Trust and Estate Conflicts in Deciding Who Has Right to Property
Trust and Estate Conflicts in Deciding Who Has Right to Property
When preparing or updating your trust and estate documents, consider how real property is held, make sure the real property gets put into the trust, and make clear your intentions of who gets the property if you pass away. Otherwise, there can be a battle.
An appellate court recently had to grapple with property owned by Benny Wall before he died. He died without a will or trust. Conflicting statutes governing ownership of real property became a dispute in the ensuing probate. Benny’s surviving spouse (and stepmother to Benny’s children from his first marriage) and Benny’s biological children from the prior marriage both claimed rights to Benny’s home.
Benny bought the home during his second marriage and took title as “a married man as his sole and separate property.” When he later died unexpectedly without a will, his then wife Cindy claimed a community property ownership interest in the home. However, Benny’s children said because Benny held title to the home in the real property title as his sole and separate property, Cindy did not have any rights to the home.
In this new case of Estate of Wall,[1] a California Court of Appeal held that the “form of title” presumption (Evidence Code §662)[2] prevails over the “community property” presumption (Family Code §760)[3] when determining ownership of legal title to property upon a decedent’s death. This court decision thus establishes a new bright line in California for probate courts to follow: if a spouse dies while holding sole title to real estate, despite California being a community property state, that deceased’s heirs and beneficiaries can assert the form of title presumption to claim ownership of the property.
Do not fear, sometimes Courts get to the fair result, but in a convoluted way. Despite establishing the bright line rule that “form of title” trumps the “community property” presumption at death, the court still wound up affirming the trial court’s ruling that the home at issue was community property in which Cindy held a half interest based on a different Family Code section that overrode Evidence Code §662. Family Code §721 (the “undue influence” presumption)[4] carried the day for Cindy. The court found that a presumption of undue influence existed when it came to Benny’s acquiring sole title to the real property in question, Benny’s children had not submitted evidence to rebut this presumption, and that the house was thus community property.
Statutes and court decisions affecting the outcome of disputes over property interests and inheritance rights in probate litigation can be extremely tricky and are ever evolving. Epps & Coulson, LLP and its lawyers and staff are well-versed in estate planning and litigation of trust and estate cases, including disputes involving trust and probate administration and contests of trusts and wills. If you have any questions, please contact Dawn at dcoulson@eppscoulson.com or Adam at anicolai@eppscoulson.com.
Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney. It is likely considered advertising. Epps & Coulson, LLP encourages you to call to discuss these matters as they apply to you or your business.
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[1] In re Estate of Wall (2021) 68 Cal.App.5th 168
[2] Evidence Code §662 states: “The 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.”
[3] Family Code section 760 states: “Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.”
[4] Family Code section 721, subdivision (b) states, in part: “[I]n transactions between themselves, spouses are subject to the general rules governing fiduciary relationships that control the actions of persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other.”