Drafting estate planning documents requires careful consideration of not only your current situation in life, but also how circumstances might change over the course of the remaining years you are alive. A well-drafted set of estate planning documents should carry out your wishes as they exist today and also provide enough flexibility to account for changes that may arise. 

Your Will and Revocable Living Trust may be modified or revoked during your lifetime, so steps can be taken to update them if necessary. In fact, major life changes such as marriage, the birth of a child, or a death in the family are almost certainly times when you should be reviewing your estate planning documents.

Below are some of the things that an estate planning lawyer might consider as he or she is drafting your documents.

Clear Definitions

Sometimes people use words in a colloquial manner that don't necessarily match what they intended in their Will or Trust. For example, if a person states that they want their assets to "be distributed to their children," are they including step-children, adopted children, or foster children? Defining key terms can help to clear up any confusion after the person passes away.

Alternate Beneficiaries

Often people will specify a gift to a beneficiary, but fail to consider what will happen if the beneficiary isn't alive at the time the gift is to be made. Should the gift go instead to that person's children? If not, should the gift be given to someone else? It's always important to consider contingencies when it comes to gifts.

Gifts to Young People

One aspect that people often forget is that minors may be legally unable to receive a gift from your estate. Moreover, even if they could, it may not make sense to give substantial gifts to young people who are not mature enough to handle the responsibility. In such situations, one may want to provide that the gift is to be held by a custodian or in a special trust for the minor beneficiary until he or she is old enough to manage it themselves.

Survivorship

What if a beneficiary related to you died shortly after receiving the gift from your estate? In that situation, it's possible that the anti-lapse rules (found in California Probate Code Section 21110) would apply and the beneficiary's children would receive the gift instead. If that's not your intent, including a requirement that the beneficiary outlive you for a certain number of days in order to receive the gift can help avoid this outcome. Here's the text of California Probate Code Section 21110:

(a) Subject to subdivision (b), if a transferee is dead when the instrument is executed, or fails or is treated as failing to survive the transferor or until a future time required by the instrument, the issue of the deceased transferee take in the transferee’s place in the manner provided in Section 240. A transferee under a class gift shall be a transferee for the purpose of this subdivision unless the transferee’s death occurred before the execution of the instrument and that fact was known to the transferor when the instrument was executed.

(b) The issue of a deceased transferee do not take in the transferee’s place if the instrument expresses a contrary intention or a substitute disposition. A requirement that the initial transferee survive the transferor or survive for a specified period of time after the death of the transferor constitutes a contrary intention. A requirement that the initial transferee survive until a future time that is related to the probate of the transferor’s will or administration of the estate of the transferor constitutes a contrary intention.

(c) As used in this section, “transferee” means a person who is kindred of the transferor or kindred of a surviving, deceased, or former spouse of the transferor.

Thinking through the various permutations can be difficult for the uninitiated, and certainly gaining the perspective of a skilled estate planning lawyer will help avoid problems down the road.

Under California Probate Code Sections 13500-13053, if some or all of a deceased spouse's estate goes to the surviving spouse, that property may be transferred without probate administration. However, some title companies, banks, or other financial institutions may still require a formal court document allowing the transfer. 

Spousal or Domestic Partner Property Petition

A surviving spouse or registered domestic partner may file a petition known as the Spousal or Domestic Partner Property Petition with the Court to confirm that some or all of a deceased spouse's estate passes to his or her surviving spouse or domestic partner. The relevant law can be found in California Probate Code Section 13650, which provides:

(a) A surviving spouse or the personal representative, guardian of the estate, or conservator of the estate of the surviving spouse may file a petition in the superior court of the county in which the estate of the deceased spouse may be administered requesting an order that administration of all or part of the estate is not necessary for the reason that all or part of the estate is property passing to the surviving spouse. The petition may also request an order confirming the ownership of the surviving spouse of property belonging to the surviving spouse under Section 100 or 101.

(b) To the extent of the election, this section does not apply to property that the petitioner has elected, as provided in Section 13502, to have administered under this code.

(c) A guardian or conservator may file a petition under this section without authorization or approval of the court in which the guardianship or conservatorship proceeding is pending.

If the probate of the deceased spouse's estate is underway, this petition will be filed under the same case number as the main probate and notice must be given to the relevant parties as outlined in California Probate Code Section 13655.

If the Court approves the petition, a Spousal or Domestic Partner Property Order should be prepared and signed by the judge.

The use of the Spousal or Domestic Partner Property Petition can greatly simplify the administration of the deceased spouse's estate and should be an avenue that's considered when working with a prospective client whose spouse or domestic partner passed away.

Occasionally there's a need to analyze the types of gifts that a deceased person describes in his or her Will to figure out which ones should be given priority. This problem usually arises when the estate does not have enough assets to fulfill all of the gifts described in the deceased person's Will. California Probate Code Section 2117 identifies six types of gifts, and it provides as follows:

At-death transfers are classified as follows:

(a) A specific gift is a transfer of specifically identifiable property.

[For example, "I give my car to Sammy."]

(b) A general gift is a transfer from the general assets of the transferor that does not give specific property.

[This one is a bit confusing, but it would be something like, "I give a gift of a new Rolex watch to Linda." This would require the executor to purchase such a watch and give it to Linda. On the other hand, if the Will said, "I give my gold Rolex watch to Linda," this would be considered a specific gift.]

(c) A demonstrative gift is a general gift that specifies the fund or property from which the transfer is primarily to be made.

[For example, "I give $10,000 to Bob from my Wells Fargo Money Market Savings account."]

(d) A general pecuniary gift is a pecuniary gift within the meaning of Section 21118.

[Probate Code Section 21118(b) describes a "pecuniary gift" as a "transfer of property made in an instrument that either is expressly stated as a fixed dollar amount or is a dollar amount determinable by the provisions of the instrument." An example would be, "I give $3,000 to Steve."]

(e) An annuity is a general pecuniary gift that is payable periodically.

[For example, "I give $1,000 per month to Mark for the next 60 months."]

(f) A residuary gift is a transfer of property that remains after all specific and general gifts have been satisfied.

[For example, "I give the residue of my estate to my son, Carl."]

The distinction between residuary, general, and specific gifts is important when a deceased person's estate is inadequate to fulfill all of the contemplated transfers. In general, specific gifts are given the highest priority, general gifts are given the next level of priority, and residuary gifts are given the lowest level of priority. 

The Small Estate Set-Aside was previously discussed in the context of family protection statues, but it is worth mentioning again for purposes of probate avoidance.

California Probate Code Sections 6600-6615 permit a summary set-aside of a deceased person's estate if all of his or her personal property and California real estate has a net value of $20,000 or less. The key here is that we look to the net value of the property rather than the gross value. This means that we reduce the value of the property by any debt, mortgages, liens, and other encumbrances (as well as the value of the probate homestead, if any).

This procedure, however, is only available to the surviving spouse and to the deceased person's minor children.

Although somewhat limited in scope and only allowed to be used by certain family members, it can be an incredibly useful tool when the appropriate context arises. More often than not, the surviving spouse and minor children are the ones who are faced with the need to probate the deceased person's estate any way. In addition, with the rising level of household debt, it's not uncommon for a deceased person's estate to have relatively little equity (especially if he or she is young).