05-05-1 Resolution 05-05-2009 Marital Property: Revocable Estate

Resolution 05-05-2009
Marital Property: Revocable Estate Planning Documents Not Evidence of Transmutation.
RESOLVED that the Conference of the Delegates of California Bar Associations recommends
that legislation be sponsored to amend Family Code section 853 to read as follows:
1
2
3
4
5
6
7
8
9
10
11
12
13
§853
(a) A statement in a will, a revocable trust or other revocable instrument which is not
intended to take effect until the death of the person creating the instrument, of regarding or
changing the character of property, is not admissible as evidence of a transmutation of the
property in a proceeding commenced before the death of the person who made the will, trust
or other instrument.
(b) A waiver of a right to a joint and survivor annuity or survivor's benefits under the
federal Retirement Equity Act of 1984 (Public Law 98-397) is not a transmutation of the
community property rights of the person executing the waiver.
(c) A written joinder or written consent to a nonprobate transfer of community
property on death that satisfies Section 852 is a transmutation and is governed by the law
applicable to transmutations and not by Chapter 2 (commencing with Section 5010) of Part 1
of Division 5 of the Probate Code.
(Proposed new language underlined; language to be deleted stricken)
PROPONENT: Bar Association of San Francisco
STATEMENT OF REASONS
Existing Law: Encourages married individuals to make plans to provide for their spouses by
providing that a will is not admissible as evidence in a dissolution proceeding to prove a change
from separate property to community property solely by virtue of the estate planning efforts. In
In re Marriage of Holtemann ((2008) 166 Cal.App.4th 1166, the Court of Appeal held that a
transmutation agreement, prepared in conjunction with a revocable trust, was effective upon
dissolution. The court refused to extend the inadmissibility rule to revocable trusts or other estate
planning instruments not intended to take effect until the death of the person making the
document.
This Resolution: Seeks to reverse the ruling in Holtemann and amends Family Code Section 853
to provide that wills, revocable trusts and other revocable estate planning documents, not
intended to take effect until the death of the person making the document, are not admissible to
prove the character of the property in an action commenced prior to the death of the maker of the
instrument.
The Problem: In re Marriage of Holtemann, supra, has created a major disincentive to the use of
revocable trusts as will substitutes and in essence creates a trap for the drafter of the estate
planning documents. A statement in a will is not admissible to prove a transmutation of separate
05-05-1
property to community property in a dissolution proceeding. A similar statement in a revocable
trust is admissible for that purpose. A statement in a revocable trust or other revocable estate
planning document not intended to take effect until the death of the person making the
instrument should be given the same effect as a statement in a will. Such a statement should not
be used to prove that separate property has been changed to community property prior to the
death of the person creating the revocable estate planning document. This proposed resolution
would ensure that revocable estate planning documents which indicates that they will not take
effect until the death of the maker are treated the same as wills. A person planning property
distribution on death should not be required to run the risk that the revocable future disposition
conditioned on the death of the person will be given present effect depending on the form of the
instrument.
IMPACT STATEMENT:
This resolution does not impact any other statute, rule or regulation.
AUTHOR AND/OR PERMANENT CONTACT: Michelene Insalaco, 100 Spear Street Suite
1640, San Francisco CA 94105, telephone (415) 357-5050, fax (415) 357-5051,
[email protected] and Patrick Fabian, 101 Howard Street suite 310, San Francisco
CA 94105, telephone (510) 525-5443, [email protected].
RESPONSIBLE FLOOR DELEGATE: Michelene Insalaco
05-05-2