Estate Planning Tips for You and Your Clients

John O‘Grady, O’Grady Law Group

Expanding Protections Against Financial Elder Abuse

There are plenty of financial predators out there trying to take advantage of vulnerable people – and many of them see senior citizens with diminishing cognitive functioning and valuable assets as easy prey.

For example, Helen Bounds was an 88-year-old widow with Alzheimer’s disease who was about to sell a commercial property to neighboring businesses for over $3.4 million when her family convinced her not to. However, some of the business owners subsequently persuaded her to sign a letter of intent to sell the property for less than half the original offer, along with escrow documents authorizing the property’s sale. Bounds cancelled the deal after consulting with an attorney, and then sued the business owners under the Elder Abuse and Dependent Adult Civil Protection Act. Even though the property had never changed ownership, the court ruled in Bounds’ favor because the escrow agreement compromised her ability to sell it at market rate.

If you have elderly parents who are potentially vulnerable to financial predation, call them every day – because if you don’t, financial predators will. Bounds v. Superior Court, 229 Cal.App. 4th 468 (2014).

Tricks of the Trust: Real Estate to Trustee

A trust is only valid – and valuable to you and your beneficiaries – to the extent that it actually owns your assets. When creating a trust, the key is to get your assets out of your name and into your trustee’s name, whether or not you are the trustee. The precedent set by one recent case simplifies that process. Ukkestad v. RBS Asset Finance, Filed March 16, 2015, Fourth District, Div. One, C065630.

In 2012, Larry Gene Mabee added language to his trust stating that all of his “right, title and interest” in all of his real property is assigned to the Trustees “even though other documents may be necessary to perfect title to such property in the name of the Trustees.”

After Mabee’s death, RBS initiated a creditor’s claim in probate court for two parcels of land in California that he owned, arguing that these properties were not part of Mabee’s trust because he did not specifically name them in it as required by the statute of frauds. So co-trustee Daniel Ukkestad submitted a petition under Estate of Heggstad (1993) 16 Cal.App.4th 943, on the grounds that Mabee clearly intended them to be included in the trust.

The probate court denied Ukkestad’s petition. The appellate court reversed, noting that a Heggstad petition will lie if the owner of the real property creates a trust with him or her as initial trustee and the transfer of the real property complies with the statute of frauds. The appellate court held that the recital in the trust satisfied the statute of frauds because it could be established by extrinsic evidence that the settlor held record title to the parcels as an individual when he signed the trust document.

Many people who skimp on their estate planning with bargain trusts are unaware that they must transfer their real estate to themselves as trustees if they want to keep their loved ones out of court. Your first line of defense against making this expensive mistake is having your lawyer prepare and record deeds transferring all of your real estate to yourself as trustee. As a backup plan, include the full language quoted in Ukkestad v. RBS in your trust document.

About the author:

John O‘Grady, O’Grady Law Group, was the 2012 chair of BASF’s Estate Planning, Trust & Probate Section.