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Mark Cornwall: Dying ‘Intestate’ Could Affect Family Dynamic
The courts are about to come alive with the music of the Jackson family dynamic. The hearing date was continued one week so the Jackson family could “work something out” with Michael’s ex-wife and biological mother of two of his three children.
It is estimated that 60 percent or more of the population lives in a blended family. The term “blended family” is a modern term used in the legal field. It includes families where the parents are on their second or third marriages, have their children, their stepchildren and perhaps children together.
The stepchildren may live in the same house, or there could be adult children who live out of the home. There could be a large disparity in age with the new children. They have little in common with these younger children resulting from generational differences.
Dynamics such as the age differences between children of prior marriages and the new children may breed animosity. Petty jealousies can arise. The new spouse may have brought wealth to the marriage that the older children mistakenly believe they have a right to.
From a litigator’s point of view, this family is living in a volatile world and is subject to “probable litigation” upon the death of the first spouse. It can happen whether the estate has something to fight over or not. The best way to understand what to do in the blended-family situation is to understand what will happen if you do nothing. Remember that all of us have an estate plan whether we like it or not.
The state of California, as with every state, has devised a plan that will distribute your assets upon your death in accordance with old family values. Twenty years might have passed since the first or second marriage ended, which means there is a wife No. 1 and/or a husband No. 2, etc. It can cause huge disparities in people’s sense of justice.
All you have to do for these rules to apply to you is to die without a will or some other nonprobate estate plan. This is called to die “intestate.” It means the beneficiaries of your estate will be identified by statute and fixed by the court, rather than by you.
The legislative policy for “intestate succession” (to whom your property goes) reflects a paternal instinct in the law to protect and provide for the surviving spouse and minor children. The policy is designed for the “traditional family,” and heavily favors the surviving spouse.
This is all fine and good for the traditional Jones family of hardworking Bruce and stay-at-home mom Kathy. They have been happily married for 25 years and have two healthy boys whom they love dearly. If Bruce dies, the estate would go to Kathy; after she dies, to the two children equally — no problem.
But what about the Smiths, with older Tom and younger Cindy? Tom is 59 years old and Cindy is 40. Tom has two adult sons from a previous marriage of 25 years with whom he has been very close, and two grandchildren. Cindy and Tom have been married for five years and have a 3-year-old daughter.
If Tom dies without a will or revocable trust, his adult children would be surprised to find that Cindy is in control of everything, and is entitled to most of their father’s estate — regardless of how much separate property their father took into the marriage with him.
Pursuant to California’s laws of “intestate succession,” Cindy is entitled to all of the community property, including Tom’s half of the community property, as well as the quasi-community property. But as Tom’s wife at the time of his death, she is also entitled to one-third of his separate property, regardless of where it came from or how large its value before marriage.
In addition, Tom’s 3-year-old daughter is entitled to one-third of the remaining two-thirds of Tom’s separate property, which the daughter will share equally with his two sons. But because the daughter is a minor, her share will pass directly to Cindy. Therefore, Cindy is entitled to all of the community property and almost two-thirds of Tom’s separate property regardless of the amount of value.
That’s a bitter pill for the sons when the law also allows Cindy, as Tom’s executor, to take an administrative fee, as well as inheriting the “power of appointment” over the estate. That means she determines who the heirs of Tom’s separate property will be, as long as she leaves a will or revocable trust. If his separate property is $10 million, that seems a little unfair, and also causes will contest.
— No opinion herein is a “marketed opinion” and no information provided herein can be used to avoid tax penalties for which the taxpayer would otherwise be responsible. Mark S. Cornwall has lived in Santa Barbara for more than 30 years and practiced law here for 25 years. He is accepting new clients. His book, Estate Planning: The Heroes Way for Baby Boomers, can be purchased via his Web site, www.MarkCornwall.com; Amazon.com; or locally at Chaucer’s and Borders bookstores. To schedule an appointment, contact him at .(JavaScript must be enabled to view this email address) or 805.845.7558.
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» on 07.15.09 @ 05:10 PM
I think if you interchange the name of Michael Jackson’s ex-wife Debby Row with Cindy’s name and assume they were still married, it would give the average reader a rare glimpse of how a short term marriage could play havoc with anybody’s estate; particularly for the previous children.
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