Probate Law: Topics Of Interest
After many years of representing clients in trust and probate disputes, our team at the Freedman Law Firm has developed a wealth of knowledge on various probate law issues. Below is a selection of topics that we have researched, briefed and litigated. The topics below are only a sample of legal issues and are by no means a comprehensive list of probate law subjects.
Successful Financial Elder Abuse Settlement
Successful Demurrer To A Petition To Determine Entitlement To Distribution And Breach Of Contract Claim
Advance Health Care Directive Is Free Of Judicial Intervention
Are Handwritten Notes By A Settlor An Amendment To The Trust?
Can A Surviving Spouse Claim Recovery Of Community Property Expenditures On The Deceased Spouse?
Can An Irrevocable Trust Be Modified?
What Does It Take To Prove A Contract To Make A Will?
What Is Financial Elder Abuse?
Successful Financial Elder Abuse Settlement
For more than 35 years, the elder, a Russian speaking mother of two, had expressed her testamentary wish to distribute her remaining estate to her two children in equal shares or to the issue of her children. The elderly mother had three grandchildren from one daughter who had recently tragically died. Five months before the elder’s death at the age of 93, she changed her trust and disinherited her three grandchildren from her deceased daughter, and gifted her entire estate to her one surviving daughter. Our firm represented the three grandchildren and successfully settled a financial elder abuse case.
Successful Demurrer To A Petition To Determine Entitlement To Distribution And Breach Of Contract Claim
We represented the administrator of an estate of a young woman who tragically died overseas of an undetermined cause. The decedent died intestate leaving only her parents as her heirs at law. The decedent had a boyfriend, with whom she cohabitated briefly, who commenced a petition against the estate claiming that he was entitled to an estate distribution under Probate Code Section 11700, which is an action to determine the right of a party to inherit a probate asset. The boyfriend also claimed a breach of contract against the decedent for unspecified damages arising out of their cohabitation.
The parents were understandably grieving the loss of their daughter and declined to serve as administrator of the estate. The parents nominated a trusted friend of the decedent to serve as the administrator.
Petitioner never filed a creditor’s claim as required pursuant to Probate Code Section 9000. The administrator properly served a notice of administration to creditors on the petitioner, and the time to file a creditor’s claim expired.
The creditor’s claim procedure was an important element to the success of the demurrer.
Pursuant to Probate Code Section 9351 (“Action Precondition on Filing of Claim”):
An action may not be commenced against a decedent’s personal representative on a cause of action against the decedent unless a claim is first filed as provided in this part and the claim is rejected in whole or in part.
[Added 1990 ch. 79, optve. July 1, 1991.]
Pursuant to Probate Code Section 9100 (“Time for Filing Claims”):
(a) A creditor shall file a claim before expiration of the later of the following times:
(1) Four months after the date letters are first issued to a general personal representative
(2) Sixty days after the date notice of administration is mailed or personally delivered to the creditor Nothing in this paragraph extends the time provided in Section 366.2 of the Code of Civil Procedure.
A demurrer is a procedure pursuant to Code of Civil Procedure Section 430.10, which tests the pleadings of a complaint in a civil action. A demurrer may be sustained with leave to amend, granting the plaintiff another opportunity to file an amended pleading. The court may also sustain a demurrer without leave to amend where it has been shown as a matter of law that no legal cause of action exists, and an amendment cannot cure the defective pleading. When a demurrer is sustained without leave to amend, it is a final order and the matter is dismissed with prejudice.
Whether a demurrer applies to a probate court proceeding is a matter of some debate.
Probate Code Section 1000 provides:
Except to the extent that this code provides applicable rules, the rules of practice applicable to civil actions, including discovery proceedings and proceedings under Title 3a (commencing with Section 391) of Part 2 of the Code of Civil Procedure, apply to, and constitute the rules of practice in, proceedings under this code. All issues of fact joined in probate proceedings shall be tried in conformity with the rules of practice in civil actions.
In probate proceeding, civil rules are the “default rules” and apply except where the Probate Code provides a “special rule.” California Law Revision Commission (CLRC) comment to §1000. Probate proceedings are to conform as nearly as is consistently possible with civil actions. Civil rules, therefore, apply unless “inconsistent with specific provisions of the Probate Code.” Swaithes v. Sup. Ct., (1989) 212 Cal.App.3d 1082, 1088.
A demurrer is consistent with the Probate Code’s rules of response and objection pursuant to Probate Code Section 1043. As provided in Code of Civil Procedure Section 430.30(a), a demurrer is an “objection.” The purpose of Probate Code Section 1000 is to supplement the Probate Code with civil rules. Probate Code Section 1043(a) does not preclude an objection by demurrer, and, therefore, a demurrer is not inconsistent with the provisions of the Probate Code.
The demurrer to the petition was appropriate because the petitioner lacked standing under Probate Code Section 11700, and the petitioner was required to file a creditor’s claim and failed to do so.
Petitioner alleged that he is the designated beneficiary of decedent’s employment-related benefits, including decedent’s 401K plan and that he was named a beneficiary of a will, which was never actually produced. However, the decedent made no beneficiary designation, nor had any estate plans. The 401K benefits were an asset of the estate.
Probate Code Section 11700 is a “versatile procedure for determining who is entitled to distribution of the assets of a probate estate.” (See Cal. Decedent Estate Practice, (2009 CEB) “Proceedings to Determine Entitlement to Estate Distribution,” Charles P. Wolff, §28.1 ). Section 11700 “potentially applies to every dispute over who is entitled to take under a will or as an heir of the estate.” Although the scope of the proceeding is broad, Section 11700 does not apply to an allegation that a probate asset is actually a nonprobate asset, like a 401K plan. Nor does Section 11700 apply to an allegation that an estate plan exists but has never been found.
In Estate of Fincher, (1981) 119 Cal.App.3d 343 a surviving spouse of a two-year marriage brought an heirship proceeding to distribution of estate community property under former Probate Code Section 1080, now Probate Code Section 11700. The deceased spouse left a will that specifically disinherited his spouse. The “heirship” proceeding was proper because the surviving spouse claimed entitlement to estate community property. In addition, the surviving spouse alleged a “Marvin” partnership, which purportedly arose during a period prior to marriage when the two lived together. The Court of Appeals, considering the applicability of an heirship proceeding and the Marvin issue held:
In the usual case of a nonmarital relationship, where one of the partners dies and the surviving partner is not made a beneficiary under the decedent’s will, the surviving partner cannot claim to be an heir of the decedent’s estate. A Marvin-type relationship would not automatically give the surviving partner any property interest in the decedent partner’s estate.
Estate of Fincher, Id. at 349
Petitioner was a nonmarital partner, and, therefore, an heirship proceeding under Probate Code Section 11700 is inapplicable.
The distribution of the decedent’s estate is by intestate succession to her parents. The petitioner could not allege that he was an intestate heir. Therefore, the petitioner lacked standing to bring a Probate Code Section 11700 petition. If a party “lacks standing to sue, a general demurrer will be sustained.” Friendly Village Community Association, Inc. v. Silva & Hill Construction Co., (1973) 31 Cal.App.3d 220, 224.
The creditor’s claim procedure is mandatory.
Any person who may have a claim against estate property is a creditor, Prob.Code §9000(c), and creditors must file their claims as provided in Division 7, Part 4, of the Probate Code.
Petitioner alleged in his petition that he suffered damages as a result of the “estate’s breach of contract” and that petitioner is entitled to relief under the doctrine of “quantum meruit.”
Claims that must be filed under Probate Code Section 9100 include demands for payment, “whether due, not due, accrued or not accrued, or contingent, and whether liquidated or unliquidated” Prob. Code §9000(a). Pursuant to Probate Code Section 9000(a)(1), a claim means “Liability of the decedent, whether arising in contract, tort or otherwise.”
A timely claim must be filed and served for all claims for money based on or arising out of a contract. Prob.Code §9000 (a)(1). The word “arise” employed in this context has been described to mean “Spring, originate, flow, issue, emanate, proceed [or] stem.” Borba Farms, Inc. v Acheson, (1988) 197 Cal.App.3d 597. Generally, creditors who assert only oral promises of payment for services must file a creditor’s claim and will be limited in their recovery to quantum meruit. Wilkison v Wiederkehr, (2002) 101 Cal.App.4th 822.
Although the petition was vague and the cause of action uncertain, the general substance of the allegations appeared to be a “Marvin” claim. (Marvin v. Marvin, (1976) 18 Cal.3d 660) A “Marvin” claim against the decedent is “essentially a claim based on an oral contract, not a claim to an interest in particular estate property.” (Moreover, a “Marvin” claim is not cognizable in a Probate Code section 11700 proceeding.) Estate of Fincher, (1981) 119 Cal.App.3d 343, 349.
Pursuant to Probate Code Section 9351, an action on a contract claim may not be commenced unless a creditor’s claim is first filed and the claim is rejected in whole or in part.
Pursuant to Probate Code Section 9100, a creditor “shall file a claim before expiration” of the sixty-day period after notice of administration is mailed to the creditor. The time to file a creditor’s claim expired.
The Court sustained the administrator’s demurrer without leave to amend.
Advance Health Care Directive Is Free Of Judicial Intervention
The primary purpose and advantage of having and creating the advance health care directive (AHCD), and the power of attorney for health care (PAHC), is to save the expense of a judicial proceeding and to maintain the privacy and dignity of the principal.
For many important reasons, the AHCD is a favored manner of health care decision-making. It is dignified. The principal has the advice of an attorney. In addition, “most people prefer that their personal affairs and personal care decisions be handled by someone with whom they have had a personal relationship over time, someone who knows their personal habits and preferences.” California Durable Power of Attorney, 2007, §2.3, (Cal CEB 1996)
The AHCD provides clarity for the health care provider who may consult with the agent and rely upon the agent as the person most knowledgeable of the patient’s desires, and as the person who is making decisions in the patient’s best interests. Prob.Code §4684. Moreover, a health care provider who follows the agent’s instructions is protected from civil liability, criminal prosecution and professional discipline. Prob.Code §4740.
Therefore, judicial intervention is clearly disfavored. When a valid AHCD is in full force and effect, judicial intervention is in contravention to the careful estate planning that a principal has undertaken. Judicial intervention ultimately leads to confusion by the health care professionals who may be uncertain of the extent, validity and meaning of a court order, and the risk of liability for any actions taken by the health care providers.
Are Handwritten Notes By A Settlor An Amendment To The Trust?
A client presented us with an unsigned trust instrument leaving the entire estate worth more than five million dollars in stock and real estate to him. The client was the settlor’s brother and the only surviving heir at law. A prior signed trust left the trust estate to a nephew of the settlor. The settlor had also made handwritten notes on a separate piece of paper regarding his intentions to modify the trust and change his will. These notes, written when the settlor was about 94 years old, were somewhat cryptic and raised a question as to whether such notes were signed. Upon a careful reading, the handwritten notes appeared to support an argument that the settlor had amended the trust and had disinherited the nephew. The notes also expressed the settlor’s desire to name his brother the trustee of the trust. None of the settlor’s stock had been retitled to the trust, nor had the settlor ever transferred his real property to the trust. In furtherance of the settlor’s desire to make the changes to his will and trust, the settlor had visited his estate planning attorney. The estate planning attorney drafted the new trust and will for the settlor. However, the attorney mailed the revised documents to the settlor with a vague letter about executing the documents. The settlor received the revised documents in the mail. However, prior to his death, the settlor never signed the trust. A witness who was close to the settlor and worked for him as a caretaker testified that the settlor’s intention was to leave his estate to his brother.
Probate Code Section 15402 makes procedures for modification the same as those for revocation, which are spelled out in Probate Code Section 15401. Any method of modification provided in the trust instrument will of course be effective. We argued that the handwritten notes were an amendment and expresses an intent to modify paragraphs of the older trust. The notes simply stated to delete the prior named beneficiaries of the trust and to delete the prior named trustees. The notes stated to add our client as the trustee. The settlor wrote his name and circled it at the top of the notes, and the entire document was in the settlor’s handwriting.
We also argued that the revised trust drafted by the attorney was evidence of the intent to amend the trust. We argued that the unsigned revised trust was admissible extrinsic evidence to further explain the handwritten amendments. Estate of Russell, (1968) 69 Cal.2d 200, 206-209; Burch v. George, (1984) 7 Cal.4th 246.
Regarding the question of whether the notes were signed, we relied on the California Uniform Commercial Code, which defines the term “signed” as including “any symbol executed or adopted by a party with present intention to authenticate a writing.” (Cal. U. Com. Code, § 1201, subd. (38).) The comment regarding the corresponding provision of the Uniform Commercial Code states: “The inclusion of authentication in the definition of ‘signed’ is to make clear that as the term is used in the code, a complete signature is not necessary. Authentication may be printed, stamped or written; it may be by initials or by thumbprint. It may be on any part of the document and in appropriate cases may be found in a billhead or letterhead. No catalog of possible authentications can be complete, and the court must use common sense and commercial experience in passing upon these matters. The question always is whether the symbol was executed or adopted by the party with present intention to authenticate the writing.” (U. Com. Code com., reprinted at 23A West’s Ann. Cal. U. Com. Code (1964 ed.) foll. § 1201, p. 65; Rest.2d Contracts, § 134.)
The UCC supported our position that the notes met the requirements of an amendment to the trust. The notes were in writing and signed by the settlor who was, in fact, serving as trustee at the time he wrote the notes, and he was competent at the time he signed.
We also took the position, although perhaps less persuasively, that the settlor had created an oral trust. A trust funded with personal property may be created orally on “clear and convincing evidence.” (Prob. Code §15207).
Probate Code Section 15207 (Oral Trust of Personal Property) provides:
(a) The existence and terms of an oral trust of personal property may be established only by clear and convincing evidence.
(b) The oral declaration of the settlor, standing alone, is not sufficient evidence of the creation of a trust of personal property.
(c) In the case of an oral trust, a reference in this division or elsewhere to a trust instrument or declaration means the terms of the trust as established pursuant to subdivision (a).
We argued that the unsigned trust is clear and convincing evidence of the existence of the terms of a trust of personal property. The personal property had not been funded to the trust. Nevertheless, the notes written by the settlor expressed his intent in writing to fund the trust with his stock.
Ultimately, the parties reached a settlement prior to trial.
Can A Surviving Spouse Claim Recovery Of Community Property Expenditures On The Deceased Spouse?
We represented the children of a deceased father who had owned real property as his sole and separate property. The property remained his separate property at the time of his death. The separate real property was acquired by the father approximately eighteen years before his marriage to his second spouse. The father neither transferred this property to his second spouse nor did he ever transmute this property to community property.
The deceased father left a will providing for his children and his surviving second spouse. The second spouse commenced a probate of the will and sought a family allowance. The second spouse also claimed she was entitled to make a claim against the estate for the value of the community property expenditures to reduce the principal balance of the mortgage on the deceased spouse’s separate property. This claim is known as a Moore-Marsden claim. Marriage of Moore, (1980) 28 Cal.3d 366, Marriage of Marsden, (1982) 130 Cal.App.3d 426.
We concluded that the recovery of community property expenditures on a spouse’s separate real property is available only if a dissolution action is not resolved before one spouse dies. There must be a pending dissolution action for a spouse to make such a claim. In re Marriage of Bono, (2002) 103 Cal.App.4 th 1409
In our case, we argued that, at the time of the spouse’s death, the parties were married and neither a legal separation had been filed nor dissolution action was pending.
Our position was that a surviving spouse cannot divorce post-mortem. This is because a deceased spouse cannot participate in such a divorce proceeding, and there are a multitude of dissolution issues that cannot be resolved. To begin with, had there been a pending divorce, the surviving spouse would not be entitled to make a claim for a family allowance because of a separation or an interlocutory decree. Grand v. Superior Court, (1963) 214 Cal.App.2d 15.
After spouses are divorced, their respective wills, and nonprobate transfers in such instruments as trusts, joint tenancies, retirement plans, employee benefit plans, and pension plans will fail as prescribed under California Probate Code Section 6122.
In our case, the deceased spouse’s bequest to the surviving spouse could not fail as provided under Probate Code Section 6122.
If a surviving spouse can successfully open the door to claims of recovery of community property expenditures, the estate will likewise be entitled to make a claim against the surviving spouse’s separate property.
Our position is that the cases decided in California to date were not willing to open the door to this type of post-mortem dissolution.
Can An Irrevocable Trust Be Modified?
We represented two daughters of an elderly mother who was, unfortunately, suffering from advanced dementia and was confined to a nursing home facility. The father had predeceased the mother, and the family had a marital trust naming the two daughters as the remainder beneficiaries and if they did not survive to the daughters’ issue. The income of the marital trust paid for all of the expenses of the mother. The problem was that the successor trustee of the trust was a third-party individual who was mishandling the administration of the trust and was generally hostile to the daughters.
We commenced a petition for removal and a petition for guardian ad litem for the mother. The Court granted the petition for guardian ad litem and named a court-appointed guardian.
Now that the elderly mother had a guardian ad litem, it seemed that under the laws of modification, the mother, through her guardian, could modify the trust in order to appoint a different trustee.
Under Probate Code Section 15403, if all beneficiaries of an irrevocable trust consent, they may compel modification of an otherwise irrevocable trust on petition to the court. The mother, through her guardian ad litem, and the remainder beneficiaries all consented to the modification to name a different trustee.
Under Probate Code Section 15405 (consent by guardian ad litem), the consent of a beneficiary who lacks legal capacity may be given in proceedings before the court by a guardian ad litem.
The modification of a trust had to overcome several hurdles. We had to prove to the court that the remainder beneficiaries’ interest in the trust was identical to those of their children and unborn issue, and, therefore, such unborn issue were adequately represented by the remainder beneficiaries and no guardian ad litem was needed for the unborn issue.
Under the Probate Code, we had to prove that the guardian ad litem was persuaded of the “general family benefit accruing to living members of the beneficiary’s family as a basis for approving a modification . . . of the trust.” We were also required to show that the modification would benefit the life beneficiary herself.
The petition for modification was persuasive, and the trustee resigned before the court decided the issue.
What Does It Take To Prove A Contract To Make A Will?
A client’s mother died intestate leaving valuable real property in her estate. A friend of the deceased mother brought a claim under the theory of a contract to make a will and claimed that the decedent had promised to leave the property to the friend. The mother’s friend also tried to probate a will, which purportedly left a fractional interest in the real property to the friend. We commenced a will contest on the grounds of lack of due execution and disqualification of the friend pursuant to Probate Code Section 21350. Ultimately, the purported will was found to be invalid due to lack of due execution.
Other than this invalid will, there was no written document evidencing the claimed contract to make a will. The friend attempted to offer into evidence documentation pertaining to a failed LLC involving the real property. However, this LLC agreement did not expressly mention a contract to make will.
In researching the issue, we found this interesting passage from an older California Supreme Court case: Upon a person’s death, “the temptation is strong for those who are so inclined to fabricate evidence giving color to a claim that the parties entered into … an oral arrangement.” Notten v. Mensing , (1935) 3 Cal.2d 469, 477.
Under the Probate Code, a contract to make a will is established only by 1. a will stating material provisions of the contract; 2. an express reference in a will to a contract and extrinsic evidence proving the terms; or 3. a writing signed evidencing the contract. Probate Code Section 21700.
Probate Code Section 21700 requires an express reference in a will or other writing to the contract to make a will or devise and extrinsic evidence of its terms. In the absence of the three specified forms of writing, Probate Code Section 21700 permits proof of the contract by “clear and convincing evidence of an agreement between the decedent and the claimant or a promise by the decedent to the claimant that is enforceable in equity.”
In our case, the invalid will did not state the material provisions of the alleged contract to make a will. Nor did the invalid will make an express reference to an alleged contract to make a will.
What Is Financial Elder Abuse?
We represented one of three children of the settlor, who created a trust consisting of real property. The trust distributed the property upon the death of the settlor in equal shares to the three children.
The settlor, who was the surviving mother of the three children, was seriously ill suffering from terminal cancer. She was living at a Nursing and Rehabilitation Center, and she spoke very little English. About a year after she knew that she was suffering from terminal cancer, she created the trust and transferred the real property to the trust.
Yet, two months after she made the trust transfer deed, she purportedly executed a grant deed transferring the real property to one of her children. She died about one year later.
We filed a petition to set aside and cancel the grant deed transferring the real property on various grounds, including Probate Code section 850(a)(3)(b)); undue influence; financial elder abuse; fraud; imposition of constructive trust. Our petition sought punitive damages as provided under Cal. Welfare and Institutions Code Section 15610.30, et seq. and Cal. Probate Code Section 850.
“Financial abuse” under the Elder Abuse and Dependent Adult Civil Protection Act (EADACPA) occurs when a person or an entity: “Takes, secretes, appropriates, or retains real or personal property of an elder or a dependent adult for a wrongful use, with intent to defraud.”
A person shall be deemed to have taken, secreted, appropriated or retained property for a wrongful use if, among other things, the person takes, secretes, appropriates or retains possession of property in “bad faith.”
The settlor was an elder adult, as well as a dependent adult, who suffered from multiple physical and mental limitations, which restricted her abilities to carry out normal activities or to adequately protect her rights. The son stood in a position of trust and had a fiduciary relationship with the settlor by undertaking to allegedly assist the settlor in managing her financial affairs.
When the grant deed was executed transferring the real property to the son, the settlor was not represented by independent counsel, she was likely isolated and alone with her son, she was gravely ill, unable to speak, unable to understand English, on multiple prescription medication that impaired her mental abilities, and she had placed her trust in her son.
We argued that the case raises a presumption of constructive fraud and undue influence, and a presumption of financial elder abuse. The case also raised the issue of whether the settlor was of “unsound mind” to execute the grant deed under Civil Code Section 39(b).
Under a claim for Financial Elder Abuse, a person who is liable for fiduciary abuse of a decedent may forfeit his or her right of inheritance. Prob.Code Section 259. Therefore, the son who committed the elder abuse would not be entitled to his one-third distribution of the trust asset.
Moreover, a person committing elder abuse would be liable for treble damages, attorneys’ fees and costs of suit.
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