Friday, December 11, 2009

Intestate Succession--Laws of US States

Over at my commercial website, there is a page with links and excerpts of the intestate succession laws of the 50 states plus the District of Columbia. These laws are used to determine who inherits in cases where the decedent dies without a valid will. At the bottom of the page for each state is a comment text box. Feel free to leave a question there about the intestate succession laws for that state. If there are sufficient fact stated in a concise manner, I'll try to answer the question.

Wednesday, November 18, 2009

Child from Prior Marriage / Relationship

Question: I have a child from a prior relationship but am now married to another woman. My wife is pregnant. I want to provide for my eldest child in case I die. Do I need a trust?
Response: Perhaps. The standard estate planning template for a married couple is for each spouse to leave everything to the other spouse with the kids as contingent beneficiaries in cases where both the husband and wife die. That template does not necessarily work for blended families (i.e., one where at least one child of the couple has a parent other than the husband and wife). Taking your case as an example, if you die and everything is left to your wife, can you rely on her to provide for your child by another woman? That is the crux of the problem with blended families. So you are left with trying to balance the needs of children by different mothers as well as your wife in your estate planning decisions.

One option is life insurance. Perhaps there is a child support order in effect in your case already requiring that you maintain life insurance payable to the mother of your eldest child. Let's assume you have not been ordered to maintain life insurance for the mother of your child. The first priority is to ensure the basics of life are covered for your eldest child. If you are a younger man (which I assume from the question), term life insurance is a cost effective approach to cover necessary living expenses and education until the child reaches adulthood. Another administratively simple option is to name the child a transfer on death beneficiary of one of your financial accounts (in lieu of life insurance). Most states allow this type of designation for financial accounts and it's easy to put in place.

But a minor cannot take control of his or her own finances. If you die leaving your child the beneficiary of a life insurance policy, the child's mother mostly likely will be named guardian to hold and spend that money for the child's benefit. If you do not trust the mother to do the right thing, then a revocable trust that remains unfunded until you die can be useful. What a revocable trust does is allow you to name a successor trustee for after your death to administer any assets that have been set aside for your eldest child. The successor trustee, as opposed to a court appointed guardian (who would most like be the child's mother), will be the one to take control of investing and disbursing the trust funds for your child's benefit.

The foregoing are just general observations on a few fragmentary facts. An attorney must sit down with your and go over your entire family and financial situation to give a recommendation on whether or not a trust is right for you.

Tuesday, November 10, 2009

Death of Sole Shareholder With Revocable Trust

Question: My father, sole stockholder of his architectural business and corporation, passed away. He had a revoable living trust with pour-over will leaving everything equally to my brother and I. His business has no activity and any remaining funds were disbursed to pay business debts. We want to dissolve the corporation. I am trustee and executor of trust and will. Is it correct that my brother and I can as heirs to the stock - have a shareholders meeting, appoint ourselves to the board and as officers and then vote for and file for dissolution of the corporation? William, California
Response: The first issue that comes to mind is whether or not your father's revocable trust owned the shares of stock in his architectural corporation (or the shares were subject to a transfer on death designation to the trust). How do you tell? Try and locate the share certificate and / or the corporate minute book. A trust only possesses those assets transferred to its ownership.

Let's assume there is no record of the shares being transferred to the trust during your father's life. The provisions of a pourover will can only be used to transfer property by opening up a probate estate and transferring assets via the probate process. Obviously, you wish to avoid this but this might not be possible. One suggestion is to call the general information number of the California Secretary of State's business entities office and tell them you have a legal question regarding the mechanics of dissolving a California corporation. In some states, the secretary of state's office will field questions of this nature. I'm not sure whether California does or not. It can't hurt to ask and see if they will route you to a staff attorney or paralegal who will at least attempt to answer the question. The secretary of state's office might have an internal policy of accepting articles of dissolution from the executor of the estate of a deceased sole shareholder (but I wouldn't bet on it).

As always, your best source of information is a local attorney experienced in California probate and corporate law.

p.s. If all your father's other assets are properly titled in the name of the trust and this is the last asset to deal with, you won't have to go through a full estate probate cycle to take care of dissolving the corporation to my knowledge. You would file in the California probate court for letter of administration formally making you the administrator of your father's estate. List the shares of the architectural corporation as the sole assets of the estate. Once that is accomplished, I believe you can vote the shares as executor. Next, sign a resolution appointing you sole director. Next, sign resolutions as sole shareholder and, also, as sole director approving dissolution of corporation. File the required documents with the secretary of state's office. Once completed, close the probate estate as it no longer possesses any assets. Again, local counsel can walk you through this process and prepare the necessary documents.

Wednesday, October 28, 2009

All Assets TOD, Do I Need A Will?

Question: I am widowed, have grown children, my house, car, and financial accounts that are all transfer on death. Do I need a will? Cindy, Missouri.
Response: Legal issues are rarely black and white, most wallow in shades in grey. So it is with your question Cindy. If all of your assets have proper TOD designations, then it is unlikely your heirs shall need to open a probate estate after your passing and, thus, the function of a last will greatly decreases. However, what if an asset exists that you forgot to TOD? What if the form used to create a TOD designation on one of your assets is found invalid? Even in cases where no probate estate is created, a last will naming an executor (aka personal representative) is useful. For instance, your last federal income tax return can be signed by the executor named in your last will. Further, any loose ends with creditors (such as credit card companies), expenses of your last illness, arranging the details of burial, and closing accounts with your financial institutions can be facilitated by someone close to you being named executor in your last will. It gives some semblance of authority to this individual to act in small matters without a formal probate estate being opened.

So one must balance the potential help afforded to your heirs as discussed above against the expense of obtaining a last will. Lawyers do not work cheap; however, they do offer you greater assurance that their work is in accordance with the law. No such assurance comes from online last wills; however, they are inexpensive. Only you can decide how to proceed.

Saturday, October 24, 2009

Testator Physically Unable To Sign Will

Question: I am assisting my brother in preparing his wills. He is currently in a rest home. My brother's condition (the result of age and being legally blind) virtually prevents him from signing a Will with a legible signature. I have been told that he can authorize someone else to sign for him, as long as his authorization and the signing is observed by the Will's witnesses. Is that true? Robert, Arizona.
Answer: The first question is whether your brother is mentally competent to execute a last will. That determination must come from your brother's doctors. Assuming he is, the next issue is his physical inability to sign his name to the last will document. The Arizona Probate Code (as in other states) provides a solution to this problem. It reads, in pertinent part, as follows at Section 14-2502:
A. [A] a will shall be:
1. In writing.
2. Signed by the testator or in the testator's name by some other individual in the testator's conscious presence and by the testator's direction.
3. Signed by at least two people, each of whom signed within a reasonable time after that person witnessed either the signing of the will as described in paragraph 2 or the testator's acknowledgment of that signature or acknowledgment of the will.
Emphasis added. Although the statute seems clear on its face that a last will document may be validly executed if someone else signs the document in the "testator's conscious presence", the testator must have knowledge of the entire contents of the last will (if he is unable to read) before orally authorizing its execution by another.

There is one final tangential issue that might come into play. In Arizona, there is a presumption of undue influence which invalidates a last will. Undue influence exists when one who occupies a confidential relationship to a testator is active in procuring the execution of the will AND is one of the principal beneficiaries of the will. Those acting as attorney-in-fact under a power of attorney executed by the testator have been held to occupy a confidential relationship with the testator. See Estate of Shumway, 9 P.3rd 1062 (2000). Proceed with caution if your hold a financial power of attorney AND are to be a beneficiary of your brother's last will.

Thursday, April 2, 2009

Last Will Not Created In State of Residence

Question: My husband wrote a will up and had it notorized in Florida. We lived in NJ at the time, he has since passed. Is it a valid will? Cindy, New Jersey.
Response: Two issues are presented by your question: (a) whether the last will is valid in the sense that the court will accept it for probate in New Jersey and (b) whether it is a self-proving will that can be admitted into probate without the need to get affidavits from the witnesses to the will's execution. As to the first question, the fact that you were in Florida when the will was executed although residents of New Jersey should not, by itself, effect the legality of the will. New Jersey probate law sets for the following as the rule for a legal last will.
3B:3-2. Formal execution of will. Except as provided in N.J.S. 3B:3-3, every will shall be in writing, signed by the testator or in his name by some other person in his presence and at his direction, and shall be signed by at least two persons each of whom witnessed either the signing or the testator's acknowledgment of the signature or of the will.
Note that it is not necessary for the will to be notarized in order for it to be valid.

Although having the will notarized is not necessary for a valid will, it is necessary to make the will self-proving. It may or may not be difficult for you locate the witnesses to the will in order to secure affidavits from them (which will be necessary if the will is NOT to be self-proving). On this point, the question is whether a notary licensed as such in the State of Florida is a proper officer before whom to execute a New Jersey last will so that it will be accepted into probate in New Jersey. I don't know the answer to that question. As always, the best course of action is to take the will to a local attorney experienced in probate administration for an opinion on the matter. I hope the foregoing was helpful in some way.

Wednesday, January 28, 2009

Question On California Probate Law

Question: My brother died three months ago and now my sister-in-law is expected to die soon from cancer. Who inherits the money. Todd, CA.
I'll make a few general statements on the issue Todd but the question lacks sufficient information to be precise. I assume your concern is whether your family will inherit a portion of your brother's estate. No will was mentioned so I'll assume your brother died intestate. Let's start with the mechanics of what his estate contains. California is a community property state. His estate contains his separate property and 1/2 of all community property. Any property jointly owned (regardless of its nature) passes outside of probate to your sister-in-law by operation of law.

Does the impending death of your sister-in-law play into this equation in any way? The Uniform Simultaneous Death Act provides that if two or more people die within 120 hours of one another, each is considered to have predeceased the other. Your sister-in-law has survived your brother for well past the 120 hour threshold, therefore, the fact that she may not have long to live does not play into the answer to your question unless your brother has a will that contains a contingency on her inheritance from his estate with a longer period. That's unlikely even if he has a will. (Note: California did not enact the most recent version of the Uniform Simultaneous Death Act. California's version is not as far reaching.)

Assuming your brother died intestate, what portion of his estate goes to his widow and what portion to other heirs? That depends on whether he had children. A good summary of the California intestate succession laws can be found here.