What About the Children? Family Allowances in the Age of the Revocable Trust - Is Parson Still Good Law and Should it Be?
| Publication year | 2010 |
By Jeremiah J. Moffit, Esq.*
"If we don't stand up for children, then we don't stand for much." — Marian Wright Edelman1
Family allowances and probate homesteads have entered the popular consciousness with the high profile dealings in the estates of James Brown and Michael Jackson. In December 2006, Brown's widow and five year old son, James, Jr., were locked out of the family home in South Carolina by the named executor of Brown's will, who also served as trustee of a trust created by Brown.2 Neither wife nor minor child was named in Brown's will, which was executed prior to the marriage and James, Jr.'s birth.3 More recently, in California, Michael Jackson's father, Joe Jackson, sought a family allowance in excess of $15,000 per month, alleging his financial dependence upon his son.4 In the same proceedings, the Los Angeles County Superior Court awarded Jackson's minor children and mother family allowances totaling $86,000 per month while litigation continues over the estate.5
California law provides for an award of a family allowance payable to a decedent's minor children in estate proceedings.6 Over the past fifty years, however, more estate plans have turned to the revocable trust as the primary means to devise or bequeath property at death. Using a narrow definition of the term "estate," the Second District Court of Appeal's decision in Parson v. Parson held that no family allowance may be awarded from a revocable trust if a decedent leaves no probate assets.7 Other decisions have taken a broader reading of the term "estate" to allow the assets of a revocable trust to be reached to pay similar charges against decedents' estates.8
While subsequent and contemporary decisions call into question some of the reasoning in the Parson decision, Parson remains good law. The perhaps unintended effect of Parson is to allow parents of minor children to avoid their obligations of support, despite the long history and public policy to the contrary, merely by funding all of their assets into a revocable trust rather than allowing their property to pass via will or intestacy. As a result, unless Parson is overturned or the family protection statutes modified, the minor children of the wealthiest Californians can be left destitute by a savvy or unintended estate plan. Likewise, creditors could leave the decedent's minor children destitute, even if the minor children are named remainder beneficiaries, if the creditors' claims exceed the assets of the revocable trust. Furthermore, minor children could be left with no means of support during the pendency of litigation concerning a decedent's revocable trust. Any of these results would defeat the long-held view in favor of family allowances and parental support for minor children under California law.
While California law allows a testator to dispose of property without regard to whether the dispositions specified are fair and appropriate, this right has been restricted by the Legislature.9 Since early statehood, California has protected a decedent's minor children by providing a statutory framework for awarding family allowances and probate homesteads.10 The minor children of a decedent are "entitled to such reasonable family allowance out of the estate as is necessary for their maintenance according to their circumstances during administration of the estate."11 The priority for their payment comes before the claims of most debts, including unsecured creditors.12
Family allowance awards may be made retroactive to the decedent's date of death and can continue until the order finally distributing the estate is entered if the estate is solvent.13 Even if the estate is insolvent, family allowances can, and in the proper circumstances must, be paid up to a year after letters are issued.14 Indeed, the administration of the estate can be continued solely for the payment of a family allowance if (1) the family allowance is needed by the recipient to pay for the necessaries of life or education and (2) the needs of the recipient outweigh the needs of the decedent's named beneficiaries whose interests would be adversely affected.15
Family allowances are strongly favored and the statutory framework granting such right is liberally construed by the courts.16 Family allowances are "based on the policy that places the welfare of the decedent's surviving family above the interests of his creditors, heirs, legatees, and devisees."17 Acting within the statutory framework, courts have wide discretion in making an order for family allowance, including such matters as its necessity, amount and duration.18 An award is not discretionary if the assets of the estate are sufficient to satisfy prior charges.19
In Estate of Woodward, the Third District Court of Appeal construed the statutory framework liberally to hold a family allowance was properly awarded to a decedent's child born out of wedlock, even though the decedent had never seen or acknowledged the child during his lifetime.20 The court found the word "family" as used in the statute is not synonymous with "household," but includes those members of the family living apart from the decedent for whose support he is liable.21 A family
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allowance is "an extension of the obligation of support" and the father of an illegitimate child is obligated to give the child support and education suitable to his circumstances.22 Similarly, courts have liberally construed the statutory framework to hold a family allowance is properly chargeable to assets without regard to whether they were the community or separate property of the decedent;23 to find social security payments are not monies "derived from other property" within the meaning of the family allowance statute and should not be considered when determining an award;24 and to determine a minor child's attorneys' fees incurred in obtaining a family allowance should be awarded as part of the allowance.25
In California, a minor child's parents are equally responsible for the care and support of the child.26 In fact, it is a crime not to provide a minor child with necessary support.27 The duty to support cannot, by any act, conduct or arrangement be shifted from a parent's shoulders.28 For instance, a parent's assets that cannot be reached under normal circumstances, such as a beneficial interest in a spendthrift trust, can be used to satisfy support obligations.29
After a parent's death, any child support obligation fixed by court decree or property settlement agreement survives as a charge against his or her estate.30 In that event, the minor child can proceed against the parent's estate and revocable trust as would any other creditor.31 If there is no existing support order or agreement however, the estate of a parent is not liable for the support of his or her minor child payable under the Family Code.32 Accordingly, if a minor child, through no fault of his or her own, fails to obtain a support order prior to his or her parent's death, then the minor child's only recourse is to apply for relief under the family protection provisions of the Probate Code, which include the provisions for family allowances.33
In Jacobs v. Gerecht, the court confirmed the synergic relationship between the support provisions of the Family Code (allowing a minor child to seek support from a parent during the parent's lifetime) and the Probate Code (allowing a minor child to seek support from a parent's estate).34 The three-year old minor in Jacobs filed a creditor's claim for support against her father's estate.35 When the creditor's claim was rejected, the minor brought suit against the personal representative.36 Citing the testator's freedom to leave his assets as he wished and the failure to obtain a support order during the father's lifetime, the Second District Court of Appeal held the minor child was without recourse after the father's death under the Family Code support statutes.37 Instead, the minor child's means to obtain support were contained solely within the Probate Code, including an award of a family allowance.38
Decisions preceding Jacobs likewise confirm a family allowance "is an extension of the obligation of support" obligating the parent to provide a minor child with support and education suitable to the circumstances.39 Accordingly, protection is given to the child in the matter of provision for a livelihood whether sought under the child support framework of the Family Code or the family allowance framework of the Probate Code.40
In Parson v. Parson, the Second District Court of Appeal considered whether a family allowance could be paid out of a decedent's revocable trust.41 The decedent transferred all of his assets to a revocable trust during his lifetime.42 In the revocable trust and his will, the decedent specifically disinherited his spouse.43 After the decedent's death, his spouse filed a petition seeking a family allowance award from the revocable trust, which was opposed by the trustee.44 No probate was opened and the decedent had no assets subject to probate.45
The trial court awarded a family allowance under Probate Code section 6540, finding implicit authorization for the award in Probate Code sections 11420 and 19001.46 Specifically, Probate Code section 11420 provides a family allowance is to receive priority amongst the debts paid from an estate. Probate Code section 19001 provides that upon the death of a settlor, the property of the deceased settlor that was subject to the...
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