Probate Code § 850 Petition

1969 Shelby GT350

The probate code permits an interested party to seek a judicial determination, i.e. an order, that property is owned by the decedent's estate or that the decedent's estate owns property that is really the property of another. See Probate Code § 850. The typical reason for filing a Probate Code § 850 petition is a dispute over the ownership of land. For example, the decedent held title to property that another party believes is rightfully theirs. Or title to property is held by another that is rightfully the decedent's. However, a recent unpublished appellate decision revolved around ownership of a rather unique item, a 1969 Shelby GT500.

Fredrickson v. Gersh, Case # BP125612, Los Angeles County Superior Court 

"Decedent (Gersh) and Frederickson became high school friends in the 1970's. In 1980, decedent was involve in a motorcycle accident that rendered him a quadriplegic. Despite his disability, decedent achieved success as an investment manager, until his physical condition precluded him from continuing to work. Decedent was able to sign his name to important documents by using a mouth pen. As for Frederickson, he worked in various automobile businesses, although not as a mechanic, and he had some experience in motorcycle repair.

In 1991, Frederickson purchased the subject vehicle, an inoperable 1969 Shelby GT500, a classic "muscle" car. The purchase price was $2,000, according to the application for title. Frederickson did nothing with the car for 13 years.

In 2004, Frederickson and decedent entered into a joint venture with respect to the car. Prior to that, they had not spoken in three years. They orally agreed that decedent would pay for what it would take to restore the car to showroom condition, with Frederickson to perform the physical labor needed to do so. There was no specific deadline for completion of the project. Thereafter, Frederickson brought the car to decedent's home and parked it in the garage where the work could be done.

In June 2004, Frederickson submitted a title application to the Department of Motor Vehicles (DMV) for registration of Frederickson and decedent as the owners of the car. The title application was purportedly signed on decedent's behalf by one of his then caregivers, "Otto Gonzalez P.O.A.," but there was no evidence that Gonzalez had a power of attorney.

On June 25, 2004, the DMV issued a title certificate showing Frederickson "or" decedent as the registered owners of the car. Notwithstanding the use of the word "or," neither the title application nor the certificate of title specifically stated that Frederickson and decedent were owners as joint tenants.
Thereafter, Frederickson disassembled the car and took voluminous notes and photographs of the parts for purposes of later reassembly. Decedent, in turn, spent about $40,000 for parts. The project dragged on for years, the work on the car was sporadic and it was never completed.

In 2007, decedent amended the living trust he created in 2002 (before decedent acquired an interest in the car), leaving his estate to his brother, Gersh, and their sister, Wilson. At the same time, decedent signed a pour-over will which left his assets to the Trust. In connection therewith, decedent specified in writing that the car was part of his personal property to be assigned to the Trust.

On January 9, 2010, decedent died."

Ultimately the trial court found that there was no joint tenancy between decedent and Frederickson. Since title was tenants in common, ownership of the car went as follows: (1) 50% to decedent's estate and (2) 50% to Frederickson. This decision was upheld on appeal.

Frederickson argued that title to the 1969 Shelby GT500 was held in joint tenancy. If so, Frederickson would automatically inherit decedent's 50% interest in the 1969 Shelby GT500 upon his death. Alas for Frederickson, neither the trial court nor the appellate court ruled his way. 

Joint Tenancy v. Tenants in Common

When a person changes title to real property, the process is rather easy. A deed is signed, then notarized and recorded with the appropriate county recorder. The substance of changing title though can have an extremely lasting impact. This was evident in the following case:
 
Perna v. Perna, San Diego County Superior Court Case # 37-2013-00032837-PR-LA-CTL
 
According to the unpublished appellate opinion:
 
"Angie [Perna] is [Carlo] Perna's daughter. On March 22, 1999, Carlo presented to a hospital emergency room in respiratory distress and was later admitted to the intensive care unit. (All further date references are to 1999.) On March 29, Carlo changed title to real property located in Chula Vista from tenants in common with his sister, Maria S. Da Luz, to joint tenancy. Carlo signed the quitclaim deed and a notary public notarized the document. On March 30, Carlo underwent a tracheotomy. Carlo later requested that he not be resuscitated and that food and medication be withdrawn. Carlo died intestate on April 5. In 2013, Angie filed a petition for letters of administration challenging the transfer. Carlo's other daughter, Connie E. Castellanos, and his sisters, Concetta R. Perna and Da Luz, objected to the petition."

The reason why Ms. Perna challenged the transfer was due to the disposition of the property. 

If Mr. Perna had left title as is, the property in question would have  been distributed to his daughters, Mrs. Perna and Connie E. Castellanos. The reason being is that a tenant in common interest is passed via intestate succession if the decedent had no will. Here the opinion notes that Ms. Perna filed for Letters of Administration which means that Mr. Perna died without writing a will. Therefore, the heirs (see next of kin) of Mr. Perna's estate would inherit his tenant in common interest through intestate succession. Presumably his heirs were his two daughters, Mrs. Perna and Connie E. Castellanos.

The problem for Ms. Perna is that by changing title to joint tenancy from tenants in common, the owner of Mr. Perna's interest in the property upon his death was Maria S. Da Luz, the other joint tenant, not his estate. The reason being that a joint tenancy interest automatically passes to the surviving joint tenant. Grothe v Cortlandt Corp. (1992) 11 CA4th 1313, 1317. Here Mr. Perna and Ms. Da Luz were each joint tenants. Thus, they each owned 50% of the property. When Mr. Perna passed away, his 50% interest automatically passed to his sister, Ms. Da Luz.

In light of this, Ms. Perna challenged the validity of the transfer. The objective was to have the deed invalidated whereby title to the property would be held as tenants in common (in which she would partially inherit) as opposed to joint tenancy (in which she would inherit nothing). 

Ms. Perna lost her appeal at the appellate level for those of you keeping score at home.

Tenants in Common

Contractor's special real estate

When people purchase real estate jointly, they may hold title in a number of different ways. For example, they can hold title as (1) tenants in common, (2) joint tenants, (3) community property or (4) community property with right of survivorship. For (2), (3) and (4), it is not necessary to specify the ownership interest of each owner because it will be equal. 

Joint tenancy requires that ownership be equally allocated between the owners. CC § 683. For instance, if there are 4 owners, each owns 25% or if they are 8 owners, each owns 12.5%. Similarly, community property and community property with right of survivorship require equal ownership by each partner. Fam C § 2550. Hence, it would be redundant to list the ownership interests.

As for tenants in common, if there is no specification as to the ownership breakdown, a presumption arises that each owns an equal share. Caito v United Cal. Bank (1978) 20 C3d 694. For example, if A and B took title as tenants in common and the deed just said "A and B as tenants in common", the presumption would arise that A owns 50% and B owns 50% of the realty.   

The problem is that outside evidence can be used to prove, in case the percentages are not spelled out on the deed, that the tenancy in common does not have equal interests. Anderson v Broadwell (1931) 119 CA 150. Therefore, even if the deed did not list ownership interests, a separate document can be used to rebut the presumption of equal ownership. In light of this, it is best to just state that the interests are equal or just spell out the number, e.g. 50/50 or 25/25/25/25. 

Partition Action

When a person inherits real property, they often do so jointly with another. For example, a parent might equally devise the family home to son and daughter. The problem with this scenario, which frequently arises, is that one child will want to keep the property and one child will want to sell the property. The legal term used for a child wishing to sell their co-ownership interest, despite the objections of the other co-owner, is known as a "partition action."

In a partition action, three possible avenues are available for the parties:

1. Physical division of the property
   
2. Sale of the property and allocation of the proceeds; and
3. Partition by appraisal 

For (1), a court-appointed referee will literally carve up the real property and award the severed parcels to the parties in proportion to their interests. In other words, a person draws lines on a map and tells each party which side of the lines he, she or it owns. This method is rarely utilized except in cases of raw land because it is clearly quite difficult to divide a a house into halves or thirds. Trust me on this one.

For (2), a court-appointed referee will sell the parcel at public or private sale and distribute the proceeds. For example, assume Able owned 40% and Baker owned 60% of Blackacre. Reggie, the court-appointed referee, sold the property for $100,000. Following deductions for expenses, Able would be entitled to 40% and Baker 60% of the sale proceeds. 

For (3), the parties essentially agree to have one buy the other out for a price set by the court-appointed referee. For instance, from (2) above, Able could purchase Baker's share for $60,000. Thus, Able would become the sole owner and Baker would be $60,000 richer.

One key aspect to remember is that a tenant in common or a joint tenant has an absolute right to sever his or her interests from those of other co-owners, unless a waiver has been signed. Lazzarevich v Lazzarevich (1952) 39 C2d 48. In the case of inherited real property, it is highly unlikely that such a waiver is ever signed. The reason being is that the parties often do not share the same goals. They are co-owners by chance. In contrast, in many business arrangement, co-owners often agree to waive the right to partition because of shared interests. One would like to think that business partners have roughly the same objectives.

A partition action is in a sense the nuclear option. It is seldom in the best interests of either party to undertake a partition action because of the associated fees with the procedure. For instance, the  attorney fees for a partition action are typically in the thousands of dollars. Still, many people use the the threat of a partition action as a bargaining chip when negotiating with co-owners as to the property's future.

Severance of a Joint Tenancy

A common method to hold title to real property in California is joint tenancy. For example, if John and Jane Doe purchase a home together, they can hold title as joint tenants simply by adding "as joint tenants" to their names.

One of the key features of joint tenancy is, as mentioned, right of survivorship. This legal term dictates that when one joint tenant dies, the surviving joint tenant automatically inherits the deceased joint tenant's interest in the property. CC §683; Prob C §223. For instance, if John Doe and Jane Smith owned their home in joint tenancy and John passed away after being hit by a bus, Jane would automatically inherit John's 50% interest in the home. To transfer John's interest in the home to Jane, she would simply have to file an affidavit of death of a joint tenant along with some other forms depending on the county in which the realty sits. Hence, there is no probate or trust administration needed to transfer an interest held in joint tenancy. This is particularly important because a few words can amount to thousands or hundred of thousands of dollars. The following example illustrates this point.

John Van Persie and Norm Vermaelen were best friends and decided to purchase a rental home together in Campbell, CA for $600,000 in 2012. They decided to take title as joint tenants because the real estate agent told them it would be easier that way. John wrote a will that devised his entire estate to his brother Arjen. Thereafter John passed away in April 2012 in a tragic skiing accident in Bear Valley, ID. Since title was held in joint tenancy, John's interest automatically passed to Norm, despite John's valid will. Conversely, if John and Norm had taken title as "tenants in common", John's interest would pass to his brother Arjen albeit a probate would be needed. Still, the use of the phrase "as joint tenants" instead of "tenants in common" amounts to a roughly $300,00 difference for Arjen.

In light of this, a few clients have asked to transfer property out of joint tenancy to tenancy in common because of the inflexibility of joint tenancy. The following are the methods in which joint tenancy is severed and a tenancy in common results. CC §683.2(a).

1. Transferring the joint tenant's interest to a third person via a deed; 
2. Executing a written instrument with intent to sever that transfers the joint tenant's interest out of joint tenancy and into tenancy in common via a deed; or
3. Declaring the severance in writing.

For all these methods, the instrument must be recorded in the county where the real property is located. CC §683.2(c).

Small Estates involving Real Property

If a homeowner passes away, it is often the case that the beneficiaries will have to go through probate in order to pass title unless the property is held in joint tenancy or in trust. An exception to this general rule is where  the gross value of the decedent’s real and personal property in California does not exceed $150,000. Prob C § 13151.  The valuation limit used to be $100,000 but this was increased to $150,000 on January 1, 2012. Thank you California legislature.

The petition is usually filed in the county where the decedent owned real property and may be filed once 40 days have elapsed since the decedent's death. Prob C §13151. The form for this procedure is Judicial Council Form DE-310. The petition will need to include a completed Inventory and Appraisal (Judicial Council Forms DE-160, DE-161), verifying the value of the property. Prob C §13152(a)(2), (b). Once filed, the petitioner needs to serve notice on the heirs, executors and/or trustees. Prob C § 13153. If the  petition is appropriately completed and notice is served on the correct parties, the probate court judge will sign the form and this form should be recorded with the county recorder's office. This order is conclusive for passing title. Prob C § 13155.

One key aspect of this procedure is that it relates to real property, as opposed to personal property. If the decedent had only personal property in their estate, e.g. a bank account and some stocks, this procedure would not be needed. Instead, the beneficiaries could utilize the small estate affidavit to collect the asset(s). Still, if the decedent had a mixture of real and personal property, the petition to determine succession to real property could be used to collect both types of property. 

If the beneficiary is the decedent's spouse, the spouse should not use this procedure because there is a valuation limit of $150,000. Instead, the spouse should use the spousal property petition.

The following examples illustrate when the petition to determine succession to real property is used and not used.

Lionel Ozil's estate consisted of a bank account, stocks and bonds worth $125,000. Since his estate is worth less than $150,000, the small estate affidavit could be used to collect these assets.

Thierry Van Persie's estate consisted of a home in Campbell, CA worth $500,000, held in joint tenancy with his brother Arjen, and a bank account worth $50,000. Since the home was held in joint tenancy, the beneficiaries do not have to use the petition to determine succession to real property for the Campbell home. As for the bank account, since it is under $150,000, the small estate affidavit can be used.

Theo Chamberlain's estate consisted of a home in Campbell, CA worth $250,000, held as a tenant in common with his brother Alex and a 2,000 shares of ATT stock worth $8,000. Since the home was held as a tenant in common by Theo, probate would be required albeit formal probate would not be required because the value of the estate was less than $150,000.  That is, the petition to determine succession to real property could be used to transfer Theo's interest in the property to his beneficiaries.

Real Property in California

650 Rosewood Court Los Altos, CA 94024

When couples purchase real property they have a number of methods in which they can hold title to such. The following are some of the more common methods for couples to own real estate collectively. Although couples can own real property through a business entity, such as a corporation or LLC, I omitted that section because the vast majority of couples do not purchase real property through a business entity. 
  

	Tenants in Common	Joint Tenancy	Community Property	Community Property with Right of Survivorship
Ownership Restriction	No	No	Must be spouses or domestic partners	Must be spouses or domestic partners
How title may be held (this is how the grantee's name might  be stated on the deed)	John Doe and Jane Doe, as tenants in common	John Doe and Jane, husband and wife, as joint tenants	John Doe and Jane Doe, husband and wife, as their community property	John Doe and Jane Doe, husband and wife, as their community property with right of survivorship
May ownership interests be different	Yes	No, must be  50/50	No, must be 50/50	No, must be 50/50
How title is transferred on death	Probate	Affidavit of death of a joint tenant	Spousal probate petition	Same as joint tenancy
Notable advantage	Interests need not be equal	Avoids probate	Entire property subject to stepped-up basis	Avoids probate
Notable disadvantage	Subject to probate	Lack of testamentary control	Spousal probate petition	Lack of testamentary control

Spousal Property Petition

Spouses or registered domestic partners are given privileged status in regards to collecting the assets of their deceased partner’s estate. The following are some questions that address this topic. 

1. What is spousal or domestic partner property petition? 

Spousal or domestic partner property petition is where the surviving spouse or registered domestic partner collects the assets of the deceased partner without formal administration, namely probate. Prob C §§13500-13660. 

2. When can a person utilize this? 

This process can be utilized when a husband or wife dies intestate leaving property that passes to the surviving spouse under California’s intestacy laws, or dies testate and by his or her will devises all or a part of his or her property to the surviving spouse. Prob C § 13500. This aforementioned law also applies to registered domestic partners. Fam C § 297.5(c).

For example, assume Hal and Wendy were married in California and owned their California home as tenants in common. They purchased the home for $500,000 during marriage with funds exclusively derived from Hal’s job at the Dutch Goose in Menlo Park, CA (my favorite burger place in the Bay Area). Hal later passed away due to a tragic Vespa accident on Interstate 280 without ever having written a will. Thus, Hal died “intestate.” Under normal circumstances, Wendy would be required to go through probate to transfer the home to her. However, since Wendy is the surviving spouse, Wendy may utilize the spousal probate petition to transfer the home from Hal and Wendy to just Wendy. 

3. How does a person start the process? 

First, the surviving spouse or domestic partner files a petition in the superior court in the county in which the decedent spouse's or domestic partner's estate may be administered. Prob C §13650; Fam C §297.5(c). For instance, if the decedent passed away in Campbell, CA, the petition would be filed in Santa Clara Superior Court. For reference, the form used is Judicial Council form Spousal or Domestic Partner Property Petition (Judicial Council Form DE-221). 

4. How does a person complete the process? 

If the person complies with all the legal requirements for filing the petition, the Probate Court will sign an order confirming the transfer of the assets of the deceased partner to the surviving partner. For reference, the form used is Judicial Council form Spousal or Domestic Partner Property Order (Judicial Council Form DE-226) .

5. How long does the process take? 

The process should take a few months to complete. Most courts now have access to case files on the Internet, so you can look up cases to get a better idea of how long the process might in your specific county. 

6. How much are the attorney fees? 

Unlike regular probate, there is no set schedule for compensating an attorney for spousal or domestic partner property probate. Also, no court approval of the agreement is required. Prob C § 13660. 

7. Is the surviving spouse or domestic still liable for the 

decedent’s debts? 

Yes, the surviving spouse or domestic partner is personally liable for the decedent’s debts. Prob C §13550; Fam C §297.5(c). Thus, the survivor cannot inherit the property absent the liabilities, if any, that are attached to it. This is consistent with other types of probate and non-probate transfers in that the beneficiary may not inherit an asset without assuming the attached liabilities. This is a sensible rule because a prudent person would agree that one should not be allowed to receive all the benefits without incurring any burdens. 

The one exception to this general rule is the case of exoneration. Exoneration is where a will specifies that an encumbered piece of real property will have the encumbrance, a mortgage for example, paid off before it is transferred to the beneficiary. Prob C § 2113. However, a person must write in their will that they want exoneration to occur because the default rule is to not pay off the encumbrance prior to transfer.

Joint Tenancy in California

Joint tenancy is a common arrangement for owning real estate in California, and much of the United States. The following are various questions that address some key aspects of joint tenancy. 

1. What is a joint tenancy in terms of real property? 

A joint tenancy is a method of holding title to real property by two or more persons in equal shares. CC §683. 

2. How can I create a joint tenancy? 

A joint tenancy is created by inserting certain language on the deed, the document that transfers ownership of real estate. For example, assume best friends Aaron Rivers and Chad Stafford wish to purchase real estate together and own it as joint tenants. Aaron and Chad would instruct the title company to insert the phrase “as joint tenants” or “in joint tenancy” after their names as grantees on the deed. So if Joe Clyde and Bonnie Clyde sold the property to Aaron and Chad, the deed would read, as to the Grantor-Grantee section:

For a valuable consideration, receipt of which is hereby acknowledged,
Joe Clyde and Bonnie Clyde, husband and wife
hereby grant to
Aaron Rivers and Chad Stafford, as joint tenants 

3. How is ownership allocated amongst the joint tenants? 

Each joint tenant owns an equal undivided share of the property. Rupp v. Kahn (1966) 246 CA2d 188. Thus, if there are 4 joint tenants, then each joint tenant would have a 25% interest in the property. 

4. How can a joint tenant change the joint tenancy arrangement? 

A joint tenant can sever the joint tenancy by transferring their interest to a third party or themselves, recordation of a written declaration, agreement of the joint tenants, a partition decree or judgment.

For example, recall from Question #3 that Aaron and Phillip purchased a property as joint tenants. Aaron became disgusted with Phillip’s decisions about maintaining the property and decided to terminate the joint tenancy. Aaron executed a deed which conveyed his interest to himself as a tenant in common with Phillip. This deed would sever the joint tenancy relationship between Aaron and Phillip. 

5. What happens after a severance? 

When the joint tenancy is severed, it becomes a tenancy in common. Estate of Propst (1990) 50 C3d 448. One key feature of a tenancy in common is that there is no right of survivorship on the death of a tenant in common unlike a joint tenancy. 

6. What is right of survivorship for real property? 

Right of survivorship is the automatic transfer of an interest in the real property, by operation of law, from the deceased joint tenant to the surviving joint tenant. Grothe v Cortlandt Corp. (1992) 11 CA4th 1313. Thus, regardless of what a will or trust dictates, the deceased joint tenant’s interest in a piece of real property transfers to the surviving joint tenant. 

7. How do you transfer ownership interest from a deceased joint tenant to another? 

There are two methods in which a deceased joint tenant’s interest can be transferred, (1) by an affidavit procedure and (2) by a court order. Prob C §210. The vast majority of joint tenancy transfers are done via the affidavit procedure. The affidavit needs to be signed by a person having knowledge of the facts which includes the legal description of the real property at stake and an attested or certified copy of the decedent's death certificate needs to be attached to the affidavit. Prob C §210. This affidavit is filed with the County Recorder in the county in which the real property is located. 

8. What other ways can multiple people own real property? 

Multiple people can own real property in tenancy in common, community property or partnership interests. CC §§682-687. 

9. Can a joint tenant force a sale of real property? 

Yes, a joint tenant can force the sale of real property. CCP § 872.210. The term for this is a partition action and is quite expensive. The right to seek a partition by a joint tenant is automatic unless the joint tenants have agreed to waive the right to seek a partition. Harrison v Domergue (1969) 274 CA2d 19. 

10. Can a person hold other assets in joint tenancy? 

Yes, bank accounts, automobiles, stocks, bonds and brokerage accounts are other types of assets that may be held in joint tenancy. 

11. Is there a disadvantage for a married couple to hold property as joint tenants? 

Yes, there is a significant tax disadvantage for a married couple to hold title as joint tenancy as opposed to community property.

Proposition 13 - People's Initiative to Limit Property Taxation

One of the sacred cows in California politics is Proposition 13. Proposition 13, the “People's Initiative to Limit Property Taxation" was the landmark ballot proposition that was passed overwhelmingly by California voters in 1978 which capped property tax rates and annual assessment increases for realty. 

Simply stated, Prop 13 caps the maximum taxation rate for realty at 1% and the maximum increase for an assessment at 2% annually. 

The tax rate of 1% signifies the multiplier each county uses when calculating property taxes for each piece of real property. The assessed value is the amount multiplied by that 1% tax rate, which in turn provides the amount of property taxes due annually. For example, if Paul purchased a home for $100,000, the maximum amount Paul could be charged for property taxes is $1,000 (100,000 x .01) and the assessed value could not be increased by more than $2,000 for the following year, $102,000.

It should be noted that there are numerous taxes or fees tacked onto your property tax bill each year that are not subject to Prop 13’s jurisdiction, these include schools bonds, public safety bonds, retiree benefits, etc.

The assessed value of realty is, generally speaking, the fair market value of the property as of the last sale date plus annual increases not to exceed 2%. From the example above, Paul purchased a home for $100,000. The amount of property taxes due would probably go as follows

Assessed Value - Year 1                    Property Taxes Owed – Year 1

$100,000                                            $1,000

Assessed Value - Year 2                    Property Taxes Owed – Year 2

$102,000                                            $1,020

Assessed Value - Year 3                    Property Taxes Owed – Year 3

$104,004                                            $1,040.04

Assessed Value - Year 4                    Property Taxes Owed – Year 4

$106,120.8                                         $1,061.208

Assessed Value - Year 5                    Property Taxes Owed – Year 5

$108,243.16                                       $1,082.43

Assume that Paul had a neighbor, Ned, who purchased his home in Year 4 for $200,000. Ned’s property taxes would roughly be double Paul’s because the assessed value of Ned’s home is roughly twice the amount of Paul’s home. Thus, despite the fact that Paul and Ned are neighbors, Paul pays significantly less than Ned in property taxes. This example illustrates how purchasers of realty in California enjoy significant property tax savings if they can retain ownership of the realty for a long duration of time. Although this argument is based off of the assumption that California real estate prices increase over time, you would be hard-pressed to find a dissenting opinion from a reputable source.

The key phrase for property taxes is “change in ownership.” Whenever there is a “change in ownership” then the property’s value will be re-assessed. The assessed value is usually pegged to the fair market value of the home (see sale price) on the date of transfer.

The following are some examples of transfers which present “change in ownership” questions:

Business Entity/Proportional Interest

Henry and Whitney purchased a rental property, Hotel California, as joint tenants in 1988. Upon seeing that a LLC is a superior method of owning Hotel California, Henry and Whitney create a LLC, Acme LLC, in which Henry will have a 50% interest and Whitney will have a 50% interest. Later on, Henry and Whitney each transfer their 50% interest in Hotel California to Acme LLC. Since the proportional interests in the realty remain exactly the same both before and after the transfer, there is no change in ownership. Rev & T C §62(a)(2).

Joint Tenancy

Al purchases a fabulous retirement home in Scotts Valley, a charming community nestled in the Santa Cruz Mountains. Al then decides to gift half of his interest in the home to his neighbor Jefferson. Al prepares and records a deed naming Al and Jefferson as joint tenants for the retirement home. This transfer from Al to Al and Jefferson as joint tenants does not constitute a change in ownership. Rev & T C §62(b),(f).

Divorce

Eldrick and Elin decide to part ways after many years of marriage. One of the marital assets is a home owned in joint tenancy by Eldrick and Elin. The separation agreement provides that Eldrick will transfer to Elin the marital home. The transfer from Eldrick to Elin of the marital home will not result in a change in ownership. Rev & T C §63(c).

Leases

Link, a landlord, owns a piece of farmland in the fertile San Joaquin Valley named Big Gulch Road. Tobias, an entrepreneurial farmer approaches Larry and inquires about leasing Big Gulch Road. Tobias has grand plans for Big Gulch Road and thus needs at least a 50-year lease in order to complete his plans for harvesting pomegranates, the best fruit on earth (author’s opinion). Larry agrees to lease to Tobias Big Gulch Road for a term of 50 years. This lease would constitute a change in ownership because the lease term exceeded 35 years. Rev & T C §61(c). However, if the lease term had been for less than 35 years, then there would not be a change in ownership. Rev & T C §61(c).

Tenants in Common

John, Paul, Ringo and George purchased a home together, Nabbey Road Manor. John later becomes fed up with having to co-own the property with 3 other people and decides to sell his interest, 25%, to his eccentric consultant Yoko. This transfer would result in a change in ownership, albeit a partial one. In that, 25% of the property would be re-assessed for property tax purposes whereas the other 75% would maintain its assessed value. Rev & T C §§61(f), 65.1.

Name Change

Romeo Shakespeare purchased a home in Markleeville, California and took title under said name. Since Romeo’s friends, family and neighbors loved to poke fun at this name, Romeo decided to file a petition with the Alpine County Superior Court to change his name to John Brown. Eventually, Romeo was able to have his name changed. Subsequently, John executed a new deed in which Romeo Shakespeare conveyed to John Brown his interest in the property. Due to the fact that this transfer involved only a name change, no change in ownership occurred. 18 Cal Code Regs §462.001.

Divorce and Community Property

When two people divorce, or legally speaking dissolve their marriage, there are serious consequences for their estate plans, assuming they have one.

For illustrative purposes, assume that Harry and Wendy married in 1985 and divorced in 2010. During their marriage, the couple had two children, Samuel, born in 1988, and Donna, born in 1990. During the course of their marriage, Harry and Wendy executed various estate planning documents. 

For example in 1995, Harry executed a will in which he bequeathed his Monet oil painting to Wendy as the primary beneficiary and his brother Bob as the alternate beneficiary. Furthermore, Harry inherited some money from a distant heir and deposited the money into a bank account in his name alone and made Wendy the pay-on-death primary beneficiary and Samuel the pay-on-death secondary beneficiary. Moreover, Harry and Wendy owned their home as joint tenants and never changed the title even after the divorce. In 2010 Harry and Wendy sadly divorced, and then in 2011 Harry passed away.

Will

Generally speaking, California law says that upon divorce, all provisions in a will that benefit a former spouse are revoked and the will is interpreted as though the former spouse had predeceased the testator and hence are not entitled to inherit from their former spouse. Prob C § 6122. 

Here, since Harry had divorced Wendy, California law says that Wendy died before Harry (just ignore reality and embrace the legal system for a moment) and thereby Harry’s brother Bob would be entitled to the Monet because Bob survived Harry.

Bank Account

Generally speaking, California law invalidates a nonprobate transfer (which is what a P.O.D. account is) to a former spouse. Prob C §5600(a). Here Harry named Wendy as the P.O.D. beneficiary but later divorced her and thus Prob C §5600(a) would apply, whereby Wendy would not receive any proceeds from the bank account and instead Samuel would.

Home (Joint Tenancy)

Generally speaking, California law says that a joint tenancy between the decedent (the person who died) and a former spouse is severed if the former spouse is not the decedent’s surviving spouse at the time of death. Prob C § 5601. 

This is particularly important because many couples own their homes as joint tenants. For instance, roughly 3 out of every 4 deeds I see from clients who are couples are titled as joint tenants. Regardless, upon the death of one joint tenant, the surviving joint tenant automatically inherits the deceased joint tenant’s interest regardless of what a will or revocable trust dictates. Yet here, because Wendy was not Harry’s spouse at the time of his death, Wendy would not be entitled to inherit Harry’s interest in the property as the surviving owner, since their divorce severed the joint tenancy between the two and made them tenants in common. Consequently, unlike joint tenancy, a tenant in common does not automatically inherit the interest of a deceased tenant in common. So Harry’s heirs would need to go through probate in order to inherit Harry’s half of the property.