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Hi, my name is John T. Anderson. Welcome to my blog! I have been practicing law in California since 1975 and have been the Chairman of the Estate Planning and Probate Section of the Long Beach Bar Association since the mid-1980s. I'm also certified by the State Bar of California Board of Legal Specialization as a specialist in Estate Planning, Trust and Probate Law. On this blog, you will find articles written by me regarding estate planning and probate in California. Many of these articles address recent changes in the law and summaries of the Long Beach Bar Association’s Estate Planning and Probate Section meetings. I hope that you find these articles helpful. If you would like more information about me or my law office, please visit my website at www.trustlaw.ws or contact my office at 562.424.8619.

Wednesday, June 1, 2011

“BEWARE HOW TITLE IS TAKEN . . .”

June 01, 2011
“BEWARE HOW TITLE IS TAKEN . . .”

. . . a quote from Roy Paul, Superior Court Judge after reading In re Marriage of Frankie and Randy Valli 5/18/11, B222435 (hereafter “Valli”).  How many times would you have to say that for people to get the point?  We have had numerous cases the past 5 years regarding the importance of making clear the intent to transmute the character of an asset if the intent of the parties is to change the character from community property to separate property or from separate property to community property.  Something more than just the blanket statement of how the asset was to vest was necessary to make the change clearly intentional and thus enforceable.

In Valli, Frankie (“Husband”) is having some heart problems and determines to purchase life insurance for the agreed purpose of making certain that Randy (“Wife”) and three children are taken care of in the event of husband’s death.  Husband and his manager informed Wife of the plan to purchase the $3.75 million policy on husband’s life with Wife as owner and beneficiary.  That was the testimony at trial.

At the time of the divorce, the policy had a cash surrender value of $365,032.  The trial court found that the policy was purchased during the marriage and the premiums were paid during the marriage.  Family Code §770 (a) defines separate property, §760 defines community property and gives the general presumption of community property.

Evidence Code §662 provides that “[t]he owner of the legal title to property is presumed to be the owner of the full beneficial title.  This presumption may be rebutted only by clear and convincing proof.”  This title presumption is pursuant to a public policy favoring stability of titles to property (In re Marriage of Fossum (2011) 192 Cal.App.4th 3336).  The specific presumption of Evidence Code §662 trumps the general presumption of Family Code §760.

“. . . the mere fact that property was acquired during marriage does not . . . rebut the form of title presumption; to the contrary, the act of taking title to property in the name of one spouse during marriage with the consent of the other spouse effectively removes that property from the general community property presumption.  In that situation, the property is presumably the separate property of the spouse in whose name title is taken.”  (In re Marriage of Brooks & Robinson (2008) 169 Cal.App.4th 176).

The court distinguished the “transmutation” cases as applying to situations where the vesting of an asset is changed (Husband and Wife own an asset and put it into just one of their names) from the situations, as in the instant case, where community property funds were used to acquire a new asset, in Wife’s name and Evidence Code §662 will apply absent clear and convincing evidence to the contrary.

Bottom line, in years past it was good estate planning to “cross-own” life insurance.  Wife owned the policy on Husband and paid premiums from her account; and Husband owned the policy of Wife’s life and paid the premiums from his account.  So people did this intentionally for estate planning and estate tax purposed.  YOU CANNOT INTEND SOMETHING FOR ONE PURPOSE AND THEN DENY IT FOR ANOTHER.  If you do something for estate planning, you cannot avoid it in a divorce.

Frankie is hung by his own petard.  As Judge Paul advised, “Beware of how title is taken.”

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John T. Anderson, Section Chair
Certified Specialist in Probate, Trust and Estate Planning
By the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson
All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.
File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2011.06.01  Valli Title CP or SP.docx

Tuesday, May 31, 2011

Shapiro v. USA: Cohabitant Rights

May 31, 2011
Shapiro v. USA: Cohabitant Rights

The Federal Court has, once again, gotten into the area of State Family Law and Estates when the U. S. Court of Appeals for the 9th District ruled on the application of “Marvin-type” facts (Marvin v. Marvin, 557 P.2d 106) that facts on cohabitation could support a deduction on decedent’s estate tax return.

In Estate of Bernard Shapiro et al v. USA, No. 08-17491 DC No 2:06-cv-01149-RCJ-LRL, the couple had set-up housekeeping without the benefit of marriage approximately one year after they started dating.  Twenty years later, girlfriend discovered boyfriend had another woman friend and sued him in Nevada State Court for all the Marvin causes of action.  While the matter was pending in State Court, boyfriend died.  Ultimately, the estate settled with girlfriend.

In filing the estate tax return for boyfriend, estate took a deduction excess of the ultimate settlement, for the amount the claim exposed them to.  IRS rejected the deduction.  The Tax Court agreed with IRS that, looking at Nevada State Law (which is similar to California’s), girlfriend’s contributions of “22 years of cooking, cleaning, and other homemaking services did not constitute sufficient consideration to allow the estate to deduct her claim against it.”

The Federal Court of Appeals reversed the decision, finding widespread “acceptance of non-marital cohabitation” and an “expansion of co-habitant’s legal rights.”  Implied contracts “manifested by conduct” are enforceable.

The “type of consideration necessary to support a contractual agreement between co-habitants” is not the only element to look at.  The parties conduct determines “whether their actions support the conclusion that they intend to share their property as though married.”

Although the Nevada Supreme Court has not addressed the sufficiency of homemaking services as adequate consideration for a contract, California has found it to be sufficient [Chiba v. Greenwall (2007) 67 Cal.Rptr.3d 86].  So, the palimony claim was valid under Nevada law. The value of the claim is subject to factual determination.                          
_________________________________
John T. Anderson, Section Chair
Certified Specialist in Probate, Trust and Estate Planning
By the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson
All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.
File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2011.05.31  Shapiro v. USA cohabitant rights.docx