Your supervising attorney\'s client, Samuel Spendthrift, is referred to your law
ID: 470111 • Letter: Y
Question
Your supervising attorney's client, Samuel Spendthrift, is referred to your law firm by his daughter, Wilma Workaholic, an attorney at the local Megalaw firm. Samuel Spendthrift, seventy years old, is a retired stockbroker. Samuel has another daughter in Colorado and owns a restaurant in Parker, Colorado.
Samuel lives in Heavenly Valley, California. There he spends time with his "godson" developing homes. His godson and he have an "oral partnership" in which some of the land, partially constructed homes, and loans are in the client's name and some are in the godson's name. He maintains a mailing address in Sparks, Nevada, to "avoid California income taxes." Meanwhile, he maintains a driver's license and automobile registration in Oregon but does not live there.
Samuel also has three sons who currently live in California with their spouses and children. Samuel tells you in the initial interview that he may also have several illegitimate children. The client tells you that his sons do not deserve any inheritance and so he wishes to disinherit them.
Samuel brings you a Will which he has drafted using some forms from a book he purchased titled "Wills for Dummies." He tells you that he called your law firm because his daughter insisted that he have someone experienced review the Will he drafted.
After interviewing the client, you discover that he owns quite a bit of property. His assets are as follows:
1. Ranch in Wyoming (Value $350,000) originally owned by him but transferred by deed to him and daughter, Wilma, in joint tenancy
2. Two Condos in Hawaii (Value $325,000)
3. Two brokerage accounts in his name Value $650,000)
4. $10,000 cash kept in the trailer he lives in during the summer in Arizona
5. California Real Estate owned in the "oral partnership" (Value $700,000)
6. Oil and Gas Interests in Oklahoma which he inherited from his father (Value Unknown)
7. Yacht named "Tax Evader" (Value $125,000)
Samuel brings you a copy of the Will he drafted. You find it to be "grossly inadequate."
Discuss the following:
1. What are the legal issues?
2. What are possible estate planning solutions?
Explanation / Answer
1. What are the legal issues?
The will drafted by Samuel has certain issues which are legally incorrect and needs to be fixed, before finalizing the will and sign it off.
1. Samuel have several illegitimate children who are not eligible to get anything out of the will and he should not consider them to have any stake over the will, in short he should keep them out from there.
2. As the deed is written in California, his address in Nevada has to be changed, as he is saving the taxes from there, but to execute the will and the properties that he owns have to be from California itself. So, he has to change his address to california and pay the due taxes.
3. The California Real estate deals have to be clarified between the godson and the clients to make sure what is Samuel's share in it, how much does he actually has to make it a part of the will.
4. The will cannot be drafted on the forms of a purchased book, but it rather has to be prepared and executed on legal stamp papers with stamp duties paid.
5. The Ranch after Samuel's death should automatically be transferred to the joint holder Wilma.
2. What are possible estate planning solutions?
The real estate business that Samuel holds alon with his goldson and the current loan outstanding on the clients have to be settles down and thereafter, the estates have to be cleared from the banks by paying the loan account, or if he would like to hold the loan business, then he needs to make sure to transfer the same onto his name. Samuel also needs to separte the share of the estates with his goldson, so that there is transparency on the estate holding share by each individual.
The condos that he holds in Hawaii, each of them can be allotted to each of the daugthers. The california real estate in parnership with value of $700,000 can be transferred and shared with the 3 sons living in california, with value equivalent to each of them. Considering all the above allocations, the estates have been equally divided to all the children and he could pass away in peace, but he would of course have to eradicate the legal challenges involved and clear the hurdles for smoother processing.
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