of a Trusteed I.R.A. which allows the funds to be distributed to beneficiaries and control how someone uses the money so it's not squandered or ill-spent. For clients who have large I.R.A. holdings (over $500,000), this may be a wise option or at least something to consider.

It also allows the assets in the I.R.A. account to be broken up into separate accounts for the beneficiaries. Each account can have different guidelines on when and for what distributions are made and take into account their age.

One advantage is that there is better asset protection for the beneficiaries. In 2014, the U.S. Supreme Court rule that funds held in traditional I.R.A.s that are inherited do not have the same protection as retirement assets. Another benefit is if the I.R.A. owner becomes incapacitated where the trustee can request the minimum distribution since without the owner reqeuest there can be a large penalty.

There is the option of creating a trust and putting the I.R.A. into it but that can cause issues with the I.R.A. especially where there is a spouse and can be more expensive. Trusteed I.R.A.s have management fees so that is one reason why they are usually recommended if the account is large.

Trusteed I.R.A.s have their limits and anyone thinking of a Trusteed I.R.A. should consult an experienced attorney to draft the documents, consider it in the context of retirement and estate planning.

Posted by Henry (Hank) Moravec III
Email: hm@moravecslaw.com
Office: 626-793-3210

L.A. Times / Don Bartletti ~ Reading Cinemas Movie Theatre

The Los Angeles Times is reporting on a family estate dispute and court drama thatis affecting the Los Angeles-based movie theater chain Reading InternationalInc. which has dozens of cinemas around the world, major real estate holdings, and a nearly 200-year history with roots in the railroad and coal business. The adult three children of Reading’s late chief executive, James J. Cotter Sr., are waging a battle for control of the company.

This case is more complicated than the typical estate dispute in that it involves a public company but it has some allegations that are common to many of them such as whether the father had capacity to amend the trust, breach of fiduciary duty and undue influence.

The Los Angeles Times reported that the issues began after James J. Cotter Sr., a Los Angeles businessman, resigned as CEO and chairman in August 2014 because of declining health, leaving son James Cotter Jr. in charge. Cotter Sr. died in September 2014 at age 76. Shortly thereafter, his two daughters went to court, alleging their brother improperly convinced their father to add him to a trust that would control the voting shares of the company.

The article notes that Ellen and Margaret Cotter’s court papers claimed that James Cotter Jr. unduly influenced their father while he was in the hospital after suffering a fall in his home. The daughters said their father lacked “the knowledge and understanding necessary” to make such financial decisions. The daughters contend that after their dad was admitted to the hospital, their brother convinced an estate attorney to draft an amendment to the trust that made him a co-trustee. They allege he lied to Margaret by saying the changes were made based on videos he took of their father expressing his wishes. 

Prince May Have Died Intestate and Estate Estimated Worth Is $300 Million

Los Angeles City Hall Turns Purple In Honor of Prince

The untimely passing of music superstar Prince even gets to estate and probate attorneys who grew up on his music. One of the first questions estate and probate geeks ask is about his estate planning since he owned copyrights to his music, has a valuable public brand and name, and had an estate large enough to be subject to estate tax. 

The Los Angeles Times reported that Prince's estate is rumored to be worth over $300 million and that he may have died intestate (without a will or trust). While hard to imagine, it is not unusual. This would mean his sister would inherit everything as his closest heir regardless of whether he had a live-in companion or other people he wanted to provide for. 

If you have not done your estate planning, you're not alone. It is natural to put it off. Being in Los Angeles, we have had celebrity clients and Us Magazine is right in that celebrities are "like you and me." This is easy to put off since it involves planning and preparing for a time when we will not be with our loved ones. One meeting I had with a celebrity for estate planning, required me to not mention the word "death" in the meeting. Of course, I complied. Why? The important thing is helping clients have peace of mind and having the satisfied feeling that one's affairs are in order. 

Posted by Henry (Hank) Moravec III
Email: hm@moravecslaw.com
Office: 626-793-3210
Moravec, Varga and Mooney

What Happens When Trust Real Property Is Only Listed on a Schedule to a Trust but No Deed is Signed? Trust Litigaton, Appeal And Court of Appeal Decision Reversing Probate Court's Ruling.

A recent California Court of Appeal decision, Carne v. Worthington (4/13/16), shows how disputes over trusts happen if one is not careful in executing and recording all the deeds to property that are to be part of a trust. It also shows how a relative can try to take advantage of a failure to record a deed and how trust litigation happens and can take years to resolve.

This case involves a dispute over the ownership of real property located on Via Regla formerly owned by decedent Kenneth Liebler. Kenneth, who passed away in October 2012, had executed a revocable trust in 1985 and the Via Regla property was transferred to the 1985 Trust.

Kenneth then executed an irrevocable trust in 2009 (the “2009 Trust”) which stated, “I transfer to my Trustee the property listed in Schedule A, attached to this agreement.” The sole asset listed on Schedule A was the Via Regla property.

However, Kenneth did not transfer title to the Via Regla property by a deed from the 1985 Trust to the 2009 Trust. This was an apparent oversight. 

After Kenneth passed away, his daughter Melanie Carne filed a petition to confirm the validity of the 2009 Trust.  A grandson, Dillon Hasting, opposed the petition and argued that the 2009 Trust was not valid because Kenneth had not properly transferred title to the Via Regla property and that property was the only asset in the trust. Nancy Worthington (Kenneth's former live-in companion) also opposed the petition on similar grounds. 

The trial probate court ruled in favor of Worthington and Hasting which meant the Via Regla property would not be left to the daughter. Daughter Melanie filed an appeal. The Court of Appeal reversed the trial court and ruled in favor of Melanie. The appellate court held that the language in the 2009 Trust was sufficient to convey the property to the 2009 Trust, and Kenneth was not required to execute a deed.

The appellate court reasons that while Kenneth did not own the property individually at the time of the transfer, his signature on the 2009 Trust was sufficient to convey title from the 1985 Trust to the 2009 Trust because the 1985 Trust was a revocable inter vivos trust, he owned the property as sole trustee of the 1985 Trust, and he had the power to transfer real property owned by the 1985 Trust. 

This case is interesting because the law has been moving towards confirming property listed on a Schedule A as trust property ever since the famous Heggstad case. It has now become settled that if title to a piece of real property was in the name of a person, a Schedule A to a trust or a general assignment to the trust was sufficient to transfer title to the trust, even if the person never got around to actually executing a deed.  This is because the Trust, Schedule A, and/or general assignment is evidence of the intent of the person.  This was not always the case, for years the Courts simply held:  no actual transfer = no transfer.  Heggstad was a watershed ruling because many people intend to have all of their property in their revocable trust but can either forget to transfer the property or forget to transfer it after a refinancing. 

Worthington moves the law moves a bit farther towards effectuating the intent of a person, rather than following the technical rules of how the property is held. 

Of course, the delay involved in probate litigation is the same as ever.  This decision, issued over three and one-half years after Kenneth passed away, also shows us how long these type of matters can take to resolve. 

Finally, remember to follow up on trust recording and use professionals so nothing falls through the cracks. Our office records the deeds so these type of oversights do not happen. A simple failure to record can have a significant impact on an estate. 

Posted by Henry ("Hank") Moravec III
Email: hm@moravecslaw.com
Office: 626-793-3210
Moravec Varga & Mooney 

Technology and Online Tools Can Help Executors of Estates While Executor Works With Probate Attorney

Technology is making it easier to save and share information and the probate and estate administration world is no different. Clients can use Excel spreadsheets, Dropbox and other file sharing tools with us and beneficiaries.

The New York Times recently had an article "Online Tools Can Ease the Burden of Being an Executor of an Estate" and it recommended an interesting online database tool called EstateExec that has gotten good reviews. It is an interactive tool that allows an executor to list and track financial assets, personal property, debts and then share it online with a lawyer or other beneficiaries and family members. It also has timelines and checklists (so court hearings for approval can be entered) which provides a transparency to the process which helps others understand why it can take months in the probate court system.

While this does not eliminate the need for a probate attorney in an estate with assets, the will is complex or where there is a likelihood of litigation, it has good checklists and is a useful tracking device. It can also be helpful for very small estates that do not need probate court. 

Part of our practice is focused on using technology where possible to make it easier for our clients. Older clients are not as technology based but things are changing and we can take advantage of all the tools available to us to make probate administration easier and faster. 

Posted by Henry (Hank) Moravec III
Office: 626-793-3210
Email: hm@moravecslaw.com

Foreign Property Considerations In Estate Planning and Probate

In our practice, we have a significant number of clients who own real property or have bank account in a foreign country whether China, Mexico, England, Costa Rica, England, Canada or France or other countries. Our clients are becoming more global and mobile, especially when buying properties abroad for retirement, vacation or for their families.

One issue that arises with foreign property is the risk of double taxation. It is possible that when foreign property is transferred, U.S. estate tax will apply, but so will the tax of the foreign country. When a citizen of the United States dies and owns property in a foreign country, the property in the foreign country will be subject to U.S. estate tax if the estate is subject to taxation at all. There are treaties with certain countries which prevent the double taxation and give credit.

Another issue that comes up is multiple wills in different jurisdictions. Somestimes one last will and testament may ultimately revoke another. When ttwo wills are needed, it is important that attorneys from each country work and coordinate the estate planing and wills.

If there is no will or trust, in civil law countries, such as France, the property vests in the decedent’s heirs immediately upon the death of the decedent. This is unlike the United States and other common law countries, where there generally must be a personal representative or executor to transfer title or, at a minimum, some sort of court recognition of the death and transfer of property. 

For example, if a client owning property in France desired that property vest in a long time companion and there was no will or trust, the property would immediately vest as set forth under French succession laws. On the other hand, if the client wanted the property to vest in their heirs, then drafting a will in France to deal with the French property would be not be needed.  

We work with attorneys in other countries while advising clients with foreign property during the estate planning or probate phase. It is always best to address these issues during estate planning rather than going through the difficult and expensive process of dealing with them after death through the probate process. As we live in a more global society and smaller world, these issues are becoming more common. Don't forget to prepare for all your estate planning and probate issues, particularly when foreign real property is involved. 

Posted by Henry (Hank) Moravec III
Email: hm@moravecslaw.com
Office: 626-793-3210

Who Gets Grandma's Antique China? Do Not Forget the Minor Details and Sentimental Items in Estate Planning.

We have had two cases in the last couple of years where one of the attorneys from our office had to spend days sitting with the disputing relatives in estate cases while they took turns going through personal property and effects of their relative. 

Not only was this emotional for the parties but costly from a legal fee standpoint. The parties required it since without cousel present, it could not be accomplished for a variety of reasons.

A recent New York Times article by finance writer Paul Sullivan, When Dividing Assets the Little Things Matter (4/15/16) gives all of us a reminder and good ideas on how to not overlook the personal items that may not have as much monetary value as cash, real estate, securities but have sentimental value as well as some monetary value. 

When relatives go in and take personal property without agreement between the parties this can be a huge source of future conflict.  Photographs are often important, for example, but with scanning companies this can be taken care of as long as one relative has not taken the albums and refused to cooperate. 

This is something that one can do themselves by making lists, taking photographs or videos, etc. We find, however, that for our senior clients it is often overwhelming for them to do. We can send a paralegal or attorney to your home to assist the process which is then covered by the attorney-client privilege and is part of the estate planning process. This can even be done when parents or grandparents decide to downsize and move to avoid family disputes. 

For the do-it-yourselfers, there is a company FairSplit that has an interesting concept of having licensed insurance adjusters come to your home and take photographs and videos of all items and list them with price based on square footage. This company also has a less expensive online option where you do the listing yourself. 

As attorneys we can incorporate this and monitor it so the parties keep track and it is used for the final reports. With technology, there are a lot of tools that can make this entire process easier and less expensive. Lesson is though not to forget the small details and personal mementos, and get help to get it done. Advance planning and hiring someone is far less expensive than legal fees later and less painful than fractured families later. 

Posted by Henry (Hank) Moravec

Frequently Asked Questions About Probate Mediation. How to Use Mediation as a Important Tool in Probate Cases.

Many clients understand the concept of going to court or "suing" someone, and that a lawsuit can result in a trial before a judge or jury.  However, not as many know that (i) in probate courts, which hear all estate and trust disputes, there is no jury, and (ii) there is a strong preference among the probate court judges that the parties attempt to mediate a matter before a trial will be scheduled. 

What is mediation? Well, in a non-legal sense any negotiation between two people can be called a mediation.  But in the context of a formal court proceeding mediation has a specific meaning, which is a commitment by the opposing sides to schedule a day (or series of days) to meet with a mediator and try to resolve the case in a confidential, non-binding process.

Mediation is a flexible and less formal process that may reduce the time, legal fees and costs often associated with preparing for and going through a formal trial. In our practice, we work on making our clients' position as strong as possible before the mediation process so that there is more leverage during negotiations. 

A trained mediator (often a retired probate judge or experienced probate attorney) acts as a neutral person who facilitates communication and assists parties in reaching a mutually acceptable resolution of all or part of their dispute. The mediator is not the decision-maker and does not resolve the dispute -- the parties do with the mediator's assistance. A written settlement agreement is drafted and signed at the end of the day so there is an enforceable agreement.

A mediator is often able to more fully explore the parties' underlying interests, needs and priorities. It is often conducted like shuttle diplomacy and the parties can tell the mediator "confidential' information not to be shared with the other side. Mediation may be particularly effective when family members have a dispute or when emotions are getting in the way of resolution. 

The attorneys participating are also key to the process. For example, I am also a tax attorney and many probates have tax issues in the background. There can be income tax, step up (or down) in income tax basis or estate tax issues. Sometimes with structuring on the tax side during mediations, taxes can be reduced and used to bridge any settlement gap. The certainty on the tax side can be an important benefit. Creative problem solving by the attorneys is key. Most of the time it is the well-prepared, knowledgeable, strategic and credible attorney who helps the mediator settle the case. 

The Complexities of Assisted Suicide

The California Senate recently approved a bill which would, if approved by the Assembly and Governor, make it legal for a physician to participate in the end of their patients life.

If you read the actual text of the Bill, its quite a list of requirements which the treating physician must meet.  Regardless of where you come out on this issue, it is an example of how a decision can have multiple levels of legal ramifications.

We will see if this goes any further.

The L.A. Times weighs in:

http://www.latimes.com/local/political/la-me-pc-assisteddeath-bill-approved-by-california-senate-20150603-story.html

What Happens When There is an Argument About Your Will?

Or, for that matter, about your Trust?  Well, the answer is that depending upon the issue, possible beneficiaries will make any argument they can think of, even that they need to be paid $7,500 per month to take care of your dog.  Check out The Hollywood Reporter on the late Sam Simon's Will

The article is not only interesting in a "lifestyles of the rich and famous" sense, but more detailed than many articles about disputes in estates, most of which skim the surface.

In this case, the late Sam Simon, a producer of the Simpsons TV show, was also a committed animal rights activist.  He supported many charities before his untimely death from colon cancer, and was unmarried without children when he passed away.

While the "how much can you spend on your dog?" angle is the entertainment hook, it is a perfect illustration of how even those who seek counsel and draft proper documents cannot guarantee that arguments won't come up later.

Here, its about alleged oral promises.  Should an oral promise be enforceable?  Generally the legal answer is "no" - but everything depends on the documents.

At Moravec, Varga & Mooney we help clients deal with these post-death arguments on a regular basis.  If you are a beneficiary or an Executor of an Estate or Trust, we can tell you all about your rights and duties.

Four Estate Planning Documents Everyone Should Have

Is "estate planning" only for the wealthy or for those who are leaving large inheritances or have tax shelters? No. the Wall Street Journal recently had an article on this very topic.  The WSJ article emphasized, as we estate and probate lawyers know, that this is not just about planning to avoid taxes, but is about what happens if you pass away or if you get very sick and live.  Here's are the four estate-planning documents everyone needs regardless of your wealth. Planning also helps prevent litigation and saves what money there is in the estate and helps preseve family relationships.

1.  Will.

Many people think they don't need a will. But sitting down with a lawyer and completing a will is the best way to ensure your wishes will be fulfilled—and to avoid leaving anything up to the courts. This is important if there are minor children who need guardians or multiple adult children who are heirs.  

An important part of the will is naming the executor who is in charge of managing an estate, including paying bills. While you don't need to tell anyone what is in your will, it's important to let your designated executor know he or she has been chosen to do that job, and it might be a good idea to inform other family members, too.  You should also have have discussions with family members about how personal effects or family heirlooms are handled.

There may be a temptation to do a will on the cheap, using online resources. As the WSJ advised, "Tread warily." "Small details can end up invalidating wills or leaving your wishes unfulfilled."

2.  Durable power of attorney.

A power of attorney can give someone else the authority to act as your "agent" and make legal and financial decisions should you become incapacitated.

Don't take this decision lightly. Unlike an executor, this could be a continuing role. Give a serious thought about to whom you are giving power of attorney.  It's important to consider that this person will be managing your finances. Does this person have the skill sets for managing money?

In addition, always name a backup. Many people will name their spouse, but what happens if both are injured in a car wreck or both develop signs of dementia?

3.  Medical power of attorney.

This document—also known as a health-care proxy—enables any adult you designate to make medical decisions on your behalf should you be unable to make them yourself.  One idea is to pick the person who you think is going to stay calm in a crisis.  Who can handle making medical decisions in a difficult situation without being overcome by emotion or grief? 

4.  A living will.

A living will—sometimes known as an advanced health-care directive—specifies in writing your wishes for end-of-life care. That includes such things as whether you want to be resuscitated if your breathing or heartbeat stops, or whether you want to be kept alive through artificial respiration or feeding.

When it comes both to the medical power of attorney and living will, sit down and have a conversation with loved ones about your wishes. It may not be easy, but will help later in what will be a difficult time for your family.

5.  Be organized.  Make things easier for everyone by keeping your important documents, financial records and even information about doctors and medication updated and in one place. (Just not in a safe-deposit box, which will require a power of attorney to access.)

Once a year, provide your estate and probate attorney with an updated list of your bank and investment accounts, and any other important information, which they can hold in your file.  

Posted by Henry J. Moravec, III  You can reach him at  hm@moravecslaw.com or 626-793-3210.

Moravec, Varga and Mooney website: www.moravecslaw.com

Gifts To Caregiver - Special Protocols Are Required. Sample Case Where Court of Appeals Ruled Step-Daughter Was An "Heir" For Purposes of "Blood or Marriage" Exception

When a client (especially an elderly one) wants to make a bequest to a caregiver in estate planning documents (a trust or will), the law requires a special protocol. Similarly, when we are hired as an administrator or to represent beneficiaries, gifts to caregivers are subject to great scrutiny. Why? Gifts to caregivers are generally prohibited by law under California Probate Code section 21350 with some exceptions. 

Probate Code Section 21351, enumerates several exceptions to this general rule. One of the exceptions—found in Section 21351(a)—provides that section 21350 does not apply IF the transferor is related by blood or marriage to, is a cohabitant with, or is registered as a domestic partner of the transferee. Cal. Prob. Code § 21351(a). 

One California published decision addressed whether this provision applied to a stepdaughter by marriage and highlights the issues that arise when a caregiver is a beneficiary under a trust or will. This California Court of Appeal case is Hernandez v. Kieferle (2nd Circuit, 2011). 

In Hernandez v. Kieferle, the Second Appellate District of California reviewed a probate court decision which invalidated an amendment to a trust designating stepdaughter Claudine Kieferle as the trustee and sole beneficiary of her stepmother Gertrude’s estate.

In plain language, here is what happened. At one point, neighbor Florentina Hernandez was the trustee and principal beneficiary of Gertrude Kieferle's estate. The stepdaughter Claudine moved in with Gertrude and took care of her. Stepmother Gertrude amended her trust to make stepdaughter and caretaker Claudine the trustee and sole beneficiary. Now neighbor Florentina was not going to receive anything with the new amendment. 

After Gertrude passed away, Florentina challenged the validity of the second trust amendment under Probate Code Section 21351(a) mentioned above. The probate court ruled in neighbor Florentina's favor and invalidated that amendment. At the probate court level, the court ruled in favor of Florentina noting that section 21350 established a presumption that transfers to care custodians are the product of fraud, duress, menace, or undue influence and, since Claudine lived with Gertrude and cared for her in the evenings, Claudine was disqualified from taking under the trust.

Stepdaughter Claudine appealed the ruling and won on appeal. In reviewing the lower court ruling, the Appellate Court reversed this decision and concluded that it was an error not to apply the exception found in section 21351(a). The Court rejected the argument that the exception did not apply to Claudine because she was not an “heir”—where her stepmother’s estate did not actually contain property attributable to her father (who passed away eleven years prior)—and found that a person is the transferor’s heir if some intestate rule identifies the person as the transferor’s successor, regardless of whether the transferor’s estate includes the type of property distributed under the rule. Therefore, the section 21351 exception applied and the second amendment was deemed valid allowing Claudine to remain as the trustee and sole beneficiary of Gertrude’s estate.

Posted by Henry Moravec, III, Attorney at Moravec, Varga and Mooney.  
Contact at hm@moravecslaw.com or 626-793-3210

Do I Need to Hire a Lawyer in Probate Court?

One common question that we often hear is the following:

"Do I have to hire a lawyer in Probate Court?"

or its close relative:

"Can I represent myself in Probate Court?"

I would note that this question also comes up during Probate Court hearings on a regular basis, because on a typical day, out of about 50 or so matters on the calendar there are bound to be 2 or 3 people representing themselves without lawyers.  Invariably, of the two or three, one or two of them is told by the judge to "seek legal advice."

You would expect a lawyer to say "of course you need to hire a lawyer" but the most accurate answer is that the need depends upon the facts:

1. If you have plenty of time on your hands, and no time pressure with respect to the estate, and no pressure from creditors or heirs, you might be able to represent yourself and have no downside.   Most people consider "wasting time" a downside, hence the first qualification.  A continuance, which is what the Court calls the situation where a matter scheduled for January 31 has to to be rescheduled for March 5 because a document is not properly prepared, causes a delay of the time of the continuance, in this example over 30 days.  So, if it does not matter how long it takes to, for example, take title to property, then the client would not be upset with the delay.  However, if a creditor or another heir wants things concluded, the delay is problematic.

2  So, that leads us to the next generalization:  if time is in any sense of the essence, only by using an experienced probate lawyer can you be confident to minimize delays.   This also applies if the client simply wants to not worry about the matter, because regardless of how long the process takes, the stress factor drops if a lawyer helps with the case.

3. Then, there are the situations in which you absolutely need a lawyer, and as soon as possible: (a) any time there is a party against you.  This is because a mistake you make may result in liability to the other party, be they creditor or heir.  (b) Any time there is a potential tax problem of the decedent.  (c) any time there is a creditor of the decedent which has a claim which may be disputed.

4. Finally, if you do not want the burden of responsibility, you should always hire a lawyer.   If, for example one sibling is nominated to be the administrator, and part of the job is reporting on the administration to the other siblings, use of an experienced probate lawyer greatly increases the odds that the administration will be stress free, since an expert will be available to answer questions.  This factor alone seems like a matter of common sense but is in fact important.  Many "probate disputes" start when the administrator is un-represented and an avoidable mistake is made.

 The Cost May Be Less Than You Think

 Probate fees are significantly less than fees charged by realtors to market and sell property.  Although there are some discount real estate (market your property yourself) brokerages, in the main no one considers the standard 5% commission on a real estate transaction to be out of line, and as a matter of fact considering the amount of people who voluntarily pay it, it is considered very much "in line."  To sell a $1,000,000 house, in a transaction which might take 60 to 90 days, costs $50,000.   To probate a $1,000,000 estate, which might take more than a year, and collect various assets and deal with multiple beneficiaries, and protect yourself as a fiduciary from liability costs a $23,000 statutory fee in Probate Court.   Although there are sometimes other fees and costs for additional work, at a fundamental level in this area legal representation is less expensive that selling a house.

So, it turns out that advice is actually simple.  Save money if you can, but don't be "penny wise and pound foolish."

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership.
For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210. The firm website is www.moravecslaw.com

Probate and Trust Administration Top Posts

 The other day I was looking through all the stats on the blog, to see the most popular posts.  In first place is What happens when someone dies without a will?  with 1550 views.  If you liked that one, check the  2013 related post: What happens when someone dies without a will? Does joint tenancy save the day? The rest of the top five posts of all time on the blog are:

2. Recent California Decision On Breach Of Trust & Trustee Fiduciary Duties   with 1010 views.

3. Recent California Decision Highlights Trustee's Breach Of Duties And Misconduct When Trustee Is Also A Beneficiary  with 961 views

4. What Is Undue Influence In California Probate Courts? with 740 views, and 

5. Potential Estate Tax Implications Of J.D. Salinger's Death  with 490 views.

We feel that there is an overall theme developing here, since the most viewed posts are probably connected with what people are searching for on the Internet and what brings them to the blog.  

As a technical matter, the permanent change to a $5,000,000 exemption per person means that for many people, estate taxes are no longer an issue which would drive estate planning.  It is a huge difference to not so long ago when the exemption was only $600,000.

However, family relationships cannot be legislated, and the conflicts which develop after death are very much unaffected by tax laws.  If one child thinks that their sibling unduly influenced Mom, well, that is simply an issue which will always be around.

We see our practice in disputed matters steadily expanding, so these stats are not surprising to us. 

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership.
For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210. The firm website is www.moravecslaw.com

The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.

What Happens when a Person Dies with an Ambiguous Will?

I have been posting lately on the various issue and challenges raised by probate and trust litigation.  Now, just to be clear, "litigation" means an actual filing in a Court of law.   But what of something that rises to the level of a mere "argument" or maybe a level or two above an argument, perhaps where each person feels they need a lawyer to advise them, but does not actually end up in court?  In other words, a "dispute?"

It is probably fair to predict that for every matter which actually results in litigation in the probate courts, there are some multiple of matters over which there is a dispute which, although it may be serious to the parties, does not (fortunately) result in actual litigation. 

A new matter came into the office the other day which reminded me of law school, where the law professors try to fit all of the possible legal issues into one fact pattern.  This matter had the following facts:

1. The decedent elected to have the most "simple" Will he could get.  I am not sure where he got it, but it only consisted of a couple of pages.  In it, his stepson was given "all the Widgets I own at the time of my death."   There was no list of Widgets either in the Will or set forth otherwise.

2. Of course, the relationship between the stepson and the biological son (who was to get the remainder of the assets) was not good.

3. Like many people do, the decedent made gifts during his lifetime.  One of them was a gift of a relatively valuable Widget #1 to his biological son.  This was actually shipped by the decedent to the biological son, but no written notation of the gift was made.

4.  The decedent also, like many people, talked.  All kidding aside, he also promised one reasonably valuable Widget #2 to his grandson (the son of the biological son).  Although he talked about it with various people, and referred to the Widget as "grandson's Widget" he never actually delivered it to the grandson.  After the decedent's death, biological son shipped this Widget to the grandson.  Like the Widget in paragraph 3 above, there was no written notation.

5. The decedent also had charitable intent.  Shortly before his death he had his biological son contact a charity which ran a Widget museum.  He wanted to donate one valuable and rare Widget #3 to the museum.  There was an email exchange on this topic between the museum and the decedent's biological son about three months before the decedent passed away, but no formal contract.  After the decedent's death the museum accepted the rare Widget.

6.  Last but not least, the decedent of course had a comprehensive set of Widget making and Widget repairing tools and spare parts.  He also was in the process of making a couple of Widgets (which would be #4 and #5 --- of course, the guy was a Widget maker, what would one expect?).   After the decedent died, the biological son, not being a Widget maker, asked the museum if they would like this esoteric set of personal property, the museum said yes.

Now the biological son learns a few things:  the step son basically wants to know why he should not get Widgets 1 through 3, and also that the step son thinks that some of the "materials" were close enough to being completed  "Widgets" that they should have gone to hims as "Widgets 4 and 5" under the Will.

What result?  Well, at the moment there is no court "litigation" on these claims.  Everyone is upset, but how will it work out?

My predictions, which I will expand upon in upcoming posts, are:

Widget #1 stays with biological son.  Widget #2 might have to be returned, depending upon whether the executor can enforce the "oral" gift under local law.  Widget #3 may well come back into the estate, because charities do not like to get a reputation for holding on to property at the expense of heirs.  However, Widget #3 also has a written pledge (the email).  Widgets #4 and #5 probably stay with charity, as the executor can conclude that they are not completed Widgets.

This is exactly the sort of disputes which can be avoided if appropriate time is taken in the drafting of estate planning documents in the first place.  And this avoidance does depend upon having someone with experience advise you when you draft documents.  A good lesson to keep in mind.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership.
For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210. The firm website is www.moravecslaw.com

The Los Angeles area office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.

Litigation in the Probate Courts Part II, How Long Does it Take?

In the first installment of this series of posts, we talked about the general aspects of probate litigation, and what to expect if you find yourself involved in a case.  In this post I will talk about how long each phase of a case may take, and what a litigant can expect along the way.  Often, the timing of a case is as important as the substance of the claims.

A case breaks down into the following segments:

A. Pleading, or the making of allegations by one side and the corresponding denial of allegations by the other side.  Pleading alone can take several months.  In a Probate case, it is rare for one party to file any sort of motion, the other party to receive it and object, and for the parties to both agree with the Court to move to the next stage in anything less than about four months, sometimes much longer.  The other factor is that in a Probate case there are often more than two sides.  Each beneficiary of an estate could have a different view of a matter.

B. Discovery, or additional fact finding.   Additional fact finding always takes time.  For example, let say that the matter at issue is a beneficiary demanding an accounting.  Well, the court may say "when can you have that accounting done?"  The party may respond "in three months."  Then the court orders it filed, and of course the other side gets time to examine it and have specific objections, which might take a couple of more months.  So now you could easily have taken a year.

C. Preliminary Orders, which are Orders from the Court to keep the case moving along.  There may be some preliminary orders along the way, but those could be expensive to get and are always time consuming.  To continue with the example above, a typical case may start with a beneficiary accusing the trustee of some act and asking that the trustee be removed.  However, if there has not been an accounting filed the court will want to see that first, and that may take a few months.

D.  A formal mediation. At this point a year or so may have gone by, and the parties are already growing tired.  At this point the Court will offer the parties a chance to mediate the matter before a private mediator.  Often, this is the point at which the case settles.  Mediation can be very helpful, since it is often in mediation that, for the first time, one side hears how the other side's arguments and their arguments are viewed by an unbiased third party.

E.  An Evidentiary Hearing.  Thiis is what most people consider "a trial" to be, or what they think of by "going to court."  Not only do the first four steps often take more than a year to complete, it now may take a year to get a hearing date on a matter that will take more than a couple of hours of evidence.  Two years with no resolution feels like a long time, and it is.

F.  Appeals, if any.  An actual appeal, with briefing schedule to the appellate court, could be another year.  Often, appeals are filed simply to create the possibility of additional settlement discussions.

As you can see, the rather extreme length of time it can take to obtain a court order is a factor in the dispute,  independent of the actual merits of the claim.  Time is a factor which simply must be discussed with the client, because not only is "time" an issue, but costs rise along with time.  There is no positive way to really spin this, but this is why most cases settle -- it would simply take too long and cost too much to achieve complete victory.

At Moravec, Varga & Mooney we have extensive experience with disputed matters and the various phases of a case.  We have found that it is a great help to a client to give them an honest appraisal of how long a case can actually take.  It can be an extremely bad thing if a lawyer is "too optimistic" about how quickly a client can get a case to a judge.  If the client does not understand the time and costs involved, the time and cost can simply overwhelm the merits of the case, which can be a disaster if the case is actually a good one.


Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership.
For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210. The firm website is www.moravecslaw.com

The Los Angeles area office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.

What Happens When Someone Dies Without a Will? Does Joint Tenancy Save the Day?

One of the features of Blogger is that you can see the list of the most popular posts on a blog.  Currently our number one post is "What happens when someone dies without a Will?"    It is easy to see why this would be a popular search, since it may well be true that a very large number of people die without a Will or a Trust, which is known as dying "intestate" (the technical legal term). 

The chap to the right looks very satisfied with himself.  He may have been thinking "I have my property sorted out and I did it all by myself!"  However, he may well have simply created a minefield for his heirs.

Our post from 2009 addressed the basic question of what happens in an intestate estate administration.  That post set forth the basic ways in which property can be transferred when someone dies without a Will or Trust: (I) by small estate declaration, (II) by "contract" or (III) through a probate proceeding.

In this post I will elaborate a bit on what by "contract" means.  We use "contract" to cover a wide range of non-probate transfers.  The most common may be the joint tenancy.   Joint tenancy means that title to a piece of property, either personal property, such as a bank account, or real property, is in the name of two or more people as joint tenants.  The long phrase is "joint tenants with right of survivorship" and what it simply means is that when any joint tenant dies, upon proof of death, the property passes to the other joint tenants.

Joint tenancy has always had one advantage going for it -- simplicity.   It is not a big deal to put a bank account into joint tenancy, you just fill out the appropriate form at the bank.  For real property, a deed is required, but these days many people attempt to fill out their own deed and often are successful.  When real property is purchased, the escrow company can simply put the title into joint tenancy at the request of the buyer.

However, joint tenancy has a number of disadvantages, which can run the gamut from annoying to serious:

1. It assumes order of death.   For estate planning purposes, properly drafted documents take into account variables in who dies first.  At best, if a parent puts a child on as a joint tenant and the child dies first, it is a waste of effort.  At worst, if the child is put on only one deed with the intent of that particular property going to that child, and ultimately to that child's children or spouse, and the child dies, then the property reverts to the parent, and does not go to the child's heirs.

2. It provides no protection against disability.  One of the benefits of a revocable trust is that it applies if the settlor (or creator) of the trust becomes disabled.   Putting property in joint tenancy does not have any management upside -- both joint tenants must executed any documents of sale or financing.  So if a parent puts a property in joint tenancy and becomes incompetent, that parent could not execute any documents with respect to that property, and problems could easily arise.

3. No creditor protection on first death. Another issue with a simple joint tenancy between husband and wife is that the change in tax laws has perhaps led some to ignore other, non tax issues.  For example, a couple who are in no danger of amassing an estate worth $10 million could have all of their assets in joint tenancy, and thus if one dies all goes to the survivor.  However, this does not deal with: creditors of the surviving spouse, everything from potential remarriage to medical bills.   With a trust, half of the couple's net worth would have been protected.  Plus, upon the death of both parents a probate would be necessary.

4. It is easy to forget.  A joint tenancy is so simple that its easy for a person to forget they even have set one up.  We have had many instances where one of the contingencies discussed in this memo occurs and the client, or the client's children, are surprised to learn of  a joint tenancy property or account set up years before.

5. It does not verify actual ownership interest.  This is a real nuts and bolts problem.  For example, take refinancing or sales of property.  Once a person is a joint tenant, they have to sign off on all of the documents relating to that property.   A second point that comes up is whether, when a couple puts a child on a deed as a joint tenant, if they intended a specific gift.  The IRS generally says "no" but the County Assessor, who is looking to re-assess property, may say "yes."  In California, the Proposition 13 property taxation system always needs to be considered.

The other, most common way an interest in property can pass is by "beneficiary designation" which I will cover in another post.

For now, the main thing to consider is that estate planning is all about "planning" for various contingencies.  Many clients are unaware of all the possible contingencies which might affect them.  That is where we can help, since we have experience with just those contingencies a client might miss.

When it comes to sorting out an estate of a person who dies intestate, many of the same contingencies a client should have considered while alive are triggered.   This is where our expertise again is of great help to clients, because just as much planning can occur after a person dies as before.

The majority of the work in our practice, in terms of hours spent, is always on post death administration, be it sorting out an intestate estate or resolving a dispute.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership.
For a complimentary 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210. The firm website is www.moravecslaw.com

A Candidate for the Longest Estate Administration - over 60 years!

An Epic Story of Procrastination?  Or an Epic Story of a Distaste for English Weather?

The U.K.'s Daily Mail has a story about, a long (very, very long) Probate dispute.

Incredibly, an English estate with a manor house and (at one time) 3,000 acres of farmland, and a steady rental income went unclaimed for decades.  The case is both interesting in a "Downton Abbey" kid of way, and a procedural way:  what is the result if a beneficiary refuses to accept property?

The estate is known as the Figg-Hoblyn estate, named after the family who first lived there beginning in the 1600s.   The saga which recently ended began with the estate plan set up in 1856.  As was the custom at the time, the estate was left to the oldest surviving male heir.  For those interested in what happened as a technical matter (well, let's not count how many of you make up that category, shall we?) the "estate plan" in question was not a Will or a Trust, but a deed, which contained trust-like provisions for ownership of the property and its income.  

Squire William Hoblyn had one son and four daughters.  When his son, Ernest, died shortly after William's death, the downside of the "eldest male heir system" was  brought into full relief.  None of the other Hoblyn daughters had yet married.  When one of them finally did marry, she first moved to Canada and then California (as, presumably, she did not have a legal right to the "family" estate).

Her oldest son, Francis Figg-Hoblyn, visited the estate in 1947 (after presumably becoming aware that he was now the oldest male heir), but was daunted by the amount of work needed to be done, and never took possession.  When Francis died in 1965 his eldest son, John, a former college professor with what reads as a fairly unconventional lifestyle, also refused to accept the estate, citing an unwillingness to pay taxes as a reason.  In the various articles you see from a Google search, it not entirely clear why John did not want to formally take possession of the property.,  "Taxes" do not seem to be the actual reason, since John would have owed no U.S. tax to accept the property, and  any UK tax could be paid by selling some of the property or through the collection of rental income.

Finally, when John died in 2011, the English Court was able to entertain a motion to amend the original Will to allow John's sisters to inherit the property.  This ruling was disappointing to William, a male cousin, but is welcomed by the local residents who now know the estate, which has been vacant since at least the 1940s, may now be rehabilitated by the new owner.

What is sometimes glossed over in the articles (since the thought of any "unclaimed" estate is so entertaining to those of us who will never inherit an estate in the first place) is that the court appointed administrator  in England had actually been renting the land out and collecting the rents during this time period.  This is what would happen in a California court if any heir could not be located -- the administration of the estate would continue, and distributions would be postponed until the heir was able to accept them. What makes the Figg-Hoblyn story so unusual is the length of time that a known heir refuses an inheritance.

The full article can be found here: http://www.dailymail.co.uk/news/article-2293296/The-5million-Cornwall-estate-left-ruins-rightful-male-heir-claim-40-years.html, or simply Google "Hoblyn estate" for further reading.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership.
For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210. The firm website is www.moravecslaw.com

The firm's office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.  There is ample free parking.

Litigation in the Probate Courts, Part I - What Will Happen If Someone Files A Lawsuit In Probate Court?

What Will Happen If Someone Files A Lawsuit In Probate Court?

One common question that arises in the area of our practice which focuses on resolving disputes among executors, trustees, and beneficiaries is: "what will happen if someone files a lawsuit in Probate Court?" It's the client's  "nickle" if legal fees mount up, so its not only a fair question, but a critical one.

The answer to that question is something everyone who is focusing on their own estate planning ought to know, and something a person who is involved in an estate administration should absolutely know. Not knowing can lead to bad decisions which are difficult and expensive to fix at a later date. I will explore this topic over a series of posts.

The "normal functions" of the Probate Court are simply:
-- to figure out who is entitled to the property of someone who died, and
-- to also administer the estates of people who can no longer legally take care of themselves (guardianships and conservatorships).

This series of posts will focus on the estate and trust litigation process, but the possibilities for disputes in guardianships and conservatorships are just as frequent and can be even more frustrating.

Difference Between Civil Litigation and Probate Litigation

What I often tell clients is that there is a big difference between general civil litigation and probate litigation.  In general civil litigation: the vast, vast majority of disputes (which are not a matter of divorce proceedings) involve an insurance company as the ultimate paying party. General civil matters end up essentially boiling down to a war of attrition, where the insurance company who is defending the matter finally decides what the case is worth to go away. There are also a large contingent of employment related disputes, where you substitute an employer (usually a large one, since small employers do not have large amounts of money)  for the insurance company.

In a probate or trust dispute litigation, however, there is rarely, if ever, an insurance company involved, the matters tend to be highly emotional (more on that below). The first "stage," if you will, is sorting out the dispute from the actual amount in dispute.

For example, in a $100,000 estate, the maximum amount in dispute is a maximum of $100,000. In a $1,000,000 estate, the maximum amount in dispute is $1,000,000 and so on.

Emotional Losses Can Exceed The Monetary Loss (Case Study)

The most common emotion we see is a client who has an "emotional loss" which far exceeds the monetary loss. Here is a case study in this which is common in our practice.

A brother was certain his sister had been taking advantage of their father prior to and after their father's death. In the first few hours of investigating, we found $40,000 had been improperly transferred. We wrote a demand letter and the sister agreed to reimburse the estate. Since the sister and the brother were splitting the estate --  that $40,000 improper transfer was worth $20,000 to the brother (the sister was entitled to the other half).  At this point, the brother had spent only a few thousand dollars in attorneys' fees.

Then, a very familiar emotion kicked in.  The brother was upset that his sister had taken $20,000 that should have gone to him. Brother also became upset that he had to hire an attorney to protect his rights. Based on this emotion, he embarked on a hunt to see what other improper transfers or expenses his sister "might" have made in the estate.  After many more thousands of dollars in legal fees -- and at least a hundred hours of his own time -- he found a trip to the Home Depot  for $325 that the sister charged to her father that she should have paid herself.

In the end, the case settled because both brother and sister realized that there was only so much involved  and that a search, involving lawyers, for total certainty, was simply too expensive.  They would both (especially our client) have to be satisfied with what I would call "partial certainty"  - they did not know for certain that every nickel had been accounted for, but they did know that the overall result was relatively fair, and that more litigation was not worth it.

One reason that the case settled with a relatively small attorney cost was that opposing counsel was an experienced probate attorney who knew, from the beginning, how to advise his client about her duties and moreover, that the case should settle.  In future installments, I will tell a horror story or two about what can happen if a general civil litigator is involved in a probate litigation.

Probate Litigation Lesson 

We all have parents. Many of us have siblings. In any case no one has a perfect relationship with all members of their family. Thus, the lesson to be learned from the above story is that the death of a parent and an inheritance can fray almost any family bond.  Before you make a decision based on those very understandable emotions, call us or any experienced probate lawyer. Although it may not seem like it, it could save you quite a bit of money down the road.

As a trustee or executor, you can be sure not to make an inadvertent mistake that riles up beneficiaries for no reason. As a beneficiary, you can be sure not to throw allegations at a trustee who may actually be doing their best.  Either way you can replace emotions with knowledge, which is always a good deal.

An experienced and honest probate lawyer will help you create a strategy from the outside and not simply capitalize on the normal emotions that are inherent in these cases. When you need to be aggressive - they will also know how to be efficiently aggressive to help you win or obtain the best possible result.


Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership.
For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221. The firm website is www.moravecslaw.com

The firm's office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108 and there is ample free parking.