Estate Tax in 2025

Since the estate tax exemption amount is currently pegged to inflation, the IRS recently announced the exemption amount for 2025 as detailed below: 

Year                   Amount Excluded        Maximum Tax Rate
 
2001                   $675,000                      55%

2002                   $1M                             50%
 
2003                   $1M                             49%
 
2004                   $1M                             48%
 
2005                   $1M                             47%
 
2006                   $2M                             46%
 
2007                   $2M                             45%
 
2008                   $2M                             45%
 
2009                   $3.5M                          45%
 
2010                   Repealed                      0%
 
2011                   $5M                             35%
 
2012                   $5.12M                        35%
 
2013                   $5.25M                        40%
 
2014                   $5.34M                        40%
 
2015                   $5.43M                        40% 
 
2016                   $5.45M                        40%  
 
2017                   $5.49M                        40%         
 
2018                   $11.18M                      40%   

2019                   $11.4M                        40%  

2020                   $11.58M                      40% 

2021                   $11.7M                        40% 

2022                   $12.06M                      40% 

2023                   $12.92M                      40% 

2024                   $13.61M                      40%

2025                   $13.99M                      40%

Vexatious Litigant

A litigant is generally entitled to file court documents at their discretion. That is, the litigant does not need pre-approval to file a complaint, petition, objection, etc. from a third-party. However, for an unlucky subset of litigants, they do need pre-approval to file because they have been declared a vexatious litigant.

An unpublished appellate opinion described the rationale behind the vexatious litigant law:

"`The vexatious litigant statute (§ 391 et seq.) was enacted "`to curb misuse of the court system'" by "`persistent and obsessive' litigants." [Citation.]' [Citation.] Relevant here, a "`[v]exatious litigant'" is one who, proceeding in propria persona, . . . `repeatedly files unmeritorious motions, pleadings, or other papers, conducts unnecessary discovery, or engages in other tactics that are frivolous or solely intended to cause unnecessary delay' (inter alia)." (Deal, supra, 45 Cal.App.5th at p. 618.)

"`A court exercises its discretion in determining whether a person is a vexatious litigant'" based on statutory criteria. (Deal, supra, 45 Cal.App.5th at p. 621; see § 391, subd. (b).) "Once a person has been declared a vexatious litigant, the court, on its own or a party's motion, may `enter a prefiling order which prohibits [the person] from filing any new litigation in the courts of this state in propria persona without first obtaining leave of the presiding judge of the court where the litigation is proposed to be filed.'" (Shalant v. Girardi (2011) 51 Cal.4th 1164, 1170; see § 391.7.)

This unpublished appellate opinion also described how a party had been declared a vexatious litigant by a trial court:

"After a continued hearing, at which all parties had the opportunity to orally present their positions, the temporary judge hearing the motion issued an order granting respondents' motion. The written ruling listed roughly four dozen court filings by appellant since the time of the ruling on the first vexatious litigant motion, and it described them as "repetitive," "difficult to decipher," and unsuccessful. Based on appellant's actions of "repeatedly fil[ing] unmeritorious motions, pleadings, or other papers," the court found appellant to be a vexatious litigant and issued a prefiling order "prohibit[ing] [him] from filing any new litigation in the courts of this state in propria persona . . . without first obtaining leave of the presiding justice or presiding judge of the court where the litigation is proposed to be filed."  

The appellate court affirmed the the trial court's vexatious litigant determination.  

Elias v. Jensen, Orange County Superior Court case no. 30-2018-00980796

Duty of Care Owed to a Nonclient Third-Party

An attorney owes a duty of care to their client (see act in their best interest). In the context of estate planning, the client is writing an estate plan to benefit a third-party, i.e. the beneficiaries of their estate plan. The question then becomes, does the attorney owe a duty of care to third-party beneficiaries? A recent published appellate decision touched upon this issue. 

"Richard died in March 2014 at the age of 81. His estate was valued at $18 million. Richard's 2012 estate planning documents, prepared by appellants, disinherited respondents and Peter. Richard's entire estate was left to his fourth wife, Elizabeth Grossman (Elizabeth), even though she was independently wealthy. Richard married Elizabeth in 2000, and they remained married until his death."

Following Richard's death, the disinherited relatives sued the drafting attorney of Richard's estate plan for legal malpractice and prevailed at the trial court level. This decision was then appealed to the California Court of Appeal.

"The sole issue on appeal is whether appellants owed a duty of care to respondents even though respondents were not their clients. "Whether [such] a duty exists is a question of law that we independently assess." (Gordon, supra, 88 Cal.App.5th at p. 554;"

"In Gordon the Court of Appeal stated: "We hold, as the courts before us uniformly have, that a nonclient third party can maintain a malpractice action only if there is clear, certain and undisputed evidence of the client's intent to benefit the third party, or to benefit the third party in the way [the third party] claims . . ." (Gordon, supra, 88 Cal.App.5th at p. 564.) The third party must show that the client's attorney knew or reasonably should have known of this evidence when the alleged malpractice occurred. Attorneys are not clairvoyants capable of ascertaining the unexpressed intent of their clients. (See id., at p. 556 [nonclient plaintiff must "establish[] that the client, in a clear, certain and undisputed manner, told the lawyer, `Do X,' (where X benefits the plaintiff)"].) Because the evidence of Richard's alleged intent to leave his estate to respondents instead of Elizabeth is not clear, certain, and undisputed, as a matter of law the evidence is insufficient to show that appellants owed a duty of care to respondents in preparing the 2012 restatement of the ARG Trust. Wakeman's testimony, together with the supporting testimony of Elizabeth, Laurel Luby, and Meredith Rattay, shows that the evidence of Richard's alleged intent was disputed.

If Richard had intended to leave his estate to respondents, there would have been no need for him to have obtained the letter from Dr. Miao attesting to his capability of "making competent financial and estate planning decisions." Wakeman advised Richard to obtain the letter because Richard said he wanted to disinherit his children and grandchildren and leave his entire estate to his independently wealthy fourth wife. The imposition of malpractice liability in these circumstances would not only be unjust, it would also "place an `intolerable' `burden' on the legal profession." (Gordon, supra, 88 Cal.App.5th at p. 559.)" 

Grossman v. Wakeman (2024) ____ Cal.App.4th ____

Financial Elder Abuse

Under Welfare & Institutions Code §15610.30(a)(1)–(3), financial elder abuse occurs when an individual

"(1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.

(2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.

(3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 15610.70."

A recent unpublished appellate opinion focused on the issue of financial elder abuse. The trial court ruled that respondent had committed financial elder abuse and awarded the petitioner $318,000 in compensatory damages and $50,000 in punitive damages. The respondent appealed the trial court's ruling of financial elder abuse. The appellate court agreed with the trial court's finding of financial elder abuse.

"From 2015 through 2017, under the guise of providing comfort and care, Baik repeatedly misrepresented to Mr. Tak that the government could seize his condominium before or after his death unless he created a trust. Fearing the loss of his home and worrying about his ability to reside in it for the rest of his life, Mr. Tak acted upon Baik's misinformation to create a trust.

Subsequently, in March 2017, Baik actively facilitated Mr. Tak's creation of the Trust by driving him to We the People and paying Yi for her services. As a result of her efforts, Mr. Tak signed a slew of complicated legal documents, which he could not read or understand. He believed that, by creating the Trust and signing those documents, he was protecting his home from government seizure and ensuring his testamentary wishes would be carried out. Instead, Mr. Tak unwittingly granted Baik the exclusive rights to his entire estate, including his condominium, upon his death. Two months later, Baik quelled any concerns Mr. Tak may have had by assuring him, in writing, that she would carry out his wishes by distributing $100,000 to his church and $50,000 to Hwang when he died. Her actions taken following Mr. Tak's death, however, reflect that this promise was false.

Rather than following Mr. Tak's testamentary wishes, Baik immediately commenced efforts to sell Mr. Tak's condominium as quickly and surreptitiously as possible. Less than two months after his death, she sold the condominium to a distant family member through a closed sale, after initially concealing the transaction from Hwang. Ultimately, through the relationship she formed with Mr. Tak, her campaign of misrepresentations causing him to fear the loss of his home and believe she would carry out his testamentary wishes, and her active efforts to ensure the Trust's creation, Baik pocketed nearly $200,000 from the sale of Mr. Tak's home, as well as $9,700 from his life insurance policy. As a result of her actions, Mr. Tak's wishes remain unfulfilled: Hwang and Mr. Tak's church have been deprived of gifts they would have received had Baik not kept the entirety of his estate.

On this record, we conclude there is substantial evidence to support a finding that Baik took and retained Mr. Tak's property with the intent to defraud and by undue influence. Thus, the trial court did not err by concluding Baik committed financial elder abuse under section 15610.30, subdivision (a)(1) and (3)."

In the Matter of: Grace S. Hwang, Los Angeles County Superior Court case no. B325870

Can an Email Amend a Revocable Trust?

Can emails to an estate planning attorney constitute an amendment to an individual's revocable trust? This interesting legal question was the focus of a recent appellate case:

Jerry and Mary Trotter, who were married, established the Trust as a revocable trust in 2011, and named themselves collectively as both "Trustee" and "Trustors." The Trust names Timothy, their son, as the successor trustee in the event neither Jerry nor Mary can act as a trustee. The Trust also provides that upon the death of whichever spouse survives the other, certain stock is to be distributed to Timothy, and the rest of the trust estate should be distributed in equal shares to each of several children, including Jerry's daughter from another marriage, Van Dyck.

When Jerry died in 2012, Mary became the sole trustee. According to declarations in the record, Mary intended to exclude Van Dyck as a beneficiary because Van Dyck had already inherited from Jerry's previous wife, and Mary believed Van Dyck had "been fairly provided for" in 2015. In relevant part, the Trust authorized Mary to amend the Trust "by an instrument in writing signed" by Mary and delivered to the "Trustee" — at the time, herself.

In late June 2020, Mary, Timothy, and Matthew Pribyl, Mary's estate planning attorney, exchanged e-mails about amending the Trust, excerpted below. On June 25, before her scheduled surgery on July 1, Mary e-mailed Timothy stating:

"My mind is quite clear now as [to] how to move forward on the house and will.

"I will write it out and then we need to see that the lawyer gets a copy asap and start redoing the will and trust.

"1. The house will go to you

"2. My cash assets will be divided among my five children; nothing to Wendy [¶] . . . [¶]

"The rest of selected items will be assigned to different children/grandchildren and I'm working on that list.

"Thanks, mom"

Mary underwent surgery the next day on July 1, 2020, and contracted an infection while in the hospital. She suffered two heart attacks and passed away a few weeks after her surgery. Timothy became the successor trustee, and when disputes arose about the administration of the Trust, Timothy petitioned the probate court for instructions. He sought, among other things, guidance about "whether under the express terms of the Trust, [Van Dyck], by reason of Mary's writings, has been removed as a beneficiary of the [Trust]."

Timothy J. Trotter (Timothy), successor trustee of the Trotter Family Revocable Trust (Trust), petitioned the probate court seeking guidance about whether certain e-mails from his mother, Mary Trotter (Mary), constituted a valid amendment to the Trust's beneficiaries. The court found that Mary's writings were insufficient to constitute an amendment to the Trust, and it ordered that the Trust be distributed to its original beneficiaries, including Wendy Trotter Van Dyck (Van Dyck).

The appellate court concluded "that at least two of the grounds the court relied on were proper: (1) there was no signed document amending the Trust and the electronic signature provision of the Uniform Electronics Transaction Act (UETA) does not apply because a unilateral trust amendment does not constitute a "transaction" within the meaning of the statute (Civ. Code § 1633.2, subd. (o)); and (2) Mary's writings did not adequately express an intent to amend the trust by the writings themselves."

Trotter v. Van Dyck (2024) ____ Cal.App.4th ____

Complying with a Filing Deadline

It is axiomatic that a party is best served to observe filing deadlines. A judge does not impose filing deadlines for no reason. Rather filing deadlines are imposed to ensure the orderly administration of a case. A party who does not comply with a filing deadline does so at their own peril. This point was recently illustrated in an unpublished appellate opinion.

"On March 28, 2022—five days after the probate court's deadline to file objections to Liane's petition, three days after the court's deadline to file short briefs before the continued hearing, and just two days before the continued hearing itself—Tony filed and served objections to Liane's petition and an opposition brief."

"The probate court began by remarking that although the matter was set for an evidentiary hearing, "I don't think we're going to have one based on what I read." The court explained it had ordered any objections to the petition to be filed seven days in advance of the hearing and had received none. The court also observed it ordered the parties to walk their pre-hearing briefs into the courtroom five days before the hearing but had received only Liane's and Jett's briefs.

Tony's attorney, who was retained to represent Tony solely for purposes of appearing at the continued hearing (and the initial, uncompleted hearing earlier in March), explained that his client had difficulty filing his objections and brief through the electronic filing system. The court said Tony should have walked his filings into the courtroom and explained that as a "pro per litigant" Tony had "the luxury of walking in the door with [his] paperwork to the clerk's office and handing it to the clerk and saying `file it.' That is a luxury only pro pers have."

The probate court stated it would only "consider[ ] the briefs that were given to the court in a timely fashion." When Tony's attorney attempted to argue points raised in Tony's opposition and objections, the court rejected those arguments because Tony failed to timely file those documents: in the probate court's words, "[Tony] doesn't have a chance to have this fight because he did not do what he was required to do." When Tony's counsel asked for a short continuance so that the court could read what his client had filed, the court explained it gave Tony ample to time to file his responses to the petition and reiterated, "I'm not going to hear from him, because he did not do what he was ordered to do." When Tony himself attempted to interject, the court stated, "Mr. Bral, . . . I specifically put forth a briefing schedule and you did not comply with it. Therefore, we are not having this evidentiary hearing based on the fact that there is no need for it."

Tony personally interjected to inform the probate court that he had witnesses that would "respond to every item, every allegation." The probate court then invited both sides to make an offer of proof about what their witnesses would say if called to testify. Liane and Jett provided an extensive offer of proof; Tony did not.

"[B]ased on the briefs that were received," the offers of proof presented by Liane and Jett, and the fact that "no objection [was] lodged to th[e] petition," the probate court granted the petition and immediately suspended and removed Tony as co-trustee."

Estate of Ramin Bral, Los Angeles County Superior Court case no. B323383