In yet another development in the sensational saga spanning 15 years, a court of appeals recently ruled that none of J. Howard Marshall’s billions will go to the estate of his late-in-life bride, Anna Nicole Smith.

The former Playboy model challenged her late husband’s will in a Houston probate court alleging that his son, E. Pierce Marshall, had illegally coerced his father to exclude her. She claimed that Howard had promised to leave her more than $300 million.

The court found, though, that Howard was mentally fit and under no undue pressure when he wrote the will that left nothing to Anna Nicole.

The two met in a strip club and were married in 1994, Howard at the age of 89 and Anna Nicole, 26. Howard died a mere 14 months later and in his will left nearly all of his $1.6 billion estate to Pierce.

Since the legal battle began, both Pierce and Anna Nicole have died leaving their respective estates to duke it out in court. Pierce is succeeded in the litigation by his heirs, a wife and two sons, and Smith left a daughter, now 3, fathered by an ex-boyfriend.

The case has already bounced around both state and federal courts in bankruptcy and probate, and has been through numerous appeals, even getting a day in the U.S. Supreme Court on a question of jurisdiction.

Unsatisfied, though, Anna Nicole’s probate lawyer is already planning to appeal the latest ruling.

James D. Perry

A recent article by Forbes highlighted what I believe to be a serious problem: half of Americans don’t have even the most basic estate planning documents.

According to a phone survey conducted among 1,022 adults in December 2009, only 35% have a will and only 29% have a living will, which states an individual’s views on end of life medical procedures.

The numbers are only a little more promising for the elderly. Fifty-one percent of adults over the age of 65 have a health care power of attorney in place, and 58% say they have a living will.

The poor economy seems to have taken its toll – 44% report they are more focused on immediate needs, such as groceries and paying bills rather than future protection. And, there seems to be a misconception amongst the survey respondents that they don’t need an estate plan if they are not independently wealthy.

In fact, it can be more costly in the long run for those who fail to prepare estate-planning documents.

If you die intestate (without a will) a lot of your assets may get chewed up in probate court rather than going to your loved ones. And, your family may have to pay heavy court costs out-of-pocket if they have to go through legal proceedings to get a judge to appoint someone to make medical decisions for you should you suffer an incapacitating accident or illness.

If you haven’t put together an estate plan, I encourage you to do so to protect your assets, your personal wishes, and your family in the event they have to make difficult decisions.

James D. Perry

America’s prison population is nearing 2.5 million – roughly 1 person in every 133 – so it’s not unusual that I’ve had clients who have friends or family who are incarcerated.

Leaving assets to a federal, state, or county inmate comes with some bureaucratic hurdles and must be done with careful assessment.

In California, when an individual dies leaving an inheritance to a prisoner, both the Department of Corrections and Rehabilitation and the Victim Compensation and Government Claims Board must be notified. If a prisoner owes any money as restitution as part of his or her criminal sentence, the VCGCB with the help of the Franchise Tax Board is going to take its chunk first.

For example, I had an elderly client with very little family who willed part of his estate to a friend doing a few years’ time in state prison. His friend did not owe any restitution on his sentence, and all lawyers and state agencies involved were properly notified.

However, it was later discovered that he hadn’t paid child support to his wife in over 15 years. The arrearage was near $100,000, which was roughly equal to the value of the inheritance my client left him.

In some states, the department of corrections may even collect the cost of incarceration from an inmate’s inheritance by filing a lien in probate court. The State of Connecticut’s laws allow the probate court to extract the cost of incarceration or 50 percent of the inheritance, whichever is less.

If you’re thinking of leaving assets to a guest of the State, I urge caution. If you intend to provide a nest egg for a prisoner’s reentry into society, be aware of the debts they may have incurred as a result of their crimes, and recognize that they don’t have the autonomy to make decisions regarding that chunk of change until their release.

James D. Perry

California residents started the new year with a bevy of changes to state law governing estate planning. One notable change is to California’s No Contest Clause Statute.

A no contest clause includes language in an estate planning instrument that warns heirs from challenging any provisions in the will at the risk of being disinherited in the process.

No contest clauses were originally seen as a way to avoid costly litigation and the public airing of dirty family laundry, and were fully enforced in California courts.

However, the California Law Revision Commission, while scrutinizing the statute in 2008, determined that the intent and the reality were far divorced from one another. Today, the Commission finds that no-contest clauses are too often being used by greedy and dishonest heirs as a tool to blackmail other family members into settling their disputes out of court. And heirs who had legitimate concerns that the instrument was executed fraudulently, under duress, or while the testator was mentally incapacitated were forced to seek judicial review under safe harbor hearings that would protect them from being disinherited.

As of January 1, 2010, California courts are giving no contest clauses included in wills and revocable trusts greater scrutiny. This means that no contest clauses included in wills or revocable trusts which became irrevocable on or after January 1, 2001 will remain enforceable, but heirs hoping to make a good faith challenge to the instrument will not be immediately disinherited upon challenge. Good faith probable cause challenges may be based on allegations including, but not limited to forgery, incapacity, duress, fraud, undue influence, or revocation.

If you have any questions about your estate planning documents or the effects of your no contest clause, contact your estate planning lawyer.

James D. Perry

The daughter of oilman Alfred C. Glassell Jr., founder of Transcontinental Gas Pipe Line Co., is contesting his will in a Texas probate court saying he was manipulated by his lawyers to leave most of $500 million fortune to charity.

Glassell executed a will in 1998, which left his daughter, Curry, and her two sons more than $100 million. But she is challenging his 2003 will, believed to be the final one Glassell signed before his death last year, which transfers most of his money to Houston’s Museum of Fine Arts and to a family foundation run by Curry’s younger half-brother.

The probate lawyers trying the case told the jury panel that Glassell must be declared mentally incompetent at the time he signed the 2003 will for it to be invalidated.

This is a big risk for Curry as the 2003 will contains a broad no-contest clause. If Curry doesn’t win her fight in probate court, she forfeits her entire inheritance, which is roughly one-tenth the size of the one bequeathed to her in the 1998 will – still a sizable chunk of change.

The state of California gives full force to no-contest clauses with a few exceptions, and they can be especially beneficial where family dynamics are tumultuous.

A no-contest clause is a provision in a will, trust, or other estate-planning instrument to the effect that a beneficiary who contests the instrument forfeits any gift made by the instrument. It is intended to reduce litigation by disappointed beneficiaries.

California law includes probable cause exceptions for menace, duress, fraud, or undue influence where a beneficiary who challenges the document with probable cause would not be subject to forfeiture under the clause.

Curry doesn’t have that protection. If she prevails in her challenge, she may nullify his 2003 will and have the 1998 will declared valid.

Or she could lose everything.

James D. Perry.

Joe Jackson is reported to be seeking “some manner” of support from the Michael Jackson estate.

Michael Jackson’s father is seeking an allowance from his son’s estate to help cover expenses that exceed $15,000 a month, according to court documents filed Friday.  The request seeking an unspecified amount for Joe Jackson was filed by lawyer Brian Oxman, who said there was no apparent reason for the administrators of the estate to not seek an allowance for the Jackson family patriarch.

The King of Pop’s 2002 will, however, omitted any mention of his father.  The two had an often-strained relationship, and Michael said at one point that he would get physically sick — as a child and as an adult — at the sight of his father.

The singer’s private trust calls for money to be paid to his mother, Katherine, his three young children, and various charities when his estate is distributed.

Under California Probate Law, during the time Michael’s case is still pending in the probate court, prior to final distribution to the named beneficiaries, family members may petition the court for a “family allowance.”  Top priority for family allowances go to a surviving spouse and minor children, but parents, and sisters and brothers can also ask for a temporary allowance.

It’s totally up to the probate court judge to decide if someone deserves a monthly family allowance.  The judge is allowed to a give an allowance if his or her discretion determines an allowance is necessary for the family member’s maintenance according to his or her circumstances. An allowance is possible if it can be shown that a parent of the decedent was actually dependent in whole or in part upon the decedent for support.

The filing claims that Joe, who suffers from diabetes, was supported by Michael before his sudden death through payments made to the singer’s mother, Katherine,  — Joe’s wife  — which were passed on to Joe.??Joe says his expenses exceed $20,000 per month, but his income from U.S. Social Security is a mere $1,700.

“Mr. Jackson’s circumstances require a family allowance because he is 81 years old and Michael Jackson supported him in the same manner as his wife, Katherine Jackson, who was Michael’s mother and who the court granted a family allowance on October 2,” says the petition.

If the court gives Joe an allowance it will be interesting to see if Jackie, Tito, Jermaine and Marlon, Rebbie, LaToya, Randy, and Janet follow with their own petitions to the court.

Stay tuned, a decision on Joe’s request comes on for hearing in January.

James D. Perry

Former NFL quarterback Steve McNair was shot and killed in what police have deemed a murder-suicide on July 4, 2009, apparently at the hand of his mistress.

He left a wife, Mechelle, and four young children (two from a previous relationship), and no will or estate plan.

McNair’s estate is sizeable. He earned more than $90 million in his playing career, not including marketing and endorsement deals. At last inventory, his widow listed his estate assets at around $19.6 million.

Mechelle McNair hired a probate attorney and was granted the legal authority to administer his estate. However, in the probate petition, she listed only herself and her natural children as heirs saying she didn’t have proof that the other two were McNair’s natural children.

McNair was ordered by Mississippi courts to provide child support for the two children, which seems to indicate that Mechelle really had no reason to doubt their parentage. And while it doesn’t appear that Mechelle plans to challenge their claims to the estate, the two children – both of whom have attorneys representing their interests – have not yet filed as beneficiaries.

And most recently, another Mississippi woman has come forward claiming that McNair fathered her 17 year-old daughter.

And these are just the claims from McNair’s heirs and potential heirs. This says nothing of his outstanding debts, one of which may be unpaid rent for an apartment that may have housed a second mistress.

This sad story of his death is further agitated by the fact that this family’s grief and indiscretions must be played out in public.

Even if you are not a celebrity, or weren’t murdered by your mistress, there is no privacy when your assets go through the probate court – not from the media nor from the nosy neighbors next door. Everything is out there for the world to see, your debts, an itemization of each of your assets, and the names and addresses of your heirs.

A good estate plan can avoid this. Just do it.

James D. Perry

In my wills and living trust practice, it’s routine for a client to come in wanting to draft a will. From time to time, that client doesn’t speak any English. This may be a bit of a hurdle, but drafting the will is far from impossible.

Where the would-be testator speaks a different language, a translator will be called in, either by me or by the client, and together, we’ll hash out the details and make sure the will is drafted to specification in accordance with California laws.

The requirements to execute a will in California are the same for everyone, regardless of language, literacy, or physical disability. Your will is valid even if you can’t read the words on the paper. The same goes for your living trust document.

In the deciding case on this issue, the court ruled that a California resident who spoke Italian and very little English still had a valid will because the testator’s friend had translated as the lawyer read the document during execution proceedings, and because the testator indicated that he understood what was in the will.

The policy behind this is to encourage people to make arrangements for the orderly distribution of their property to their intended beneficiaries either by their last will, or through a revocable living trust.

Failure to have a valid will or living trust in place could result in your property going to legal heirs that you would just as soon disinherit.  Our lives and relationships are complex, and they deserve the extra effort that comes with drafting a will, or a living trust – even if it’s done in a non-native language.

Ultimately, my job is to make sure I draft the document to the client’s wishes, and to ensure that he or she is fully aware of and satisfied with the content whatever his or her native tongue.

The desire to protect our assets and provide for our loved ones is universal. Don’t let a language barrier stop your from carrying out your last wishes for your estate.

James D. Perry

Michael Jackson was laid to rest in Glendale last week, and after much controversy surrounding the costs of the funeral – initially, the City was going to foot the bill, to the dismay of the taxpayers – it was finally decided that the estate would pick up the tab.

And apparently, it was a big tab.

The Los Angeles Times wrote that attorney Jeryll S. Cohen urged Probate Judge Mitchell Beckloff to approve the expenses for interment at Forest Lawn Memorial Park amongst lavish decorations saying the costs “may not be appropriate for an ordinary person, but Michael Jackson was not ordinary.”

Under probate law, all the debts of an estate must be paid before beneficiaries get their share. And, in California, there is a general rule as to how much of an estate will go toward the funeral expenses.

The law specifically states that appropriate funeral costs include the reasonable cost of interment, family plot, and endowment care. Those costs though, are to be calculated “proportionate to the value of the estate and in keeping with the standard of living adopted by the decedent.” Any outrageous bills may require additional justification and judicial approval.

Judge Beckloff OK’ed the payments.

Jackson lived enormously, and he will rest in peace as such surrounded by statues and stained glass windows.

An attorney representing Jackson’s children did not appear concerned that the funeral costs would overburden the estate to the detriment of her clients.

James D. Perry

The New York Times ran a story this week on bill collectors who call relatives of the dear departed asking  if they want to settle the balance on a credit card or bank loan, or perhaps make that final cable tv bill or cellphone payment for the deceased person.

The next of kin on the other end of the line often have no legal obligation to assume the debt of a spouse, sibling or parent. But they often pay for it anyway.

Dead people are the newest frontier in debt collecting, and one of the healthiest parts of the industry. Improved database technology is making it easier to discover when estates are opened in the country’s 3,000 probate courts, giving collectors an opportunity to file timely claims.

The law varies from state to state. In California, survivors are generally not required to pay a dead relative’s bills from their own assets. In theory, however, collection agencies could go after any property inherited from the deceased.

Sentiment also plays a large role, the agencies say. Some relatives are loyal to the credit card or bank in question. Some feel a strong sense of morality, that all debts should be paid. Most of all, people feel they are honoring the wishes of their loved ones.

It is likely that most of those who pay a dead relative’s debts are unaware they may have no legal obligation.

I think collections from the next of kin of deceased persons should be better regulated. I doubt survivors are told up front that they are under no legal obligation to pay the debt.

My recommendation:  Unsecured creditors who want to seek payment for deceased persons’ debts should be required at beginning of call, to state that the survivor has no personal obligation to pay debt.  They should also be required to state the only legal recourse the creditor has is against the debtor’s estate.  

In my Orange County Probate practice I have seen many instances of family members paying bills for a deceased person from their own funds.  Think twice before you do this.  If there is a probate estate pending, notice is given to all creditors - they have 120 days to file a claim after the notice. If a creditor fails to file the claim with the court, the claim is barred.  

If your in doubt about a collection claim against a deceased relative, call a probate attorney.   

James D. Perry