Trust Law Course 11 — Lesson 2: The Law – Family Owned Businesses

[Music] Now let's listen to the approach the Keith Davidson would take to fight for your inheritance hi this is Keith Davidson at Albertson and Davidson so we have a problem here with Simon and Todd because they've found out that there's a substantial amount of the business that they've been working with their father that they probably are not going to receive or that somehow is going to pass to their stepmother Patty and the problem really comes about because Walter didn't do any planning and so it's an intestate estate and under our california intestate laws patty is entitled to a hundred percent of anything that's community property and at least 1/3 of anything that's separate property because there's two children that Walter had so that means that at a minimum patted Patty's probably going to get anywhere from 1/3 to 100% of this business and that really puts Simon and Todd in a bad position of the options that we presented certainly the first thing I would do is ask Simon and Todd to see if they could find any type of holographic will so they know that their dad died without a formal will so there wasn't a will that you normally would see this typed up by a lawyer and signed and witnessed and all that but there's a lot of different types of handwriting's that people can do during their lifetime and some of these handwriting's can be considered a will and we refer to that as a holographic will and a holographic will is anything that's in the testator's own handwriting that they sign and so if dad had sent them a note for example that says when I die I want you to to have my business and he signed that note that could suffice to be a holographic will and that would be a big difference here because at least then Simon and Todd would have some rights to that business now a lot of this is going to come down to is the business community property or separate property because if it's community property even if they do find a holographic will only half of that community property can be given away from the spouse the other half has to go to patty if it's separate property then Walter could give a hundred percent of it to the kids and exclude patty so there's always going to be that argument that's gonna have to be worked out we don't have enough facts here to really get to the bottom of that argument but that's going to be a big part of this case as to how the assets go if they can't find a holographic will and chances are they can't then they have a lot of choices here that they need to make obviously negotiating with patty would be a great way to start to see if Patty's open to a discussion as to the ownership of the business it could be that maybe patty doesn't want to run the business or she doesn't know how to run the business or she wants some money in exchange for the business if that's the case then Simon and Tod might be able to negotiate with her Simon and Tod do need to be a little realistic here because they are going to lose something to Patty so they're gonna have to come up with something to buy patty out if they're going to successfully negotiate if that doesn't work then they either can't bring a contract to make a will and say that their father had a contract with them or they can file what we call a creditors claim either way there's a potential that they might be triggering a no-contest clause if Walter has a trust in place for other assets now if Walter just has no trust or will whatsoever then they don't have to worry about a no-contest clause but if there's a trust over the home for example and Simon and Todd we're going to get something from that then filing a claim with the probate court could put that gift in jeopardy but let's assume that that's not happening here they just want to secure the business that's the only thing that they wants the only thing that they're going to get then they have two approaches with the contract to make a will that's a claim where you say that you gave up something in exchange for the receipt of gifts at death so here Simon and Tod would have to say that they gave up pay they gave up benefits they gave up pursuing other opportunities in exchange for getting the business but they would have to prove that by clear and convincing evidence because they don't have anything in writing and if you don't have anything at writing you have to prove by clear and convincing evidence that there was an actual agreement a meeting of the minds between and Simon and Todd if Simon and Todd chose to just give up other opportunities to help that out because they wanted to be nice to dad and help him that wouldn't be enough to base a contract to make a will you have to have an actual contract or an actual agreement between the parties for that to work and finally Simon and Todd could file a creditors claim the creditors claim would have to be based on something so perhaps they could say that they bought into the business or they earn some of the business with sweat equity or they can say the dad said that they were joint owners of the business and all they want is to at least get their joint ownership out and they're each entitled to a third under joint ownership the problem with that of course is they don't have anything in writing to establish their joint ownership so they're gonna have to somehow prove up that they were joint owners of this business it's a very very tricky situation that Simon and Todd find themselves in but it's not uncommon a lot of times families don't document these sorts of things so to recap our options number one definitely look around see if there's any evidence of a holographic will any writing at all that dad signed that would give Simon and Todd some right to the business number two see if you can negotiate with Patty and the third and fourth option is file a contract to make a will claim or a creditors claim and see if you can get something using either one of those avenues. 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