THE IMPORTANCE OF AN ESTATE PLAN…AND REGULAR REVIEWS OF THAT PLAN
Summary: New case law reaffirms the importance of having your intentions clearly stated in your Trust or Will. Whether you need a new plan; a review of an existing plan; want to discuss your rights as a beneficiary or responsibilities as a Trustee, Cannon Legal Firm can help. Contact us for a free consult.
The right to dispose of property in contemplation of death is as old as the right to acquire and possess property, and the laws of all civilized countries recognize and protect this right. ” (Estate of Della Sala (1999) 73 Cal.App.4th 463, 467 (Della Sala).)
For most people thinking about your estate plan is not a favorite pastime. A lot of individuals equate an estate plan with your own mortality and find it unpleasant to think about or discuss as if thinking about it or discussing it could bring about your own demise. Additionally, it is an expense that no matter how tastefully or professionally it is packaged at its core is just a stack of papers. It is a lot more fun to think about spending your hard-earned money on the latest gadget or a vacation. For those who have planned ahead and created a comprehensive estate plan, you often put your estate planning binder on a shelf and do not think about it again. As if checking off an item on a “To Do List,” you have accomplished the primary goal for most, which is ensuring that your assets are protected from probate. If you have an estate plan, that should not be the end of your planning though.
Your estate plan should be reviewed and changed with the major events of your life. If you have more children or grandchildren; if you move to a new house; if you inherit assets; if your spouse or domestic partner passes away. If nothing else, it should be reviewed at least every 5 years to ensure that your documents comply with and that you are benefiting from any changes in the law.
In the recent case of Rallo v. O’Brian, B290526; filed August 3, 2020, Second District, Div. Three https://www.courts.ca.gov/opinions/documents/B290526.PDF, the Appellate Court upheld the ruling of the Los Angeles Superior Court with regard to the Trust of actor, Hugh O’Brian (“O’Brian”). O’Brian was best known for his role as Wyatt Earp a 1950s television series. O’Brian died on September 5, 2016. O’Brian’s Trust set forth his intent to disinherit any children known or unknown indicating: “I have no children, living or deceased. I am intentionally not providing for …. and any other person who claims to be a descendant or heir of mine under any circumstances and without regard to the nature of any evidence which may indicate status as a descendant or heir.” The Court found that this language was sufficient to disinherit four adult children (born out of wedlock to different mothers) even though some of them were not specifically named in the disinheritance clause and O’Brian indicated he had no children living or deceased. The Court recognized that this outcome was specific to children who were alive at the time of the creation of the Trust and/or Will. If O’Brian had fathered children after the creation of his Trust and/or Will, this disinheritance clause would likely not have been effective and a different Probate Code Section would have applied.
You may be thinking, how does this apply to me? I am not a movie star with unknown children. My estate plan provides for my kids; it does not disinherit them.
While your plan may provide for your children and you would be happy to have any after born children or grandchildren included in your estate plan, without having to add them, the O’Brian case highlights to importance of keeping your estate plan current and your wishes clearly stated in your document. O’Brian’s children argued that since he did not specifically identify them and because he apparently did not know that one or more of them existed, that his plan could not disinherit them. The Court was not impressed with hose arguments and instead followed the well-recognized rule that the Trustor’s intent is key in interpreting and carrying out the provisions of a Trust. In this case, the Court believed that the simple language indicating O’Brian was intentionally not providing for a descendants or heirs (in other words, children, or grandchildren) was sufficient. So, I ask, does your plan clearly set forth your intent?
The laws are constantly changing and being interpreted. We are living in the age of blended families and we do not always get along. The sad truth is that not all of you want to leave your estates to your children, and some do not want to leave your estate to your children in equal shares. These opinions and beliefs may change as you grow older and find that one child may be sacrificing more to assist you, or another child may have created their own wealth and not need yours. Although most people seek out a Trust or an estate plan to avoid probate, perhaps the more important result of an estate plan is that you are also setting forth your wishes and intentions. Those are what are to be carried out in the event of your incapacity or death, when you are no longer able to speak for yourself. Because discussing our mortality is not a popular pastime, your estate plan is often the only indicator of your intentions. If you are like most, your intentions may change over time, thus the need for a regular review of your estate plan.
So, while an estate plan not fun to think about and it is not as enjoyable as a new gadget or a vacation, it is important. It is important that your plan be customized to your needs and clearly state your intentions. It is important that it be reviewed periodically. If COVID-19 has taught us nothing else, it's that anyone can become sick or die at any time, an estate plan isn't just for the elderly. An estate plan may be one of the more important things you create in your lifetime as it is truly your legacy. It controls the distribution of your wealth on your death and sets forth your final wishes.
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