June 14, 2013

Disqualified Donee

When a person writes a will and/or trust, there are certain individuals who are generally barred from being a beneficiary of said testamentary instrument. One class of individuals is the drafter of the testamentary instrument. For example, an attorney would generally be barred from writing themselves into a client's will.

This law is designed to protect the client from an unscrupulous lawyer or other malevolent individual.
However, if the drafter is related to the client, then the transfer is permissible.

A recent Court of Appeal decision addressed when the drafter has to be related to the client, at the time of execution or at the time of death.

Estate of Lira (2012) 212 CA4th 1368

Oligario Lira married Mary Terrones in 1968. At the time of their marriage, Oligiario had 3 children from a prior marriage and Mary had 6 children from a prior marriage. One of Oligiario's children is Mary Ratcliff. Given the size of this large blended family, the Terrones-Lira family was the inspiration for the television show "The Brady Bunch." No, not really, it was just too easy to not pass up.

Ms. Terrones filed for divorce in Santa Barbara County on February 21, 2008. This divorce was not finalized until February 21, 2010. During this gap in time, Oligiario executed a will and trust on January 6, 2009. Oligario named his three children and three of his stepchildren as the primary beneficiaries of his will and trust. Oligario named his son Robert Terrones to be the successor trustee and personal representative of his estate. The drafter of his estate plan was Glenn Terrones, a California attorney and son of Robert. Oligiario later died on July 20, 2010.

Mary then petitioned for probate on August 6, 2010 and stated in her filing that Oligiario died intestate. Robert countered by filing his own petition for probate and attached a copy of the will. Mary objected to Robert's petition because Robert was related to the drafter of Oligiario's estate plan, Robert was Glenn's father, but at the time of Oligiario's death, Glenn was not related to Oligiario because of the divorce. 

The issue on appeal was at what time does the statute apply, when the client executes the document or when the client dies. If the former, then Robert's petition would be granted because Oligiario was still married to Ms. Terrones at the time the will and trust was executed. Namely, on January 6, 2009 Oligiario was still legally married to Ms. Terrones. If the latter, then Mary's petition would be granted because Oligiario was not married at his death to Ms. Terrones and thus Glenn had no familial relationship to Oligiario. Oligiario's divorce was finalized on February 21, 2010 and died on July 20, 2010.

The Court of Appeal held that the applicable time is when the client signs the document, not when the client dies. Hence, since Oligiario was still married at the time he executed his will and trust, the transfers to his stepchildren were valid because on January 6, 2009 he had a familial relationship to Glenn and thereby Robert.