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What is a No-Contest Clause?

A no-contest clause is a provision in a will or trust that, if enforced, would penalize a beneficiary if the beneficiary files a contest with the probate court.  In other words, a no-contest clause provides that a beneficiary will lose his or her inheritance in the estate plan if he or she seeks to invalidate or impair the estate plan documents or any of its provisions.

Why Do Estate Plan Documents Contain No-Contest Clauses?

A no-contest clause is designed to discourage litigation by an unhappy beneficiary.  The no-contest clause requires the beneficiary to choose between accepting the gift provided in the estate plan and pursuing a claim that is a contest and perhaps possibly losing his or her entire inheritance.

What Is The Current California Law on No-Contest Clauses?

The California law on no-contest clauses changed dramatically in 2010.  A discussion on the former no-contest clauses and former accompanying case law is beyond the scope of this blog.  This blog will discuss the current California law on no-contest clauses (i.e., instruments that became irrevocable on or after January 1, 2010).

Generally speaking, no-contest clauses are governed by three different enforcement statutes.  The applicable statutes will depend on the date that the instrument at issue became irrevocable (i.e., on the death of the creator of the will or trust instrument).

Wills or trusts that became irrevocable on or after January 1, 2010, are governed by California Probate Code §§21310-21315.  Under the current law, no-contest clauses are greatly restricted.  In fact, a no-contest clause “shall only be enforced” against contests that are within the three types:

a.  Direct contests brought without probable cause.  A direct contest means a contest that alleges the invalidity of a protected instrument based either on fraud, lack of due execution, lack of capacity, menace, duress, fraud, or undue influence…  Probable cause exists if, at the time of filing a contest, the facts known to the contestant would cause a reasonable person to believe that there is a reasonable likelihood that the requested relief will be granted after an opportunity for further investigation or discovery. California Probate Code §21311(b).

b.  Challenges to certain property transfers if expressly barred by the no-contest clause.  A no-contest clause may be enforced against a pleading to challenge a transfer of property on the grounds that it was not the transferor’s property at the time of the transfer, but only if the no-contest clause expressly provides for that application.  California Probate Code §21311(a)(2).

c.  Filing or prosecution of creditor’s claim if expressly barred by the no-contest clause.  A no-contest clause may be enforced against the filing of a creditor’s claim or prosecution of an action based on the claim, but only if the no-contest clause expressly provides for that application.

If an instrument contains a no-contest clause, a beneficiary and his or her attorney should review the penalty for triggering the no-contest clause.  If the penalty is insubstantial (e.g. beneficiary will receive a $2,000 inheritance) and the chance of recovery is great (e.g., a $1 million inheritance), the beneficiary may want to assume this risk and contest the instrument.  On the other hand, if the inheritance is substantial (e.g., a $1 million inheritance) and the chances of prevailing on the contest is low to moderate, then the beneficiary has a tough decision to make; take the money or perhaps lose it all if he or she contests.  It will of course depend on the facts and circumstances of each case.

Matthew W. Harris is a Marin County estate planning, conservatorship, and probate attorney located in San Rafael, California.  For more information on estate planning, conservatorship or probate, please contact The Law Office of Matthew W. Harris today at (415) 521-5610 for a free consultation.

Note:  Attorney advertising.  Nothing posted on this blog by the Law Office of Matthew W. Harris, a Marin County estate planning attorney, is intended, nor should be construed, as legal advice.  Blog postings and hosted comments by The Law Office of Matthew W. Harris are available for general educational purposes only and should not be used to assess a specific legal situation.  Nor does any comment on a blog post by The Law Office of Matthew W. Harris create an attorney-client relationship.  The presence of hyperlinks to other third-party websites does not imply that the Law Office of Matthew W. Harris endorses those websites, their contents, or the activities or views of their owners.

The Law Offices of Matthew W. Harris is pleased to announce that Marin County’s very own, Matthew W. Harris, Esq,,earned his LL.M (Master of Laws) degree in Estate Planning, Trust & Probate Law from Golden Gate University School of Law.  GGU is the only law school in the Western United States that offers such an LL.M in Estate Planning, Trust and Probate Law.

Matthew W. Harris, Esq., LL.M assists clients with estate planning, probate, conservatorship, and trusts and estates disputes.   The Law Offices of Matthew W. Harris is conveniently located in Marin County, and City of San Rafael.  Matthew W. Harris serves San Francisco County, Marin County, Sonoma County, Alameda County and Contra Costa County.

Please call Matthew W. Harris, Esq., LL.M., the Marin County estate planning, conservatorship and probate attorney you want to see.

Probate is the court administration of transferring the decedent’s estate to certain beneficiaries.  If a decedent dies with a will, then this person is deemed to have died testate.  If the decedent died without a will, then the decedent is deemed to have died intestate.

In a Marin County Probate, a fiduciary is appointed by the court as personal representative of the decedent’s estate.  The personal representative will have to ascertain and collect the decedent’s assets to protect the interests of the decedent’s creditors. The personal representative will have to arrange for the timely payment of debts and taxes of the decedent.

Once the decedent’s estate and liabilities are ascertained and properly credited, then the decedent’s estate is ready for distributions to his or her designated beneficiaries (if there is a will) or to his or her legal heirs (if there is no will).

A Marin County Probate administration can range from easy to extremely complex. Matthew W. Harris, Esq. LL.M offers free probate consultations.

Matthew W. Harris, Esq., a Marin County Probate attorney, is conveniently located in Marin County, and the City of San Rafael.

Thank you for visiting my page. Best wishes.

San Rafael Probate Attorney

On April 21, 2016, Prince suddenly died. The official cause of his death has not been released. But much media speculation surrounds his use and addiction to prescribed medication. To make matters worse, ostensibly Prince died without a will, or “intestate” as it is called in California.

Many of my clients and family members asked me whether I was surprised that Prince died without a will, as it has been reported in the media.  Much to their surprise I was not really surprised at all about Prince dying without a will.

I cannot honestly recall the number of excuses I hear from people on why they never got around to creating a basic will or a comprehensive estate plan. The most common excuses are: (1) people are young so they will create an estate plan later on in life; (2) People do not have a “large enough estate” to warrant implementing an estate plan; (3) hiring an estate planning attorney is too expensive; (4) certain people do not want to confront their own immortality; and (5) certain people never really stop to think about creating their estate plan.

If Prince truly died without a will or estate plan of any kind, then results are going to be tragic.  First, Prince’s heirs will have to be determined.  Sadly, there is a gentleman in jail who claims he is Prince’s son and is demanding that a DNA test be conducted. Second, Prince’s debts will have to be ascertained.  In fact, it has also been reported that certain of Prince’s employees, friends or agents will file claims against his estate for money.

Like any true artists, their fame and value increase exponentially after they die.  It has been reported that Prince had an estimated $300 million dollar estate at the time of his death, which will now skyrocket.  With all this money and the uncertainty of heirs and creditors, a perfect storm is brewing in Prince’s estate.

San Rafael Probate attorney Matthew W, Harris, Esq., LL.M  assists individuals and families during the emotional and legal aspects of probate in Marin County.  Matthew W. Harris, Esq., LL.M. offers free probate consultations. Call  the Law Offices of Matthew W. Harris at (415) 521-5610.  Thank you for visiting my blog.

Marin County Estate Planning Attorney

Many Baby Boomers are in the difficult position of taking care of their elderly parents. And millions of Baby Boomers are inching closer to their own golden years. It is no secret that America is aging rapidly. With the ever increasing aging population, many have responsibly created revocable living trusts to protect themselves from their potential incapacity and ultimate death. Many of these trust instruments nominate a successor trustee to step in the shoes of an incapacitated trustee.

Incapacity is an elusive term.  To begin with, every adult person is presumed to have capacity unless he or she has been determined by the court to be “incapacitated.”  A determination of incapacity must be supported by clear and convincing evidence. As a result, an incapacity determination for a fading or diminished trustee can be very difficult to prove.

Many elderly trustees can exhibit behavior indicative of diminished or fading capacity. This problem can be further compounded when the elderly trustee denies that he or she may have capacity issues and refuses to resign as trustee. Such a fading trustee of a large estate can cause a substantial amount of damage (i.e., loss of money or property).  Obviously, a fading trustee’s amicable resignation is by far the best approach.

On the other hand, if a trustee with fading capacity refuses to resign, then he or she may be removed according to the terms of the trust instrument.  A well drafted trust should grant one or more persons the power to remove a trustee, for specified reasons or on specified contingencies. By way of example, many standard trust provisions require two doctor declarations stating that the trustee is incompetent to handle his or her financial affairs.

A trustee may be removed by a court order pursuant to California Probate Code, section 17200. A trustee may be removed under Cal. Probate Code, section 15642, if it is determined that the trustee is substantially unable to manage the trust’s financial resources or is otherwise substantially unable to properly execute the duties of office, or the trustee is substantially unable to resist fraud or undue influence.

Marin County estate planning attorney Matthew W, Harris, Esq., LL.M assists individuals dealing with a diminished or fading capacity trustee.  Mr. Harris offers free trust administration consultations.

Call the Law Offices of Matthew W. Harris at his San Rafael office at (415) 521-5610.  Thank you for visiting.

To better understand trust administration, one must have a general understanding of a revocable living trust.  To begin with, a revocable living trust is a popular estate planning device used by many responsible individuals to avoid a court imposed conservatorship (incapacity) or a court imposed probate (death).  With a revocable living trust, assets are administered during an individual or couples lifetime, and during his or her potential incapacity, and then ultimately distributed at his or death to the beneficiaries designated by the trust.

Most individuals who create these trusts name themselves as the initial trustees.  Usually these trusts name close family members or close friends to serve as successor trustees of the trust.  Unfortunately, many of these family members or friends do not know what the job of being a trustee truly entails.

A trustee is a fiduciary, meaning that he or she is held to a very high standard when managing trust assets on behalf of the beneficiaries.  A trustee has many duties that he or she owes to the beneficiary(ies) of the trust.  A trustee also has many powers in administering the trust.  The duties and powers of a trustee are well beyond the scope of this blog.

Administering a trust can be extremely complex.  The Law Offices of Matthew W. Harris provides legal representation to trustees who need assistance with trust administration.  Mr. Harris, Esq., LL.M provides free trust administration consultations. The Law Offices of Matthew W. Harris is located in the County of Marin, and City of San Rafael, and serves clients throughout the San Francisco Bay area.

Thank you for visiting our blog!

Below please find 6 basic steps to create an effective estate plan:

1.Make a valid California will, also known as a last will and testament.

2.If there are sufficient assets, perhaps a revocable living trust is a better option.

3.Make a power of attorney to manage assets in the event of incapacity.

4.Make an advance health care directive to cover medical wishes in the event of incapacity.

5.Make valid guardian nominations if there are minor children.

6.File or update appropriate beneficiary designation forms.

Matthew W. Harris, Esq., LL.M assists clients with estate planning, probate, conservatorship, and trusts and estates disputes.   The Law Offices of Matthew W. Harris is conveniently located in Marin County, and City of San Rafael.

Please call Matthew W. Harris, Esq., LL.M., at (415) 521-5610 for a free estate planning consultation.

Will

A will is a written document in which an adult person (the testator) makes a disposition of his or her property that only takes effect after his or her death and is subject to probate court proceedings.

Overall, wills are simpler and shorter instruments than a standard revocable living trust.  Because wills are simpler and shorter documents, they are generally less time-consuming to create and less expensive.  If a person has a relatively small estate, then a will might be the better choice than a standard revocable living trust.

How Do I Create A Will?

A witnessed will or a formal will, must be in writing and signed by an adult testator (or in the testator’s name by another person in the testator’s presence and direction).  Generally, the will must be witnessed by at least two competent and disinterested witnesses.

A holographic will is document whereby the material provisions are in the handwriting of the testator, and signed by the testator.  A holographic will does not have to be witnessed.

Revocable Living Trust

A trust is defined as a relationship whereby property is held by one party (the trustee) for the benefit of another (the beneficiary).  The person who creates the trust is called the settlor, grantor or trustor.  The settlor, grantor or trustor often serves as the initial trustee of the trust.

How Do I Create A Trust?

A trust can be created by agreement, declaration or exercise of a power of appointment to another person as a trustee.  If a person is under a court-ordered conservatorship, then the conservator can create and fund a revocable trust to avoid the expense and delay of probate.

There are five legal elements to create a trust: (1) a settlor, trustor or grantor; (2) the settlor, trustor or grantor’s intent to create a trust; (3) trust property; (4) a trust beneficiary; and (5) a valid trust purpose.

Note:  Attorney advertising.  Nothing posted on this blog by the Law Office of Matthew W. Harris, is intended, nor should be construed, as legal advice.  Blog postings and hosted comments are available for general educational purposes only and should not be used to assess a specific legal situation.  Nor does any comment on a blog post create an attorney-client relationship.  The presence of hyperlinks to other third-party websites does not imply that the Law Office of Matthew W. Harris, endorses those websites, their contents, or the activities or views of their owners.

Trust Defined

A trust is defined as a relationship whereby property is held by one party (the trustee) for the benefit of another (the beneficiary).  The person who creates the trust is either called the settlor, grantor or trustor.  The settlor, grantor or trustor often serves as the initial trustee of the trust.

Advantages of Trusts

Assets transferred to a revocable living trust before the settlor’s death can avoid the imposition of a conservatorship proceeding in court.  After the settlor’s death, the assets held in trust are not subject to probate proceedings.  As a result, a trust may save significant administrative costs for both a conservatorship and probate.  A trust also allows the trustee to act more quickly than an executor or administrator in probate court. And unlike a public probate proceeding, a trust administration is handled privately and out of the purview of the courts.

Under California law, a settlor can be the trustee of his or her own trust.  In fact, this arrangement is very typical.  The settlor can also choose a trusted family member, friend or financial advisor to serve as trustee of the trust. A settlor can also appoint a “special trustee” or “trust protector” to serve specific and limited roles during the trust administration.

Disadvantages of Trusts

The biggest disadvantage of a trust is the initial costs of planning, drafting, and funding a revocable living trust, which is generally higher than the cost of planning and drafting a will. Another disadvantage of a trust is the actual process of funding the trust with assets.  The funding of the trust can be time-consuming because assets have to be retitled in the name of the trust.  If the trust will continue long after the settlor’s death, significant trustee fees could be incurred. Unlike a will, trust beneficiaries do not have the oversight and protection of the superior court.

Note:  Attorney advertising.  Nothing posted on this blog by the Law Offices of Matthew W. Harris, is intended, nor should be construed, as legal advice.  Blog postings and hosted comments are available for general educational purposes only and should not be used to assess a specific legal situation.  Nor does any comment on a blog post create an attorney-client relationship.  The presence of hyperlinks to other third-party websites does not imply that the Law Offices of Matthew W. Harris, endorses those websites, their contents, or the activities or views of their owners.

Revocable and irrevocable trusts have many similarities. Both types of trusts provide for the transfer of trust property to a trustee who administers and distributes the property as governed by the trust document.

A trust is revocable by the settlor or settlors unless expressly made irrevocable by the trust instrument. Most revocable trusts become irrevocable on the death of the settlor or cosettlor.

Irrevocable trusts involve a relinquishment of control or enjoyment by the settlor and have a gift and other tax consequences. On the other hand, a revocable trust usually does not have such substantive tax effects because it may be revoked by the settlor at any time. Moreover, so long as the trust is revocable, the settlor’s creditors are able to attach the assets of the trust.

What Are the Different types of Irrevocable Trusts?

1. Trusts for Minors

Trusts for minors are specialized forms of permanent trusts that more narrowly focus on the specialized circumstances and requirements of minors.

2. Special Needs Trusts

The primary purpose of a special needs trust is to preserve and supplement government benefits for a disabled or aged beneficiary.

3. Life Insurance Trusts (ILIT)

An irrevocable life insurance trust is typically used to remove the proceeds of life insurance form the insured’s gross estate, while making the proceeds available as a source of liquid funds.

4. Charitable Trusts.

A charitable remainder trust is designed to provide benefits to named individuals for a specified period of time, with the remainder interest passing to charity.  A charitable lead trust is designed to provide benefits to a charity for a specified period of time, with the remainder interests passing to individuals.

5. Qualified Domestic Trust (QDOT)

Generally, no estate tax deduction is allowed for transfers to a surviving spouse who is not a citizen of the United States.  A variation of the marital deduction can be obtained if the transferred property is put in a qualified domestic trust (QDOT).

6. Estate Balancing Trusts

If one member of a married couple is wealthy and the other has a few assets, an inter vivos qualified terminable interest property (QTIP) trust can be used to provide the less wealthy spouse with a taxable estate, thereby making it possible to take advantage of that spouse’s unified credit on his or her death.

7. Permanent Trusts.

The permanent trust is designed for the management of irrevocably transferred assets.  The trust objectives include immediate removal of the transferred property from the settlor’s estate for estate tax purposes (at the price of making an immediate gift for gift tax purposes).  The trust terms are also designed to ensure that the taxable income form the trust corpus will no longer be includable in the settlor’s taxable income for income tax purposes, although irrevocable trusts are sometimes drafted intentionally to cause the trust income to be taxed to the grantor (intentionally defective grantor trust).

8. Grantor Retained Interest Trusts or Grantor Retained Annuity Trusts

A grantor retained interest, or annuity, trust allows the settor to retain an interest, or annuity, in trust assets for a limited period of time, with the remainder interest passing to another person.  These trusts are designed to minimize taxes by incurring a gift tax only for the remainder interest that follows the settlor’s retained interest.

Note:  Attorney advertising.  Nothing posted on this blog by the Law Offices of Matthew W. Harris, is intended, nor should be construed, as legal advice.  Blog postings and hosted comments are available for general educational purposes only and should not be used to assess a specific legal situation.  Nor does any comment on a blog post create an attorney-client relationship.  The presence of hyperlinks to other third-party websites does not imply that the Law Offices of Matthew W. Harris, endorses those websites, their contents, or the activities or views of their owners.