Probate Terms

Probate law has certain terms that have specific legal meanings to them. The following are some of those terms.

Abatement 

Definition: The reduction of testamentary gifts. Black's Law Dictionary 8th ed. (West Group, 2004).

Example: John Negligent decides to leave $50,000 in his will to his friend Larry Appleton with the balance, known as the residuary, to his other friend Homer Thompson. When John wrote his will, his estate was worth $500,000 in liquid assets. However, when John passed away, due to his profligate spending, his estate was only worth $30,000. California laws on abatement say that Larry is entitled to the remaining $30,000, not Homer. Prob C § 214029(a). However, the default rules of abatement can be altered in a will. Prob C § 21400. 

Ademption 

Definition:  Property that was listed in the person's will that is not in his or her estate at the time of their death. Black's Law Dictionary 8th ed. (West Group, 2004).

Example: John Negligent states in his will that his friend James Rodgers is to receive his prized red Ferrari 308 GTS, which was featured in the movie National Lampoon's Vacation. (I have watched that movie about a thousand times now). John then sells his Ferrari to pay off his credit debt and passes away in a tragic hot air balloon accident shortly thereafter. John's gift of the Ferrari to James is therefore adeemed. James will then need to prove, in order to inherit replacement property from John's estate, that there is no sufficient proof to conclude that John intended for the gift to fail. Estate of Austin (1980) 113 CA3d 167. For example, James will argue that John sold the car because he intended to pay off his credit card rather than avoid having James inherit his Ferrari.

Beneficiary

Definition: "A person to whom a donative transfer of property is made or that person's successor in interest." Prob C § 24.

Example: John Negligent leaves, in trust, a beach home in Santa Cruz for his nephew Bobby Smithson.

Class gift

Definition: A gift to all individuals matching the description of the class. Black's Law Dictionary 8th ed. (West Group, 2004).

Example: John Negligent writes a will and leaves his entire estate to his "nieces." When John write his will, he has 4 nieces but at the time of his death he has only 1 niece. Since the devise was to a class of members, rather than individuals, the remaining niece is entitled to inherit the entire estate rather than split the estate with the heirs of the predeceased nieces.

In contrast, a gift made by Katherine Moore in her will to "Carrie D. Griffin and her sister, Anna M. Davis, equally divided" was found not be a class gift.  Estate of Moore (1955) 135 CA2d 122. Thus, Anna could not inherit the entire gift even though Carrie had predeceased Katherine.

Creditor

Definition: "One to whom a debt is owed." Black's Law Dictionary 8th ed. (West Group, 2004)

Example: John Negligent runs over a defenseless old lady in the Santa Cruz mountains on a dark and stormy night. The old lady's family sues sues John for wrongful death and wins. While on appeal, John passes away due to an unforeseen traffic accident. The victim's family is a creditor of John's estate and may assert a creditor's claims during John's probate.

Decedent

Definition: "A dead person." Black's Law Dictionary 8th ed. (West Group, 2004)

Example: Self-explanatory. I will avoid making a potshot at a recently deceased celebrity.

Disclaimer

Definition: "Any writing which declines, refuses, renounces, or disclaims any interest that would otherwise be taken by a beneficiary." Prob C § 265

Example: Homer Thompson is the first named beneficiary of John Negligent's large estate, his uncle. However, Homer has enormous credit card debt and multiple judgments against him. Rather than have his creditors inherit his uncle's estate, Homer disclaims his interest in John's estate so that it transfers to the second named beneficiary. For reference, this is legal. Prob C § 283.

Executor

Definition: An individual nominated in a will to be appointed by the probate court to administer the estate of the decedent's death. Black's Law Dictionary 8th ed. (West Group, 2004).

Example: John Negligent nominates in his will that Freddy Freebird to be the executor of his will. 

Fiduciary

Definition: A person who is required to act for the benefit of another person, on all matters within the scope of their relationship; one who owes to another the duties of good faith, confidence and candor. Black's Law Dictionary 8th ed. (West Group, 2004).

Example: An executor hires an attorney to handle a decedent's probate. The executor is a fiduciary for the decedent's estate and the attorney is a fiduciary for the executor.

Heir

Definition: Any person, including the surviving spouse, who is entitled to take property of the decedent by intestate succession under this code. Prob C § 44. 

Example: Harry is married to Wendy but the couple decides never to have kids. Harry passes away in a tragic rafting accident on the Colorado River in Arizona. At the time of his passing, Harry did not write his will. Wendy is considered Harry's heir. 

An heir is basically a person's next of kin.

Intestate

Definition: A person who has died without a valid will. Black's Law Dictionary 8th ed. (West Group, 2004). 

Example: Irwin decides to write a will but can only locate 1 witness, his neighbor, to sign his type-written will. On the way home from having his will countersigned by his neighbor, Irwin is run over by a pizza delivery guy. Irwin has died intestate because a type-written will requires 2 witnesses. Prob C §6110.

Issue

Definition: All his or her lineal descendants of all generations, with the relationship of parent and child at each generation being determined by the definitions of child and parent. Prob C § 50.

Example: Harry and Wendy, a married couple, have two children, Sonny and Denise. Denise then gets married and has a child, Gwynn. Harry then passes away in an unforeseen blender accident. Harry's issue would be considered Sonny, Denise and Gwynn. 

Lapse

Definition: A devise to a beneficiary that fails because the beneficiary has either predeceased the testator or has failed to live until a certain point in time. Black's Law Dictionary 8th ed. (West Group, 2004).

Example: Thomas devises to Bobby his home in Los Altos, CA free and clear, 650 Rosewood Court. Bobby unexpectedly passes away before Thomas succumbs to mortality. Bobby's inheritance is a nullity because he has failed to survive Thomas, namely the gift has "lapsed." 

Minor

Definition: An individual under 18 years of age. Fam C §6500.

Example: Self-explanatory   

No Contest Clause

Definition: A clause in a will or trust that disinherits a beneficiary should they contest a will or trust. Black's Law Dictionary 8th ed. (West Group, 2004).

Example: Thomas writes in his will that his son, his sole heir, shall only receive $10,000 of Thomas' $1,000,000 estate. The remainder of the estate will go to Thomas' drinking buddy Barney. The will also contains a no contest clause which states that Thomas will forfeit his $10,000 inheritance if he chooses to pursue litigation in hopes of overturning the will for whatever reason.

Pretermitted Child

Definition: A will, made by a parent, that fails to account for a child.  Black's Law Dictionary 8th ed. (West Group, 2004).  

Example: Harry writes his will in 2000. In 2002, Harry marries Wendy and they have a child named Doris in 2004. In 2011, Harry passes away after toppling a vending machine after he tried to grab the last Diet Mountain Dew from it. Doris is a pretermitted child because Harry's will does not account for her. In light of this, Doris may be able to claim an intestate share of Harry's estate.

The companion to a pretermitted child case is the pretermitted spouse, in which the husband fails to account for the wife in his will.

Residuary

Definition: A residuary gift is a transfer of property that remains after all specific and general gifts have been satisfied. Prob C §21117(f).

Example: Thomas pens a will with the following stipulations (1) $15,000 to my Uncle Buck (2) $20,000 to my neighbor Al Bundy (3) my Honda Accord to my friend Larry Appleton and (4) the residual to Pancho Villa. When he dies Thomas' estate has (1) $100,000 in cash (2) $300,000 in Exxon Mobil stock (3) a home in Beverly Hills, CA (4) a Honda Accord and (5) a Rolex Oyster Perpetual. 

Villa, as the residual beneficiary is entitled to $65,000 in cash, all the Exxon Mobil stock, Thomas' house and his watch. 

Rule Against Perpetuities 

Definition: A nonvested property interest is invalid unless one of the following conditions is satisfied: 

(a) When the interest is created, it is certain to vest or terminate no later than 21 years after the death of an individual then alive or (b) The interest either vests or terminates within 90 years after its creation. 

Example: William Randolph Hearst, the media baron, wrote in his 1951 will that his trustee was to operate his business, which is estimated to be worth billions of dollars, as long as they see fit and without time limit. Due to the rule against perpetuties, the trust is expected to last until 2040. Hearst v Ganzi (2006) 145 CA4th 1195. The reason for this is because by 2040, the trust will have failed to vest or terminate within 21 years of Hearst' death and it will be 90 years since the trust's creation.

Testator
 
Definition: A person who has made a will.Black's Law Dictionary 8th ed. (West Group, 2004).
     
Example: Pretty sure an explanation is not needed here.

Trustee

Definition: One who, having legal title to property, holds it in trust for the benefit of another and owes a fiduciary duty to that beneficiary. Black's Law Dictionary 8th ed. (West Group, 2004). 

Example: Thomas writes a trust and leaves property to his son Samuel. However, since Samuel is a minor, Thomas entrusts the property to Theo to hold in trust until Samuel becomes an adult.

The list of duties a trustee owes a beneficiary are expansive and there is significant liability involved with this undertaking.

Trustor (or Settlor)

Definition: One who creates a trust. Black's Law Dictionary 8th ed. (West Group, 2004). 

Example: Every trust has three components, a trustor (or settlor), the person who creates the trust, the trustee, the legal owner of trust property and the beneficiary, the equitable owner of the property.

Escheat - Government Inheritance

One partial misconception in estate planning is the notion that the government, in this case the State of California, will inherit your property. The legal term for this is "escheat." 

While the State of California may theoretically inherit your estate, in real-world application escheat rarely happens. The reason for this is because if a person writes a will or has legal heirs, escheat is avoided. Prob C § 6800. In terms of typing a will, the formalities for such are outlined in Prob C § 6110. As for legal heirs, the California Probate Code says that heirs means "any person, including the surviving spouse, who is entitled to take property of the decedent by intestate succession under this code." Prob C § 44. What this means in everyday language is that your heirs are the people who are related to you by blood. For instance, this would include your children, nieces, nephews, cousins, uncles, aunts, brothers and sisters.

For illustrative purposes, let us assume that a person named Emmanuel had moved to California from the Ivory Coast. When Emmanuel passed away years later, he left no will because he had never got around to writing one. However, Emmanuel was survived by a second cousin who lived in Arizona named Cornelius. Cornelius and Emannuel shared the same great-grandparent, thereby making them second cousins. Upon hearing that Emannuel had passed away and that he was next of kin, Cornelius came to California to administer Emmanuel's estate as he was entitled to inherit it through intestate succession. Prob C § 6402. 

While very basic, this example demonstrates how easy it is to avoid escheat. Even if a person fails to write a will, which is common, the fact that he or she is survived by a heir will avoid the imposition of escheat for their estate. It is very difficult to find a person who lacks any heirs. If you trace your family tree back further and further, the number of heirs you have will increase substantially. Thus, escheat will most likely be avoided because you will have an heir who can claim your estate should you not write a will.

One possibility where escheat might occur is where a person moves to a far off place, say Modoc County California, and loses contact with their family. Consequently, when they pass away, nobody will know about it in order to inherit that person's estate. While plausible, technology today is so extensive today, email, Facebook, twitter, instant messaging, etc.,  it prevents people from getting cut off from their families, unless they want to be a recluse or the black sheep of the family.

Estate Planning Mistakes

The following are some common estate planning problems I have seen over the years.

1. Adding a child's name to the title of the family home

Parents often wish to leave their entire estate to their children. One imprudent method of doing this is to add a child's name to the title of the home by partially transferring the parents' interest in the home to include the child as well. For example, Hal and Wendy have two children, Samuel and Donna. They decide that both should inherit the home once both of them have passed away. They execute a deed transferring their interest in a home to include their children as well. Thus, the deed to the home now reads that it is owned by Hal, Wendy, Samuel and Donna.

There are two reasons why this procedure is not recommended at all. 

First, since Samuel and Donna are owners of the home, they can force what is known as a "partition action." In a partition action, the property is either physically divided up and distributed to the owners in proportional to their interest, sold and the proceeds distributed in accordance with the ownership interests or one party buys out the interest of the other party. CCP §§873.210-873.290; CCP §§873.510-873.850; CCP §§873.910-873.980. Each owner has a right to seek a partition action subject to waiver. CCP § 872.710(b). Essentially, if one owner seeks a partition action, there is nothing a co-owner can do to stop it. From our example, if Samuel and Donna become fed up with their parents for whatever reason, say they failed to let them stay out late one evening when they can back from college, they can petition a local court to partition the family home, regardless of any objections by Hal and Wendy.

Second, adding a child's name to the family home is foolish because of liability reasons. Most assets are subject to recovery if a creditor obtains a court judgment against the debtor. For example, if Samuel ran over an unsuspecting bicyclist with his car and the injured bicyclist won a judgment against Samuel in civil court, Samuel would be personally liable for this judgment. This means that most of his assets would be subject to attachment by the bicyclist. Consequently, the bicyclist would be very pleased to see that he could attach a judgment lien to the property that Samuel owned with his parents. By placing a judgment lien on the property, this would prevent the sale of the home until the judgment lien was paid off. So if Hal and Wendy ever decided to sell the home, they would have to either pay off the judgment lien in full or negotiate a reduced price. 

2. Failure to observe formalities

The legal system is very much interested in formalities. Certain formalities must be met in order for a document or legal action to be considered valid. For example, typewritten wills in California require that 2 witnesses sign the will. Prob C § 6110(c). This means that a notarized signature will not suffice because a notary is only 1 person. Thus, the fact that you had your will notarized is a clear indication that it is probably not valid. For whatever reason, many people believe that 1 notary equals 2 witnesses for executing a will, which is clearly not true.

3. Selecting the wrong trustee of a living trust

Besides the beneficiary designation, the biggest question a person confronts when writing a trust is who will be the successor trustee. The choices include family members, friends, professional trustees, trust companies and attorneys. Often times a family member is selected and major problems ensue because the family member is ill-prepared to handle such a responsibility.

4. Oral estate planning   

It is not uncommon to hear a disgruntled heir state "Aunt Gertrude told me when I was young that I would inherit her antique brooch when she passed away." Yes we all have been the recipients of a statement by a relative promising us something when they pass on. 

The good news is that these statements make us feel happy because it shows that our relatives care enough about us to see us inherit a prized possession of theirs. The bad news is that these statement have speculative legal value at best and thereby most likely not to persuade a court as to its veracity. Prob C § 15207. In particular, most attorneys cringe when they hear about oral agreements pertaining to an inheritance because if the matter was so important it would have been written down. As the saying goes, "talk is cheap" and most people will casually throw around all sorts of ideas. Yet when given the opportunity to express their thoughts on paper, people often have a change of heart and refuse to spell out their testamentary intentions.

5. Avoidance of creditors by transferring property pre-death

People regularly incur a large amount of debt in the latter stages of their life due to costly life-prolonging medical care. Cognizant of this debt, people mistakenly assume that if they transfer their assets to the beneficiaries of their will or trust before they pass away, their creditors (medical insurance company, credit cards, etc.) will have no recourse against them because the property is not in their control. 

For instance, Dan had health problems and owed Chase Bank roughly $50,000 in credit card debt due to medical charges. Dan had written in his will that his friend Ezekiel would inherit his home upon his death. Rather than have Chase Bank place a judgment lien on the property, Dan transferred his interest in the home to Ezekiel one month before he passed away, assuming that the transfer would allow Ezekiel to inherit the home free and clear of any claim by Chase Bank.

However, California law provides creditors many legal remedies if the transfer was done to defraud a creditor's attempt to recover a lawful debt owed. Uniform Fraudulent Transfer Act CC §§3439-3439.12. In this case, Chase Bank could see that Dan transferred the home to Ezekiel even though Dan surely had to know that he owed Chase Bank $50,000. Thus, Chase Bank could successfully pursue a lawsuit against Dan's estate for fraudulently conveying the property to Ezekiel. Chase Bank could then either nullify the transaction, attach their claim to the home via a judgment lien, or prevent a future transfer of the home by Ezekiel. CC § 3439.07. 

Disqualifed Donees

Although you can leave your estate to an assortment of persons: your spouse, your kids, your friends, your relatives, a charity, the government, etc., there are certain individuals who you cannot devise your inheritance to, as laid out in Prob C § 21350:

The person who drafted the instrument (e.g. the attorney);

A person who is related by blood or marriage to, is a domestic partner of, is a cohabitant with, or is an employee of the drafter (e.g. the attorney's spouse);

Any partner, shareholder, or employee of any law partnership or law corporation in which the drafter has an ownership interest (e.g. the attorney's law firm or business partner);

Any person who has a fiduciary relationship with the transferor (e.g. a conservator or trustee) who transcribes the instrument or causes it to be transcribed. 

A person who is related by blood or marriage to, is a domestic partner of, is a cohabitant with, or is an employee of a person described in the immediately preceding paragraph (e.g. the conservator's spouse);

A care custodian of a dependent adult who is the transferor (e.g. a nurse/in-home care worker); or

A person who is related by blood or marriage to, is a domestic partner of, is a cohabitant with, or is an employee of a care custodian (e.g. a nurse/in-home care worker's spouse).

However, as is often the case, there are exceptions to this rule. For example, if an otherwise disqualified person is related to the transferring-party by blood (within the fifth degree) or by marriage, or is the registered domestic partner or cohabitant with the transferee or the person who drafted the will, then the devise is permissible. Prob C § 21351(a), (g). For example, wife assists husband in drafting a will and husband leaves his entire estate to his wife.

Furthermore, if an independent attorney who counsels the transferring-party about the nature of the intended transfer, determines that the gift is not a result of fraud, duress, menace, or undue influence, and signs and delivers to the drafter a Certificate of Independent Review, then the devise is permissible. Prob C § 21351(b). For example, Widower decides to leave her entire estate to her in-home care worker of many years. In-home care worker enlists the services of an independent attorney to thoroughly explain the legal ramifications of this transfer to the Widower. Attorney explains the legal situation to the Widower and obtains her signature on a Certificate of Independent Review. 

Finally, a transfer to a disqualified person is also permitted if approved by the court, following full disclosure of the relationships involved and on clear and convincing evidence that the transfer was not the product of fraud, duress, menace or undue influence. Prob C § 21351(d)-(e). Widower decides to leave her entire estate to her neighbor, who also happens to be the drafter of her will. Neighbor petitions Probate Court and states that Widower was competent at death, she had known Neighbor for many years, Widower's family never visited her and that Neighbor was not in financial trouble.

Intestate Succession

If someone dies without a will or trust, he or she dies "intestate" and the laws of intestate succession are used to determine who will inherit the decedent's estate (tangible and intangible property) that is not subject to non-probate transfers such as POD bank accounts and real property held in joint tenancy. This determination is made by analyzing the decedent's familial background.

A. The first question is whether the decedent (the person who died) was married at the time of his or death.

1. If the decedent was not married at the time of his or her death, the estate is distributed as follows:

a. To the decedent's children, who take in equal shares if they are in the same generation.
b. If there are no children or other issue (issue is the legal term for children, grandchildren, great-grandchildren, etc.) living, the estate goes to the decedent's parents.
c. If there are no parents living, the estate is distributed to the "issue of the parents." If the decedent had siblings, they will inherit the estate.

d. If there are no siblings, the decedent's grandparents will inherit the estate.
e. If there are no grandparents, then the "issue of the grandparents" will inherit the estate. This could include the decedent's aunts and uncles, or if there are no aunts and uncles, the decedent's cousins will take.
f. If there are no cousins, Probate Code section 6402 provides that the estate will be distributed to "next of kin in equal degree," generally meaning more distant cousins.

B. If the decedent was married, the first question is whether the decedent owned community property, separate property, or a mixture of the two.

Community property is generally defined as the assets derived from community labor (both husband/wife) during marriage. For example, job earnings while the decedent was married would be considered community property.

Separate property is generally defined as assets brought into the marriage by the decedent, the decedent's inheritance, or gifts to the decedent. For example, if the decedent inherited $10,000 from his uncle, such would be considered the decedent's separate property.

However, California law provides many exceptions to these definitions, and assets can change from community to separate property, or from separate to community property, or from the separate property of one spouse to separate property of the other spouse. This is known as transmutation. For example, in order to transmute property from community to separate, one spouse would need to make an express declaration stating that he or she is transmuting the property from community to separate.

Ultimately, if the decedent was married at the time of death, the property will be distributed as follows:

1. The decedent's community property goes to the surviving spouse, who may have to file a spousal property petition to establish ownership. This is a much faster and cheaper version of regular probate.

2. The decedent's separate property is distributed as follows:

a. The surviving spouse receives all (100%) of the separate property if the decedent is not survived by issue, parents, siblings, nieces or nephews.

b. The surviving spouse receives one-half (50%) of the separate property if the decedent had only one child, or issue of a deceased child.
c. The surviving spouse receives one-half (50%) of the separate property if the decedent left no issue, but left parent(s) or their issue.
d. The surviving spouse receives only one-third (33%) of the separate property if the decedent left more than one child.
e. The surviving spouse receives only one-third (33%) of the separate property if the decedent left one child and the issue of one or more deceased children.
f. The surviving spouse receives only one-third (33%) of the separate property if the decedent left the issue of two or more deceased children.

Intestate succession is the default rule. It does not apply if the decedent had assets that fall outside of probate, a house held in joint tenancy for example, a trust or a will. Furthermore, courts are reluctant to invalidate a will so as to trigger intestate succession.

California Anti-Lapse Statute

It is not uncommon for the person entitled to something in a will, the beneficiary, to die before the person who wrote the will, the testator. In such case, the gift lapses or fails. A beneficiary needs to survive the testator in order to take the bequest. Prob C § 21109. 

However, if the beneficiary is related by blood to the testator or the testator's spouse (surviving, predeceased, or former), the descendants of the deceased beneficiary take the gift in his or her place, unless the will provides for an alternate disposition. Prob C §21110. This is known as California’s Anti-Lapse Statute. 

Yet if the deceased beneficiary is not related by blood or does not have living descendants, and no alternate disposition is provided in the will, the gift lapses and becomes a part of the residue of the estate. Prob C §21111(a)(2).

For example, suppose Tom wrote a will leaving his favorite car to his beloved brother Bob and everything else, the residue of his estate, to his friend Richard. Bob then dies before the Tom passes away and thereby the gift to Bob would lapse because Bob did not survive Tom. Yet because of California's Anti-Lapse statute, Bob’s gift of the car would pass to his children if he had any. Prob C §21110. Although if Bob did not have any children the gift of the car would pass to Richard because he is the residual beneficiary and Tom did not specifically provide for a contrary intention or a substitute disposition in case Bob died before him. Prob C §2110.