Source: https://donahue.com/resources/publications/an-estate-planners-guide-to-family-law-presumptions/
Timestamp: 2019-04-24 19:48:45+00:00

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With the potential for divorce and trust and probate litigation, estate planners need to consider various presumptions that apply to testamentary documents, property characterizations, marital-property transfers and attempted transmutations. This article provides an overview of the California presumptions in these areas so estate planners can evaluate the various risks and safeguard their clients’ testamentary wishes.
As estate planners, we prepare carefully crafted estate plans for clients who typically have a clear view of their family dynamics and ultimate wishes. We aim to be thorough and to provide multiple contingency plans so our clients’ wishes are carried out upon their deaths. However, it cannot be ignored that, with the high rates of divorce, our clients’ assets often are being apportioned and distributed not upon their deaths, but upon dissolution of their marriages. With the high rates of divorce, as well as growth in the areas of trust and probate litigation, it is perhaps more important than ever for estate planners to understand the various presumptions that apply to testamentary documents, property characterizations, marital property transfers, and attempted transmutations. This article provides an overview of the California presumptions in these areas to enable estate planners to evaluate the various risks and safeguards that can be put in place to ensure that their clients’ estate plans accomplish their testamentary wishes.
Estate planners preparing estate planning documents for married couples should be aware of general presumptions affecting the characterization of marital property. California is a community property state that characterizes marital property as either separate property, community property, or quasi-community property.15 Separate property consists of both property owned by a married person before marriage and property acquired after marriage by gift, bequest, devise, or descent, as well as any rents, issue, or profits derived therefrom.16 Community property, in turn, consists of any property that a married person acquires during marriage while domiciled in California, regardless of where the property is situated.17 Three presumptions arise from these property classifications.
Though the foregoing marital property presumptions lay the groundwork for determining the characterization of marital property, spouses may attempt to circumvent the presumptions by using transmutation agreements. Transmutation agreements must comply with strict requirements to alter property characterizations.
As a result of the rigid transmutation requirements, it is crucial that those preparing community property agreements or other transmutation agreements state clearly in those agreements that the characterization of the property is being changed. Counsel should not rely on general provisions in the trust to accomplish a transmutation.
Recently, a presumption of undue influence was applied to trust agreements benefiting a single spouse. In Lintz v. Lintz,71 the husband, a wealthy real estate developer, had three children from a previous marriage. Following his second marriage to his third wife, he signed a tenth amendment to his trust that left half of the trust estate to the third wife and left the other half to his children and grandchildren.72 A series of additional trust amendments followed, each leaving a greater percentage of the trust to the third wife.73 The husband and third wife then prepared a family trust as settlors and trustees, designating all of the husband’s property as community property, and giving the third wife both a life estate in all of the trust property and the power to disinherit one of the children.74 During the marriage, the wife also spent large sums of the husband’s money without his knowledge.75 After the husband died, his children brought an action against the third wife. The court held that “[t]he presumption [of undue influence] should have been applied to the transmutation of [the husband]’s separate property to community property and to the huge sums of money decedent transferred to [the third wife]. It also should have been applied to the [family trust], which was a contract between [the husband] and [the third wife] both as settlors and as trustees.”76 By failing to note whether the presumption applied to the husband’s amendments to his individual trust, the court left unresolved the argument that a spouse’s amendment of an individual trust will not be considered an interspousal transaction subject to the presumption if the other spouse is not acting as trustee of that trust.
To ensure that their clients’ desires are met, estate planners must competently advise them about the foregoing presumptions in the event their testamentary documents become the subject of litigation, whether for the purposes of separating assets after a dissolution or in a trust or probate proceeding. Practitioners also should ensure that any property agreement meets the rigid transmutation requirements. And, until courts clarify whether unfair advantage is required to trigger the presumption of undue influence and what constitutes an interspousal transaction, estate planners should take care in drafting transmutation agreements and trust agreements. Estate planners must equip clients with the legal tools—and facts—to rebut a presumption of undue influence where it may apply. Furthermore, when one spouse is disproportionately advantaged in the estate planning documents, practitioners should consider advising spouses to retain independent counsel to help safeguard estate plans from attack on the ground of undue influence.
The article entitled “An Estate Planner’s Guide to Family Law Presumptions” authored by Lorin B. Bender and Priscilla N. Hatton was published in the California Trusts and Estates Quarterly Volume 24, Issue 4, 2018 published by the California Lawyers Association Trusts and Estates Section.
Estate of Fritschi (1963) 60 Cal.2d 367, 372; Estate of Locknane (1962) 208 Cal.App.2d 505, 510; Prob. Code, section 810, subd. (a).
Estate of Goetz (1967) 253 Cal.App.2d 107, 114.
See Andersen v. Hunt (2011) 196 Cal.App.4th 722, 731.
Id. at p. 736 (stating trust amendments merely reallocating the percentage of assets among beneficiaries should be subject to the lower capacity standard in Probate Code section 6100.5).
Code, section 6100.5, subd. (a); see Anderson v. Hunt, supra, 196 Cal.App.4th at p. 736.
Code, section 6100.5, subd. (a).
Doolittle v. Exchange Bank (2015) 241 Cal.App.4th 529, 545.
Andersen v. Hunt, supra, 196 Cal.App.4th at p. 727.
Lintz v. Lintz (2014) 222 Cal.App.4th 1346, 1352–53 (Trusts that “addressed community property concerns, provided for income distribution during the life of the surviving spouse, and provided for the creation of multiple trusts, one contemplating estate tax consequences upon the death of the surviving spouse,” should be evaluated under “the sliding-scale contractual [capacity] standard in Probate Code sections 810 through 812.”).
Code, section 811, subds. (a)–(b).
Quasi-community property is property acquired by spouses while they reside in a non-community property state that would be community property if the marital couple had been domiciled in California. Quasi-community property is treated as community property in California and therefore will not be discussed separately in this article. See Prob. Code, sections 66, 100–01.
Code, section 770, subd. (a).
In re Marriage of Haines (1995) 33 Cal.App.4th 277, 290 (interpreting predecessor statute to Family Code section 2581); In re Marriage of Peters (1997) 52 Cal.App.4th 1487, 1491.
In re Marriage of Haines, supra, 33 Cal.App.4th at p. 290; Wilson v. Wilson (1946) 76 Cal.App.2d 119, 125–27.
See In re Marriage of Haines, supra, 33 Cal.App.4th at p. 291.
Property acquired before 1975 is additionally subject to the “married woman presumption,” which states that property titled in a married woman’s name alone or titled in her name and a third party’s name is her separate property. See Fam. Code, section 803.
In re Marriage of Haines, supra, 33 Cal.App.4th at p. 291; In re Marriage of Weaver (2005) 127 Cal.App.4th 858, 865–66, overruled on other grounds in In re Marriage of Haines, supra, 33 Cal.App.4th at p. 300.
Code, section 2581; In re Marriage of Weaver, supra, 224 Cal.App.3d at p. 865.
In re Marriage of Haines, supra, 33 Cal.App.4th at pp. 301–02.
In re Marriage of Brooks and Robinson (2008) 169 Cal.App.4th 176, 184–85, disapproved on other grounds by In re Marriage of Valli (2014) 58 Cal.4th 1396, 1405; In re Marriage of Haines, supra, 33 Cal.App.4th at p. 292.
In re Marriage of Brooks and Robinson, supra, 169 Cal.App.4th at p. 185.
Code, section 662; In re Marriage of Brooks and Robinson, supra, 169 Cal.App.4th at p. 189.
Code, section 2640, subd. (a).
Code, section 2640, subds. (b)–(c).
See In re Marriage of Moore (1980) 28 Cal.3d 366, 371–72.
See In re Marriage of Frick (1986) 181 Cal.App.3d 997, 1019–20.
Code, section 852, subd. (c).
Transmutations made prior to January 1, 1985 may be established by oral agreements. See, e.g., In re Raphael’s Estate (1949) 91 Cal.App.2d 931, 938–40.
Estate of MacDonald (1990) 51 Cal.3d 262, 272–73.
In re Marriage of Benson (2005) 36 Cal.4th 1096; see In re Marriage of Campbell (1999) 74 Cal.App.4th 1058.
See Marriage of Weaver, supra, 224 Cal.App.3d at p. 486–87.
Estate of Bibb (2001) 87 Cal.App.4th 461, 466–69.
In re Marriage of Barneson (1999) 69 Cal.App.4th 583.
Id. at pp. 591, 593–94.
In re Marriage of Valli, supra, 58 Cal.4th at pp. 1400–01.
In re Marriage of Lafkas (2015) 237 Cal.App.4th 921.
In re Marriage of Starkman (2005) 129 Cal.App.4th 659, 662–66.
Cecconi v Cecconi (Bankr N.D. Cal 2007) 366 BR 83, 129–30.
Marriage of Holtemann (2008) 166 Cal.App.4th 1166, 1172.
Estate of MacDonald (1990) 51 Cal.3d 262.
Estate of Petersen (1994) 28 Cal.App.4th 1742.
In re Marriage of Fossum (2011) 192 Cal.App.4th 336, 343–44; see also In re Marriage of Bonds (2000) 24 Cal.4th 1, 28.
See In re Marriage of Delaney (2003) 111 Cal.App.4th 991 (presumption arises any time one spouse gains advantage to disadvantage of other spouse in transaction); but see In re Marriage of Burkle (2006) 139 Cal.App.4th 712, 717 (presumption of undue influence did not apply to post-marital agreement in which (1) both spouses were represented by independent counsel and obtained advantages, (2) there was full disclosure of assets, and (3) agreement contained acknowledgment by both sides that neither was obtaining unfair advantage).
In re Marriage of Delaney, supra, 111 Cal.App.4th at p. 998.
In re Marriage of Fossum, supra, 192 Cal.App.4th at pp. 344–45; see also David v. Hermann (2005) 129 Cal.App.4th 672, 684.
Code, section 86; Welf. & Inst. Code, section 15610.70, subd. (a).
Welf & Inst. Code, section 15610.70, subd. (a)(1)–(4).
Welf & Inst. Code, section 15610.70, subd. (b).
In re Kreher’s Estate (1951) 107 Cal.App.2d 831, 839.
In re Marriage of Delaney, supra, 111 Cal.App.4th at p. 994.
In re Marriage of Mathews (2005) 133 Cal.App.4th 624, 627.
Lintz v. Lintz, supra, 222 Cal.App.4th at p. 1350.

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