Don’t you believe it. This may be one of the oldest arguments in the book. Siblings often argue that whatever mom and dad gave you during life belongs to the estate. Or a closely related argument: we are going to count your lifetime gifts against your share of the estate. It really is all the same thing, siblings hate inequality—especially when is does not benefit themselves.
Do all Siblings Receive an Equal Part of the Estate?
But the law has no requirements for equality among children. Parents have the right to make lifetime gifts that are unequal, and then leave their estate in an equal or unequal fashion all they like.
If you find yourself as the hated recipient of lifetime gifts, there is some help in the Probate Code you can use to fight off claims of inclusion in the estate. Probate Code section 21135 provides a method for determining whether your lifetime gift will reduce the amount you receive from your parent’s estate after your parent’s death. The concept is known legally as satisfaction. The issue is whether the lifetime gifts you received satisfies, in whole or in part, your share of the estate after death. For example, if you were given a cash lifetime gift of $100,000 from your mom, does that mean your share of her estate will be decreased by $100,000 after mom dies?
Should Lifetime Gifts Be Offset From Inheritance?
California Probate Code section 21135 says none of the lifetime gifts you receive will be used to reduce your share of the estate UNLESS one of the following exceptions applies:
- The Will or Trust specifically provides for reduction of your share by the amount of lifetime gifts received (there must be specific language to this effect in the Trust or Will document),
- The decedent states in an independent writing that the gift should reduce the amount given to you after her death (again, there must be a document with this specific language in it),
- You acknowledge in writing that your share of the estate should be reduced by the amount of the gift(s) your received, or
- The property you received by gift is the same property given to you under the Trust or Will (this does NOT include cash, but does include things like real property).
In other words, your parent’s intent to reduce your share of the estate by the amount of your lifetime gifts must be clearly documented in writing, otherwise it does not apply. Think about that, the law presumes that lifetime gifts do NOT affect what you receive from the estate unless it is documented in writing. The law wants clear evidence that your share of the estate should be reduced. If there is no clear evidence, then the law presumes that your parent intended to give you a bigger benefit from his or her assets. It’s just that simple. If a parent wanted to equalize all lifetime gifts, then he or she should have specified that in writing as part of the estate plan. Since they failed to do so, they must have wanted it unequal.
And yet, siblings routinely argue that your lifetime gifts should either be part of the estate or should be used to reduce your share of the estate. Well they better have written proof of that or they are going to lose. And lose they do, in almost every case I have handled that raises these claims. So why do siblings make these claims if they are going to lose them? Simply put, inequality makes people mad. And mad people take illogical positions at times. And by fighting about these issues, they may hope that you are willing to give them something rather than spend money and time fighting about it.
Whether you choose to fight it out or not is your decision to make. But you should know that any lifetime gifts are yours to keep. And except where there is clear written proof to the contrary, your lifetime gifts will not affect what you are entitled to receive form a parent’s estate after your parent dies. This may be one of the simplest issues in Trust and Will cases that is still hotly contested.