California law gives residential borrowers various rights and remedies when it comes to foreclosure prevention alternatives against a mortgage servicer, mortgagee, trustee or beneficiary under a deed of trust, and authorized agent. But what happens after the borrower’s death?
Updated 5/22/18: In County Line Holdings, LLC v McClanahan (May 2, 2018, B2778790) 2018 Cal App Lexis 392, the court held that a creditor could enforce a previously recorded judgment lien on a deceased debtor’s property more than 1 year after the debtor’s death.
So you have a money judgment, but the debtor dies before you can collect. Never mind. You still have a judgment lien on the debtor’s estate. Right?
State law changes enacted in 2010 have restricted the enforceability of no-contest clauses. Under Prob C §§21310–21311, a typical no-contest clause providing that an unsuccessful contestant gets nothing from an estate or trust is enforceable only against a “direct contest” brought without probable cause on specified grounds. And even if it is enforceable, a no-contest clause may not be an effective deterrent if the beneficiary thinks the amount at stake is outweighed by the benefit of a successful contest.
Revenge is a dish best served cold. In a recent case, a disenchanted suitor not only sued to recover gifts he made to his former lover but also reported those gifts to the IRS as income payments! See Diane Blagaich, TC Memo 2016–2.
Probate avoidance is a primary consideration for estate planners and their clients. A revocable trust is usually the vehicle of choice for making nonprobate transfers, but alternatives have always existed for personal property such as cash in the bank, retirement plan benefits, and brokerage accounts. For real property, no such vehicle existed. Until January 1, 2016, that is.