If you die without a legally valid estate plan, the California Probate Code has certain “intestate provisions” that govern how your assets shall be distributed. In general, if you were married at the time of your death, your community property and at least a portion of your separate property will be distributed to your surviving spouse. If you did not leave a surviving spouse, then your assets will be distributed to children if any and if none to your grandchildren or younger descendants. If you did not have any living descendants, your estate will be distributed to your parents if any and if none then to your siblings. The intestate provisions go on from there, detailing several more contingent heirs.
Although there are these “default” rules with respect to heirs of your estate absent a valid estate plan, the law allows you to dispose of your assets upon your death however you see fit. With a few exceptions, there is generally no requirement that you leave your assets to your spouse, children, or other immediate family members. You are free to exclude your “natural heirs,” i.e., those who would inherit from you absent a valid estate plan, and name anyone of your choice. This might include significant others, friends, charities, and even complete strangers.
There have even been several instances where decedents established estate plans leaving their assets to celebrities whom they had never met! Contrary to the assumptions of my friends, I have actually not left any part of my estate to rock-goddess Gwen Stefani, though I would be free to do so under the law if that were my desire.
Of course if you decide to leave your assets to named beneficiaries who are not your natural heirs, your natural heirs would have a motive to try to undermine and invalidate your estate plan somehow. If your estate plan were deemed invalid, then your estate would pass to your natural heirs as if you did not have an estate plan. Although your natural heirs could not argue that you did not have a right to name someone other than your natural heirs as beneficiaries of your estate plan, your natural heirs could argue that there was a mistake, fraud, undue influence, or that you lacked mental capacity to understand the nature of what you were doing when you signed your estate plan.
There was a recent case where a decedent named a celebrity (not Gwen Stefani) as his beneficiary at the exclusion of his natural heirs. The natural heirs believed that the decedent was delusional and that he wrongfully thought that the celebrity was a relative. In fact the celebrity was a stranger. However, the document did not indicate whether or not the decedent mistakenly thought the celebrity was a relative or whether the decedent simply admired the celebrity and wanted that person to benefit from his estate. The entire case centered upon that key issue: was the decedent delusional in thinking that the celebrity was a relative and that therefore the estate plan should be deemed invalid due to mistake and lack of mental capacity or did the decedent simply want to name a celebrity he admired as a beneficiary of his estate, knowing that the celebrity was a stranger?
To date, this case of the celebrity beneficiary has not yet been resolved. However, the facts and circumstances of the case demonstrate some key principles when leaving an estate to named beneficiaries at the exclusion of your natural heirs.
First, you should be clear about your intent. If the decedent in the example above was aware that the celebrity was not a relative but simply wanted to include the celebrity as a beneficiary of the estate plan, he should have said so. The drafting attorney could have inserted a clause that read: “While I understand that I have never met Celebrity X and am not related to Celebrity X in any manner, nevertheless I admire and respect Celebrity X and I intend to include Celebrity X as a beneficiary of my estate plan.”
Second, if you are planning on excluding any natural heir, say so. You could include language that reads: “I acknowledge the existence of my brother who is my only natural heir. However, I intentionally exclude him as a beneficiary of my estate.”
Third, make sure that you that it cannot be argued that you were unduly influenced when creating your estate plan. Executing your estate plan with the counsel of an impartial attorney without the presence of your named beneficiary can blunt any accusation that you were wrongfully pressured into naming someone other than a natural heir as a beneficiary of your estate.
Fourth, it is often said that “bad facts make bad law.” Make sure that there aren’t any “bad facts.” To the extent that you can execute your estate plan long before it can be argued that you don’t have mental capacity to understand what you are doing, you will blunt an argument that you lacked mental capacity. “Deathbed planning” by its very nature often raises red flags that can create doubt about the validity of your estate plan. If you are diagnosed with a mental or physical issue, executing your estate planning sooner rather than later is paramount.
A qualified attorney can help you take care in drafting your estate plan to ensure that your wishes – whether unconventional or not – will be carried out after your death.
KRASA LAW, Inc. is located at 704-D Forest Avenue, Pacific Grove, California and Kyle may be reached at 831-920-0205831-920-0205.
Disclaimer: This article is for general information only. Reading this article does not establish an attorney/client relationship. Before acting on any of the information presented in this article, you should consult a competent attorney who is licensed to practice law in your community.