In 1985, Ralph Placencia died holding a joint account with a right of survivorship in favor of his daughter, Lisa Strazicich. Prior to his death in 2009, Ralph left clear statements in his will that he did not wish for Lisa to succeed to this specific account. Instead, he stated his intention was for the account proceeds to pour over into his trust at his death for the benefit of all three of his daughters. After Ralph’s death, Lisa refused to relinquish the funds to the trust. Lisa and Stephanie Placencia, one of Ralph’s other daughters, as co-trustees of his trust, petitioned the court to determine their respective rights to the joint account. The trial court determined that Ralph’s intent should prevail and ordered Lisa to account for the funds to the trust.
On appeal, affirming in part and reversing in part, the court noted that the Probate Code makes a distinction between the express terms of a joint account and the beneficial interests in an account.
The court held that even though Probate Code §5302(e) provides that a right of survivorship cannot be changed by will (offering a safe harbor for financial institutions that pay according to the terms of the account), a court may still look to the will as an expression of intent to negate survivorship. The court reversed on other grounds noting that funds had been improperly directed to the trust without the required probate proceeding to transfer ownership.
Summary: A decedent’s will containing clear and convincing evidence can be used to defeat the presumption of a right of survivorship to a joint tenancy account.
David Sachs had two children, Benita and Avram. He created a trust in 1980 that provided the majority of the assets at his death be divided equally between Benita and Avram. Beginning in 1989, David began tracking money he distributed to his children on papers he referred to as the “Permanent Record.” Each time a child asked for money, David would record the payment on the Permanent Record and let such child know it would be reflected on this document. After David began experiencing cognitive problems due to a stroke, he hired a bookkeeper, Ronda Landrum, to help him manage his finances including keeping records of distributions to Benita and Avram. In 2013, David resigned as trustee and Benita became his successor trustee. After David’s death, Benita, as trustee of David’s trust, filed a petition for instructions to equalize the distributions of assets from the trust based on the Permanent Record. The trial court found Avram had received $451,027 more than Benita in lifetime distributions and granted Benita’s petition.
On appeal, the appellate court affirmed the trial court’s order granting a petition for instructions allowing the trustee to treat lifetime gifts to trust beneficiaries as advances on their inheritances. The court held that the writing requirement under Probate Code §21135(a)(2) had been satisfied where the trial court could reasonably conclude that the Permanent Record was sufficient. The court also held that parole evidence was properly admitted to interpret the Permanent Record. Further Probate Code §21135(a)(3) was satisfied in that the emails could constitute a written acknowledgement that the distributions were advancements.
Summary: A transferor’s record of amounts periodically distributed to his children is a writing that satisfies the requirements of Probate Code §21135.
The SECURE Act (which stands for “Setting Every Community Up for Retirement Enhancement”) makes significant changes to inherited retirement plans, such as 401(k) plans and IRAs (both traditional and ROTH). Previously, beneficiaries of these types of accounts could typically spread the required distributions based on their own life expectancy. Now, the SECURE Act will require most beneficiaries to distribute the account over a 10-year period.