WILLS, TRUSTS, AND ESTATE ADMINISTRATION FOR THE PARALEGAL

104 Pages·2002·2.25 MB·English

Dennis R. Hower
California Supplement to Accompany
WILLS, TRUSTS, AND
ESTATE ADMINISTRATION
FOR THE PARALEGAL
Fifth Edition
Prepared by
George Yount
Australia Canada Mexico Singapore Spain United Kingdom United States
C
ONTENTS
1 The Purpose and Need for a Will 1
2 The Concept of Property Related to Wills, Trusts, and Estate Administration 2
3 The Participants and the Proper Court 6
4 The Law of Succession: Death Testate or Intestate 12
5 Wills: Validity Requirements, Modification, Revocation, and Contests 19
6 Preparation to Draft a Will: Checklists and the Conference with the Client 23
7 Final Draft and Execution of a Valid Will 25
8 Introduction to Trusts 28
9 Classification of Trusts, the Living Trust, and Other Special Trusts 35
10 Estate Planning and Long-Term Care 37
11 Personal Representatives: Types, Pre-Probate Duties, and Appointment 38
12 Probate and Estate Administration 44
13 Informal Probate Administration 95
14 Tax Considerations in the Administration of Estates 101
15 Ethical Principles Relevant to Practicing Legal Assistants 103
In this supplement, a page reference follows each head—(Hower 000). This page reference correlates with
Dennis Hower’s textbook, Wills, Trusts, and Estate Administration for the Paralegal,Fifth Edition.
ii
1 T P
HE URPOSE AND
N W
EED FOR A ILL
Statutory Requirements for a Will (Hower 2)
The statutes governing the requirements for, and validity of, wills in California are primarily
found in the California Probate Code (which will be abbreviated “Prob” in this supplement).
Basic Terminology Related to Wills (Hower 3)
The terminology found in the text is generally consistent with probate practice in California.
The court in California which has jurisdiction over probate matters (the “probate court” as de-
fined in the text) is the Superior Court. There is one Superior Court for each county in the State,
each with geographic jurisdiction over its county.
The use of the term “heir” in California relates to anyone who receives or would receive
anyproperty—whether real or personal—through intestate succession (and not just those re-
ceiving real property, as defined in the text). It excludes surviving remarried ex-spouses. Prob
44, 21114.
1
2 T C P
HE ONCEPT OF ROPERTY
R W ,
ELATED TO ILLS
T , E
RUSTS AND STATE
A
DMINISTRATION
PROPERTY:TERMINOLOGY AND
CLASSIFICATION (HOWER 25)
Real Property (Hower 25)
The definition of real property in California is found in CC 658, et seq. and includes land, fix-
tures, appurtenances, and things growing upon the land, as well as airspace rights, solid min-
erals, and the right to drill for liquid minerals (gas, oil, and geothermal steam).
Fixtures (Hower 25)
Fixtures are defined in CC 660 and trade fixtures in CC 1019. Provisions regarding fixtures are
as explained in the text, generally. CC 1013, 1013.5.
In addition to the three tests identified in the text (annexation, adaptation, and intention),
California courts may also look to the relationship between the parties (certain parties being
generally favored over others—tenants over landlords, buyers over sellers, borrowers over
lenders—the grantor having presumptively greater knowledge of the property in question); or
the court may look to any agreement between the parties, since such agreements are binding
between the parties absent other mitigating factors. Oroville-Wyandotte Irr. Dist. v. Ford 47
Cal.App.2d 531 (1941).
Transfers of Real Property (Hower 27)
Acquisition of real property and the modes by which property may be acquired, are embod-
ied in CC 1000, et seq. Transfers of real property are addressed in CC 1039, et seq.
Personal Property (Hower 28)
Concepts regarding personal property in California are addressed in CC 946, et seq., and do
not differ from the discussion in the text.
2
FORMS OF PROPERTY OWNERSHIP (HOWER 32)
Ownership of property and all of the rights in property by a single person is absoluteowner-
ship. CC 679. When ownership is shared with another, or enjoyment of the property is delayed,
or its use is restricted, ownership is qualified.CC 680.
Tenancy in Severalty—Ownership by One Person (Hower 34)
In California, ownership by a single person is designated as a soleor several ownership.CC 681.
Forms of Concurrent Ownership—Ownership by Two or More
Persons (Hower 34)
California statutory law does not provide for tenancy by the entirety. However, within the def-
inition of ownership by several persons, CC 682 includes joint tenancy, tenancy in common,
community property, and partnership interests.
Joint Tenancy (Hower 34)
Joint tenancy interests and their creation are set forth in CC 683, et seq., and do not differ from
the discussion in the text.
Tenancy in Common (Hower 44)
All co-ownership not otherwise defined in the grant as community, partnership, or joint ten-
ancy property in California is held as tenancy in common. CC 686.
Community Property (Hower 51)
As noted in the text, California is a community property state. Any property acquired by a per-
son while married, if not otherwise separate property, is community property (CC 687; Fam
760; Prob 28(a)) and the spouses share equally in community property. Fam 751.
Separate property is property owned prior to marriage; or acquired while married by gift,
bequest, devise, or descent; or the rents, issues, and profits of either of the foregoing (Fam 770)
where neither spouse has any interest in the separate property of the other. Fam 752. Moreover,
separate property may also be acquired by transmutation(the transfer of one spouse’s inter-
est in property to the other spouse, other than in a will) (CC 850, et seq.), or while the parties
are separated (Fam 771, 772).
When dealing with the characterization of jointly held property as community or other-
wise, care must also be taken to recognize the purposes for which the characterization is being
made, as the results will vary. For example, some statutes defining community property limit
their application to particular circumstances. Prob 28(b) and (c) defining community property
are applicable only for probate purposes; whereas Fam 2581 (defining joint tenancy interests
acquired by husband and wife as community property absent an express declaration in the
grant that the property interests of the spouses are held as separate property) is expressly ap-
plicable only to dissolution proceedings.
Intestacy (Hower 54)
The laws of intestate succession in California are generally found in Prob 6400, et seq. Contrary
to other community property states, in California the length of the marriage has no effect upon
the distribution of community property or separate property by intestate succession.
3
Division (Hower 54)
As stated in the text, at dissolution (California is a no-fault state) the community property is
divided equally between the spouses and the separate property of each is affirmed. As previ-
ously noted, however, a transmutation of the separate or community property of each spouse
may be undertaken, dividing the estate even in the absence of a dissolution. To be valid, a
transmutation must be in writing, expressly declaring the transmutation, and made, joined
in, consented to, or accepted by the spouse whose interest is adversely affected. Fam 852(a);
Estate of MacDonald,51 Cal.3d 262, 272 Cal.Rptr. 153 (1990). However, no writing is required
for gifts between spouses of clothing, wearing apparel, jewelry, or other tangible personal
items not of substantial value in light of the circumstances of the marriage. Fam 852(c).
Creditors’ Rights (Hower 54)
In general, the separate property of a spouse and the community property are available to sat-
isfy the debts of that spouse. Additionally, the separate property of the other spouse may be
available to satisfy debts for necessaries of life of that person’s spouse; however, the paying
spouse is entitled to reimbursement if separate property of the other spouse or nonexempt
community property is available. Fam 910–916.
Quasi-community Property (Hower 55)
Quasi-community property is generally treated the same as community property. Fam 125,
912, 2660; Prob 66.
ESTATES IN REAL PROPERTY (HOWER 56)
Estates in real property are generally treated at CC 761, et seq.
Freehold Estates (Hower 57)
Fee Simple Estate or Fee Simple Absolute (Hower 57)
Fee simple estates are defined at CC 762–764. In 1983, California did away with the distinction
between fee simple determinable estates and fee simple estates subject to a condition subse-
quent. All such estates are now considered fee simple subject to a condition subsequent giving
rise to a power of terminationshould the stated condition arise. CC 885.010, et seq. The abo-
lition of fee simple determinable estates replaced the common law possibility of reverter which
accompanied that estate, with the requirement of affirmative action in exercising the power of
termination (known at common law as a “right of re-entry”).
Life Estate (Hower 60)
Life estates (treated at CC 761, 766, 779, and 818) are as explained in the text.
Future Interests—Reversion and Remainder (Hower 61)
Future interests, reversions, and remainders are addressed in CC 767, et seq.
Dower and Curtesy (Hower 64)
Dower and curtesy have been abolished in California. C 5129, Prob 6412.
4
Spouse’s Right to Election or Elective Forced Share ( Hower 65)
Asurviving spouse’s election to take against a decedent spouse’s will is limited to those in-
stances in which the will purports to convey all or some portion of the surviving spouse’s half
interest in community (or quasi-community) property. Prob 141. Thus, if a spouse dies leaving
a will which devises to another all of the community property (including the surviving
spouse’s 50% interest in that property), the surviving spouse is given an election to take what
is provided for him or her in the will, or to take his or her intestate share of the estate as though
no will existed. If the election is made to take against the will, the electing spouse receives his
or her intestate share of the probate estate first, and the balance of the estate remaining is then
distributed in accordance with the decedent’s will. The election is made by filing a statement
with the court indicating that the surviving spouse claims his or her one-half share of com-
munity (and/or quasi-community) property, or that the spouse waives that right and consents
to the distribution of property in the will.
Waste (Hower 66)
CC 818 provides that a life tenant may use the land in the same manner as an owner in fee sim-
ple; however, “He must do no act to the injury of the inheritance.”
Leasehold Estates (Hower 66)
Tenancy or Estate for Years (Hower 66)
Pursuant to CC 717, no lease of agricultural land may be valid for a longer period than 51 years;
and no lease of any town or city lot (CC 718) or for the production of minerals, gas, oil, or other
hydrocarbons in excess of 99 years in duration is valid. CC 718f.
5
3 T P
HE ARTICIPANTS AND THE
P C
ROPER OURT
THE PARTICIPANTS (HOWER 70)
The Personal Representative (Hower 70)
Appropriate Terminology (Hower 70)
In California, an executoris a person named in a will by a decedent to carry out the terms of
the will. Prob 8420, et seq. An administrator with will annexedis appointed where the dece-
dent died testate (having written a will) but no executor was named in the will or all named in
the will as executors were unwilling or unable to assume that role. Prob 8440. An administra-
toris appointed as personal representative where the decedent died intestate (without a will).
Prob 8460(a). Aspecial administrator is appointed where immediate action is required with
regard to the estate but no permanent personal representative has yet been appointed. Prob
8540(a).
The Role of the Personal Representative (Hower 71)
The role of the personal representative is as described in the text; however, the authority of the
personal representative to act is dictated by whether the personal representative is appointed
under the Independent Administration of Estates Act (Prob 10400, et seq.), and whether, if so
appointed, the personal representative has been granted independent authority by the court
to sell real property, exchange real property, grant an option to purchase real property, or bor-
row money with the loan secured by an encumbrance upon real property. Absent such au-
thority, all of the personal representative’s dealings must be approved by the court.
Each personal representative is required to acknowledge receipt of a statement of duties
and liabilities in a form prescribed by the Judicial Council, prior to issuance of letters to the ap-
pointee. Prob 8404.
The Attorney (Hower 75)
The conduct of attorneys in California is governed by the provisions of the State Bar Act found
in the California Business & Professions Code (B&P6000, et seq.) and the California Rules of
Professional Conduct.
Prob 2640 provides for court-approved payment of attorney’s fees in conjunction with
guardianships and conservatorships. Prob 2644 authorizes contingent fee contracts, in writing,
with attorneys when such is “to the advantage, benefit and best interest of the ward or con-
servatee or the estate ...”
6
Prob 10810 establishes a fee schedule based upon the value of the estate accounted for by
the personal representative for compensation of an estate attorney for conducting ordinary
proceedings as follows:
Four percent (4%) on the first fifteen thousand dollars ($15,000);
Three percent (3%) on the next eighty-five thousand dollars ($85,000);
Two percent (2%) on the next nine hundred thousand dollars ($900,000);
One percent (1%) on the next nine million dollars ($9,000,000);
One-half of one percent (0.5%) on the next fifteen million dollars ($15,000,000); and
Areasonable amount determined by the court for all estates above twenty-five million dol-
lars ($25,000,000).
Thus, for example, an attorney representing an estate with a total value of $100,000 shall
receive compensation of $3,150 (being .04 (cid:1) $15,000 (cid:2) $600 plus .03 (cid:1) $85,000 (cid:2) $2,550, to-
talling $3,150); or, for an estate with a value of $600,000, authorized attorney’s fees for ordinary
services would be $13,750 (being .04 (cid:1)$15,000 (cid:2)$600 plus .03 (cid:1)$85,000 (cid:2)$2,550 plus .02 (cid:1)
$500,000 (cid:2)$10,000, totalling $13,750).
In addition, Prob 10811 authorizes the award of additional compensation for attorney’s ex-
traordinary services in an amount determined to be just and reasonable by the court.
Awill may make provision for the payment of attorney’s fees; however, if it does, those
fees shall be the full and only compensation of the attorney for the personal representative
unless the personal representative or the attorney petition to be relieved from that provi-
sion of the will and the court determines, after notice to all interested parties and hearing,
that it is to the advantage of the estate and in the best interest of all interested in the estate
to authorize an award of attorney’s fees in excess of that provided for in the will. Prob
10812. Any agreement for payment of attorney’s fees in excess of those permitted by statute
is void. Prob 10813.
Moreover, if a special administrator is appointed, the combined fees of the attorneys for
both the special administrator and the other personal representative cannot exceed the sums
set forth by statute for the ordinary and extraordinary services of attorneys for personal rep-
resentatives. Prob 8547(c) and (d).
However, Prob 10804 provides that a personal representative who is an attorney may be
compensated as a personal representative, but may not receive compensation as the estate at-
torney unless the court specifically approves the right to compensation in advance after find-
ing that the arrangement is to the advantage, benefit, and best interests of the estate.
The Paralegal or Legal Assistant (Hower 77)
Prob 2645 specifically states that:
Legal services for which the attorney may be compensated include those services
rendered by any paralegal performing the legal services under the direction and
supervision of an attorney. The petition or application for compensation shall set
forth the hours spent and services performed by the paralegal.
The Probate Court/Jurisdiction (Hower 78)
Exclusive jurisdiction over all probate matters rests with the Superior Court in California. Prob
7050. There is one Superior Court for each county in the State.
7
Venue (Hower 84)
The proper venue for probate proceedings is the county in which the decedent was domi-
ciled at the time of death, and not the place of death. Prob 7051. If the decedent was a non-
domiciliary, then proper venue is in the place of death if the decedent’s property is also located
there; or, if the decedent owned no property located at the place of death or if the place of death
was outside California, then the proper venue is any county in which the decedent owned
property at the time of death. If property is located in more than one county, then proper venue
is in the county in which a petition for ancillary administration is first filed. Prob 7052.
8