Should mom do a formal Estate Plan, or put everything into Joint Tenancy?

Dear Len & Rosie,

Mom is 78. She has some money, a little over $100,000, in a certificate of deposit and her checking accounts. She has put me on as a signer on all of her accounts. She lives in a trailer park. She owns her trailer, worth about $75,000, but pays rent on the pad. She wants to put me on the trailer so I could sell it if she got sick or worse. Can she do that? Would it accomplish her goal?

Lyn

Dear Lyn,

Your mother is trying to do her estate planning on the cheap. This isn’t such a bad idea, because she hasn’t got a lot of money, but it’s important for both you and her that she does it right.

If your mother gave you signature authority on her bank accounts, you will have access to her money, but only until her death.  If upon her death her accounts are worth less than $150,000, you can collect them 40 days or more after her death using a form provided by the bank or a declaration under California Probate Code section 13101. If the accounts happen to be worth more than $150,000, then her estate will be subject to probate in the courts. This would be expensive and time-consuming.

To avoid probate altogether, your mother can put her bank accounts and her mobile home in joint tenancy with you. It’s easy to do at the bank - the teller will do all the work for her, but it’s more difficult to transfer the mobile home. She will have to get transfer forms from the California Department of Housing and Community Development at www.hcd.ca.gov or have a title insurance company do the paperwork. But before she does this, she should check with the mobile home park. Many parks will not allow owners who don’t actually live there.

Putting you on title to her mobile home will make it easier after her death, but you wouldn’t be able to sell it without your mother’s signature unless she also gives you a Durable General Power of Attorney. She needs one, and she also needs an Advance Health Care Directive. If she should ever become incapacitated, there are all sorts of legal, financial, and medical decisions you may have to make on her behalf. Without a DPOA and AHCD, it could become necessary for your mother to be placed into a conservatorship, just to allow you to conduct business on her behalf. You can download a free Advance Health Care Directive at  www.lentillem.com.

Finally, if you are not the only child and your mother really wants to leave everything to you, then forget everything we said about your mother doing it herself. If your mother is planning on disinheriting her other children, she needs to see a lawyer, without you being there, to create a will to back up her putting everything into joint tenancy with you. If you were to get sued by vengeful siblings after your mother’s death, you’ll have a much better chance of winning if you’re not the only voice trying to convince the judge that your mother wanted to all to go to you. The lawyer and his or her staff will be neutral witnesses who can testify as to your mother’s wishes.

Len & Rosie

What happens to a biological child's inheritance if they have been adopted by a stepparent?

Dear Len & Rosie,

My recently deceased brother had a daughter thirty years ago. He and his wife divorced within her first year of her life. Apparently, my brother’s daughter was adopted by her mother’s second husband after she remarried.  Would this daughter be legally entitled to any part of my brother’s estate or his trust? My brother had a living trust and didn’t want to leave anything to her, but the trust didn’t specifically name her and exclude her from an inheritance. Instead, the trust says, “I have purposefully omitted any other relatives from any and all distributions.” Is this a problem?

Nancy

Dear Nancy,

When we meet an estate planning client, the first thing we do is to talk about the client’s family. How many children and grandchildren are there? Are there any deceased or disabled children? Are there children our client has adopted, or children who’ve been adopted away? It’s also a subtle way to quiz a client’s mental capacity. It’s a good sign when a client knows the names and ages of all seven of her grandchildren.

If our client wishes to disinherit a child, we like to include language such as “The settlor has intentionally and with full knowledge of the consequences made no provision for the settlor’s daughter, Nancy, or her issue.” (Issue is a legal term that means “descendents.”) From what you’re telling us, it looks like your brother’s attorney may not have been that thorough.

Fortunately, the law is somewhat forgiving. Your niece will always be the biological daughter of your brother, but if she was adopted by her step-father, she’s no longer legally related to you or your brother. She’s not entitled to notice of the existence of your brother’s trust, or notice of a probate. She also does not inherit anything from your brother’s trust or probate estate unless the trust or will names her as a beneficiary.

Unless you have proof of the adoption, the successor trustee of your brother’s trust should provide your niece (or ex-niece) notice of the existence of the trust under Probate Code section 16061.7. Play it safe.

If she was never adopted away from your brother, she’s still not entitled to inherit anything if your brother’s will and trust left everything to others. The only time a child is automatically cut into an estate plan is if the trust or will fails to dispose of everything, or if the child was born after the trust or will was created.

So why name children and specifically disinherit them when it strictly isn’t necessary? It makes the client’s intentions clear. It’s harder to prove a man didn’t know he was disinheriting a daughter when his initials are next to a paragraph saying so in clear unambiguous language.

Len & Rosie