Articles Posted in Probate

Although, joint tenancy will avoid probate, holding property as joint tenants may also have adverse and unexpected consequences. First, a little primer on basis to understand what is meant when we speak about your basis in property.

Generally, your basis in property is what you paid for it when you acquired the property. For purposes of this discussion and to keep things simple, we will not address the adjusted basis which is determined when you consider gain or loss such as capital improvements or depreciation, respectively, to the property.

If you paid $100,000.00 for real property, your basis in that property would be $100,000.00. If you later sold it for $250,000.00, you would realize a gain of $150,000 that, ignoring any exclusions or exemptions that may be available, would be subject to taxation. Similarly, If someone gifted you that same property during their lifetime, your basis in the property would be the same as the person gifting it to you. If they paid $100,000.00 for the property and gave it to you when it’s fair market value was $250,000.00, your basis would be $100,000.00 and if you sold it for $250,000.00, you would have a taxable gain of $150,000.00. Again, for demonstration purposes we are not taking into account any state or federal exemptions or exclusions available such as those under IRC section 121.

A Will, a Trust, Powers of Attorney, Advance Health Care Directives, HIPAA Authorizations, Personal Property Assignments and any thing else attendant to your estate plan are legal documents. We don’t advocate drafting your own estate planning documents, but if you do, make sure your intent is clear. The smallest mistake can completely disrupt your plans, goals and desires with respect to your estate assets.

For example, a man, Duke, who passed away in 2007 had handwritten (holographic) his own Will in 1984 which purportedly provided that his $5 million estate was to be distributed to his wife and then 1/2 to the City of Hope and the remaining 1/2 to the Jewish National Fund. The Will disinherited anyone not mentioned in the document. Duke had two surviving heirs, his nephews, Robert and Seymour Radin who were estranged from Duke.

The language in the Will specifically provided that if Duke and his wife died “at the same moment”, then the estate was to be equally divided to the above named charities. Duke’s wife died in 2002.

People usually do not grasp the unintended consequences of who their property will be distributed to upon their death without an estate plan of some sort.

I had a client who had dated a man for 30 years before finally giving in to his multiple proposals. Unfortunately, the man passed away within the year of their marriage. The man had an estranged daughter from a previous relationship and had not had contact with her for decades. The man owned multiple assets, including the home he lived in with my client, but because the couple was recently married, all the property was the decedent’s separate property and my client did not have a community property interest in any his assets.

The man did not have an estate plan. Under the laws of intestate succession, all of his property would pass to his wife and his estranged daughter equally. Additionally, a probate would be necessary to effectuate the transfer of the assets which included multiple bank accounts and real properties to the wife and estranged daughter.

In August 2010, SB 105 was passed by the legislature. There is a new Probate Code Section (21362) updating the previous definition of “care custodian.” This Section addresses gifts that become irrevocable after January 1, 2011.

This Code states that a care custodian will no longer include “a person who provided services without remuneration if the person had a personal relationship with the dependent adult (1) at least 90 days before providing those services, (2) at least 6 months before the dependent adult’s death, and (3) before the dependent adult was admitted to hospice care, if the dependent adult was admitted to hospice care.”

And if all this is too confusing, or you are not certain if a gift will be disqualified under the statute, an independent attorney can provide a Certificate of Independent Review.

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