Orange County Estate Planning Lawyer Blog
Can I give everything to the “love of my life” and keep it secret?
NO DISCLOSURE TO OMITTED HEIRS?
Up until 1997 a person could legally change his or her estate plan and the people previously benefited did not have any legal way to find out what the situation was. Before the law was changed to require disclosure as it is now, the state legislature committee reviewing the proposed legislation was presented with a case of a 90-year-old man who met the “love of his life” on a bar stool and married her three months later.
He then changed his entire estate plan to disinherit his three children and six grandchildren and to leave everything to his new wife. At that time, the persons administering the 90-year-old man’s estate could legally refuse to tell his children and grandchildren what happened to his estate and could legally refuse to provide any of the documentation. The family was left in this type of situation with no alternative but to pursue expensive and timely court litigation.
THE LAW NOW REQUIRES DISCLOSURES
Where there is a living trust which becomes permanent on death and no probate court proceeding, there is no access to the trust document or its terms unless the successor trustee provides it. In a typical living trust situation, the person who established the living trust is the trustee of his or her own trust. The trust document provides for somebody else to be a successor trustee when the person establishing the trust either resigns or becomes deceased and no longer able to be the trustee. Upon the death of the person establishing a trust, the trust typically becomes permanent and irrevocable. The California probate code now provides that the trustee has a duty to provide a true and complete copy of a revocable trust after it has become a revocable to not only the beneficiaries named in the trust but also to any heir of a deceased person who requests a copy of the trust. The beneficiaries are the people named in the trust who are to receive benefits from the trust. Persons who are legal heirs have no legal right to receive benefits from the trust unless they are actually named as beneficiary of the trust. The term “heir” basically refers to a person who would be entitled to inherit from a deceased person if there were no will or no trust establishing who is to be paid the estate of the deceased person.
This law requiring disclosure gives any excluded heir the right to at least see the documents for the trust and obtain his or her own legal advice and interpretation about whether the trust is legal and proper and or whether the exclusion is proper. People who have been excluded from a trust sometimes bring litigation to try and establish that the trust was improper on any number of grounds. Some grounds would include undue influence exerted over the person establishing the trust, or mental incapacity, and other legal grounds that may exist under the circumstances.
HOW TO KEEP EXCLUDED HEIRS FROM FINDING OUT
Sometimes people establishing trusts have legitimate interests in keeping some or all of their heirs out of their personal business. Some people are not satisfied with the law that allows effective disinheritance of people by naming them in trust documents and giving them the sum of $100 or less. This makes them a trust beneficiary but if they are named as a trust beneficiary they still are entitled to trust accounting and disclosure of all that is in the trust in who is getting paid out of the trust.
The law requiring disclosure of trust documents only applies to a situation where there is a living/revocable trust which becomes permanent at the death of the persons establishing the trust. For tax reasons and for reasons of wanting to be able to change things up until the end, most people have their living trust as being revocable. However, if a trust is set up as a permanent, not revocable trust, before the persons establishing the trust have died, the law requiring disclosure of the trust doesn’t apply.
Take for example a case in which a person has $1 million in cash to leave to his 5 children but he does not want to leave it to all of his children. He could legally set up a permanent trust before his death and deposit $900,000 into it and have that permanent trust be for the benefit of 4 of his children. Because that trust was set up before his death, the child not benefiting from that permanent trust could not require the trustees of that trust to disclose the terms or the amount of money in that trust to him. The only exception would be if he can prove that the other four children exerted undue influence on the person establishing the permanent trust or if he could prove mental incapacity.
CALL (949) 851-1771 to speak with Lawyer David L. Crockett
COMPETENCY EVALUATION AND OTHER DOCUMENTATION IS RECOMMENDED
If a person is going to establish a permanent trust which excludes children or other persons close to him who would naturally expect something from his estate, careful planning is recommended. There are professional people and doctors who can prepare written and/or videotape mental capacity evaluations. Having this type of evaluation is recommended to prevent or discourage omitted heirs from bringing lawsuits. A person can legally leave any or all of his estate to anyone or any institution or charity on his death that he or she pleases. The only legal requirement is that it has to be done in either a written will or a written trust. If it is done through a written trust which is permanent before death and while the trust maker is mentally competent, it is virtually impossible to set aside.
Conveniently located in Newport Beach near the John Wayne Airport
We are located near the Orange County California John Wayne Airport. My office is catty-corner from Fletcher-Jones Motorcars; —right behind the rear entrance of Newport Lexus on Dove Street. Here is a picture of my office building and a Google Map to get your bearings.
