Mom wants daughters to get their fair share

Dear Len & Rosie,

My parents both have wills. They have two kids, me and my sister. My mom has metastatic cancer, so she will probably die before my dad. The problem is that my dad does not get along with me and my sister. My mom wants to make sure that certain monies are left to me and my sister and that my dad does not leave them to someone else in his family. At the same time, she wants to make sure he still has his house, any joint accounts, anything else that they share.

So my mom has separate accounts with her name only on them, with me and my sister at payable upon death. If she puts “I leave my entire estate to my husband”, will he have access to these separate accounts also? Or should she put something else in the will?

Kammy

Dear Kammy,

Assets in pay-on-death accounts are not subject to the terms of your mother’s will. Even if her will leaves everything to her husband if he survives her, the pay-on-death accounts should under most circumstances pass on to you and your sister without any difficulties. You can just show up at the bank with your mother’s death certificate and divide up the money.

The problem with your mother’s plan is that California is a community property state. Everything your parents earn during their marriage is owned by both of them equally. While your mother has the right to give away her half of the community property to anyone she wants upon her death, she can give away only her half.

If your mother funded her pay-on-death accounts with community property, then your father could claim, and rightfully so, that half of the money belongs to him, even though he’s not listed on the accounts. The pay-on-death transfers could be overturned because they would count as a transfer of community property made without the consent of both spouses under Family Code section 1101. Of course this will not be a problem if the money in the pay-on-death accounts were previously inherited by your mother.

Your mother is trying to provide for you and your sister because your father may not do so. But she’s doing it the wrong way by trying to be sneaky about it and putting money aside in pay-on-death accounts that your father may not even be aware of. She can do better than this. She can leave you more. She could, for example, sever the joint tenancy on the home she shares with her husband and leave him only the right to live there until his death, rather than giving it to him outright. If she acts now and consults with a trusts and estates attorney, she can do a much better job of providing for both her husband and her children upon her death.

Len & Rosie

a trust that named his business partner as the trustee instead of any of his children

Dear Len & Rosie,

My father died a year ago. He had a trust that named his business partner, Angus, as the trustee instead of any of his children. There are four of us, and we don’t get along that well. I assume Dad thought we would fight, and wanted to prevent that. But now we are all concerned about Angus’ behavior. He showed us copies of the trust, and we all get equal shares, but he has made no distributions, saying it’s better if he continues to manage the assets. He also sold trust real properties to himself. And he even gave Dad’s girlfriend $20,000, even though she’s not a beneficiary. He says Dad told him to do it. None of this seems right, but is it?

Mike

Dear Mike,

Without seeing a copy of the trust, it’s difficult to answer your questions without guessing. Your father’s trust includes written instructions for the trustee to follow. Angus can’t make up his own rules. He can’t continue to hold everything in the trust indefinitely unless the trust says so. Angus cannot decide what he thinks is best for you.

Even if Angus is right, and you plan to waste your inheritance on drugs and casinos, he can’t withhold your share, even if it’s for your own good. Likewise, if the trust didn’t give your father’s girlfriend $20,000, then she gets nothing. Angus can’t give away your money unless you say it’s OK. Your father’s verbal instructions don’t amount to a legal trust amendment. The law draws a red line between your father’s verbal and written intentions.

If the court relies on statements your father is rumored to have said, then everything is up for grabs. Anyone can step forward and claim your father promised them a well-deserved gift. That’s too messy, so the law imposes a burden on us to state our wishes in writing.

It’s harder to guess whether Angus was entitled to purchase your father’s real properties. Since he was your father’s business partner, there could have been a buyout agreement between them. The trust could also have dictated the terms of the sale. However, judging from Angus’ other actions, he may have breached his fiduciary duty as trustee. He may have sold himself properties at the expense of the beneficiaries. If you haven’t done so yet, you and your siblings should engage an estate planning attorney to review the trust, and tell you what it really says.

Len & Rosie