Real property held in Joint Tenancy

When real property is held in joint tenancy, an interest in the real property generally passes to the surviving joint tenant automatically when a joint tenant passes away. Due to the nature of joint tenancy, it has been called a "poor man's will." Estate of Propst (1990) 50 C3d 448, 464. However, just like a will, the creation of a joint tenancy can be challenged under various legal theories. A recent unpublished appellate opinion involved such a scenario. The daughter of a deceased joint tenant objected to the joint tenancy's creation mere days before the deceased joint tenant passed away. A picture of the deed that created the joint tenancy is to the right.

"Five days before her death in 2015, Joanne Magdaleno transferred title to certain real property (the property) from herself to her ex-husband James Handelin and herself as joint tenants. In 2020, Magdaleno's daughter Andrea Wood, in her capacity as administrator of the estate, filed a petition under Probate Code section 850 for an order declaring the property an asset of the estate and for damages against Handelin, asserting among other things that Magdaleno had lacked the mental capacity to sign the deed and that Handelin had engaged in fraud and undue influence. The probate court ultimately sustained Handelin's demurrer to a first amended petition without leave to amend, concluding that Wood's claims were time-barred."

"The first amended petition alleged the following: Magdaleno divorced Handelin in 2014. Handelin signed a quitclaim deed as to the property the same year. In 2015, Magdaleno was hospitalized for three weeks with pneumonia. She was under heavy medication. Five days before she died, on April 13, 2015, she signed a deed granting to Handelin and herself title to the property as joint tenants. Magdaleno did not have mental capacity to understand what she was doing when she signed the deed. Handelin had the deed prepared, and he unduly influenced Magdaleno to sign it. He made false representations to Magdaleno to induce her to sign the deed. Magdaleno's signature on the deed was partial and the name on the deed was not the name restored to her upon her divorce. Wood did not discover the existence of the deed until after March 31, 2017."

On appeal, the appellate court held that Ms. Wood should have had the opportunity to amend her petition and reversed the trial court's ruling.

Wood v. Handelin, Shasta County Superior Court case # 30146

Contesting a Trust in California

In California, an heir or beneficiary can challenge the validity of a trust generally within 120 days of receiving a Probate Code §16061.7 notice.  Probate Code §16061.8. Typically the aggrieved heir or beneficiary will try to invalidate a single trust. It is atypical to see an heir or beneficiary try to invalidate multiple trusts because the circumstances surrounding the execution of multiple trusts do not necessarily overlap. However, a recent unpublished appellate decision involved such a scenario. 

"Before she died in April 2018, Cynthia Bronte executed three revocable trusts to distribute her primary asset, Basiltops, LLC (Basiltops), a pesto sauce company she built. In a 2014 trust, Cynthia left 75 percent of Basiltops to her daughter, Andrea Bronte, and the remainder to her employees. In a 2016 trust, Cynthia completely disinherited Andrea, and left the company entirely to her employees. In a 2018 trust, Cynthia left the company to one specific employee, Rut Gumeta Albarez. Andrea, who had a difficult relationship with her mother and had been estranged up until Cynthia's death, remained disinherited.

Two months after Cynthia's death, Andrea filed a petition to invalidate the 2018 trust, asserting that Cynthia lacked capacity to execute it and she had been the victim of undue influence and financial elder abuse by Albarez. Andrea sought to have the 2014 trust declared as the valid and rightful trust of Cynthia's.

At trial, Albarez's attorney asserted that "Andrea need[ed] to knock out both the 2018 trust and the 2016 trust" in order for the 2014 trust to be valid and operative. That is, if the 2016 trust is valid, Andrea could not take under the 2014 trust. Agreeing that issue would be dispositive, the court bifurcated the trial to first determine the validity of the 2016 trust. Andrea's attorney did not object then, nor did she object at any time over the next two days of the bifurcated trial. Andrea conceded that Cynthia signed and executed the 2016 trust, which disinherited her, but argued Cynthia's subsequent conduct evidenced her intent to revoke the 2016 trust. The trial court found the "overwhelming" evidence demonstrated the 2016 trust was validly executed, Andrea had not met her burden to demonstrate revocation, and accordingly it denied Andrea's request to have Cynthia's estate distributed pursuant to the 2014 trust."

On appeal, the appellate court affirmed the trial court's ruling.

Bronte v. Albarez, San Diego County Superior Court case # 37-2018-00031659-PR-TR-CTL

Discovery - Requests for Admission

When a case is litigated, the parties will typically engage in discovery to gather the relevant facts that pertain to the case. 

For example, assume a person passed away without a will and owned a home in their name alone. A petition is filed by the decedent's son to be appointed the administrator of the estate. In turn, a competing petition is filed by the decedent's "spouse" to be appointed the administrator of the estate.

The son is represented by counsel whereas the "spouse" is not.

If the "spouse" qualifies as the decedent's surviving spouse, they have the highest priority to be appointed administrator of the estate. Probate Code §8461(a). However, if the spouse does not qualify as the surviving spouse, then the son would have priority over the "spouse" to be appointed administrator of the estate. Probate Code §8461(b).

The son discovers through a public records search that the "spouse" filed a dissolution of marriage from the decedent years prior to his death. The son relays this information to his attorney who looks up the case on the court's website. The attorney finds that a dissolution of judgment had been filed years before the decedent's passing.

The son's attorney then sends "Requests for Admissions" to the "spouse" to have her admit that she was not married to the decedent at the time of his passing. That is, the marriage between the "spouse" and decedent had been dissolved prior to his passing. Therefore, the son would have priority to be appointed administrator of the estate.

The "spouse" refuses to answer that she was married to the decedent at his passing by asserting that family court records, which are public and easily accessible, can verify whether she was married to the decedent at the time of his passing. Due to this refusal, the son's attorney files a motion to have the Requests for Admissions be deemed admitted and for monetary sanctions.  

The trial court agrees and has the Requests for Admissions admitted (see the marriage was dissolved) and imposes monetary sanctions on the "spouse."

The foregoing facts are loosely-based upon a recent unpublished appellate decision. 

Estate of Sukhjinder Singh, San Luis Obispo County Superior Court, case # 19PR-034.

Estate Tax in 2023

Since the estate tax exemption amount is currently pegged to inflation, the IRS recently announced the exemption amount for 2023 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%

U.S. Residency Requirement for a CA Administrator

If a person passes away without a will in California and a probate is needed to administer their estate, an administrator will need to be appointed by a judge. Typically, the administrator will be a relative of the decedent such as a spouse or child. However, Probate Code §8402(a)(4) requires that this person be a U.S. resident.

A recent published appellate decision addressed the issue of what constitutes U.S. residency for purposes of being an administrator.

Estate of El Wardani, 82 Cal.App.5th 870 (2022) 

"Ramsey Walter El Wardani died intestate in 2016 and was survived by his wife Janine and daughter from a previous marriage, Alexandria (Ali). Four years into a protracted probate dispute between Janine and Ali, the court removed Janine as court-appointed administrator of Ramsey's estate. It deemed her ineligible to serve in that role because it found that she was not a United States (U.S.) resident as required by section 8402, subdivision (a)(4) of the Probate Code"

"In short, as a matter of law, a resident of the U.S. under section 8402, subdivision (a)(4) is a person who actually lives in the U.S. and is not merely present temporarily. U.S. residency is not established by mere connections alone."   

"In her 2021 declaration, Janine asserted that she "frequently come[s] to the United States (252 days in 2019 and 2020)" and noted several contacts and ties in California. She stated that she grew up in California and has family here, holds a California driver's license, voted in San Diego County (including in 2016, 2018, and 2020), maintained medical providers and attorneys in California, and held bank accounts and paid taxes in California. Janine disavowed any intent to become a permanent resident or citizen of Mexico, explaining that she stayed in Mexico on a tourist visa and did not speak fluent Spanish. Yet in that same declaration, Janine confirmed that she still owned a home in Mexico. The only reason she stayed there was because "[she] own[ed] a house there, free and clear, where [she could] live inexpensively." She claimed her plan was to "sell [the] home in Mexico and return to live permanently in the United States" after the probate case was over."

"At best, while Janine had many contacts with the U.S. and visited frequently, there was no evidence that she actually lived anywhere but Mexico since moving there in 2014. Her bank accounts, doctors, and family gave her several reasons to visit California, but those visits did not establish residency on their own. Janine was not a person who lived in California and temporarily found herself in Mexico, but rather someone who lived in Mexico and made frequent but temporary visits to the U.S. Accordingly, sufficient evidence supports the court's finding that Janine was not a "resident of the United States" as required by section 8402, subdivision (a)(4), and there was no abuse of discretion in ordering her removal as administrator of Ramsey's estate."

Surcharging a Fiduciary

A fiduciary, whether a trustee or a personal representative, is generally required to produce an accounting prior to making distributions to the beneficiaries. If a fiduciary is ordered by a judge to render an accounting, then naturally it is prudent for the fiduciary to do so. Otherwise, liability can arise for this omission. A recent unpublished appellate decision involved a fiduciary who failed to provide an accounting to the court, when required to do so, and suffered the consequences.

On September 12, 2005, appellant filed a petition to be appointed executor of her father's estate. Appellant's petition was granted and she was appointed executor in November 2005. "After letters were issued, appellant proceeded to implement the transfer of the property listed in the will. Relevant to this appeal, in September 2006, appellant executed deeds for three properties the will stated should be transferred to Hulsey and Holtermann as joint tenants. Thereafter, in October 2006, appellant filed an ex parte petition seeking a final discharge of the probate. In November 2006, the probate court struck the letters it had issued to appellant after realizing the steps necessary to close the probate had not been taken by appellant." 

"No further filings were made in this matter until November 2019 when Holtermann filed a petition to reopen the administration of the estate."

In December 2019, "[n]oting he needed an accounting before he could enter any final orders closing the estate, the judge also issued an order instructing appellant to appear and provide an accounting. Appellant was not present at this hearing. The hearing on the petition was then continued to June 2020."

During a September 14, 2020 hearing, the trial court judge believed that "an accounting would help resolve outstanding issues before closing probate, the judge continued the matter to December 28, 2020, and directed appellant, through her attorney, to file an accounting by November 30, 2020. Prior to that hearing, Holtermann's attorney submitted a declaration to the court documenting attorney's fees he generated while pursuing the case for Holtermann."

"At the December 28, 2020, hearing, the judge learned no accounting had been submitted by appellant. The judge warned appellant's attorney that his client had a fiduciary duty to prepare the accounting before probate could be closed and might be subject to a surcharge if one was not provided. The court then continued the hearing, once again, to February 8, 2021."

"An accounting was not provided by appellant at the February 8, 2021, hearing."

"The order also awarded Holtermann $3,500, designated as a "surcharge" against appellant for failing to provide an accounting to the court."

On appeal, the $3,500 surcharge was upheld. 

Holtermann v. Irvin, Tulare County Superior Court, case # VPR042397