Estate planning rules in California
Key takeaway
California estate planning rules include a no-contest clause statute, an elder abuse statute that reaches undue influence, and a state that no longer requires an estate tax return. A no-contest clause is enforceable against a direct contest brought without probable cause, and the party seeking enforcement must prove the lack of probable cause. California's filing guidance says no state estate tax return is required for deaths after the federal state death tax credit ended.
No-contest clauses
Under the California statutes described, a no-contest clause is enforceable against a direct contest brought without probable cause. A direct contest alleges invalidity on specified grounds.
The party seeking to enforce a no-contest clause must prove that a direct contest was brought without probable cause.
A prior probate court order is not sufficient by itself to establish lack of probable cause as a matter of law, because the undue influence standard and the probable cause standard differ.
A no-contest clause reaches forced election challenges only if it expressly says so, and the court applied the plain meaning of the statute.
The California Supreme Court said that, under the common law, disputes over interpreting an instrument were not ordinarily treated as violating a no-contest clause.
The court said the party enforcing a no-contest clause may rely on the probate court's prior findings to support the merits because collateral estoppel applies.
The California Supreme Court concluded that beneficiaries could pursue their proposed claims under either version of the statute.
Challenges to the actions of successor trustees are covered by several of the public policy exceptions in the former law.
Anti-SLAPP and enforcement
The California Court of Appeal held that the anti-SLAPP statute applies to an action enforcing a no-contest provision even when the action determines inheritance rights in property.
The court said the rules for civil actions apply to probate proceedings unless a specific statute is inconsistent with them.
Trustees after revocation
The California Court of Appeal held that even after a trust is revoked or terminated, the trustee keeps power to wind up trust affairs.
Estate tax and elder abuse
California's guidance states estate taxes are due from the executor within nine months after death.
The elder abuse statute includes taking, obtaining or retaining real or personal property of an elder or dependent adult by undue influence.
Thresholds and rates change. Check the state's own current figures.