Blog: The Trusts & Estates Law Blog

Under California law, the laws of intestacy control who inherits when a person dies without having prepared a valid will or trust. These rules can be complicated particularly as remote or even unknown blood relatives may have a claim to assets of the decedent’s estate. However, these long lost relatives often must prove up their entitlement to inherit from the decedent’s estate.

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By Trusts & Estates

It was recently revealed that the late Paul Walker left his entire estate—valued at approximately $25 million—to his 15-year-old daughter, Meadow.

As reported, Paul Walker named his father as the executor of his will and his mother, Cheryl, as the guardian of Meadow’s person and now-$25 million estate. Prior to his death, Meadow lived with her father but now lives in Hawaii with her mother, Rebecca Soteros. Already, this decision is causing people to wonder why Paul would name someone other than Meadow’s biological mother as Meadow’s guardian.

In California, a deceased parent’s nomination of a guardian of the person for a minor child usually has very little practical effect when the other parent survives. This is primarily due to two considerations. First, since the surviving parent typically has custody of the child, it is not uncommon for the nomination of a guardian of the person of the minor child to take effect only upon the death of both parents. Second, under the California Probate Code, one parent can make the nomination only if the other parent (a) joins in the nomination, (b) consents to the nomination, (c) is dead, (d) lacks legal capacity, or (e) is in included in the category of parent whose consent is not required for an adoption. Also, the California Family Code requires that the preferences of the child be given “due weight” if the minor is able to form an intelligent choice. Given all this, it is unlikely that Cheryl will be appointed the guardian of the person for Meadow without either Rebecca’s consent or a strong showing that Rebecca is unable to take care of Meadow.

On the other hand, it is very possible that Cheryl will be appointed as the guardian of the estate for Meadow. California law allows a parent to nominate a guardian of the estate to oversee the management of any assets given to a minor child by that parent—regardless of whether the other parent is willing or able to manage the assets. This means that it is perfectly acceptable (and not all that unusual in these types of family situations) for Paul to nominate someone other than Rebecca to manage Meadow’s massive estate.

Although most people are focusing on who is going to be Meadow’s guardian, perhaps the more interesting question is why Paul did not establish a testamentary trust for his teenage daughter. Based on available information, when Meadow turns eighteen the guardianship will terminate and Meadow will have complete control over her $25 million estate—something most eighteen-year-olds are ill-equipped to handle. Had he instead left his fortune to Meadow in trust, Paul could have set more appropriate parameters on Meadow’s access to his assets, such as keeping the assets in trust until Meadow is older. Given the fact that Paul went to the effort to create a will, it is curious why he did not, instead, avail himself—and his estate—of the protections afforded by a trust.

As we continue to watch this story unfold, no doubt we will see more instances where better estate planning could have saved Paul’s family unnecessary conflict.

By Trusts & Estates

Over thirty-five years after Bing Crosby’s death, the California Court of Appeal put an end to the continuing battle over the Crooner’s right of publicity.

I Can’t Begin to Tell You

In 1930, Harry Lillis Crosby—nicknamed Bing for his love of a newspaper parody, “The Bingville Bugle”—married first wife, Wilma Wyatt (known professionally as Dixie Lee). The mother of his first four sons, Wilma died in 1952. In her Will, Wilma gave her community property to her two sons, which was held for their benefit in a trust known as the Wilma Wyatt Crosby Trust (the “Wilma Trust”).

Over the next several years, Bing was regularly the topic of gossip as he romanced several of Hollywood’s most beautiful women. In 1957, Bing married Kathryn Grant, a young actress and singer that Bing met on the Paramount lot. Together they had three children and remained married until Bing’s death on October 14, 1977 on a golf course in Madrid.

Bing left the residue of his estate to a trust for the benefit of his wife, Kathryn. Subsequent to Bing’s death, HLC Properties, Limited (“HLC”) was formed for the purpose of managing Bing’s interests, including his right of publicity.

Pennies from Heaven

Under the common law of California, there exists a “right of publicity” in a person’s name, likeness and identity. In 1971, the California Legislature established a statutory right of publicity in a person’s “name, voice, signature, photograph, or likeness.” After a controversial California Supreme Court decision in 2007, the California Legislature clarified that the right of publicity is freely transferable “by means of trust or testamentary documents.”

Nearly twenty years after Bing’s death, the Wilma Trust sued HLC and Kathryn, claiming that it was entitled to “interest, dividends, royalties and other income derived from the community property of [Bing] and [Wilma] . . . .” In 1999, the parties settled the lawsuit for approximately $1.5 million. While the settlement agreement provided that the Wilma Trust would be entitled to its share of any “other income derived from works or performances of Bing Crosby during [his marriage to Wilma] discovered in the future,” the agreement also contained a release of all claims that expressly stated that the parties “hereby compromise, release, acquit and forever discharge one another . . . from all manner of actions, suits, liens, indebtedness, damages, claims, judgments, obligations and demands of every nature, kind or description whatsoever, whether known or unknown and whether suspected or unsuspected, which [the Wilma Trust] has or hereinafter, can, shall or may have against [HLC and Kathryn] directly or indirectly based upon or arising out of any act, duty, agreement, omission, transaction, event, occurrence, or any other matter whatsoever, whether now known or unknown, which occurred prior to the date of this Agreement. Each party is aware of and expressly waives, to the full extent permitted by the law, the benefits of California Civil Code § 1542, which provides as follows: ‘A general release does not extend to claims which the creditor does not known or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.’ ” In light of this settlement agreement, the Wilma Trust dismissed its lawsuit with prejudice.

You’re Getting to be a Habit With Me

When, in 2008, the California Legislature clarified that the right of publicity is transferrable through trust and testamentary documents, it expressly made this right retroactive, including to those deceased personalities who died before January 1, 1985. Losing very little time, Wilma’s estate filed a petition with the court asking for an order stating that Wilma possessed a community property interest in Bing’s right of publicity, and that Wilma’s share of this interest passed to her heirs under to the terms of her Will. Not surprisingly, HLC and Kathryn objected to the petition on the grounds that the 1999 settlement agreement precluded the claim and the right of publicity is not community property.

At the trial court level, the court ruled in favor of Wilma’s estate. The trial court determined that the 1999 settlement agreement did not bar the petition because the 2008 legislation regarding rights of publicity created a right that did not exist before (since it now applied to personalities who died before January 1, 1985). On the community property issue, the trial court applied California’s presumption that property acquired during marriage is community property.

Just One More Chance

In what may or may not be a surprise, the California Court of Appeal reversed the trial court’s judgment.  More specifically, the Court of Appeal found that the 2008 legislation regarding rights of publicity did not create a new right. Instead, the appellate court determined that California legislation regarding rights of publicity had always applied to individuals who died before 1985, including at the time the Wilma Trust signed the 1999 settlement agreement. Therefore, the court reasoned, the general release in the 1999 agreement—which applied to all claims, “known or unknown”—was effective against the most recent petition.

Since the Court of Appeal decided the case without needing to address the community property issue, the opinion did not give a detailed analysis as to whether or not rights of publicity are community or separate property. However, the court did drop a footnote in which it “notes” that the right of publicity “appears” to be a separate property asset.

It’s Been a Long, Long Time

The Bing Crosby saga reminds us that the right of publicity can be a very real, very valuable asset. As such, it has the ability—no different than a thriving business or work of art—to instigate post-death litigation that can last years, even decades. Like most assets, careful planning can help moderate the likelihood of protracted litigation. Perhaps more importantly, the Bing Crosby saga highlights how effective a well-drafted general release can be in quashing subsequent litigation.

The California Court of Appeal for the Sixth Appellate District issued a ruling Tuesday in Lintz v. Lintz, 2014 Cal. App. LEXIS 27 (6th Dist. January 14, 2014) adopting the reasoning of the Second Appellate District regarding the standard for legal capacity to execute a trust instrument (as announced by the Second Appellate District in Anderson v. Hunt, 196 Cal. App. 4th 722 (2d Dist. 2011)).

In Lintz, the Court concluded that the probate court erred by applying the testamentary capacity standard (i.e., Probate Code section 6100.5) to the trusts and trust amendments in question instead of the “sliding-scale contractual standard” outlined in Probate Code sections 810 through 812. In this case, as the Court noted, the trust instruments were “unquestionably more complex than a will or codicil. They addressed community property concerns, provided for income distribution during the life of the surviving spouse, and provided for the creation of multiple trusts, one contemplating estate tax consequences, upon the death of the surviving spouse.”

Family Drama

Casey Kasem’s three adult children from his first marriage have spent the last several months in L.A. County Superior Court fighting their stepmother, Jean, for control of their father’s personal affairs through a conservatorship proceeding.

Casey’s daughter Julie originally filed a petition seeking to be appointed conservator of her father based on claims that Jean had been isolating the beloved American Top 40 host since he became essentially bedridden this past summer due to advanced Parkinson’s Disease. The petition alleged that their stepmother (best known for playing the wife of Nick Tortelli on “Cheers”) has refused their visits despite their father’s requests. Since such accusations of isolation are considered a form of elder abuse in California, Jean naturally denied these claims, saying that unspecified “disturbing” conduct by the stepchildren would make visits in the family home an “intolerable and unpleasant experience for us all, including specifically [for] Casey.”

Despite the accusations of abuse, the children’s request for an emergency conservatorship was denied on November 19, 2013. At that hearing, the judge indicated that Casey was “receiving either good to excellent care” and found “no good cause for a temporary conservatorship.” However, the independent court investigator’s report confirmed that Casey wants to see his children. In light of this, the court instructed each side to set aside its “bad blood” and attempt to resolve their problems. Predictably, Jean’s initial offer to allow the children to see their father for one hour per month under heavy security was rejected by the children. Jean and Julie announced at the December 20, 2013 hearing that they have reached a settlement regarding visitation, though the details were not revealed. Casey’s other daughter, Kerri, has so far been unwilling to agree to the restrictions Jean wants to place on visitation and says she may file a petition to see her father without those restrictions.

Uphill Legal Battle

Establishing a conservatorship is not any easy feat and even if one of Casey’s children is successful in convincing the court of the need for a conservatorship, that person still has to address the issue of who should be appointed the conservator and what powers the conservator should have. Not surprisingly, the extent to which the conservator can control the conservatee’s visits with family members is frequently a source of conflict in conservatorship proceedings. For the Kasems, this issue seems to be driving the desire for a conservatorship and court oversight.

Interestingly, legislation was recently enacted that addresses a conservator’s right to control visitation. Under this new law, a conservator will not automatically have the power to control visitation. Assembly Bill 937, which became effective January 1, 2014, requires a conservator to first obtain a court order to be able to control such personal rights of the conservatee as visitation, telephone calls, and mail. A detailed analysis of AB 937 will shortly follow. For now, it is safe to say that if visitation continues to be an issue with the Kasem children, we can expect the battle for a conservatorship to continue, as well as a great deal of resistance on the issue of whether or not to grant the conservator the power to control visitation under the now-amended Probate Code section 2351.

In most California civil cases, a party generally must wait until a trial court issues a final judgment before he or she can get through the doors of the Court of Appeal. While there are a few exceptions, this rule (sometimes called the one-final-judgment rule) prevents litigants from complaining to the appellate court about every ruling in a given case in piecemeal fashion. Even when they receive an appealable judgment, parties to an appeal often find that getting a decision from the reviewing court takes endurance and patience; e.g., the time from the notice of appeal to the decision frequently takes over a year.

Things work a bit differently in probate court. In that forum, parties can appeal from a multitude of rulings that a trial court may issue well before any final judgment. And litigants who feel like they are growing old dealing with other types of appeals may find less waiting when it comes to probate appeals. That is because probate appeals are subject to statutory preference (i.e., hurry-up-and-get-it-over-with rules) under section 44 of the California Code of Civil Procedure. Still, it is a good idea to file an application for calendar preference (to remind the appellate court that yours is one of those cases) in order to speed things along.

It might be easy to forget one or more of the numerous types of orders that are appealable in probate court – particularly for many litigants or attorneys who may have other important (or at least more interesting) things on their minds. For example, an appeal may be taken from an order that directs, authorizes, approves, or confirms a sale, lease, encumbrance, grant of an option, purchase, conveyance, or exchange of property. An appeal also lies from an order that settles an account of a fiduciary; authorizes, instructs, or directs a fiduciary; approves or confirms the acts of a fiduciary; or directs, authorizes or allows payment of compensation or expenses of a fiduciary or an attorney.

Oh but wait, the list of examples continues. With respect to a decedent’s estate, appeals can be taken from any order granting, refusing to grant, or revoking most types of letters to a personal representative; admitting a will to probate or revoking the probate of a will; or setting aside a small estate or setting apart a probate homestead or property claimed to be exempt from enforcement of a money judgment (just to name a few).

Short of memorizing the types of orders that are appealable, it is crucial to confirm whether a ruling from a probate court is appealable – as the deadline to file a notice of appeal often expires in 60 days under rule 8.104 of the California Rules of Court. Once the applicable deadline passes, the appellate court will lose jurisdiction and the possibility of obtaining appellate review will be dead. Accordingly, it is advisable to review sections 1300-1304 of the California Probate Code whenever the probate court issues an adverse ruling (to see if yours is on those lists of appealable orders). Alternatively, you can call a probate or appellate lawyer who is familiar with such things. Either way, don’t make the grave mistake of killing your appeal from an order of the probate court before it starts (by failing to recognize that it is appealable or otherwise missing the deadline).

Are you having trouble completing or updating your estate plan, although you are convinced you should? Maybe you have a referral to an attorney recommended by a friend or other advisor, but you haven’t yet scheduled the first meeting? Or you have attended the first meeting with your estate planning attorney, but you can’t quite seem to finish your action list for the next meeting?

Estate planning is not the top of anyone’s “to do” list. As an estate planning attorney, part of my job is to help my clients complete their estate plans. No one intends to delay the process, but many times the process stalls.

Here are some ideas that have helped my clients cross the finish line and enjoy the relief that a completed plan brings. See if they work for you!

1. Start the Process. As with many goals, the first step is the hardest. Schedule your first meeting with a qualified professional, and show up for the meeting. Do the homework requested by the attorney if you can, and don’t cancel if you cannot. If you must cancel due to an emergency, reschedule the meeting at the same time you cancel. Turn yourself over to the process and let the attorney lead you through it.
2. Ask for an Action List. At the first meeting, ask your lawyer to provide you with a list of items you need to handle so that the process can move forward. If the list seems long, ask which ones are absolutely essential for the attorney to prepare initial draft documents for your review, and tackle those items first.
3. Ask for Advice. If a topic seems difficult for you to analyze, ask your lawyer for input. We work with clients daily on these issues, so we know what options you have and what many others choose to do in your situation. This is not to say that you should do what others do, because your plan should suit you and your family, but the information will give you a frame of reference and help you make up your mind.
4. Narrow the Issues. Estate planning requires a number of decisions, and some will feel harder than others. Go through the general topics with your lawyer and resolve all the open issues that you can. You will likely be left with a handful of topics that stump you, ones that will require further thought. This list will be much shorter than the initial list of questions, so forge through the first round in a determined way and then focus on the issues that need more thought.
5. Plan for the Next Five Years. Remember that this estate plan should address the realities as you know them now, and cover the next five years. Estate plans should be reviewed at least every three to five years, and sooner if a major life event occurs. Laws, people and circumstances change over time. You don’t need to predict and plan for every possibility that the future may bring–instead, plan for the present. Plans can (and should) be changed.
6. Request Initial Drafts. Once you have responded to as many questions as you can, request initial draft documents. It’s easy for us to prepare drafts with blanks for the open issues. The more you can decide up front, the better it is in one sense; but if you find yourself resisting the process, looking at initial drafts is very helpful.
7. Meet with Your Attorney Again. Foundational estate plans can often be completed in two sessions with the attorney–one meeting where most decisions are made for the plan, and a second meeting to sign final documents. Your attorney should send you drafts of your new estate plan before the second meeting so you have time to review the documents and ask questions or make comments before signing. But sometimes clients leave the first meeting with so many decisions to make that draft documents can’t be adequately prepared. That’s understandable; decision-making can be difficult. If you are having trouble making all the decisions needed for your estate plan, ask your attorney if you can focus on your Advance Health Care Directive and General Durable Power of Attorney first. Request a meeting with your attorney to review drafts of these documents, which require fewer decisions than the revocable trust agreement. You will probably be able to make the necessary decisions during your meeting; or at least leave the meeting with a short list of decision points. If you can finalize and sign your powers of attorney at this meeting, this will create momentum and you will be relieved that the process is moving forward. In my experience, you will then find it easier to make the decisions needed for your revocable trust agreement and finish up your plan.
8. Schedule a Final Meeting. Time managers recommend scheduling meetings as a way to move a task up your priority list. Once a meeting for your estate plan is on your calendar, try to accomplish what is needed for that meeting. If you have a vacation planned, set the final meeting prior to the vacation and use your trip as a motivator. It’s handy to have your estate plan updated before a big trip!
9. Request a List of Trust Funding Reminders. Once you have created a revocable living trust and related documents that express your wishes accurately, you will need to “fund” your trust. Trust funding is the process of re-titling appropriate assets (such as your real estate, bank and brokerage accounts, and business interests) into the name of your trust. This final step can be challenging for people, not because it is difficult but because it is a series of somewhat tedious chores. I send my clients a final explanatory letter listing each recommendation I have made about funding their trust, so they can use it as a checklist and check off one item at a time.
10. Keep Your Eye on the Prize. People always feel good when they finish their estate plan. You are giving a real gift to your loved ones by simplifying the process as much as you can for them. Keep this goal at the front of your mind as you work through your “to do” lists.
11. Feel Good about Documenting Your Wishes! It’s hard to think about who will handle your affairs when you are unable to do so, since no one will do it as well as you do. Accept that you will not be able to find perfect solutions to the decisions you must make in your plan, and feel good about giving each decision your best guess. Your best guess will be much closer to ideal than any default that California law has for you if you do not complete a customized plan. Forget perfection, and proceed confidently with your best guesses. Congratulate yourself when you get the job done!

Creating an estate plan is extremely worthwhile, and it is only useful when completed. Select your estate planning attorney carefully, making sure you are comfortable with her or him as well as trusting her or his expertise. You will need to review your plan every few years, so find an attorney who is a good fit for you and let her or him guide you through the process, all the way to completion!