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We are pleased to announce that the California Board of Legal Specialization has certified Heidi Richert Clerc in Estate Planning, Trust & Probate Law. Heidi joins the ranks of the other Certified Specialists at Burt & Associates (Julia E. Burt and Elaine E. Hill).

California attorneys who are certified as specialists have taken and passed a written examination in their specialty field, demonstrated a high level of experience in the specialty field, fulfilled ongoing education requirements and been favorably evaluated by other attorneys and judges familiar with their work.

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Making charitable bequests in Wills or Trusts is a common practice. However, many individuals merely name a charity and do not specify for what purpose such a gift should be earmarked. Recently, an extremely generous, if not equally frugal, librarian in New Hampshire left his entire $4 million estate to the University of New Hampshire. He stated that $100,000 must be used for the library, but did not specify how the rest of the funds must be used. The University has decided to use $2.5 million to expand a career center for students and alumni. However, the University has also decided to use $1 million to purchase a video scoreboard for the school’s football team. This decision is causing an uproar among students and community members who believe that the spirit of the gift is not being followed. The contention is that the donor would be “turning in his grave” if he knew that his money was being used to purchase a video scoreboard.

To prevent similar issues for your charitable gifts, you should leave specific instructions and directions as to how your gift must be used. If you do not, the charity has the discretion to use the funds in any way it chooses. Sample language includes, “To Charity X to be used for ___________” or “$$$$ to Charity X to establish a ______________ in my name.”

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A new development in probate law involves the use of transfer on death deeds for real property located in California. Other states have authorized the use of such deeds but it has only been available in California since January 1, 2016. Essentially, the deed works like any other transfer on death designation. When you die, your designated beneficiary inherits your house. The process sounds great in theory. Such a deed would completely circumvent a probate process. However, the use of such deeds should be done with extreme care and caution.

First, the transfer on death deed must be drafted in substantially the form outlined in the Probate Code Section 5642. The deed must be notarized and the beneficiary, or beneficiaries, must be specifically named. You cannot state, “to my children” or “to my siblings.” Such language is invalid and the transfer on death deed would fail.

Second, the person executing the deed must have “contractual capacity.” This is different than “testamentary capacity” and is a higher standard. Preparing a will requires only testamentary capacity. Testamentary capacity means that you understand that you’re signing a will, you understand who your natural heirs are, and you have an understanding of the types of property you own. Contractual capacity is a higher standard and requires that a person understand fully and completely whatever they are contracting to do.

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Forbes magazine just asked this controversial question in a recent article. The answer is almost always yes with relatively few exceptions. In California, everyone has an estate plan. Either you’ve created one yourself with a Will or a Trust or the State of California has an estate plan for you. This one is called intestate succession and the California Probate Code explains who will inherit from your estate if you die without your own documents.

It is true that a form of estate planning is the use of joint tenancy and beneficiary designations on your bank and brokerage accounts. These will trump the provisions in a Will even if you have one. However, what happens if the heir dies? What if your beneficiary designations are out-of-date? Also, often times it is unadvisable to hold property jointly with your children.

Another issue often overlooked are your personal effects. There is no way to put a beneficiary designation on an art collection or family heirlooms. A Will directs the disposition of where these items should go and to whom.

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Estate taxes issues present headaches for the simplest estates. These potential issues are compounded when the decedent is a celebrity. In the wake of Prince’s untimely death, his estate attorneys will be tasked with the momentous task of valuing his name and likeness. Essentially, someone will set a monetary value on Prince’s profit potential calculated on the day he died. A recent Wall Street Journal article explains that this task will inevitably lead to an IRS battle as the estate attorneys understandably want to make this value as low as possible while the IRS will want a very high number. A similar battle is currently taking place in the U.S. Tax Court in Michael Jackson’s estate.

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It is common that a married couple in their late sixties creates an estate plan which names their child or children as Trustees and/or Agents. This is a great first step in setting up a plan that can help when the parents are no longer able to care for themselves or their finances. However, the second step is the talk openly with your children regarding your assets. Far too often children are faced with the challenge of taking over their parents’ finances only to find out they have no idea where to start. What does Mom and Dad own? Where are their accounts?

The Wall Street Journal just published an article discussing the importance of sharing financial information with your loved ones. The untangling of financial information by children for their parents is a common problem. The problem can be mitigated significantly if you write out a list of your assets or otherwise have a roadmap so that your successors and agents can get access to accounts when necessary.

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A surprising number of families learn the painful lesson that divorce doesn’t fully resolve beneficial ownership issues with certain retirement accounts. Any plans governed under the Employee Retirement Income Security Act of 1974 (ERISA) must follow specific rules and provisions, which will override the provisions in a marital settlement agreement. The only exception to this rule is if the couple has a Qualified Domestic Relations Order (QDRO) as part of the divorce settlement. The effect of all this is that if you designate your spouse as a beneficiary under an ERISA plan, and neglect to change that beneficiary designation after divorce, the now ex-spouse will receive the asset at your death.

Many states, California included, have enacted laws that prevent an ex-spouse from inheriting from the estate of a prior spouse. California Probate Code § 5600 states that if an individual designates a spouse as a beneficiary on an account, that spouse will not inherit the asset if the spouse is divorced at the time the individual dies. This makes sense. In general, most people wouldn’t want to leave any assets to an ex-spouse at their death. This code section was enacted to cure the simple mistake of not updating beneficiary designations after divorce.

Unfortunately, accounts governed by ERISA don’t follow state laws and thus the protection provided in the Probate Code doesn’t apply. The US Supreme Court has consistently ruled that beneficiaries listed on ERISA plans will receive the asset even if the beneficiary is an ex-spouse. This is true even if the couple has been divorced for decades. The only exception is a QDRO. Many do-it-yourself divorces don’t include a QDRO because the parties may not know what it is or may not know that it is required for their assets. According to the IRS, a QDRO must contain specific information regarding the retirement plan including the nomination of an alternate beneficiary, with his or her last known mailing address, and the amount or percentage to be paid to the alternate beneficiary. A simple marital settlement agreement will not be deemed a QDRO absent the required language.

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On October 5, 2015, Governor Jerry Brown signed legislation allowing terminally ill patients in California the option to end their lives. The so-called Option to Die Act will not come into effect until sometime in 2016.

California joins Oregon, Washington, Vermont, Montana and New Mexico as the only states where medically aided suicide is legal.

How does the law work?