0:00 Who are you? [music] And where are you going? [music] What do you want? [music]
0:16 >> Hello and welcome to Trust and Estates Weekly. I'm your host, Kevin Bemel, and I'm here every Monday at 10:00 a.m. Pacific time to talk about estate planning and trust and probate administration. Um, primarily for um the from the standpoint of professionals like myself who work with people um helping them create their estate plans and and and administrating trusts and estates. Um, but also for individuals who want to be able to deal with their uh their adviserss more cogently or um
0:54 maybe they're the executive of a state an estate and so while they're not a professional [snorts] they're intimately [clears throat] involved in um resolving these kinds of issues and and they're looking for some some guidance. So today I'm going to be talking about a rather complex topic um [clears throat] that I call heirs at law. So [clears throat] one of the most uh difficult aspects certainly of the work that I do is handling an estate where the deedent has
1:32 died in test state meaning he has no will there's no trust and so the only way to decide who gets his property is to look at the laws of the state [clears throat] of which he was a resident andor in which he died. Um these these things um can vary a little bit from jurisdiction to jurisdiction, but but here in California where I'm based, so we have a a number of sections of the probate code. Um
2:11 [clears throat and cough] pardon me. Um the two most important ones I think being 6400 and uh 240 sometimes called the laws of dissent and distribution not dissent as in you having a disagreement but desent as in descending from okay the laws of descent and distribution and it it's kind of an adage around uh estate planning circles that if You don't create your own estate plan. The state of California has one
2:47 for you. And in fact, each of the states has these kinds of laws and they will make the decisions for you. So, uh, that that that's the topic for today. Uh, there's a at least a little bit of math involved. So, that don't let that make you too nervous. Uh, I'm gonna, you know, do the math. Uh and and I you know I want to start out by saying as I've mentioned before I I am not a lawyer. So I'm not giving you any kind of legal advice or anything like that. I'm talking purely from the standpoint
3:22 of this is what the probate code set code says and these are some of the things that you uh that I would recommend you think about andor talk to your talk to your lawyer about them. Uh and and the main point I hope coming out of this is to see uh how um how complex it can be, what a mess it can be, how much more is opened to dispute. And so uh if if nothing else, why reinforcing
3:57 the message of, you know, get your get an estate plan in order, at least get a a simple will if you don't have much property. Um if you have more property than a trust may be uh may be appropriate but but certainly uh you know consult with the appropriate professionals and make sure that you don't end up in this particular mess uh that I'm going to describe now. So [clears throat] uh the basic rule is when a deedent dies in test state there's no valid will.
4:33 Okay, that's an important aspect of this. There's no valid will. Okay. Um I've I've handled a number of cases where there was a purported will um but but the wills were not determined to be valid by the court. Okay. And so that's what matters. Uh until until a will has been submitted for and accepted by the court for probate. uh it there it you can't be a 100% sure that it's valid. Now, if it's
5:08 been properly drawn up and all of that, you can be relatively certain that the court will accept it. But if it's some weird kind of thing, maybe it was word processed on a computer by the deedent and then he signed it, not necessarily going to held to be valid. If it's an oral will where you know the deedent was on his deathbed and he gave over the will orally to a couple of people unlikely to be ex established as valid under California law. Okay. But uh
5:44 but we're talking about a valid will. So so someone who dies in test state has no valid will or trust. Okay. So uh a a a trust basically takes the place of a will in the sense that the trust owns the deedence or holds the deedants assets. Okay. And and the purpose of the trust typically is to avoid the probate process altogether. Okay. And so um in in that respect the court may have no jurisdiction or only very limited jurisdiction because you know perhaps
6:20 for example the trustee there's some ambiguity in the in the uh instructions in the trust and so the trustee applies to the court court for clarification. Okay. So um any part of the deedence it uh the deedence estate that is not effectively de disposed of by will passes to the deedence heirs by what's called intestate succession. Okay um meaning succession where there's not a will. Okay that's according to California probate code section 6400 and that's
6:58 where most of these laws are. Okay. Um now heirs the the term heir is defined by statute. Okay. And and that statute was uh written by the California legislature at some point and and perhaps reviews re um and perhaps uh revised from time to time. Okay. It it has nothing to do with perceived fairness or the closeness of an individual to the deedent or the dependency of an individual on the
7:33 deedent. Okay. So, somebody could I have a case right now where somebody was the 30-year partner of a deedent. Okay? They never got married. They never registered a domestic partnership. Okay? And they and unfortunately for this individual the deedent never prepared a will and never prepared a trust. He died in test state and now this individual who like I said was his partner for 30
8:08 years is getting nothing. Now it's as you might imagine it's very upsetting to this person. Um and uh and and and look, I I I I sympathize uh you know um they had talked about how he would be taken care of and and he would get X Y or Z. But the fact of the matter is as the administrator of the estate, I'm not able to make him an heir where the law does not. and I'm not able
8:45 to give him money where the law does not allow me to give him money. Okay, that would be a breach of my fiduciary uh responsibility as the administrator of the estate. So, it's a very it's a very sad situation. I I think anyway, I I you know, it's it's it's gut-wrenching for this this individual. Of course, the other heirs uh you know they they range from you know being sympathetic to being you know contemptuous of of you know
9:23 this this individual which I think is uh does not speak well of them. I'll I'll just put it that way. Um the bottom line is you know they're entitled to their share of the estate and and that's kind of the end of it. So uh you know again perceived fairness, closeness, dependency, none of that matters. Okay. If a child was being taken care of by the deedent, a minor child, someone under 18 was being taken care of uh by the deedent, but that
9:59 child was never legally adopted. Okay? May not qualify as an heir under California law. Okay. So the fact that this child was financially dependent on the deedent doesn't automatically qualify that child as an heir. Okay. So these are the things to keep in mind. Okay. When you think about you know putting together your estate plan. um you know uh who is who is dependent on
10:36 you to with whom are you close and if you were to die in test state uh what would happen to those people okay and and and the answer is if they don't qualify as an heir under statute uh here in California I think this is true of most states no they're probably going to get nothing okay So, we're going to look at several kind of cases, if you will, or cases is the wrong word because that has a legal connotation, like a case. Um, several
11:12 situations, we'll call them, and so you can get an idea of how these play out. Okay? So, let's take let's take the first one where there is a surviving spouse. Okay? And it doesn't particularly matter whether it's the husband predesceasing the wife or the wife predesceasing the husband. Doesn't really matter. You've got uh you got two spouses. One of them dies. Okay. Now, here in California, this is a community property state because, as I've talked about in
11:48 previous shows, California became part of the United States under the treaty of Guadalupe Adalgo, which required that the United States uh recognize Spanish law on the matter of uh family law. Okay. And so uh there are essentially um between spouses there are two types of property. One is community property and the other is separate property. So community property is property owned essentially jointly by the two spouses.
12:25 Separate property is property that is as it says the separate property of one spouse or the other. So property owned before the two people got married is deemed generally deemed separate property. Okay. Now uh I'm going to talk about the general categories of separate property and then I'm going to talk about some complexities to that. Okay. So property owned before marriage by one of the spouses is deemed that spouse's separate property. Uh property inherited by a
13:02 spouse uh during marriage is deemed separate property as is property paid by one from by one spouse to the other. uh for um um some sort of damages uh generally related to um uh um like like some sort of spousal abuse or spousal assault. And you can you can appreciate why, right? One spouse abuses the other, loses a lawsuit, and now he's
13:38 going to get, you know, half of the money that he's been ordered by the court to pay. Makes no sense. Okay. As a as as a matter of of just law, common sense, whatever. Okay. Now, [snorts] separate property can be comingled with community property such that it loses its character solely as separate property or it might even become community property depending on how it's handled. Okay. So this is where
14:13 spouses need to be careful uh about how they handle such things. Um because uh you know it it I mean certainly in in divorce cases or what's in California called dissolution of marriage in a dissolution of marriage action the uh comingling of uh community and separate property can cause no end of disputes. Okay. So, but we're going to take a a simple case where it's, you know, there's community
14:48 property and there's separate property. All right? So, in the case of a [music] married couple where one of the spouses dies and leaves behind some community property and some separate property. Okay. So the surviving spouse receives the deedence 1/2 interest in the community property and now becomes the sole owner of that community property. Okay. So let's say that a husband and wife after they get married they buy a house. Okay. and they use their salaries
15:27 or even just the salary of one of them in order to pay the mortgage and the property taxes and the insurance and the maintenance etc. Okay. So, um that house Okay. And and the salary. Hey, can you can you stop the the blowing, please? Lewis, would you stop the blowing?
16:02 There's somebody uh cleaning leaves outside my window. It's kind of noisy. Sorry about that. Um, okay. So the um the purchase of the house uh especially since it's paid through um uh community property which salary earned during the marriage is community property. Okay, that house is community property. And so, um, in a in in a situation like that where a husband and wife bought a house, it's owned 5050 by each of them as
16:39 community property. When one of the spouses dies, now the house is owned 100% as community property. Okay? Uh, and and and that's a that's pretty easy to to understand. Um, it's one of the reasons why community property exists. Okay. So, uh, again, it's it's it's easy
17:16 to see why um, you know, community property works the way it does. um because it protects the surviving spouse's ability to live in the house. Okay. If the uh surviving spouse did not get the deedants's one half share of community property, let's say, I don't know, the children did and let's say the children and the surviving spouse are at odds. Uh the surviving spouse might end up kicked out of the house because the children want to sell the house. And you
17:51 say, why would children want to do something like that? Well, let's say the children are from a prior marriage and they don't like that their, you know, father remarried. They they dislike their stepmother or whatever. I [snorts] mean, it's it's really easy to come up with scenarios and and and Spanish law in particular sought to protect uh uh women and wives and and so it set up these kinds of mechanisms that have carried over into uh California law and in this case
18:27 California probate law. Okay. So uh again community property surviving spouse receives the deedence 1/ half interest uh outright with respect to separate property. Okay. So the in um the uh the uh separate property will be divided up among the uh uh spouse if there is one. the what are called the issue which are the children of the deedent
19:03 um and potentially although not necessarily uh the parents the siblings okay it it it depends on the situation and and for the rest of this show that's what I'm going to be talking about is what happens to the separate property okay so let's take a quick break and then we'll get into that when life brings unexpected changes. Managing inherited property shouldn't add to your stress. Magnum Properties specializes in probate and trust real estate management. We handle the
19:39 complexities while you focus on what matters most. From property maintenance to tenant relations, from legal compliance to maximizing value, we're your trusted partner through every step. Magnum Properties, Inc., turning property challenges into peace of mind. Call us today at 213-264-4396 or visit magnumprops.com. Okay, so this is Trust and Estates Weekly and I'm your host Kevin Beaml. We're talking about heirs at law. what
20:16 happens when somebody dies in testate and who gets the the the uh proceeds of the deedent's estate. So uh if the if the deedent was married um and and there was community property involved, the surviving spouse is going to get uh the deedence one half share in the community property. Separate property is more complex. Okay. So let's take the perhaps the simplest example and that is where there's a surviving spouse and uh
20:51 there's no issue at all meaning there's no children okay neither from from that marriage or or or a prior marriage. Okay. [snorts] So um if uh so in that case the separate property too will go to the surviving spouse. Okay. Um and and and so then it becomes you know pretty pretty simple. However, okay, and here's where it gets uh sticky.
21:26 uh if um if there are siblings or you know parents whatever maybe the child the deedent predesceased his parents or one of his parents okay it wouldn't be unusual for those siblings or that parent to file a claim and you know try and get a piece of the pie. Okay. um even if they're not entitled to it under the law, they may still do so. And although in the end they may not
22:01 prevail, okay, it still costs time, money to the estate, okay, and it delays the administration process. And and again, one more reason why um it's it's problematic for someone to die in test state. Okay. Now let's take perhaps a more common situation and that is where there's a spouse but there's one or more children. Okay. So um if the uh if if
22:36 let's take a situation where um there is uh a a spouse um and one child. Okay. And um in that case with respect to separate property the spouse is going to inherit half the separate property and the child is going to uh inherit the other half. Okay? So it'll be split half and half between surviving spouse and child. Now if
23:11 there's more than one child okay let's say there's two or three okay so then onethird of separate property will be inherited by the spouse and 2thirds will be split among the children. Okay. Now by the way if a child predesceases the deedent but that child has issue. Okay. So you can see right away this is getting
23:46 complicated. So just because a child uh predesceases the deedent doesn't mean that that's that child's share is extinguished. Okay. So let's let's let's take um another situation where you have a surviving spouse. They had two children. One of those children is alive but another one has died and leaves and but had two children.
24:22 Okay. So now the surviving spouse is still going to get a third. the two children, even though one of them is deceased, kind of bear with me here for a minute. The two children are going to get the twothirds of the estate, they're going to split it 50/50. So, they're each going to get a third. Okay? The child who's alive is going to get a third. The ch the deceased child, obviously, he's getting nothing. He's deceased, but he has two children. So those two children are going to split his share.
25:00 So he if he had been alive he would have gotten a one-third share. Since he's deceased each of his children will get half of the one-third share or a6th share. Okay. So in this case of a surviving spouse, one living child, one deceased child who has two children or who had two children, the surviving spouse is going to get a third. The living child is going to get a third. And each of the uh each of the living grandchildren,
25:35 okay, are going to get a six. And if you add that all up, it comes it adds up to one. Okay? All right. So that's the next level of complication in this. Okay. Now uh let's say that um let let me look at my next case here. Uh D. Okay. So let's say that um [cough] pardon me
26:11 there there are there's the deedent had no children. Okay. And he also did not get married. Okay. So there's no surviving spouse to get his se separate property or to get his property. [snorts] There's no issue children to get his property. So what happens now? Well, next in line to inherit would be his parents. So let's say that uh both of his parents are alive. Okay. So
26:49 uh the the deedence's estate will be split 5050 between his parents. Okay. His his father gets half, his mother gets half. Okay. All right. Now, um if there's if his parents both predesceased him, which would you know that would be typical. Okay. Um so then the issue of the parents uh would be next in line that is uh siblings. So his brothers and sisters uh
27:26 would would be next in line. Okay. But it could also be uh uh nieces and nephews. Okay. By by what's called representation. I'm not going to get into that. That's getting too complex. Okay. Now, if he had uh not only no spouse and no children, no issue, let's say he also had no siblings and both of his parents are deceased, [snorts]
28:01 predesceased him. So now you have a situation where his grandparents would uh would inherit the money. Okay? So it'll go back a generation and their issue which could be aunts, uncles, cousins might be entitled to um to a share. Okay. Um and so the statutes continue. Okay. By degree of kinship. And you can
28:36 see this gets pretty complicated pretty quickly. Okay. So, um that's, you know, that's kind of the essence of what are called the laws of disscent and distribution in California. Now there's something called the special timing um and special timing rule and that is that an heir must survive the deedent by 120 hours in order to in you
29:13 know be an heir in order to inherit from the deedent. Okay. Now, there are some exceptions um to this rule and and you know that this all has to be looked at and again I'm not giving you legal advice. I'm just giving you kind of what the general rules are. Okay. Now um in some limited cases okay um property uh traceable to a predesceased spouse may pass to that spouse's issue or parents
29:49 rather than to the deedants's blood relatives. Okay. And they're these these they're called sort of look back periods. Okay. They're different for real property versus personal property. But again, this is another layer of complication that comes into play when someone dies in testate. And notice that with each succeeding layer of complication, okay, there is ever more room for
30:24 disputes to arise, for people to fight, argue because, you know, they want their fair share is typically what you'll hear them say. [snorts] Okay. Now what happens if um if no errors can be identified okay or if no no he errors exist okay let's say uh I know someone who was a a single child of two parents who were single children right so there's very few blood relatives okay um
31:01 and so let's say that and and let's say somebody like that never got married, had no children, had no brothers and sisters, parents had no brothers and sisters, uh parents predesceased this person. Okay? So, and and grandparents predesceased them or predesce this person, right? So, it could be that there's no one close enough in kinship to qualify as an heir under the probate code. In that case, guess who your heir is going to be? Can you see this coming? It's going to be the state of
31:38 California. The property will do what's called estate to the state of California. Basically, it means legally go to the state of California. Okay. Um and and you know, so estee is a last resort. Um there will typically be an exhaustive search for heirs. But assuming that search turns up no heirs, then California be well the state of California in this case because we're talking we're talking about California becomes
32:14 the the heir to the estate. Okay, let's take another quick break and then we're I'm going to do some examples. Probate and Trust TV, your curated source for the most useful and insightful content on estate planning and trust and probate administration, featuring standout professionals like Bill Gross, Paul Bralet, James Cunningham, and yours truly. Whether you're a lawyer, accountant, real estate professional, or working on your own succession plan, this channel helps you
32:50 quickly find the clearest, most practical content YouTube has to offer. Subscribe now to Probate and Trust TV. Spend more time learning, less time searching. Okay, so we're back at uh Trust and Estates Weekly. We're talking about what happens when somebody dies in testate and and and what we've been what I've been talking about is what I call errors at law, right? The state of California get determines who your heirs are. Okay. So, um some additional issues. Okay. So,
33:27 heirs are determined at death. Okay. So, he airship is fixed at the moment of death. later events, marriages, births, adoptions generally do not change intestate rights. Okay. So uh you know let's say that uh uh somebody so let's say that there that that a deedent had uh two children and uh
34:03 uh well that that example won't work anyway. Look it it's look let's just it's fixed at the moment. Uh so it's it's these people as they were at the moment that the deedent died. Let's just leave it at that. Okay. So um halfblood relatives generally speaking um inherit the same as so-called wholeb blood relatives. Okay. So if uh if a a deedent had children by a first marriage and children by a second
34:40 marriage. Okay. So the both of those sets of issue have essentially equal rights. Okay. The rights of the children from the first marriage are not diminished because the deedent remarried and had more children. Okay. And um so and then with respect to adoption, adopted childrens have standing as you know so-called blood children on the one hand. On the other hand, if a child is
35:18 legally adopted, that child's uh intestate rights with the respect to the biological parent are now cut off because legally that adopted child is no longer the child of the biological parent. Okay. So uh there are some limited exceptions to this but in general that's how it works. Okay. But again another layer of complication.
35:53 Okay. So let's let's look at some mathematical equations now. Okay. Uh let's take a case where there was a there's a surviving spouse and there's one child with respect to separate property. the surviving spouse will get half and the child the sole child will get the other half. Okay? If there's a surviving spouse and two children. Okay? So the surviving spouse is going to get a third. The surviving children are going to split 2/3 meaning they're going
36:30 to get 13 each. Okay? And this this is an example I already did, but I'm going to go through it again. Okay, there's a surviving spouse, there's two children, one deceased child. Well, I'll do it slightly differently. Let's say there's a surviving spouse, and there's one deceased child who had two children. Okay? So, the surviving spouse is uh going to get half. The deceased child's
37:06 share of 1/2 will be split between his two children, the two grandchildren. They'll get a quarter each. Okay, let's take another case where there's no spouse but there's three children. Okay, one of whom is deceased and had two children. All right. So there's three children. That means each child is going to get a third because they all share equally. However, the deceased child's
37:44 oneth3 is going to get split between his two children. Okay? Meaning the two living children are going to get one/3 each and the two living grandchildren are going to get 16th each. Okay. Uh another one that I I mentioned briefly uh there's no spouse, no issue, uh but both parents are alive. So each parent receives half. Okay. Now let's
38:20 take another one where there's no spouse, no issue, one sibling and two children of a deceased sibling. Okay. So let's say you know the brother a brother died and he left behind and and he had two sisters, one of whom is alive and another who died but has but had two children who were still living. Okay. Each sibling is going to get half. Okay? So the the the the surviving sibling is
38:55 going to get half. The deceased siblings two children who are the nieces or nephews of the deedent are going to split the what otherwise would have been the other siblings half share and they're going to get a quarter a piece. Okay, so this is how the mathematics works out for these various cases. Okay. Now, the laws of descent and distribution do vary from state to state. The the the
39:33 trail doesn't go on forever. There is a point at which kinship is too distant for the state to recognize uh a particular individual as an heir. Okay? So, if you if you have like a fifth cousin twice removed or something like that, probably doesn't qualify as an heir. Okay. Uh now, if you're in a state other than California, uh the the law uh may very well be at least a little bit different than it is here in California. So, make sure that if you're
40:09 looking at this issue, you're looking at the law in the state that's relevant to, you know, your situation. Okay? But just know, and this this is what I want to end on. When somebody dies in testate, you can see how complicated it can get to determine who gets how much. And so the best way to avoid this whole mess is to make sure that you know you have you have an estate plan or your client obviously for those of you who are professionals you want your clients to
40:44 have an estate plan. Okay. But, you know, maybe maybe show them this episode so they get a sense of how complex it can be when there's no estate plan and and they will be able to uh appreciate that the relatively small cost of an estate plan is well worth it to save what could be the very large costs of a of an intestate succession. Okay. So, I thank you very much for joining me. If
41:19 you have any questions, comments, criticisms, uh links to my social media will be in the show notes. Feel free to drop a comment there. My uh email address will also be there. Um so, you can send me an email if it's something private. I'll I'll answer your question if it's within my area of expertise. If not, if it's a legal question or an accounting question, I'm I'll I'll, you know, be happy to refer you on to someone who can answer that question. Okay. Uh, so tomorrow at 10:00 a.m. Pacific time is my show, Business
41:54 Lessons from the Military. And Wednesday at 10:00 a.m., this being the week of Christmas, I I have a my special Christmas Eve show that I always do. Uh, I know it's funny that a Jewish guy does a Christmas Eve show, but I want to honor my uh my, you know, Christian uh my my Christian brothers and sisters. And so I I I I do this hopefully for your enjoyment. Uh so thank you again for joining me, especially my live guests. Wishing you a wonderful rest of the day and signing off. Marie darling,
42:29 you are my bell. Courage at all times, my friends.