Can California Intestate Heirs Divide Estate Assets by Agreement?

Can California Intestate Heirs Divide Estate Assets by Agreement?

• February 21, 2020 - Estate Litigation, Estate Planning,

The California administration and distribution of estate assets can raise many questions. And, families faced with these questions seek answers. Wills, trusts, insurance policies, bank accounts and securities are subject to different laws.

This video is about intestate estates, those where the person has died without a will. I’ll use this fictionalized account to explain how intestate heirs may divide estate assets by agreement.

Mom, a widow, dies without a will. At the time of her death, Mom owns a Castro Valley house in Alameda County. The house is titled solely in her name. The house is free and clear of a mortgage. It is valued at $840,000.

Mom also has $700,000 in a Fremont Bank savings account. The bank account is in Mom’s name alone. Beth, Margo and Vic, mom’s three children, survive her.

Beth works for Apple in Cupertino and owns $7 million in Apple stock options. Beth has a home in Los Gatos that is valued over $1.6 million.

Margo is a Middle School Teacher in the Fremont Unified School District . Margo earns approximately $85,000 per year. Margo’s husband is a veterinarian in Union City. Margo and her husband have a home in Pleasanton.

Vic is a disabled veteran with a 100% disability. Vic receives approximately $3250 per month in VA Compensation. He has a spouse and child. Vic’s spouse, Sheila, works for the Department of Veterans Affairs in Palo Alto as a Senior Social Worker. She earns approximately $70,000 per year. Vic and Sheila rent a duplex in the East Bay for $2600 per month. They have a tough time making ends meet.

Beth, Margo, and Vic meet with a probate attorney to discuss the administration of their mother’s estate. She explains that the estate assets will be split evenly between the three of them.

Beth says that she doesn’t really need the money – and asks whether it be ok to provide allow her distribution to benefit Vic? Margo says that she and her husband are well set. Their only real need is to plan for about $300,000 in combined private college tuition for their two children.

Margo says that like Beth, she want to help Vic and Sheila. The three siblings agree to split assets differently than the split defined in the probate code distribution. Under their agreement, Vic will get the house.

Since the house is free and clear, Vic and Sheila will find Bay Area living more affordable. They believe that living rent-free and having an opportunity for home appreciation will dramatically change their financial outlook.

Beth agrees to completely forego any money from her mother’s estate. She will happily receive her mother’s personal effects and mementos. The three agree that Margo should take $500,000 of the Fremont Bank account and distribute the remainder to Vic and Sheila.

Margo, Vic and Sheila sign an agreement that they, being the heirs of Mom, agree that the assets of Mom’s estate shall be distributed, notwithstanding California Probate Code Section 6402 (or other applicable Section), as indicated above. Legal counsel can help them prepare the agreement if desired.

Now the story of Mom, Beth, Margo, Vic and Shelia is fictional. While fictional, it contains truths that we sometimes see in California estates. Surviving siblings will try to arrange an estate plan that was never arranged in their parent’s lifetime.

This is not easy. It would be better to have an estate plan that meets the desires of the person who owns the assets during her lifetime. Still, families are commended who at their own expense “make the effort to do the right thing.”

Hackard Law represents foreign, out of state and California families in California Superior Courts in cases that involve Wills, Estates, Trusts and Elder Financial Abuse matters. Call us at Hackard Law, 916 313-3030, if you would like to speak with us about your case.